DEF 14A 1 de3476111-def14a.htm DEFINITIVE PROXY STATEMENT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.            )
 
Filed by the Registrant [X]
Filed by a Party other than the Registrant [   ] 
 
Check the appropriate box:
 
[   ]        Preliminary Proxy Statement
[   ]   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X]   Definitive Proxy Statement
[   ]   Definitive Additional Materials
[   ]   Soliciting Material Pursuant to §240.14a-12

  DEERE & COMPANY  
  (Name of Registrant as Specified In Its Charter)  
 
       
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 

Payment of Filing Fee (Check the appropriate box):
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Fee paid previously with preliminary materials.
 
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
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  4)   Date Filed:
 


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Who we are
 
John Deere is a world leader in providing advanced products and services and is committed to the success of customers whose work is linked to the land — those who cultivate, harvest, transform, enrich, and build upon the land to meet the world’s dramatically increasing need for food, fuel, shelter, and infrastructure.


OUR COMMITMENT       OUR CORE VALUES
 

We are committed to those linked to the land. We believe that by serving them we support improving the quality of life for people around the world. Through the excellence of our products and services, we help our customers meet two of the biggest challenges in the world: feeding a population growing in size and affluence and developing the infrastructure required to support growing urbanization.

John Deere, with major agricultural and construction equipment businesses, is uniquely positioned to help our customers meet those challenges.

In conducting our business, we are guided by four core values that company founder John Deere was known for — integrity, quality, commitment, and innovation.

We apply those values in creating our products and services, maintaining our relationships, and operating our factories.



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January 11, 2019



DEAR FELLOW SHAREHOLDERS,

On behalf of the Board of Directors and the senior management team, we cordially invite you to attend Deere & Company’s Annual Meeting of Shareholders, which will be held on Wednesday, February 27, 2019, at 10 a.m. Central Standard Time at Deere & Company World Headquarters, One John Deere Place, Moline, Illinois, 61265.

At this meeting, you will have a chance to vote on the matters set forth in the accompanying Notice of Annual Meeting and Proxy Statement, and we will share a report on our operations.

Your vote is important. Even if you plan to attend the Annual Meeting, please vote by internet, telephone, or mail as soon as possible to ensure your vote is recorded promptly. The instructions set forth in the Proxy Statement and on the proxy card explain how to vote your shares.

On behalf of the Board of Directors, thank you for your ongoing support of Deere & Company.

Sincerely,

 
 
     
    Samuel R. Allen
Chairman and CEO

  Vance D. Coffman
Presiding Director

         

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Notice of 2019 Annual Meeting
of Shareholders


     

Your opinion is very important. Please vote on the matters described in the accompanying Proxy Statement as soon as possible, even if you plan to attend the 2019 Annual Meeting of Shareholders (the “Annual Meeting”). You can find voting instructions on page 78.

In addition to the Proxy Statement, we are sending you our Annual Report, which includes our fiscal 2018 financial statements. If you wish to receive future proxy statements and annual reports electronically rather than receiving paper copies in the mail, please turn to the section entitled “Electronic Delivery of Proxy Statement and Annual Report” on page 81 for instructions.

 

DATE
Wednesday, February 27, 2019

TIME
10 a.m. Central Standard Time

PLACE
Deere & Company
World Headquarters
One John Deere Place
Moline, Illinois 61265
 
 

At the Annual Meeting, shareholders will be asked to:
 
1.Elect the 11 director nominees named in the Proxy Statement (see page 6).
2.Approve the compensation of Deere’s named executives on an advisory basis (“say-on-pay”) (see page 25).
     
3.Ratify the appointment of Deloitte & Touche LLP as Deere’s independent registered public accounting firm for fiscal 2019 (see page 72).
4.Vote on the shareholder proposal, if properly presented at the meeting (see page 75).
5.Consider any other business properly brought before the meeting.
 
 
 
 
 
 
   

 

 

PLEASE VOTE YOUR SHARES
If you were a Deere shareholder of record at the close of business on December 31, 2018, we encourage you to vote promptly in one of the following ways:

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON FEBRUARY 27, 2019:
The Proxy Statement and Annual Report are available on our website at www.deere.com/stock.
     

BY TELEPHONE
In the U.S. or Canada, you can vote your shares by calling 1-800-690-6903.

BY INTERNET
You can vote your shares online at www.proxyvote.com. You will need the 16-digit control number on the Notice of Internet Availability or proxy card.

   

BY MAIL
You can vote by mail by marking, dating, and signing your proxy card or voting instruction form and returning it in the postage-paid envelope.

IN PERSON
You can vote in person at the Annual Meeting. See page 80 for information on how to pre-register.

 

On behalf of the Board of Directors, I thank you for exercising your right to vote your shares.

For the Board of Directors,


Todd E. Davies, Corporate Secretary
Moline, Illinois, January 11, 2019


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This Proxy Statement is issued in connection with the solicitation of proxies by the Board of Directors of Deere & Company for use at the Annual Meeting and at any adjournment or postponement thereof. On or about January 11, 2019, we will begin distributing print or electronic materials regarding the Annual Meeting to each shareholder entitled to vote at the meeting. Shares represented by a properly executed proxy will be voted in accordance with instructions provided by the shareholder.

Proxy Summary
 
2     Proxy Summary
     
Election of Directors
 
6 Item 1 — Election of Directors
14 Corporate Governance
20 Compensation of Directors
22 Security Ownership of Certain Beneficial Owners and Management
24 Review and Approval of Related Person Transactions
24 Section 16(a) Beneficial Ownership Reporting Compliance
 
Advisory Vote on Executive Compensation
 
25 Item 2 — Advisory Vote on Executive Compensation
26 Compensation Discussion and Analysis
27     Executive Summary
30   2018 Compensation Overview
33 Direct Compensation Elements
47 Indirect Compensation Elements
49   Compensation Methodology and Process
53 Risk Assessment of Compensation Policies and Practices
54 Compensation Committee Report
55 Executive Compensation Tables
70 Pay Ratio Disclosure
71 Equity Compensation Plan Information


1 DEERE & COMPANY 2019 PROXY STATEMENT


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Proxy Summary

This summary highlights selected information contained in this Proxy Statement, but it does not contain all the information you should consider. We urge you to read the whole Proxy Statement before you vote. You also may wish to review Deere’s Annual Report on Form 10-K for the fiscal year ended October 28, 2018. Deere uses a 52/53 week fiscal year ending on the last Sunday in the reporting period. Deere’s 2018, 2017, and 2016 fiscal years ended on October 28, 2018, October 29, 2017, and October 30, 2016, respectively. Unless otherwise stated, all information presented in this Proxy Statement is based on Deere’s fiscal calendar.

Meeting Agenda and Voting Recommendations

Item       Voting Standard       Vote Recommendation       Page Reference
1. Annual election of directors Majority of votes cast

FOR
each nominee

6
2. Advisory vote on executive
compensation
Majority of votes present in person or by proxy FOR 25
3. Ratification of independent registered public accounting firm Majority of votes present in person or by proxy FOR 72
4. Shareholder proposal Majority of votes present
in person or by proxy
AGAINST
the proposal
75

Director Nominees
Every member of our Board of Directors is elected annually. You are being asked to vote on the election of these 11 nominees, all of whom currently serve as directors.

All directors other than Samuel R. Allen are INDEPENDENT.

Committee Memberships
Name    Age    Director
Since
   Executive    Audit
Review
   Compensation    Corporate
Governance
   Finance
Samuel R. Allen
Chairman and CEO, Deere & Company
65 2009 CHAIR
Vance D. Coffman
Retired Chairman, Lockheed Martin
74 2004 CHAIR
Alan C. Heuberger
Senior Manager, BMGI
45 2016

Charles O. Holliday, Jr.
Chairman of Royal Dutch Shell plc

70 2007-2016;
since 2018
Dipak C. Jain
Co-President/Global Advisor, China Europe International Business School
61 2002
Michael O. Johanns
Retired United States Senator from Nebraska
68 2015
Clayton M. Jones
Retired Chairman, Rockwell Collins
69 2007 CHAIR
Gregory R. Page
Retired Executive Director, Chairman and CEO, Cargill
67 2013 CHAIR
Sherry M. Smith
Former Executive VP and CFO, SuperValu
57 2011 CHAIR
Dmitri L. Stockton
Retired Special Advisor to Chairman and Senior VP, GE and Former Chairman, President, and CEO, GE Asset Management
54 2015
Sheila G. Talton
President and CEO, Gray Matter Analytics
66 2015


2 DEERE & COMPANY 2019 PROXY STATEMENT


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Proxy Summary
Governance and Compensation Changes

Annual Meeting of Shareholders

You are entitled to vote at the meeting if you were a holder of record of our common stock at the close of business on December 31, 2018. Please see “Additional Information – Voting and Meeting Information – How Do I Vote?” for instructions on how to vote your shares and other important Annual Meeting information. If you wish to attend the meeting in person, we encourage you to register on or prior to Tuesday, February 26, 2019, to obtain an admission ticket. See “Additional Information – Voting and Meeting Information – Attendance at the Annual Meeting” for additional instructions.

Governance and Compensation Changes
Over our more than 180-year history, one of the things we have learned is the inevitability of change. As a result, we regularly assess what we do to determine how we can adapt and improve. This approach applies to our corporate governance and compensation plans as much as it does to our manufacturing processes and product innovation. Here is a summary of the changes we have made in recent years.

CORPORATE GOVERNANCE

We adopted a bylaw in 2016 allowing shareholders meeting certain requirements to nominate directors and have such nominees included in the proxy statement, commonly referred to as “proxy access.”
In 2017, we increased the retirement age for board members to 75 to reflect recent industry trends and to provide stability in the composition of our board.
     

COMPENSATION

The performance goals for our short-term incentive plan were significantly increased for 2018 to align more appropriately to our current enterprise strategy.
The modifier for the long-term incentive cash plan was changed to a multiplicative payout modifier that will allow for upside potential when total shareholder return (TSR) is above the 50th percentile.
Performance Stock Units (PSUs) will now be based solely on a revenue growth metric. TSR as a standalone metric will apply only to the cash portion of the long-term award.
The consolidated financials of the Wirtgen acquisition are excluded from the Equipment Operations Operating Return on Operating Assets (OROA) and Shareholder Value Added (SVA) for calculating variable compensation for fiscal 2018 and 2019 to allow for integration and to determine appropriate incentive metrics. Wirtgen is included in the revenue component of the variable pay metrics to incent executive leadership to drive for successful integration and continued growth of the business.

Fiscal 2018 Performance Highlights
Deere & Company achieved net sales and revenues of $37.358 billion—our second-best year. Net income, while impacted by adjustments and other one-time accruals related to the U.S. tax reform legislation in December 2017, climbed 10 percent to $2.368 billion, or $7.24 per share, compared with $2.159 billion, or $6.68 per share, in 2017. Sound execution was aided by improvements to our cost structure put in place in 2017. Performance also benefited from a broad product lineup, one that makes Deere the No. 1 manufacturer of agriculture, forestry, and road-construction equipment and a leader in the construction and turf care equipment industries.

For more information regarding our fiscal 2018 financial performance, please see our Annual Report, which is available at www.proxyvote.com.

Deere made acquisitions during the year that are expected to play an important role in our future:
Wirtgen Group, industry leader in road-construction equipment (December 2017)
KingAgro, manufacturer of carbon-fiber products (March)
PLA, a South American manufacturer of sprayers, planters, and other equipment (September)
Other highlights include:
Generated $1.86 billion in economic profit, or SVA
Returned nearly $1.8 billion to shareholders in the form of dividends and share repurchases
Invested almost $1.7 billion in research and development

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Proxy Summary
Fiscal 2018 Performance Highlights


NET SALES AND REVENUES
(Millions)

     

NET INCOME(1)
(Millions)

     

SHAREHOLDER VALUE ADDED(2)(3)
(Millions)

     

DEERE SHARE PRICE
(at fiscal year-end)

Worldwide net sales and revenues rose 26% in 2018 due to improving market conditions as well as the addition of the Wirtgen Group. 2018 results include 10 months of Wirtgen sales.

 

Net income, though negatively impacted by tax change provisions, improved to $2,368 million, up 10% from 2017. This represents the fifth-highest total in company history. Without the tax change provisions, net income for the year would have been $3,073 million.

Shareholder Value Added (SVA) jumped for the year—up nearly 45%—as a result of higher operating profit and sound asset management. SVA represents operating profit less an implied charge for capital.

Deere share price ended year at $133, unchanged from 2017 and up 53% from 2016. Quarterly dividends increased 15% during the year and were raised again in December 2018.


(1)

Net income attributable to Deere & Company

(2)

SVA is a non-GAAP measure. See page 21 of the Annual Report for details

(3)

Amounts for 2016 & 2017 were restated due to the company adopting Financial Accounting Standard Board (FASB) Accounting Standards Update (ASU) No. 2016-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost in 1Q 2018.

CASH FLOW FROM OPERATING ACTIVITIES
(Millions)

Consolidated cash flow from operations totaled a healthy $1.8 billion after roughly $1.3 billion in voluntary contributions to U.S. pension and other post-employment benefit plans. Cash flow funded strategic projects and acquisitions and paid roughly $1.8 billion to investors in the form of dividends and share repurchases.


4 DEERE & COMPANY 2019 PROXY STATEMENT


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Proxy Summary
Fiscal 2018 Executive Compensation Highlights

Fiscal 2018 Executive Compensation Highlights
Our compensation programs and practices are designed to create incentive opportunities for advancing our shareholders’ long-term interests. We use metrics that align with our business strategy and motivate our executives to create value for shareholders at all points in the business cycle. For fiscal 2018, we had three separate variable pay components (described below) — Short-Term Incentive (STI), Long-Term Incentive Cash (LTIC), and Long-Term Incentive (LTI) — which stimulate complementary behaviors.

This Metric       For this type of compensation       Contributes to this goal
Operating return on operating assets (OROA)(1)(2) exceptional operating performance for equipment operations
Return on equity (ROE)(1) Annual cash bonus
(known within Deere as STI)
exceptional operating performance for Financial Services
Net Sales and Revenues   importance of sustainable growth in near-term decisions
Shareholder Value Added (SVA)(2) Long-term cash
(known within Deere as LTIC)
sustainable, profitable growth
Revenue growth Long-term equity
(known within Deere as LTI)
sustainable growth
Total Shareholder Return (TSR) LTIC exceptional equity appreciation

(1)

The equipment operations OROA calculation excludes the assets from our Financial Services segment and certain corporate assets. Corporate assets are primarily the equipment operations’ retirement benefits, deferred income tax assets, marketable securities, and cash and cash equivalents. ROE is based solely on the Financial Services segment. See Appendix B for details.

(2)

Wirtgen is excluded from both the equipment operations OROA and SVA calculations for FY18 variable pay to allow time for assimilation. See Appendix B for details.

For information about the metrics we use to measure compensation and the resulting payouts, see the Executive Summary of the Compensation Discussion and Analysis (CD&A).

The table below highlights the 2018 compensation for the CEO and, on average, for the named executive officers (NEOs) as disclosed in the Fiscal 2018 Summary Compensation Table. The table also shows how much compensation was delivered in cash (versus equity) and the significant portion that is performance-based and therefore at risk.

Summary Compensation
Table Elements
Salary STI LTIC Performance
Stock Units
Restricted
Stock Units and
Stock Options
Retirement
and Other
Compensation
Total
CEO
Compensation $1,500,000 $2,213,325 $1,509,536 $6,967,312 $5,471,821 $863,673 $18,525,667
% of Total 8% 12% 8% 37% 30% 5% 100%
Cash vs. Equity Total Cash 28% Total Equity 67% Other 5% 100%
Short-Term vs. Long-Term Short-Term 20%   Long-Term 80%   100%
Fixed vs. Performance-Based Fixed 8% Performance-Based 87% Other 5% 100%
 
Average NEO
Compensation $675,990 $664,971 $484,807 $1,325,798 $1,041,209 $263,277 $4,456,052
% of Total 15% 15% 11% 30% 23% 6% 100%
Cash vs. Equity Total Cash 41% Total Equity 53% Other 6% 100%
Short-Term vs. Long-Term Short-Term 30%   Long-Term 70%   100%
Fixed vs. Performance-Based Fixed 15% Performance-Based 79% Other 6% 100%

5 DEERE & COMPANY 2019 PROXY STATEMENT


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Election of Directors



Item 1 - Election of Directors

How We Identify and Evaluate Director Nominees
The Corporate Governance Committee of the Board is responsible for screening candidates and recommending director nominees to the full Board. The Board nominates the slate of directors for election at each Annual Meeting of Shareholders and elects directors to fill vacancies or newly-created Board seats.

The Corporate Governance Committee considers candidates recommended by shareholders, directors, officers, and third-party search firms. If you wish to nominate a director, please review the procedures described under “Additional Information – 2020 Shareholder Proposals and Nominations” in this Proxy Statement. The Corporate Governance Committee evaluates all candidates in the same manner, regardless of the source of the recommendation.

Deere’s Corporate Governance Policies, which are described in the “Corporate Governance” section of this Proxy Statement, establish the general criteria and framework for assessing director candidates. In particular, the Corporate Governance Committee considers each nominee’s skills, experience, international versus domestic background, and age, as well as legal and regulatory requirements and the particular needs of the Board at the time. In addition, the Board assesses the diversity of its members and nominees as part of an annual performance evaluation by considering, among other factors, diversity in expertise, experience, background, ethnicity, and gender. We believe a Board composed of members with complementary skills, qualifications, experiences, and attributes is best equipped to meet its responsibilities effectively.

Any director who experiences a material change in occupation, career, or principal business activity, including retirement, must tender a resignation to the Board. Upon recommendation from the Corporate Governance Committee, the Board may decline to accept any such resignation. Directors must retire from the Board upon the first Annual Meeting of Shareholders after reaching the age of 75, except as approved by the Board.

Director Nominees
The Corporate Governance Committee has recommended and the Board has nominated each of Samuel R. Allen, Vance D. Coffman, Alan C. Heuberger, Charles O. Holliday, Jr., Dipak C. Jain, Michael O. Johanns, Clayton M. Jones, Gregory R. Page, Sherry M. Smith, Dmitri L. Stockton, and Sheila G. Talton to be elected for terms expiring at the Annual Meeting in 2020. All of the nominees are current members of the Board, but Deere’s Certificate of Incorporation and good governance practices require all members of the Board to be elected annually.

We have confidence that this talented slate of nominees will lead Deere capably in the year ahead. We discuss the nominees’ professional backgrounds and qualifications in the short biographies that follow.

The board of directors recommends that you vote FOR all 11 nominees.


6 DEERE & COMPANY 2019 PROXY STATEMENT

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Election of Directors
Item 1 – Election of Directors

Board Diversity
The Corporate Governance Committee believes that our Board is most effective when it embodies a diverse set of viewpoints and practical experiences. To maintain an effective Board, the Corporate Governance Committee considers how each nominee’s particular background, experience, qualifications, attributes, and skills will contribute to Deere’s success. As shown below, the independent members of our Board have a range of viewpoints, backgrounds, and expertise.


BOARD MEMBER SKILLS

Executive Manufacturing International Academic Government Agriculture Finance Risk
Management
Corporate
Governance
Samuel R. Allen
Vance D. Coffman
Alan C. Heuberger
Charles O. Holliday, Jr.
Dipak C. Jain
Michael O. Johanns
Clayton M. Jones
Gregory R. Page
Sherry M. Smith
Dmitri L. Stockton
Sheila G. Talton

Audit committee financial expert under Securities and Exchange Commission (SEC) rules

7 DEERE & COMPANY 2019 PROXY STATEMENT


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Election of Directors
Item 1 – Election of Directors


Samuel R. Allen Chairman and Chief Executive Officer of Deere & Company

AGE:
65

DIRECTOR SINCE:
2009

COMMITTEES:
Executive (Chair)
 

  

Current and Past Positions

Positions at Deere:

Chairman and Chief Executive Officer since February 2010
 
President and Chief Executive Officer — August 2009 to February 2010
 
President and Chief Operating Officer — June 2009 to August 2009
 
President, Worldwide Construction & Forestry Division and John Deere Power Systems — March 2005 to June 2009
 
President, Global Financial Services, John Deere Power Systems, and Corporate Human Resources — November 2003 to March 2005

Other Current Directorships

Whirlpool Corporation (since 2010)
     

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.


Vance D. Coffman Retired Chairman and Chief Executive Officer of Lockheed Martin Corporation

AGE:
74

DIRECTOR SINCE:
2004

COMMITTEES:
Compensation (Chair),
Corporate
Governance,
Executive

PRESIDING DIRECTOR
SINCE 2016
 

  

Current and Past Positions

Positions at Lockheed Martin Corporation (aerospace, defense, and information technology):

Chairman — April 1998 to April 2005
 
Chief Executive Officer — August 1997 to August 2004
 

Previous Directorships

Amgen Inc. (2007 to 2016)
 
3M Company (2002 to 2018)
 
     

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; the breadth of his experiences in 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.


8 DEERE & COMPANY 2019 PROXY STATEMENT


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Election of Directors
Item 1 – Election of Directors


Alan C. Heuberger Senior Manager, BMGI

AGE:
45

DIRECTOR SINCE:
2016

COMMITTEES:
Audit Review,
Finance
 

 

  

Current and Past Positions

Positions at BMGI (private investment management):

Senior Manager — since 2004
 
Investment Analyst — 1996 to 2004

Previous Directorships

GAMCO Investors, Inc. (2004 to 2006)
     

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. Heuberger should serve on Deere’s Board of Directors: his leadership qualities developed from his service as Senior Manager of BMGI; the breadth of his experience in governance, strategy, and other areas of oversight while serving as a member of the boards of directors and advisors of various asset management entities and privately-held corporations; and his subject matter knowledge in the areas of agriculture industry investments, asset management, finance, and economics.


Charles O. Holliday, Jr. Chairman of Royal Dutch Shell plc

AGE:
70

DIRECTOR SINCE:
2007 to 2016
2018

COMMITTEES:
Compensation,
Corporate
Governance

 

  

Current and Past Positions

Chairman of Royal Dutch Shell plc (oil and natural gas exploration, refining, and product sales) — since May 2015
 
Chairman of the National Academy of Engineering (nonprofit engineering institution) — July 2012 to July 2016
 
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, material science, safety and security, and biotechnology)

Other Current Directorships

HCA Holdings, Inc. (since 2016)
 
Royal Dutch Shell plc (since 2010)
 

Previous Directorships

Bank of America Corporation (2009 to 2014)
 
CH2M HILL Companies, Ltd. (2009 to 2017)
 
E. I. du Pont de Nemours and Company (1998 to 2009)
     

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 Royal Dutch Shell, 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.


9 DEERE & COMPANY 2019 PROXY STATEMENT


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Election of Directors
Item 1 – Election of Directors


Dipak C. Jain Co-President/Global Advisor, China Europe International Business School

AGE:
61

DIRECTOR SINCE:
2002

COMMITTEES:
Audit Review,
Finance

 

  

Current and Past Positions

Co-President/Global Advisor, China Europe International Business School — since December 2017
 
Director, Sasin Graduate Institute of Business Administration (international graduate business school) — August 2014 to August 2017
 
Chaired Professor of Marketing, INSEAD (international graduate business school) — March 2013 to August 2014
 
Dean, INSEAD — May 2011 to March 2013
 
Dean, Kellogg School of Management, Northwestern University — July 2001 to September 2009
 
Associate Dean for Academic Affairs, Kellogg School of Management, Northwestern University — 1996 to 2001
 
Sandy and Morton Goldman Professor of Entrepreneurial Studies and Professor of Marketing, Kellogg School of Management, Northwestern University — 1994 to 2001 and since 2009

Other Current Directorships

Reliance Industries Limited, India (since 2005)

Previous Directorships

Global Logistics Properties Limited, Singapore (2010 to 2018)
 
Northern Trust Corporation (2004 to 2017)
     

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 or Dean at several prominent graduate business schools and as a foreign affairs advisor for the Prime Minister of Thailand; the breadth of his experiences in compensation, corporate governance, and other areas of oversight while serving as a member of the boards of directors of other global corporations; and his subject matter knowledge in the areas of marketing, global product diffusion, and new product forecasting and development.


Michael O. Johanns Retired U.S. Senator from Nebraska and former U.S. Secretary of Agriculture

AGE:
68

DIRECTOR SINCE:
2015

COMMITTEES:
Audit Review, Corporate Governance  

  

Current and Past Positions

United States Senator from Nebraska — January 2009 to January 2015
 
United States Secretary of Agriculture — January 2005 to September 2007
 
Governor of Nebraska — 1999 to 2005

Other Current Directorships

Burlington Capital, LLC (since 2016)
     

Key Qualifications, Experiences,
and Attributes

In addition to his professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Mr. Johanns should serve on Deere’s Board of Directors: his leadership qualities developed from his service in state and federal government, including serving as 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.


10 DEERE & COMPANY 2019 PROXY STATEMENT


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Election of Directors
Item 1 – Election of Directors


Clayton M. Jones Retired Chairman and Chief Executive Officer, Rockwell Collins, Inc.

AGE:
69

DIRECTOR SINCE:
2007

COMMITTEES:
Compensation,
Corporate
Governance
(Chair),
Executive

 

  

Current and Past Positions

Positions at Rockwell Collins, Inc. (aviation electronics and communications):

Chairman — July 2013 to July 2014
 
Chairman and Chief Executive Officer — September 2012 to July 2013
 
Chairman, President, and Chief Executive Officer — June 2002 to September 2012

Other Current Directorships

Motorola Solutions, Inc. (since 2015)

Previous Directorships

Cardinal Health, Inc. (2012 to 2018)
 
Rockwell Collins, Inc. (2001 to 2014)
     

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; 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.


Gregory R. Page Retired Executive Director, Chairman, and Chief Executive Officer of Cargill, Incorporated

AGE:
67

DIRECTOR SINCE:
2013

COMMITTEES:
Finance (Chair),
Audit Review,
Executive

 

  

Current and Past Positions

Positions at Cargill, Incorporated (agricultural, food, financial, and industrial products and services):

Executive Director — September 2015 to August 2016
 
Executive Chairman — December 2013 to September 2015
 
Chairman and Chief Executive Officer — 2011 to December 2013
 
Chairman, Chief Executive Officer, and President — 2007 to 2011
 
President and Chief Operating Officer — 2000 to 2007

Other Current Directorships

Eaton Corporation plc (since 2003)
 
3M Company (since 2016)

Previous Directorships

Carlson, Inc. (2010 to 2015)
 
Cargill, Incorporated (2007 to 2016)
     

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; 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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Item 1 – Election of Directors



Sherry M. Smith Former Executive Vice President and Chief Financial Officer of SuperValu Inc.

AGE:
57

DIRECTOR SINCE:
2011

COMMITTEES:
Audit Review (Chair), Finance, Executive
 

  

Current and Past Positions

Positions at SuperValu Inc. (retail and wholesale grocery and retail general merchandise products):

Executive Vice President and Chief Financial Officer — December 2010 to August 2013
 
Senior Vice President, Finance — 2005 to 2010
 
Senior Vice President, Finance and Treasurer — 2002 to 2005
 
 

Other Current Directorships

Piper Jaffray Companies (since 2016)
 
Realogy Holdings Corp. (since 2014)
 
Tuesday Morning Corporation (since 2014)
     

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; the breadth of her experiences in auditing, finance, accounting, compensation, strategic planning, and other areas of oversight while serving as a member of the boards of directors of other public corporations; her family farming background; and her subject matter knowledge in the areas of finance, accounting, and food and supply chain management.


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Item 1 – Election of Directors



Dmitri L. Stockton Retired Special Advisor to Chairman and Senior Vice President of General Electric Company and
Former Chairman, President, and Chief Executive Officer of GE Asset Management Incorporated

AGE:
54

DIRECTOR SINCE:
2015

COMMITTEES:
Compensation, Finance

  

Current and Past Positions

Special Advisor to the Chairman and Senior Vice President of GE (power and water, aviation, oil and gas, healthcare, appliances and lighting, energy management, transportation and financial services) — July 2016 to March 2017
 
Chairman, President, and Chief Executive Officer of GE Asset Management Incorporated (global investments) and Senior Vice President of General Electric Company — May 2011 to December 2016
 
President and Chief Executive Officer of GE Capital Global Banking and Senior Vice President of GE London — December 2008 to April 2011
 
President and Chief Executive Officer of GE Consumer Finance, Central & Eastern Europe — October 2004 to December 2008
 
 

Other Current Directorships

Ryder Systems, Inc. (since 2018)
 
Stanley Black & Decker, Inc. (since 2018)
 
Target Corporation (since 2018)
 
 

Previous Directorships

GE Asset Management Incorporated (2011 to 2016)
 
GE RSP U.S. Equity Fund and GE RSP Income Fund (2011 to 2016)
 
Elfun Funds (six directorships) (2011 to 2016)
 
Synchrony Financial (2014 to 2015)
     

Key Qualifications, Experiences,
and Attributes

In addition to his professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Mr. Stockton should serve on Deere’s Board of Directors: his leadership qualities developed from his service as Chairman, President, and Chief Executive Officer of GE Asset Management and as a Senior Officer of other global operations; the breadth of his experiences in risk management, governance, regulatory compliance, and other areas of oversight while serving as a member of the boards of directors and trustees of global asset management, investment, and employee benefit entities; and his subject matter knowledge in the areas of finance, banking, and asset management.


Sheila G. Talton President and Chief Executive Officer of Gray Matter Analytics

AGE:
66

DIRECTOR SINCE:
2015

COMMITTEES:
Audit Review, Finance

  

Current and Past Positions

President and Chief Executive Officer of Gray Matter Analytics (healthcare analytics for healthcare providers, payers, and pharma companies) since 2013
 
President and Chief Executive Officer of SGT Ltd. (strategy and technology consulting services) — 2011 to 2013
 
Vice President of Cisco Systems, Inc. (information technology and solutions) — 2008 to 2011
 
 

Other Current Directorships

OGE Energy Corporation (since 2013)
 
Sysco Corporation (since 2017)
 
Wintrust Financial Corporation (since 2012)
 
 

Previous Directorships

Acco Brands Corporation (2010 to 2015)
     

Key Qualifications, Experiences,
and Attributes

In addition to her professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Ms. Talton should serve on Deere’s Board of Directors: her leadership qualities developed from her service as President and Chief Executive Officer of Gray Matter Analytics and as an officer of other global technology and consulting firms; the breadth of her experiences in compensation, governance, risk management, and other areas of oversight while serving as a member of the boards of directors of other global public corporations; and her subject matter knowledge in the areas of technology, data analytics, and global strategies.


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Corporate Governance


Corporate Governance

Corporate Governance Highlights
At Deere, we recognize that strong corporate governance contributes to long-term shareholder value. We are committed to sound governance practices, including those described below:

INDEPENDENCE

All of our director nominees, except our CEO, are independent
The independent Presiding Director has a role with significant governance responsibilities
All standing Board committees other than the Executive Committee are composed wholly of independent directors
Independent directors meet regularly in executive session without management present
     

BEST PRACTICES

Directors may not stand for reelection after their 75th birthday, absent Board approval under rare circumstances
Our recoupment policy requires an executive to return any incentive compensation found to have been awarded erroneously due to accounting misconduct
Directors and executives are subject to stock ownership requirements
Directors and executives are prohibited from hedging or pledging their Deere stock
 

ACCOUNTABILITY

All directors are elected annually
In uncontested elections, directors are elected by majority vote
The Board and each Board committee conducts an annual performance self-evaluation
Shareholders have the ability to include nominees in our proxy statement (so-called proxy access rights)

RISK OVERSIGHT

The Board oversees Deere’s overall risk-management structure
Individual Board committees oversee certain risks related to their specific areas of responsibility
We have robust risk management processes throughout the company

Our Values
At Deere, our actions are guided by our core values: 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 we are committed to strong corporate governance. We are committed to strong corporate governance as a means of upholding these values and ensuring that we are accountable to our shareholders.

Director Independence
The Board has adopted categorical standards (see Appendix A) that help us evaluate each director’s independence. Specifically, these standards are intended to assist the Board in determining whether certain relationships between our directors and Deere or its affiliates are “material relationships” for purposes of the New York Stock Exchange (NYSE) independence standards. The categorical standards establish thresholds, short of which any such relationship is deemed not to be material. In addition, each director’s independence is evaluated under our Related Person Transactions Approval Policy, as discussed in the “Review and Approval of Related Person Transactions” section. Deere’s independence standards meet or exceed the NYSE’s independence requirements.

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In November 2018, we reviewed the independence of each then-sitting director, applying the independence standards set forth in our Corporate Governance Policies. The reviews considered relationships and transactions between each director (and the director’s immediate family and affiliates) and Deere, Deere’s management, and Deere’s independent registered public accounting firm. Based on this review, the Board affirmatively determined at its regular December 2018 meeting that no director other than Mr. Allen has a material relationship with Deere and its affiliates and that each director other than Mr. Allen is independent as defined in our Corporate Governance Policies and the NYSE’s listing standards. Mr. Allen is not an independent director because of his employment relationship with Deere.

Board Leadership Structure
The Chairman of the Board also serves as Deere’s Chief Executive Officer. The Board believes that combining the Chairman and Chief Executive Officer roles is the most appropriate structure for Deere at this time for three reasons:

1.         This structure has served our shareholders well through many economic cycles, business challenges, and leadership successions.
2. The Board’s governance processes preserve Board independence by ensuring discussion among independent directors and independent evaluation of and communication with members of senior management.
3. The enhanced role of the independent Presiding Director provides a strong counterbalance to the combined Chairman and Chief Executive Officer roles.

Presiding Director
Vance D. Coffman has served as our independent Presiding Director since the 2016 Annual Meeting.

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.

The Board has assigned the Presiding Director 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
Remain available for consultation and direct communication with Deere’s shareholders.

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

Board Meetings
Under Deere’s bylaws, regular meetings of the Board are held at least quarterly. Our typical practice is to schedule at least one Board meeting per year at a company location other than our World Headquarters so directors have an opportunity to observe different aspects of our business first-hand. The Board met six times during fiscal 2018.

Directors are expected to attend Board meetings, meetings of committees on which they serve, and shareholder meetings. More to the point, directors are expected to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities. During fiscal 2018, all incumbent directors attended 75% or more of the meetings of the Board and committees on which they served. Overall attendance at Board and committee meetings was 98%. All directors then in office attended the Annual Meeting of Shareholders in February 2018.

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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. The independent directors may meet in executive session, without the CEO, at any time, but such non-management executive sessions are scheduled and typically occur at each regular Board meeting. The Presiding Director presides over these executive sessions.

Board Committees
The Board has delegated some of its authority to five committees: the Executive Committee, the Audit Review Committee, the Compensation Committee, the Corporate Governance Committee, and the Finance Committee.

The Board approved the rotation of certain directors’ committee memberships effective February 2016. The Board believes that committee rotation is generally desirable to ensure that committees regularly benefit from new perspectives.

Each of our Board committees has adopted a charter that complies with current NYSE rules relating to corporate governance matters. Copies of the committee charters are available at www.deere.com/corpgov and may also be obtained upon request to the Deere & Company Shareholder Relations Department. Each committee (other than the Executive Committee, which did not meet in 2018 and of which Mr. Allen serves as chair) is composed solely of independent directors.

The committee structure and memberships described below reflect the changes that became effective in February 2017.
Every committee other than the Executive Committee regularly reports on its activities to the full Board.

EXECUTIVE COMMITTEE

2018 meetings: 0
Members:
Samuel R. Allen (Chair)
Vance D. Coffman
Clayton M. Jones
Gregory R. Page
Sherry M. Smith

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

AUDIT REVIEW COMMITTEE

2018 meetings: 5
Members:
Sherry M. Smith (Chair)
Alan C. Heuberger
Dipak C. Jain
Michael O. Johanns
Gregory R. Page
Sheila G. Talton

     
Oversees the independent registered public accounting firm’s qualifications, independence, and performance
Assists the Board in overseeing the integrity of our financial statements, compliance with legal requirements, and the performance of our internal auditors
Pre-approves all audit and allowable non-audit services by the independent registered public accounting firm
With the assistance of management, approves the selection of the independent registered public accounting firm’s lead engagement partner
All members have been determined to be independent and financially literate under current NYSE listing standards
The Board has determined that Ms. Smith, Mr. Heuberger, and Mr. Page are “audit committee financial experts” as defined by the SEC and that each has accounting or related financial management expertise as required by NYSE listing standards

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COMPENSATION COMMITTEE

2018 meetings: 5
Members:
Vance D. Coffman (Chair)
Charles O. Holliday, Jr.
Clayton M. Jones
Dmitri L. Stockton

     
Makes recommendations to the Board regarding incentive and equity-based compensation plans
Evaluates and approves the compensation of our executive officers (except for the compensation of our CEO, which is approved by the full Board), including reviewing and approving the performance goals and objectives that will affect that compensation
Evaluates and approves compensation granted pursuant to Deere’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 relative to tax deductibility
Reviews and discusses the CD&A with management and determines whether to recommend to the Board that the CD&A be included in our filings with the SEC
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

2018 meetings: 5
Members:
Clayton M. Jones (Chair)
Vance D. Coffman
Charles O. Holliday, Jr.
Michael O. Johanns

     
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
Oversees the evaluation of our management
All members have been determined to be independent under current NYSE listing standards

FINANCE COMMITTEE

2018 meetings: 6
Members:
Gregory R. Page (Chair)
Alan C. Heuberger
Dipak C. Jain
Sherry M. Smith
Dmitri L. Stockton
Sheila G. Talton

     
Reviews the policies, practices, strategies, and risks relating to Deere’s financial affairs
Exercises oversight of the business of Deere’s Financial Services segment
Formulates our pension funding policies
Oversees our pension plans
All members have been determined to be independent under current NYSE listing standards

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Board Oversight of Risk Management
The Board believes that strong and effective internal controls and risk management processes are essential for achieving long-term shareholder value. The Board, directly and through its committees, is responsible for monitoring risks that may affect Deere.

RISK MANAGEMENT APPROACH
We maintain a structured risk management approach to facilitate our strategic business objectives. To that end, we identify and categorize risks and then escalate them as needed. Our internal risk management structure is administered by a Management Risk Committee consisting of the CEO and his direct reports. This committee provides periodic reports to the Board regarding Deere’s risk management processes and reviews with the Board high-priority areas of enterprise risk.

Dedicated risk management reports typically take place at regularly scheduled Board meetings each February and August, and risk management topics are discussed as needed at other Board and committee meetings.

BOARD AND COMMITTEE RISK OVERSIGHT RESPONSIBILITIES
Each Board committee is responsible for oversight of risk categories related to its specific area of focus, while the full Board exercises ultimate responsibility for overseeing the risk management function as a whole and has direct oversight responsibility for many risk categories, including cyber security risks.

The areas of risk oversight exercised by the Board and its committees are:

Who is responsible?       Primary areas of risk oversight

Full Board

Oversees overall risk management function and regularly receives and evaluates reports and presentations from the chairs of the individual Board committees on risk-related matters falling within each committee’s oversight responsibilities.

Audit Review Committee

Monitors operational, strategic, and legal and regulatory risks by regularly reviewing reports and presentations given by management, including our Senior Vice President and General Counsel, Senior Vice President and Chief Financial Officer, and Vice President, Internal Audit, as well as other operational personnel.

Regularly reviews our risk management practices and risk-related policies (for example, Deere’s risk management and insurance portfolio, and legal and regulatory reviews) and evaluates potential risks related to internal control over financial reporting and information system risks.

Compensation Committee

Monitors potential risks related to the design and administration of our compensation plans, policies, and programs, including our performance-based compensation programs, to promote appropriate incentives that do not encourage executive officers or employees to take unnecessary and/or excessive risks.

Corporate Governance Committee

Monitors 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, monitoring the Code of Business Conduct, and evaluating potential related person transactions.

Monitors risks relating to environmental factors, as well as product safety and other compliance matters.

Finance Committee

Monitors operational and strategic risks related to Deere’s financial affairs, including capital structure and liquidity risks, and reviews the policies and strategies for managing financial exposure and contingent liabilities.

Monitors potential risks related to funding our U.S. qualified pension plans (other than the defined contribution savings and investment plans) and monitors compliance with applicable laws and internal policies and objectives.


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Shareholder Outreach
To ensure the continued delivery of sustainable, long-term value to our shareholders, we engage in regular dialogue with them. During 2018, we discussed governance, executive compensation, and other issues with shareholders representing more than 40% of our outstanding shares. The Board considers feedback from these conversations during its deliberations, and we regularly review and adjust our corporate governance structure and executive compensation policies and practices in response to comments from our shareholders.

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

Corporate Governance Policies
Because we believe corporate governance is integral to creating long-term shareholder value, our Board of Directors has adopted company-wide Corporate Governance Policies, which are periodically reviewed and revised as appropriate to ensure that they reflect the Board’s corporate governance objectives.

Please visit the Corporate Governance section of our website (www.deere.com/corpgov) to learn more about our corporate governance practices and to access the following materials:

Code of Ethics

Corporate Governance Policies
Charters for our Board Committees
Guiding Principles
Code of Business Conduct
Supplier Code of Conduct
Global Conflict Minerals Policy

Political Contributions
To promote transparency and good corporate citizenship we have provided voluntary disclosure relating to the political contributions of Deere and its political action committee. This information is publicly available at www.deere.com/politicalcontributions.

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Compensation of Directors


Compensation of Directors

We have structured the compensation of our non-employee directors with the following objectives in mind:

Recognize the substantial investment of time and expertise necessary for the directors to discharge their duties to oversee Deere’s global affairs

Align the directors’ interests with the long-term interests of our shareholders
Ensure that compensation is easy to understand and is regarded positively by our shareholders and employees

We pay non-employee directors an annual retainer. In addition, committee chairpersons and the Presiding Director receive fees for assuming those responsibilities. Directors who are employees receive no additional compensation for serving on the Board. We do not pay committee member retainers or meeting fees, but we do reimburse directors for expenses related to meeting attendance.

To supplement their cash compensation and align their interests with those of our shareholders, non-employee directors are awarded restricted stock units (RSUs) after each Annual Meeting. A person who serves a partial term as a non-employee director will receive a prorated retainer and a prorated RSU award.

Compensation for non-employee directors is reviewed annually by the Corporate Governance Committee. At its December 2016 and December 2018 meetings, the Board approved compensation as noted below for non-employee directors as recommended by the Corporate Governance Committee. The cash components are effective on January 1 following approval and the equity component is effective for the annual award in March following approval.

The following chart describes amounts we pay and the value of awards we grant to non-employee directors:

Date Approved by Corporate Governance Committee:
Effective Date of Annual Amounts:
      December 2016
January & March 2017
      December 2018
January & March 2019
Retainer                        $ 125,000                        $ 135,000
Equity Award $ 145,000 $ 160,000
Presiding Director Fee $ 25,000 $ 30,000
Audit Review Committee Chair Fee $ 25,000 $ 25,000
Compensation Committee Chair Fee $ 20,000 $ 20,000
Corporate Governance Committee Chair Fee $ 15,000 $ 15,000
Finance Committee Chair Fee $ 15,000 $ 15,000

Under our Non-employee Director Deferred Compensation Plan, directors may choose to defer some or all of their annual retainers until they retire from the Board. For deferrals through December 2016, a director could 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. For deferrals effective in January 2017 and later, directors may choose from a list of investment options, none of which yields an above-market earnings rate.

Our stock ownership guidelines require each non-employee director to own Deere 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 (regularly granted to non-employee directors prior to 2008), RSUs, and any common stock held personally by the non-employee director are included in determining whether the applicable ownership threshold has been reached. Each non-employee director has achieved stockholdings in excess of the applicable multiple as of the date of this Proxy Statement.

We require non-employee directors to hold all equity awards until the occurrence of one of the following triggering events: retirement from the Board, total and permanent disability, death, or a change in control of Deere combined with a qualifying

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Compensation of Directors

termination of the director. Directors may not sell, gift, or otherwise dispose of their equity awards before the occurrence of a triggering event. While the restrictions are in effect, non-employee directors may vote their restricted shares (but not shares underlying RSUs) and receive dividends on the restricted shares and dividend equivalents on the RSUs.

In fiscal 2018, we provided the following compensation to our non-employee directors:

Name    Fees Earned or
Paid in Cash
(1)
   Stock Awards (2)    Non-Qualified
Deferred Compensation
Earnings (3)
   All Other
Compensation(4)
   Total
Crandall C. Bowles (5)             $ 10,417               $                           $                 $ 9,566 $ 19,983
Vance D. Coffman $ 170,000 $ 144,887 $ $ 15,041 $ 329,928
Alan C. Heuberger $ 125,000 $ 144,887 $ $ 19,221 $ 289,108
Charles O. Holliday, Jr.(6) $ 104,167 $ 177,430 $ $ 118 $ 281,715
Dipak C. Jain $ 125,000 $ 144,887 $ 34,497 $ 8,738 $ 313,122
Michael O. Johanns $ 125,000 $ 144,887 $ $ 16,549 $ 286,436
Clayton M. Jones $ 140,000 $ 144,887 $ $ 11,383 $ 296,270
Brian M. Krzanich (7) $ 83,333 $ 69,749 $ 883 $ 1,699 $ 155,664
Gregory R. Page $ 140,000 $ 144,887 $ 480 $ 273 $ 285,640
Sherry M. Smith $ 150,000 $ 144,887 $ 1,335 $ 273 $ 296,495
Dmitri L. Stockton $ 125,000 $ 144,887 $ $ 9,688 $ 279,575
Sheila G. Talton $ 125,000 $ 144,887 $ $ 273 $ 270,160

(1) All fees earned in fiscal 2018 for services as a director, including committee chairperson and Presiding Director fees, whether paid in cash or deferred under the Non-employee 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 Accounting Standards Codification Topic 718, Compensation – Stock Compensation and does not correspond to the actual value that will be realized by the non-employee 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 2018, the grant date was March 7, 2018, and the grant price was $156.635.
The non-employee 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 as part of our annual report on Form 10-K for the fiscal year 2018. The following table lists the cumulative restricted shares and RSUs held by the non-employee directors as of October 28, 2018:

Director Name       Restricted Stock       RSUs
Crandall C. Bowles(5) - 13,173
Vance D. Coffman 6,532 16,952
Alan C. Heuberger - 2,487
Charles O. Holliday (6) - 1,132
Dipak C. Jain 13,234 16,952
Michael O. Johanns - 5,214
Director Name       Restricted Stock       RSUs
Clayton M. Jones 824 16,952
Gregory R. Page - 7,404
Sherry M. Smith - 9,554
Dmitri L. Stockton - 4,698
Sheila G. Talton - 4,698


(3) Directors are eligible to participate in the Non-employee Director Deferred Compensation Plan. Under this plan, participants may defer part or all of their annual cash compensation. Through December 2016, two investment choices were available for these deferrals:
an interest-bearing alternative that pays interest at the end of each calendar quarter (i) for amounts deferred between fiscal 2010 through December 2016, at a rate based on the Moody’s “A”-rated Corporate Bond Rate and (ii) for amounts deferred prior to fiscal 2010, at a rate based on the prime rate as determined by the Federal Reserve Statistical Release plus 2%
an equity alternative denominated in units of Deere common stock that earns additional shares each quarter at the quarterly dividend rate on Deere common stock
Amounts included in this column represent the above-market earnings on any amounts deferred under the Non-employee 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) Amounts in this column include spousal travel and other expenses related to the December 2017 Board meeting held in Germany. Annual or retirement gifts are also included in all other compensation.

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Security Ownership of Certain Beneficial Owners and Management


(5) Ms. Bowles retired from the Board effective December 4, 2017. The compensation amounts reflect a pro-rated retainer fee covering the portion of fiscal 2018 during which she served as director.
(6) Mr. Holliday was elected to the Board effective January 1, 2018. His compensation amounts reflect a pro-rated RSU award for the period from January 2018 through the February 2018 Annual Meeting and a full RSU award granted in March 2018.
(7) Mr. Krzanich resigned from the Board effective July 6, 2018. His compensation amounts reflect a pro-rated retainer fee for the portion of fiscal 2018 during which he served as director and a pro-rated RSU award for the period from February 2018 Annual Meeting to July 6, 2018.

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, 2018, (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 non-employee director as of December 31, 2018
each of the named executive officers listed in the Summary Compensation Table of this Proxy Statement
all individuals who served as directors or executive officers on December 31, 2018, as a group

A beneficial owner of stock (represented in column (a)) 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). A person also is 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)), restricted shares, and RSUs that could become exercisable or be settled within 60 days of December 31, 2018, at the discretion of an individual identified in the table (represented in column (c)).

All individuals listed in the table have sole voting and investment power over the shares unless otherwise noted. As of December 31, 2018, Deere had no preferred stock issued or outstanding.

Shares Beneficially
Owned and Held
(a)
Exercisable Options
(b)
Options,
Restricted Shares,
and RSUs Available
Within 60 Days
(c)
Total Percent of Shares
Outstanding
Greater Than 5% Owners
Cascade Investment, L.L.C. (1)
2365 Carillon Point
Kirkland, WA 98033 31,423,573 31,423,573 9.8%
 
The Vanguard Group, Inc. (2)
100 Vanguard Blvd.
Malvern, PA 19355 22,957,744 22,957,744 7.2%
 
Non-Employee Directors (3)
Vance D. Coffman 23,484 23,484 *
Alan C. Heuberger 100 2,487 2,587 *
Charles O. Holliday 11,905 1,132 13,037 *
Dipak C. Jain 30,186 30,186 *
Michael O. Johanns 5,214 5,214 *
Clayton M. Jones 17,776 17,776 *
Gregory R. Page 1,100 7,404 8,504 *
Sherry M. Smith 9,554 9,554 *
Dmitri L. Stockton 4,698 4,698 *
Sheila G. Talton 4,698 4,698 *

22 DEERE & COMPANY 2019 PROXY STATEMENT


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Election of Directors
Security Ownership of Certain Beneficial Owners and Management


Shares Beneficially
Owned and Held
(a)
Exercisable Options
(b)
Options, Restricted Shares,
and RSUs Available
Within 60 Days
(c)
Total Percent of Shares
Outstanding
Named Executive Officers (4)
Samuel R. Allen 266,785 919,328 93,467 1,279,580 *
James M. Field 49,851 79,598 18,724 148,173 *
Jean H. Gilles 45,094 104,197 18,263 167,554 *
Rajesh Kalathur 35,452 153,582 189,034 *
John C. May 33,834 33,357 67,191 *
All directors and executive officers as a group          
(19 persons) (5) 527,091 1,491,500 249,742 2,268,333 *
* Less than 1% of the outstanding shares of Deere common stock.

(1) The ownership information for Cascade Investment, L.L.C. is based on information supplied by Cascade in a statement on Amendment No. 4 to Schedule 13D filed with the SEC on December 20, 2016. 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 31,423,573 shares owned.
(2) The ownership information for The Vanguard Group, Inc. is based on information supplied by Vanguard in a statement on Amendment No. 3 to Schedule 13G filed with the SEC on February 12, 2018. 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 5 percent of Deere’s shares. Vanguard has sole voting power over 443,364 shares owned and sole dispositive power over 22,462,829 shares owned.
(3) The table includes restricted shares and RSUs awarded to directors under the Deere & Company Non-employee Director Stock Ownership Plan (see footnote (2) to the Fiscal 2018 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 Non-employee Director Deferred Compensation Plan:
         Director Deferred Units
Vance D. Coffman 27,136
Dipak C. Jain 8,817
Michael O. Johanns 3,039
Gregory R. Page 3,965
Dmitri L. Stockton 2,443
(4) See the Outstanding Equity Awards table for additional information regarding equity ownership for NEOs.
(5) The number of shares shown for all directors and executive officers as a group includes 110,440 shares owned jointly with family members over which the directors and executive officers share voting and investment power.

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Election of Directors
Review and Approval of Related Person Transactions


Review and Approval of Related Person Transactions

The Board has adopted a written Related Person Transactions Approval Policy that assigns our Corporate Governance Committee the responsibility for reviewing, approving, or ratifying all related person transactions.

The written Related Person Transactions Approval Policy is concerned with three types of “related persons”:

1. executive officers and directors of Deere
2. any holder of 5% or more of Deere’s voting securities
3. immediate family members of anyone in category (1) or (2)

Each year, our directors and executive officers complete questionnaires designed to elicit information about potential related person transactions. In addition, the directors and officers must promptly advise our Corporate Secretary if there are any changes to the information they previously provided. After consultation with our General Counsel, management, and outside counsel, as appropriate, our Corporate Secretary determines whether any transaction is reasonably likely to be a related person transaction. Transactions deemed reasonably likely to be related person transactions are submitted to the Corporate Governance Committee for consideration at its next meeting, unless action is required sooner. In such a case, the transaction would be submitted to the Chairperson of the Corporate Governance Committee, whose determination would be reported to the full committee at its next meeting.

When evaluating potential related person transactions, the Corporate Governance Committee or its 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 and Code of Business Conduct and in the best interests of our shareholders.

The sister of Mary K. W. Jones, Senior Vice President & General Counsel, is an employee in the Company’s global communications department. Mrs. Jones does not directly or indirectly supervise her sister. During fiscal 2018, the employee earned approximately $136,288 in direct cash compensation along with customary employee benefits available to salaried employees generally. The employee’s compensation is consistent with that of other employees at the same grade level. Pursuant to the Related Person Transactions Approval 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.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 (the Exchange Act) and related regulations require our directors, certain of our officers, and persons who own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC and to provide copies of those reports to Deere.

To assist with these required reports, we have established procedures whereby directors and officers provide us with the relevant information regarding their transactions in Deere shares and we prepare and file the ownership reports on their behalf. In addition, our directors and officers have provided written statements regarding their Deere stock ownership and reports. Based solely upon a review of these statements and reports, we believe that all Section 16(a) filing requirements applicable to our insiders were complied with during fiscal 2018.

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Advisory Vote on Executive Compensation


Item 2 – Advisory Vote on Executive Compensation

In accordance with Section 14A of the Exchange Act, we are asking our shareholders to approve, on an advisory basis, the compensation of the executives named in the Summary Compensation Table of this Proxy Statement. Deere’s practice, which was approved by our shareholders at the 2017 Annual Meeting, is to conduct this non-binding vote annually.

Supporting Statement
PAY FOR PERFORMANCE
Deere’s compensation philosophy is to pay for performance, support Deere’s business strategies, and offer competitive compensation. Our compensation programs consist of complementary elements that reward achievement of both short-term and long-term objectives. The metrics used for our incentive programs are either associated with operating performance or are based on a function of Deere’s stock price with linkage to revenue growth and Total Shareholder Return (TSR). See “Review of Pay for Performance Relative to Peer Group” in the CD&A, which highlights our success in connecting executive compensation with Deere’s financial performance.

PROGRAM DESIGN
The CD&A offers 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:

We strive to attract, retain, and motivate high-caliber executives
As executives assume more responsibility, we increase the portion of their total compensation that is at-risk and that is tied to long-term incentives
We recognize the cyclical nature of our equipment businesses and the need to manage value throughout the business cycle
We provide opportunities for NEOs to be long-term shareholders of Deere
We structure our compensation program to be regarded positively by our shareholders and employees

At our 2018 Annual Meeting, we held a shareholder advisory vote on executive compensation in which shareholders approved the advisory vote on the compensation of our NEOs.

The Board believes that the executive compensation as disclosed in the CD&A, the accompanying tables, and other 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 shareholders 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.”



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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis

Effect of Proposal
The say-on-pay resolution is non-binding, but the Board values your opinion as expressed through your votes and other communications. Therefore, the Board and the Compensation Committee will carefully consider the outcome of the advisory vote and those opinions when making future compensation decisions. However, 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 Deere and its shareholders. Therefore, the final decision regarding the compensation and benefits of our executive officers and whether and how to address shareholder concerns remains with the Board and the Compensation Committee.

Compensation Discussion and Analysis

In this section, we provide a detailed description of our compensation programs, including the underlying philosophy and strategy, the individual elements, the methodology and processes used by the Board and the Compensation Committee (the Committee) to make compensation decisions, and the relationship between Deere’s performance and compensation delivered in fiscal 2018. The discussion in this CD&A focuses on the compensation of our CEO, CFO, and the next three most highly compensated executive officers for the fiscal 2018. These individuals, referred to as Deere’s named executive officers (NEOs), were:

Name   Title
Samuel R. Allen       Chairman and Chief Executive Officer
Rajesh Kalathur   Senior Vice President and Chief Financial Officer (1)
James M. Field   President, Worldwide Ag & Turf Division; Global Harvesting and Turf Platforms, Americas and Australia (2)
Jean H. Gilles   Senior Vice President, John Deere Power Systems, Worldwide Parts Services, Advanced Technology & Engineering, and Global Supply Management & Logistics (3)
John C. May   President, Agricultural Solutions, and Chief Information Officer (4)

(1) Effective November 15, 2018, Mr. Kalathur also became Chief Information Officer.
(2) Effective November 15, 2018, Mr. Field became President, Worldwide Construction & Forestry Division. Effective January 1, 2019, Mr. Field also became President of John Deere Power Systems.
(3) Effective January 11, 2019, Mr. Gilles retired as an executive officer of Deere.
(4) Effective November 15, 2018, Mr. May became President, Worldwide Agriculture & Turf Division: Global Harvesting and Turf Platforms, Ag Solutions, Americas and Australia.

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Executive Summary

Our business strategy emphasizes achieving superior operating and financial performance throughout the business cycle. This includes maintaining aggressive goals for operating margin and asset turns while realizing sustainable Shareholder Value Added growth through disciplined expansion. Deere’s compensation program is designed to motivate NEOs to execute this strategy.

In 2018, net sales and revenues reached $37.358 billion — second-highest in company history — and net income, though hindered by tax change provisions, totaled a fifth-highest $2.368 billion. Shareholder Value Added, our measure of economic profit, jumped 45 percent. These results reflect the success of our strategy. Deere employees controlled costs and increased the productivity of our assets, while also producing award-winning advanced products and services and investing in future growth.

Since aligning the metrics of our compensation program with our strategy in 2002, Deere has shown an ability to operate profitably throughout the business cycle.

Snapshot of Compensation Elements
The components of our 2018 compensation program are:

Total Direct
Compensation
Total Indirect
Compensation
Short-Term Compensation Long-Term Compensation Other Compensation
and Benefits
Base Salary STI LTIC LTI

Fixed cash component

Annual cash award for profitability and efficient operations during the fiscal year

Cash award for sustained profitable growth during a three-year period

Equity award (consisting of RSUs, PSUs, and stock options) for creating shareholder value as reflected by stock price and revenue growth

Perquisites, retirement benefits, deferred compensation benefits, additional benefits payable upon a change in control

Metrics(1):
Operating Return on Operating Assets (OROA) (2)(3), Return On Equity (ROE)(2), and net sales and revenues in current-year performance

Metrics:
Shareholder Value Added (SVA)(3) and Total Shareholder Return (TSR) modifier to the payout

Metrics:
Revenue Growth


(1) As later described, the STI metrics have changed from 2017. Net income was removed as a standalone metric due to overlap with OROA and net sales and revenues.
(2) The Equipment Operations OROA calculation excludes the assets from our Financial Services segment and certain Corporate assets. Corporate assets are primarily the equipment operations’ retirement benefits, deferred income tax assets, marketable securities, and cash and cash equivalents. ROE is based solely on the Financial Services segment, and excludes the impact of U.S. tax reform. See Appendix B for details.
(3) Wirtgen is excluded from both the Equipment Operations OROA and SVA calculations for FY18 variable pay to allow time for assimilation. See Appendix B for details.

Our incentive program reflects the long-term, cyclical nature of our industry and provides a framework for both executive and broad-based, non-executive programs to ensure that all employees pursue the same financial and operational goals. The STI provides incentives to focus on near-term results, while a two-tiered long-term incentive program — LTIC and LTI — reward growth and sustainable profitability over a longer period. LTIC differs from LTI in that it motivates behavior for long-term profitability and asset management. Given the long-term, cyclical nature of our industry, the STI and LTIC metrics create complementary incentives. In the years since the Board adopted these two incentive plans, we have demonstrated the ability to manage through various business and market conditions more profitably and to consistently generate operating cash flow, especially compared to peer group companies. The current combination of cash- and equity-based long-term compensation reflects the current peer group practice, with about 40% maintaining a similar mix.

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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
Executive Summary

To align compensation with our business strategy of exceptional operating performance, we historically have used OROA and ROE as the metrics for our STI plan. These metrics are designed to inspire the efficient use of assets and capital. STI goals are determined each year based on where we are in the business cycle to ensure that goals are uniformly challenging in all economic conditions. In fiscal 2017, two financial metrics—net sales and revenues and net income–were added to incorporate an element of growth into the annual award. Net income was removed as an STI metric beginning in fiscal 2018 due to its overlap with the margin focus of OROA. Incorporation of net sales and revenues continues to reflect the importance of excellent near-term financial execution and growth.

To align compensation with disciplined growth, we use SVA as the metric for our LTIC plan. SVA measures our success in delivering sustained growth in economic profitability over a three-year performance period.

To align compensation with exceptional equity appreciation and to motivate and reward sustained performance, our LTI plan uses stock options and restricted stock units (RSUs), whose ultimate values are tied to Deere’s stock price, and performance stock units (PSUs), which are earned (or not) based on Deere’s revenue growth compared to the performance peer group consisting of a subset of the S&P Industrial Sector.

Here are some of the key drivers that affect the STI, LTIC, and LTI metrics on a short- and long-term basis.

DRIVERS OF ONE-YEAR
OROA, ROE, AND REVENUE
GROWTH (STI)
      DRIVERS OF THREE-YEAR
SVA (LTIC)
      DRIVERS OF REVENUE
GROWTH AND TSR (LTI)
Operating cost management
 
Disciplined asset management
 
Efficient use of equity
 
Near-term business execution
Cost management decisions with a long-term focus
 
Efficient use of long-term assets
 
Long-term investment decisions for capital and research and development
 
World-class distribution systems
 
Technology innovation
Market conditions
 
Market share
 
Successful execution of business strategy
 
Stock price appreciation over the long term

Financial Performance and Compensation Metrics
As outlined above, the metrics Deere uses to measure success in its business strategy are the same used in our compensation programs to ensure that employees are working in aligned, high-performance teams. Further details below illustrate how the company’s compensation plans and payouts are sensitive to fluctuations in business conditions. Deere’s goals for OROA remain above those of its major competitors.

              2017        2018        % Change
OROA 21.18% 24.42% 15%
ROE 10.61% 11.06% 4%
STI Net Sales and Revenues $29,363M(1) $37,358M 27%
Net Income $1,923M (1) n/a n/a
Payout as a % of Target 184% 98% -47%
LTIC 3-Year Accumulated SVA $2,382M $3,493M 47%
Payout as a % of Target 53% 83% 57%
LTI-Revenue Deere Growth Rate (6.23)% 8.98% +15.21 pts
Growth PSU Payout as a % of Target 0% 200% +200 pts
Stock Price as of 31 Oct. $132.88 $135.44 2%
LTI-TSR 3-Year TSR as of 31 Oct. 18.87% 22.94% +4.07 pts
PSU Payout as a % of Target 200% 200% 0%

28 DEERE & COMPANY 2019 PROXY STATEMENT     (1) Net Sales and Revenues and Net Income adjusted due to non-compensation related activities.


Table of Contents

Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
Executive Summary

Shareholder Outreach
In 2018, we invited our top 20 shareholders to participate in discussions regarding executive compensation and governance issues. We engaged with 15 of our top 20 shareholders, representing about 40% of our outstanding shares, to ensure changes to our program were understood and aligned to their expectations. We discussed our approach to executive compensation programs, shareholder views on the program design, and the most recent revisions to our compensation plans, as well as various environmental, social, and corporate governance (ESG) topics important to investors.

Our learnings included:

Our shareholders understand how OROA, ROE, and SVA are linked to successful operating performance
OROA successfully drives the right behavior, especially during the business downturn
The STI and LTIC programs contribute to successful operating performance, drive the right employee behavior, and promote the creation of long-term value
Our shareholders support the exclusion of Wirtgen from fiscal 2018 and fiscal 2019 STI and LTIC program metrics and development of an appropriate metric once a full business cycle with Wirtgen has been completed
Deere has strong alignment between business strategy and compensation design, and the proxy statement now better demonstrates the connection

We regularly analyze our practices to ensure we remain a leader in executive compensation best practices and remain aware of shareholder concerns. We believe the success of our STI and LTIC programs is due to our employee’s deep understanding of OROA, ROE, and SVA, which will continue to be the primary metrics for our variable pay programs. We will continue regular shareholder engagement activities to gain their perspective firsthand.

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Table of Contents

Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
2018 Compensation Overview

2018 Compensation Overview

Deere is committed to a longstanding compensation philosophy that 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 Deere and our shareholders.

Snapshot of Compensation Governance
To ensure that our compensation program meets Deere’s business objectives without compromising our core values, we regularly compare our compensation practices and governance against market best practices. Here are some of the best practices we have implemented.

WE DO:      WE DON’T:
use a combination of short-term and long-term incentives to ensure a strong connection between Deere’s operating performance and actual compensation delivered 
 
regularly evaluate our peer group and pay positioning under a range of performance scenarios
 
annually review all our compensation plans, policies, and significant practices
 
annually review risks associated with compensation
 
include a “double-trigger” change in control provision in our executive Change in Control Severance Program, as well as our current equity plan, so participants will receive severance benefits only if both a change in control and a qualifying termination occur 
 
annually review and limit executive perquisites
 
retain an independent compensation consultant who does not perform other significant services for Deere
 
have an Executive Incentive Compensation Recoupment Policy to ensure accountability in the presentation of our financial statements
 
enforce stock ownership requirements to ensure that directors and executives have interests in common with our shareholders
 
provide executive officers with benefits such as health care insurance, life insurance, disability, and retirement plans on the same basis as other full-time Deere employees
offer employment agreements to our U.S.-based executives
 
provide tax gross-ups for executives, except for those available to all employees generally
 
provide excise tax gross-ups upon a change in control to any employees
 
offer above-market earnings on new contributions to deferred compensation accounts
 
grant stock options with an exercise price less than the fair market value of Deere’s common stock on the date of grant
 
re-price stock options without the prior approval of our shareholders
 
cash out underwater stock options
 
include reload provisions in any stock option grant
 
permit directors or employees, or their respective related persons, to engage in short sales of Deere’s stock or to trade in instruments designed to hedge against price declines in Deere’s stock
 
permit directors or officers to hold Deere securities in margin accounts or to pledge Deere securities as collateral for loans or other obligations

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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
2018 Compensation Overview

Compensation Elements
The primary elements of our compensation program are summarized below:

Component Purpose Characteristics Fiscal 2018 Actions and Results
Base salary Based on level of responsibility, experience, and sustained individual performance Fixed cash component generally targeted at the peer group median Mr. Allen did not receive an increase to base salary for fiscal 2018; the other NEOs received increases of 3.5%-4% for 2018 based on market median
Short-Term Incentive (STI) Reward for achieving higher profitability through operating efficiencies, asset management, and achieving revenue targets during the fiscal year Awarded in cash, a target STI award is designed to contribute to annual cash compensation and overall compensation at the peer group median Due to the significant increase in executive OROA target goals for fiscal 2018, the STI payout was 98% of target, resulting in an award of $2.2 million for the CEO and awards ranging from $0.6 million to $0.7 million for the other NEOs
Long-Term Incentive Cash (LTIC) Reward for achieving, over a three-year performance period, sustained profitable growth and above median TSR as compared to our peers Awarded in cash, a target LTIC award is designed to contribute to overall compensation at the peer group median The LTIC payout for the 2016-2018 performance period increased from 53% for the prior performance period to 83% of target. This resulted in an award of $1.5 million for the CEO and awards of approximately $0.5 million for each of the other NEOs
Long-Term Incentive (LTI) Reward for creating shareholder value Awarded in a combination of PSUs, RSUs, and stock options, a base-level LTI award is designed to contribute to overall compensation at the peer group median; LTI awards can be increased by up to 20% to recognize individual performance The LTI grant for the 2018-2020 performance period was received in December 2017. The CEO received an LTI award valued at $9.1 million, a 20% increase over the base-level award; LTI awards for the other NEOs were increased an average of 11%, valued at $1.7 million; adjustments reflect strong operating performance and rapid response to challenging business conditions
Perquisites Provide our executives with benefits comparable to those provided to executives at our peer group companies Benefits such as medical exams and financial planning services that personally benefit the employee are not related to job performance and are available to a select group of employees There were no changes to perquisites in fiscal 2018. We modified the investment options available under deferred compensation plans to ensure participants cannot earn above-market returns on new deferrals
Retirement benefits Provide income upon retirement Include both qualified and non-qualified defined benefit and contribution plans with a company match There were no changes to retirement benefits in fiscal 2018

As this table suggests, we compare each component of compensation to the median level for that component awarded by our peers. In addition, we strive to have each NEO’s total annual cash compensation and overall compensation at target compare favorably to the median levels for comparable executives. For example, in fiscal 2018, our CEO’s base salary and target STI were 29% of his overall compensation, compared to an average of 28% for CEOs in our peer group.

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Table of Contents

Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
2018 Compensation Overview

2018 Target Direct Compensation Mix
Pay for performance is an essential element of our compensation philosophy. We believe compensation should motivate our executives to substantially contribute — both individually and collaboratively — to Deere’s long-term, sustainable growth. To that end, our performance-based compensation program consists of three components (STI, LTIC, and LTI), all driven by metrics that align with Deere’s business strategy and reflect the cyclical nature of the industries in which Deere operates.

To enhance the connection between pay and performance, as our NEOs assume greater responsibility, we award a larger portion of their total compensation in the form of “at risk” incentive awards and a larger portion of their incentive awards in the form of equity. This practice is apparent in the following charts, which illustrate the allocation of all fiscal 2018 Direct Compensation components at target for our CEO and for our other NEOs as a group.

CEO TARGET COMPENSATION MIX NEO TARGET COMPENSATION MIX

* “at risk” implies awards that are subject to performance conditions and stock price performance

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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
Direct Compensation Elements

Direct Compensation Elements

As shown in the Target Compensation Mix charts under 2018 Compensation Overview, the majority of direct compensation for the CEO and NEOs is based on “at-risk,” variable pay. Our performance-based compensation programs fall into two categories: short-term incentives based on annual metrics and long-term incentives based on a three-year performance period. Long-term performance based incentives are awarded in the form of cash and equity (RSUs, PSUs, and stock options). The following information describes each direct compensation element, including the applicable performance metrics.

Base Salary
In determining salary levels for each of our NEOs, the Committee considers factors such as the financial and operational performance, leadership, development of people, time in position, internal equity, and potential. The Committee also considers each NEO’s current salary as compared to the salary range and median salary practices of our peer group.

After considering all relevant information, the Board determined that the CEO’s base salary for fiscal 2018 should remain unchanged. The other NEOs received increases ranging from 3.5-4%. The NEOs’ salary levels remain below the market median for similar positions.
Officer   Base Salary as of
Dec. 1, 2016
   Salary
Increase %
  Base Salary as of
Dec. 1, 2017
Samuel R. Allen $1,500,000 0% $1,500,000
Rajesh Kalathur $633,276 4% $658,608
James M. Field $701,700 3.5% $726,264
Jean H. Gilles $654,312 4% $680,496
John C. May $622,116 4% $647,004

Short-Term Incentive (STI)
PERFORMANCE METRICS FOR STI
The Committee believes that operating margins, efficient deployment of Deere’s assets (both fixed and working capital), and growth are key drivers in creating long-term shareholder value. For this reason, the Committee has designed the STI program to motivate Deere’s executives and most other salaried employees to focus on reducing costs and optimizing asset and capital efficiency no matter where we are in the business cycle each fiscal year. By consistently managing OROA results through all points in the business cycle, Deere has been able to pay out more than half of cash flow from our operations to investors through dividends and net share repurchases since 2004.

In fiscal 2018, we used three distinct metrics to motivate employees, reflecting key differences between our manufacturing and financing businesses while also keeping a balanced focus on growth. For the two businesses that make up our Equipment Operations segment — Agriculture & Turf Operations and Construction & Forestry Operations — the metric is OROA. For our Financial Services segment, the metric is ROE. To measure successful short-term financial execution, the metric is net sales and revenues. As described below, the performance results for these metrics are combined to determine STI awards.

For fiscal 2018, the various business results were weighted to calculate STI as follows:

Company Performance Factor Weighting:      
Enterprise OROA/ROE Metric 67%
Net Sales and Revenues Metric 33%
Enterprise OROA/ROE Metric Weighting:      
Equipment Operations OROA 50%
Agriculture & Turf Operations OROA 25%
Construction & Forestry Operations OROA 15%
Financial Services ROE 10%

The emphasis on the OROA performance of the Equipment Operations and its constituent divisions in calculating STI reflects the critical position these operations have as drivers of Deere’s business: Equipment Operations’ net sales accounted for 89%

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Table of Contents

Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
Direct Compensation Elements

of Deere’s net sales and revenues in fiscal 2018. The 50% weighting for the combined Equipment Operations reflects the importance of employees’ aligning with the overall business strategies and not optimizing within a business segment.

We explain the metrics and the reasons behind them in this section. You can see how OROA and ROE were calculated for fiscal 2018 in Appendix B, “Deere & Company Reconciliation of Variable Compensation Measures to Non-GAAP Measures.”

OROA
Deere is primarily a manufacturing company with high investment in fixed assets, such as buildings and machinery, and significant expenses with longer term payoffs, such as research and development. Over the past few decades, Deere’s Equipment Operations businesses have weathered many business downturns. Among other things, this segment is affected by economic factors such as prices for commodities (such as corn and other crops) and the health of the housing and infrastructure sectors because we make the equipment that farmers and contractors rely on. When commodity prices are low or the housing and infrastructure sectors are weak, our customers delay equipment purchases and upgrades.

In 2004, Deere adopted a strategy designed to enable management to respond quickly and purposefully to changing business conditions to drive sustained operational results across volatile business cycles. A focus on OROA performance was and continues to be a key component of this strategy. The Committee believes OROA effectively measures the efficient use of the Equipment Operations’ assets and the ability to manage operating margins under varying business conditions and is an appropriate metric for STI awards. Using OROA as an STI performance metric aligns employee decisions with our strategic approach to sound investment of capital and asset utilization. Because business conditions can quickly change, the Committee sets a range of OROA goals for a range of potential conditions rather than for a static forecast. This allows us to be agile and encourages us to prepare in advance for a variety of business conditions.

Foundational to understanding how we determine the OROA goals for a given fiscal year is the concept of mid-cycle sales. We calculate mid-cycle sales annually by gathering historical information on the size of the industry (for example, the total number of tractors sold in the U.S. market) and Deere’s market share for every product line (in this example, the number of tractors sold by Deere). This information helps us understand the cyclical nature, from peak to trough, of our business. Mid-cycle sales are determined for each product line, which could be in varying business cycles within the same performance period. This allows us to set meaningful operating performance goals at the product line level while maintaining a unified incentive program for the salaried employee population. For most of our Agriculture & Turf products, a typical business cycle is around seven years. For the Construction & Forestry products, the cycle tends to be a bit shorter. As shown in the graph below, we use that historical information to determine mid-cycle sales — essentially our best estimate of what “normal” looks like.

WHAT IS MID-CYCLE?

Generally speaking, at the peak of a typical business cycle, actual sales constitute 120% of mid-cycle sales; at the trough, actual sales constitute 80% of mid-cycle sales. OROA goals vary each year to reflect where we are on this spectrum. We have relied on the process of analyzing mid-cycle sales for decades to make decisions related to measuring the achievement of long-term business strategies, allocating manufacturing capacity and workforce, and determining standard costs.

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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
Direct Compensation Elements

Mid-cycle goals. The Committee first established OROA goals for STI purposes by comparing Deere’s OROA performance to that of the companies in our peer group. The median OROA for the peer group is in the range of 10%-15%. Accordingly, Deere’s original target OROA at mid-cycle (the “normal” part of a business cycle) was set at 12%. That goal provided a reasonable approximation of Deere’s cost of capital and aligned with our compensation strategy of awarding median pay for median performance. The Committee then set OROA goals for threshold and maximum STI payouts at mid-cycle to approximate 25th and 75th percentile performance, respectively, relative to the peer group. The Committee has reviewed and approved the goals each year, but because peer group OROA performance has essentially remained consistent, the OROA goals at mid-cycle also remained unchanged until recently, as discussed below. The OROA goals are the same for Equipment Operations, Agriculture & Turf Operations, and Construction & Forestry Operations.

Goals for peak and trough conditions. To maintain the rigor of the program, the Committee cannot just set goals for mid-cycle, or “normal” conditions. If OROA goals were consistent regardless of where we are in a business cycle, our employees would be unduly rewarded when the economy is strong and penalized for poor general economic conditions that have a negative effect on our sales. Therefore, the Committee fixes threshold, target, and maximum OROA goals that are more ambitious at the peak of a business cycle, when it is easier to cover fixed costs and achieve a high asset turnover (and thus a better OROA), and less ambitious at the trough. This model encourages us to quickly make necessary structural changes, such as those related to cost reduction, capacity, and assets (especially inventory) as business conditions change during the year.

As shown in the following graph, the goals for a given year are determined based on where we are in the business cycle.

How do OROA goals work?
For an example of how our multi-tiered OROA goals work in practice, assume we determined that mid-cycle sales are $30 billion. If actual sales for the year are $27 billion, that means we are at 90% of mid-cycle (27 ÷ 30 = .90). In that case, OROA goals would be lower than the goals for mid-cycle. On the other hand, if actual sales are $33 billion, that means we are at 110% of mid-cycle (33 ÷ 30 =1.1). In that case, OROA goals would be greater than the goals for mid-cycle. Both scenarios are illustrated below:

EXAMPLE

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Recent changes in the OROA goals. In the years since we adopted OROA as an enterprise-wide performance metric, Deere has significantly restructured its Equipment Operations to enable more rapid responses to changing business conditions. The products we sell are subject to cycles. To put these cycles in perspective, the table below shows our OROA and net sales over the past 20 years. Note that since the adoption of OROA as an enterprise-wide metric in 2004, our OROA performance has exceeded the peer group even when we experienced volatile business conditions (as reflected by net sales):

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
OROA 3% 8% -1% 6% 10% 26% 22% 22% 25% 27% 13% 28% 30% 29% 32% 28% 16% 14% 21% 24%
Net Sales (billions) $10 $11 $11 $12 $13 $18 $19 $20 $21 $26 $21 $24 $29 $34 $35 $33 $26 $23 $26 $33

Deere’s sustained success in delivering OROA performance under varying business conditions had resulted in continued maximum or near-maximum STI payouts in recent fiscal years. To continue to improve operational performance and seize the benefits of Deere’s structural transformation, the Committee raised OROA goals for STI purposes to align more appropriately to the current business strategy. In making this decision, the Committee determined that Deere should be measured relative to its own capabilities and aspirations in addition to its performance relative to the peer group. As the following charts show, the executive OROA goals implemented in fiscal 2018 are significantly more rigorous at mid-cycle and peak than they have been historically. Going forward, the compensation goals will be reviewed annually and may be adjusted to reflect changes in the business, up or down, to continue to align with the enterprise strategy.

The following graph shows the significant changes to the OROA goals from fiscal year 2017 to 2018.

OROA GOAL INCREASES

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As shown in the table below, OROA goals have become more aggressive since 2015.

2015 OROA Goals 2016 OROA Goals 2017 OROA Goals 2018 OROA Goals
   Trough Mid-Cycle Peak Trough Mid-Cycle Peak Trough Mid-Cycle Peak Trough Mid-Cycle Peak
Maximum 12% 20% 28% 13% 24% 36% 16% 26% 36% 17% 35% 48%
Target 8% 12% 20% 10% 18% 26% 12% 19% 26% 14% 29% 40%
Threshold 4% 8% 12% 8% 12% 16% 8% 12% 16% 12% 20% 28%

ROE
ROE is the STI performance metric for Financial Services. The Financial Services business is a key differentiator for how Deere delivers value to our dealers and customers, so we think it is important to consider Financial Services’ performance as part of STI. The Committee believes ROE effectively measures the efficient use of the segment’s equity, and ROE is commonly used in the financial services industry for that purpose. We have two distinct business models within Financial Services and we use different ROE goals for each.

Historically, approximately 65% of Financial Services’ business is subsidized. Under the “subsidized business” model, the Equipment Operations provide subsidies to Financial Services to reduce the interest rates that our customers and dealers would otherwise pay on financial products. These subsidies were created to facilitate sales by the Equipment Operations, not to maximize Financial Services’ profitability. For this reason, the ROE goal for the subsidized business — 10% — is the same regardless of the business cycle and is based on the implied after-tax cost of equity for Financial Services. Analysis shows that our threshold ROE goal of 10% represents upper-quartile performance compared to other financial institutions.

The remaining Financial Services offerings are referred to as the “non-subsidized business.” The objective of the non-subsidized business is to efficiently utilize equity to earn a profitable return. Consequently, this business has more traditional (and progressively more challenging) goals for threshold, target, and maximum ROE. The Committee establishes goal levels by benchmarking against ROEs attained by similar financial services businesses with similar debt-to-equity ratios and by evaluating cost-of-equity financial models. The threshold goal equals the implied after-tax cost of equity for Financial Services; the target and maximum ROE goals are set at progressively higher levels to encourage management and employees to efficiently utilize equity relative to industry norms and market conditions while facilitating sales by the Equipment Operations. The ROE goals of 13% at target and 16% at maximum represent an even greater level of stretch, raising the difficulty of attaining target payouts. We regularly review the ROE of other financial institutions to ensure the appropriate level of stretch.

ROE goals are weighted based on the actual mix of subsidized versus non-subsidized business in a fiscal year. The Committee approved the following ROE goals at the beginning of fiscal 2018:

Fiscal 2018 ROE Goals       Subsidized business       Non-subsidized business       Weighted Goals
% of Business 68% 32%
Maximum 10% 16% 12%
Target 10% 13% 11%
Threshold 10% 10% 10%

NET SALES AND REVENUES
In 2017, two additional financial metrics — net sales and revenues and net income — were added to incorporate a growth factor into the incentive calculation. Between OROA and net sales and revenues, there was significant overlap with the net income measure. To simplify the calculation, the net income metric was removed starting with fiscal 2018. This simplified the mix, but still retains a balanced focus between margin and disciplined growth. STI weighting includes two-thirds OROA and one-third net sales and revenues.

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Direct Compensation Elements

The Committee set target goals for net sales and revenues at the beginning of fiscal 2018 based on input from management regarding our expected performance for the upcoming year. The goal for a target payout matches the number established in our annual operating budget forecast — what we call the Original Budget. Net sales and revenues that falls more than 15% below target will result in no payout on that metric. Conversely, net sales and revenues that exceeds target by at least 15% will result in a maximum (200%) payout on that metric.

APPROVAL OF STI AWARD 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 each NEO’s base salary. The target STI rates for fiscal 2018 were as follows:

Target Rate
CEO 150%
Other NEOs 100%

Regardless of the award amount reached by applying these payout rates, no individual award under the STI plan may exceed $5 million or 200% of target.

FISCAL 2018 PERFORMANCE RESULTS FOR STI

The chart below shows OROA results for the Agriculture & Turf Operations, the Construction & Forestry Operations, and Equipment Operations as a whole, based on actual sales volumes:


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Those results, together with ROE for Financial Services, are weighted to determine STI, as follows:

Fiscal 2018 Performance Results for STI    Fiscal 2018
Performance Results
   Performance
as % of Target
   Fiscal 2018
Award Weighting
   Weighted
Award Results
Equipment Operations OROA 24.4% 81% 50% 41%
Agriculture & Turf Operations OROA 25.6% 105% 25% 26%
Construction & Forestry Operations OROA 20.9% 0% 15% 0%
Financial Services ROE 11.1% 127% 10% 13%
Enterprise OROA/ROE Metric(1) 80%
 
Enterprise OROA/ROE Metric 80% 67% 53%
Net Sales and Revenues Metric $37,358M 136% 33% 45%
Actual Performance as % of Target 98%

(1) The Equipment Operations OROA calculation excludes the assets from our captive financial services and Wirtgen. ROE is based solely on the Financial Services segment, and excludes the impact of U.S. tax reform. See Appendix B for details.

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

STI AWARD CALCULATIONS

Base salary for
the fiscal year

Target STI rate

Actual performance
as a percentage
of target

=

STI award amount


Actual STI awards paid to NEOs are shown in the table to the right and detailed in the Fiscal 2018 Summary Compensation Table under footnote (4).

The STI goals and the results for fiscal 2018 previously described are used to determine the STI awards paid to executive-level employees (representing approximately 120 top-level employees). For fiscal 2018, STI awards paid to the NEOs consisted of approximately 1% of the total amount of STI awards paid to all eligible employees.

Officer       Fiscal 2018
STI award
Samuel R. Allen    $ 2,213,325
Rajesh Kalathur $  645,796
James M. Field $  712,412
Jean H. Gilles $  667,257
John C. May $  634,418

Long-Term Incentive Cash (LTIC)
LTIC, formerly known as Mid-Term Incentive (MTI), is a long-term cash award based on Deere’s performance against ambitious goals for Shareholder Value Added (SVA) over a three-year performance period. The plan name was changed, effective with the performance cycle beginning with fiscal 2018, to more clearly define all variable pay plans that span multiple years as long-term incentives.

SHAREHOLDER VALUE ADDED PERFORMANCE METRIC
The LTIC plan is designed to motivate executives and other salaried employees to consistently create lasting value. To that end, since the LTIC plan was first implemented, the performance metric has been Deere’s SVA, which essentially measures operating profit in excess of our cost of capital.

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Compensation Discussion and Analysis
Direct Compensation Elements

SVA was selected as the LTIC performance metric because the Committee believes Deere should:

earn, at a minimum, its weighted average cost of capital each year
ensure that investments in capital and research and development earn their cost of capital
ensure that acquisitions do not erode shareholder value

We believe Deere can realize sustainable improvement in SVA through a combination of revenue growth and high returns on invested capital. SVA incorporates both of these concepts and therefore serves as a barometer of long-term value.

SVA is measured on an enterprise-wide level. As a result, the LTIC plan encourages teamwork across all of our business units. In fiscal years 1994 through 2003 (the 10 years before we implemented the LTIC plan), accumulated SVA was negative $1.4 billion. In the 10 most recent fiscal years, accumulated SVA rose to $17 billion. This demonstrates that management has become adept at investing for the future while still delivering consistent shareholder returns.

We demonstrate how SVA is calculated in Appendix B, “Deere & Company Reconciliation of Variable Compensation Measures to Non-GAAP Measures.”

MODIFICATION OF AWARDS BASED ON RELATIVE TSR
In an effort to further align executive compensation with shareholder interests, the Committee added a relative TSR modifier to potential LTIC payouts for our NEOs and certain other executive officers. Starting with the performance period that began in fiscal 2015, we compare Deere’s TSR to TSR for the S&P Industrial Sector during the same time frame. The Committee chose the S&P Industrial Sector as a benchmark because it is an independently selected comparator group that includes a majority of our peer group companies. This index is also used to measure relative performance for PSUs under our long-term incentive plan. If Deere’s TSR is at or below the 25th percentile of the index, the final LTIC payout for our senior executives will be reduced by 25%. If Deere’s TSR is between the 25th and 50th percentiles, the final LTIC payout for our senior executives will be reduced by up to 25%, as shown in the following charts. The TSR modifier ensures that senior executives will not get the full LTIC award unless Deere’s TSR is at least at the median of the index. In the initial modifier, there was no upside potential for outperforming the 50th percentile.

Beginning with the performance period starting with fiscal 2018, the TSR modifier was amended to include an upside opportunity when performance is between the 50th and 75th percentile and also to create a steeper reduction when TSR performance is below the 50th percentile. The performance peer group for TSR purposes was amended to a subset of the S&P 500 Industrial Sector. This smaller group of around 40 peer companies is more closely aligned by industry or related to agricultural and construction business cycles. The same smaller peer group is used as the comparator group for PSU metrics. The charts below show how the different modifiers operate at different TSR rankings. In the original modifier, the reduction amount is subtracted from the SVA performance payout factor; the new modifier will apply a multiplicative percentage to the payout factor.

TSR MODIFIER FOR LTIC PAYMENTS


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Compensation Discussion and Analysis
Direct Compensation Elements

THREE-YEAR PERFORMANCE PERIODS
The Committee approved three-year performance periods for LTIC awards to emphasize the importance of consistent, sustained operating performance. We believe employees are motivated to achieve consistently strong SVA results because, as we illustrate under “Historical Accumulated SVA, LTIC Goals, and LTIC Payouts,” each year affects award calculations in three separate rolling performance periods. Whether positive or negative, SVA results for each year become part of the LTIC award calculation for that year and the next two years. Consequently, negative SVA in one year can offset positive SVA in another. A single year of strong performance will not result in a high LTIC payout if it follows one or two years of weak performance. Conversely, LTIC payouts will not necessarily be low after a year of weak performance if results in the two preceding years were strong.

SETTING SVA GOALS
Each year, two principles guide the Committee in setting the accumulated maximum SVA goal for the next three-year performance period. First, the goal for a maximum payout reflects return on invested capital performance in the top 25% relative to our peer group. Second, the goal for a maximum payout is calculated based on estimated enterprise SVA at mid-cycle sales levels (previously described under “Performance Metrics for STI”) for the first year of the performance period. We cannot confidently forecast SVA for the second and third years of the performance period. Instead, we assume a compounded 7% annual growth rate (a number that corresponds to Deere’s historical sales growth rate) for each of the remaining two years to arrive at a cumulative three-year SVA goal. Once set, the goal is a fixed amount for the performance period.

As mentioned above, the maximum SVA goal represents top-quartile invested capital performance, which is an aggressive stretch under “normal” business conditions. Accordingly, the target SVA goal is set at half of that amount. The threshold accumulated SVA goal was raised to $5 million starting with the performance period that ended with fiscal 2015. The threshold goal was increased to avoid nominal payouts to eligible participants.

The following table details the threshold, target, and maximum accumulated SVA goals for each performance period that includes fiscal 2018. The SVA goals grew significantly more challenging for the performance periods ending in 2015 through 2017: sales volumes for agricultural equipment increased, which led to a substantial increase in mid-cycle sales and increased expectations for SVA. As the recent business downturn became part of the business cycle, mid-cycle volumes decreased, resulting in slightly lower mid-cycle SVA for the performance periods ending in 2018 through 2020. Although the SVA goals have decreased, the same level of goal rigor exists due to the downturn in business conditions. The SVA goals have increased at a compounded annual rate of 9% since the LTIC plan was introduced in 2004.

SVA Goals for LTIC       Fiscal 2016
through
Fiscal 2018
      Fiscal 2017
through
Fiscal 2019
      Fiscal 2018
through
Fiscal 2020
Threshold SVA Required for Payout $5 million $5 million $5 million
SVA Goal for Target Payout $4,200 million $4,010 million $3,900 million
SVA Goal for Maximum Payout $8,400 million $8,020 million $7,800 million

APPROVAL OF LTIC AWARD RATES
At the beginning of each performance period, after considering data for our peer group, the Committee approves target LTIC award rates as a percentage of the median salary for each NEO’s salary grade. For the performance period that begins in 2018, the target rates were increased to align closer to peers and market changes. The following table shows the target payout rates, as a percent of the median salary for the NEOs, approved by the Committee for the performance period ended in 2018 and the rate changes that apply to the performance period beginning in fiscal 2018.

      Performance
Periods Ending in
2018 & 2019
      Effective with
Performance Period
Ending with 2020
CEO 121% 135%
Other NEOs 93% 105%

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Direct Compensation Elements

Regardless of the amount calculated for each award using these payout rates, no employee can receive an award under the LTIC plan that exceeds $6 million or 200% of target.

FISCAL 2018 PERFORMANCE RESULTS FOR LTIC
The following table shows Deere’s accumulated SVA, calculated as described in Appendix B, for the three-year performance period ended in 2018, which resulted in a payout of 83%.

The payout percentage for fiscal 2018 was calculated as follows:

Fiscal Year SVA (in millions)
2016 $344
2017 $1,264
2018 $1,885
Accumulated SVA for 2016-2018 performance period $3,493
SVA Goal for Target Payout $4,200
TSR Modifier (if below 50th percentile) no modifier applied
Actual Performance as % of Target 83%

HISTORICAL ACCUMULATED SVA, LTIC GOALS, AND LTIC PAYOUTS

The following table shows historical LTIC information and how SVA for fiscal 2018 will affect LTIC awards for the performance periods ending in 2018, 2019, and 2020.


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Compensation Discussion and Analysis
Direct Compensation Elements

CALCULATION OF LTIC AWARDS

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

Median of actual
salaries for the relevant
salary grade (a)
× Target LTIC rate × Actual performance
as a percent of target
= LTIC award amount

(a) Median (or midpoint) is the basis of the LTIC calculation for all employees so that within a given salary structure and level, the employees receive the same LTIC payout.

Actual LTIC awards paid to the NEOs are shown in the table to the right and detailed in the Fiscal 2018 Summary Compensation Table under footnote (4).

The results for the performance period ended in 2018 are also used to determine the LTIC awards for other eligible employees worldwide. LTIC awards paid to the NEOs for fiscal 2018 consisted of approximately 4.4% of the total amount of LTIC awards paid to all eligible employees.

Officer Fiscal 2018
LTIC award
Samuel R. Allen $1,509,536
Rajesh Kalathur $484,807
James M. Field $484,807
Jean H. Gilles $484,807
John C. May $484,807

Long-Term Incentive (LTI)
The LTI is designed to reward the NEOs for creating sustained shareholder value, to encourage ownership of Deere stock, to foster teamwork, and to retain and motivate high-caliber executives while aligning their interests with those of our shareholders. LTI awards consist of three components: performance stock units (PSUs), restricted stock units (RSUs), and market-priced stock options all awarded annually under the John Deere Omnibus Equity and Incentive Plan (Omnibus Plan). The Omnibus Plan is periodically approved by our shareholders and was last approved at the Annual Meeting in February 2015.

FISCAL 2018 LTI AWARD OVERVIEW FOR NEOS

PSUs RSUs Stock Options
LTI Mix
Performance measurements Revenue growth* Stock price appreciation Stock price appreciation
Vesting period Cliff vest on the third anniversary of the grant date Cliff vest on the third anniversary of the grant date Vest in approximately equal annual installments over three years
Conversion/ expiration Converted to Deere common stock upon vesting Converted to Deere common stock upon vesting Expire 10 years from the grant date
Objective Motivate and reward relative outperformance Encourage ownership and retention while providing immediate alignment with shareholders Reward for stock price appreciation

 *Based on Deere’s compounded annual growth rate

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Compensation Discussion and Analysis
Direct Compensation Elements

APPROVAL OF LTI AWARD VALUES
The Committee established LTI grants for 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.

At the first Committee meeting of each fiscal year, after consideration of peer group data on median values for long-term incentives, the Committee approves a dollar value for a base-level LTI award and the mix of awards to be delivered. The grant price is the closing price of Deere common stock on the NYSE on the grant date. The grant price is used to determine the number of PSUs, RSUs, and stock options to be awarded.

As has been the practice for several years, the Committee can increase (up to 20%) or decrease (down to $0) an individual NEO’s base-level award to distinguish that executive’s performance, deliver a particular LTI value, or reflect other adjustments as the Committee deems appropriate. For fiscal 2018, the Committee approved adjustments to base-level award values ranging up to 20% to recognize the accomplishments of the individual NEOs. LTI awards were approved for the NEOs as follows:

Adjusted Award Values*
Samuel R. Allen $9,120,000
Rajesh Kalathur $1,716,000
James M. Field $1,794,000
Jean H. Gilles $1,716,000
John C. May $1,716,000


*The amounts shown include PSUs valued at the grant price on the date of grant. These amounts differ from the value of equity awards shown in the Fiscal Year 2018 Summary Compensation Table and Grants of Plan-Based Awards table because those tables reflect the probable outcome of the performance metrics for PSUs.


See the Fiscal 2018 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 2018, the number of RSUs and PSUs granted to the NEOs represented 9% and 52%, respectively, of the total RSUs and PSUs granted to all eligible salaried employees; stock options granted to the NEOs represented 30% of the total stock options granted to eligible salaried employees.

CONVERSION OF PSUs TO DEERE STOCK
For PSUs granted in fiscal 2018 (December 2017), the actual number of shares to be issued upon conversion will be based solely on Deere’s revenue growth for the three-year performance period ending in 2020. Relative TSR as a standalone measure will no longer apply to equity awards, but will continue to be used as a modifier of the LTIC award only. Deere’s performance for PSU purposes will be measured relative to a subset of the companies in the S&P Industrial Sector as of the end of the performance period. The new performance peer group represents a more closely aligned industry comparison to our company.

For the PSU performance periods ending in 2018 and 2019, the actual number of shares to be issued will still be based equally on Deere’s revenue growth and TSR performance ranking, as compared to companies in the S&P Industrial Sector.

PERFORMANCE TARGETS (PERFORMANCE PERIOD ENDING IN 2020)

 
Revenue Growth Payout %
 
× 100% of PSUs Awarded = Final Award

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Compensation Discussion and Analysis
Direct Compensation Elements

The number of PSUs that vest and convert to shares can range from 0% to 200% of the number of PSUs awarded, depending on Deere’s relative performance during the performance period, as illustrated in the following table:

Deere’s Revenue Growth Relative
to the S&P Industrial Sector
% of Target Shares
Earned (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.

PAYOUT CAP ON PSUs
In response to shareholder concerns, for PSUs that vest at the end of fiscal 2019, the payout for the PSU portion will be capped at target if Deere’s TSR is negative, regardless of how Deere compares to its peers. PSUs that vest after 2019 will no longer be measured on TSR and therefore the cap on this metric is eliminated. Relative TSR will remain a metric for the modifier on the LTIC payout.

PERFORMANCE PERIOD 2016-2018 PSUs
The performance period for PSUs granted in fiscal 2016 ended on October 31, 2018. 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 Committee made its final payout determination in December 2018 following a review of the relative performances of Deere and the S&P Industrial Sector. Deere’s revenue growth and TSR were comparable to the 80th and 85th percentiles, respectively. This resulted in an overall payout of 200% of target. This compared to an overall payout of PSUs relative to target for each of the five prior three-year performance periods ending in fiscal 2013 through fiscal 2017 of 100%, 48.5%, 0%, 33.5% and 100%, respectively.

Deere’s Revenue Growth and TSR
Relative to the S&P Industrial Sector
     3rd Year Results      Performance Results
for Performance
Period Relative to S&P
Industrial Sector
     % of Target
Shares
Earned
     Award
Weighting
     Weighted
Payout %
    
Revenue Growth 9.0% 80th percentile 200% 50% 100%
TSR 22.9% 85th percentile 200% 50% 100%

LTI REPORTED VERSUS REALIZABLE VALUE

The values for Stock and Option Awards included on the Summary Compensation Table are presented in accordance with SEC requirements. Although this allows for comparison across companies, the Committee feels the prescribed calculation does not fully represent the Committee’s annual decision and does not support a valid CEO pay-for-performance assessment. To calculate the realizable value, the stock units from the LTI awards granted in 2016, 2017, and 2018 are valued using the fiscal year end stock price. The value of PSUs also takes into consideration the current year payout and the current performance for the performance cycles in-process (2017-2019 and 2018-2020). The value of options is calculated using the Black-Scholes value as of fiscal year end. The following chart compares the LTI values reported on the Summary Compensation Table to Mr. Allen’s realizable LTI value for each of the grants in 2016, 2017, and 2018. The three-year TSR as of October 31, 2018, is 22.9%.

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Compensation Discussion and Analysis
Direct Compensation Elements

REPORTED VS. REALIZABLE LTI VALUE


(a)  See footnotes (2) and (3) to the Summary Compensation Table for an explanation of these valuations.
(b) Realizable LTI is calculated as:
–  The value of stock options that were granted in 2016, 2017, and 2018 using the Black-Scholes value as of October 28, 2018.
The value of RSUs that were granted in 2016, 2017, and 2018 using the stock price as of October 28, 2018, of $133.00
The value of PSUs granted in 2016, 2017, and 2018 using the stock price as of October 28, 2018, of $133.00 and reflecting actual payout for the 2016-2018 performance and projected payouts of 200% for the in-process 2017-2019 and 2018-2020 performance cycles

Summary of Direct Compensation
The Committee believes each pay element included in Direct Compensation is consistent with our compensation philosophy. The Committee reviews Direct Compensation for the NEOs in the aggregate (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.

A key element of these individual performance evaluations 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 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.

Direct Compensation for the CEO is higher than for the other NEOs due to the CEO’s breadth of executive and operating responsibilities for the entire global enterprise. The Committee does not target CEO compensation as a certain multiple of the compensation of the other NEOs. The relationship between the CEO’s compensation and that of the other NEOs is influenced by our organizational structure, which does not currently include a chief operating officer. The ratio of Mr. Allen’s Direct Compensation to that of the other NEOs is generally comparable to that found among the companies in our peer group.

Other Compensation Matters
RULES RELATED TO STOCK OWNERSHIP, HOLDING REQUIREMENTS, AND ANTI-HEDGING AND ANTI-PLEDGING POLICIES
NEOs are required to hold a certain amount of Deere stock. The CEO is expected to hold stock equivalent to 6 times base salary and the other NEOs are expected to hold stock equivalent to 3.5 times base salary. These ownership levels must be achieved within five years of the date the NEO is first appointed as CEO or as an executive officer. NEOs who have not achieved the requisite ownership level may not transfer any of the stock they acquire through our equity incentive plan. Only vested RSUs and any common stock held personally by an NEO are included in determining whether the applicable ownership requirement has been met. Once an NEO achieves the appropriate ownership level, the number of shares held at that time becomes that individual’s fixed stock ownership requirement for three years, even if base salary increases or Deere’s stock price decreases.

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

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Compensation Discussion and Analysis
Indirect Compensation Elements

LIMITATIONS ON DEDUCTIBILITY OF COMPENSATION
Prior to the Tax Cuts and Jobs Act (“Tax Reform”) that was signed into law December 22, 2017, Section 162(m) of the Internal Revenue Code generally limited to $1 million the U.S. federal income tax deductibility of compensation paid in one year to a company’s CEO or any of its three next-highest-paid executive officers (other than its Chief Financial Officer). Performance-based compensation was not subject to this limit on deductibility so long as such compensation met certain requirements, including shareholder approval of material terms. The Committee strived to provide the NEOs with incentive compensation programs that preserved the tax deductibility of compensation paid by Deere, to the extent reasonably practicable and consistent with Deere’s other compensation objectives.

The Tax Reform includes a major overhaul of Section 162(m), which takes effect for tax years beginning after December 31, 2017. Amongst other provisions, it retained the $1 million deduction limit, but repealed the performance-based compensation exemption. The Tax Reform also expanded the definition of “covered employees” to include the Chief Financial Officer and any executive who is subject to the limitation in tax years beginning after 2016. As a result, beginning with Deere’s fiscal 2019, compensation paid to our named executive officers in excess of $1 million will not be deductible for tax purposes unless it qualifies for transition relief applicable to certain binding written performance-based compensation arrangements in place as of November 2, 2017. No assurance can be given that any future compensation will qualify for the transition relief. While the Committee will continue to consider the tax deductibility of compensation as one of many factors, the Committee believes shareholder interests are best served by not restricting the Committee’s discretion and flexibility in structuring compensation programs to attract, retain, and motivate key executives, even though such programs may result in non-deductible compensation expense.

RECOUPMENT OF PREVIOUSLY PAID INCENTIVE COMPENSATION
Deere’s Executive Incentive Compensation Recoupment Policy authorizes the Committee to determine whether to require recoupment of cash and equity incentive compensation paid to or deferred by certain executives under certain conditions. Under the policy, the Committee may require recoupment if the Committee determines an executive received incentive compensation that was artificially inflated because 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 an incorrect calculation of operating metrics that are used to determine incentive plan payouts

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

Indirect Compensation Elements

Perquisites
We offer our NEOs various perquisites that the Committee believes are reasonable in order to remain competitive. These perquisites, which are described in footnote (6) to the Fiscal 2018 Summary Compensation Table, constitute a small percentage of the NEOs’ total compensation. The Committee conducts an annual review of the perquisites offered to the NEOs. In addition to the items listed in footnote (6), NEOs, as well as other selected employees, are provided indoor parking at no incremental cost to Deere.

The Board requires the CEO to use company-owned aircraft for all business and personal travel because the ability to travel safely and efficiently provides substantial benefits that justify the cost. The geographic location of Deere’s headquarters in the Midwest, more than 150 miles from a major metropolitan airport, makes personal and business travel challenging. Moreover, traveling by company aircraft allows the CEO to conduct business confidentially while in transit. Personal use of company aircraft by other NEOs is minimal and must be approved by the CEO. The Committee has limited the CEO’s annual personal usage of company aircraft to approximately 100 hours.

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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
Indirect Compensation Elements

Retirement Benefits
All NEOs are covered by the same defined benefit pension plans, which include the same plan terms that apply to 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 “Senior Supplementary Plan”) and the John Deere Supplemental Pension Benefit Plan (the “Deere Supplemental Plan”).

The tax-qualified defined benefit pension plans have compensation limits imposed by the Internal Revenue Code. The Senior Supplementary Plan provides participants with the same benefit they would have received without those limits. This avoids the relative disadvantage that participants would experience compared to other qualified plan participants. The Deere 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 the defined benefit plans serve as important retention tools, provide a level of competitive income upon retirement, and reward long-term employment and service as an officer of Deere. In addition, the fact that the Senior Supplementary and Deere Supplemental Plans are unfunded (with benefit payments under these plans being made out of the general assets of Deere) and therefore at-risk (if Deere were to seek bankruptcy protection), creates a strong incentive for the NEOs to minimize risks that could jeopardize Deere’s long-term financial health. For additional information, see the Fiscal 2018 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 most of our U.S. employees, including the NEOs. We make matching contributions to participating SIP accounts on up to six percent of an employee’s pay. The actual amount of the company match varies based on two factors: the STI results for the most recently completed fiscal year (see the “Fiscal 2018 Performance Results for STI” section) and the pension option in which the employee participates (see the narrative preceding the Fiscal 2018 Pension Benefits Table). The following table illustrates Deere’s match for calendar 2018, which is reported for our NEOs under the “All Other Compensation” column of the Fiscal 2018 Summary Compensation Table:

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. Similar deferred compensation benefits are commonly offered by companies with which we compete for talent.

As of November 1, 2015, for the Defined Contribution Restoration Plan and as of November 1, 2016, for the Deferred Plan, the investment options now parallel the investment options offered under our 401(k) plan, with certain limited exceptions. Funds deferred prior to these effective dates may remain invested under the previous options, although participants also may move these funds into the new options. Additionally, participants may change investment options at any time. These changes effectively ensure that participants cannot earn above-market interest on new deferrals.

See the “Nonqualified Deferred Compensation” section for additional details.

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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
Compensation Methodology and Process

Potential Payments upon Change in Control
Deere’s Change in Control Severance Program (the “CIC Program”) covers certain executives, including each of the NEOs, and is intended to facilitate continuity of management in the event of a change in control. The Committee believes the CIC Program:

encourages executives to act in the best interests of shareholders when 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 despite potential 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
helps Deere attract and retain executives as a competitive practice

For more information, see “Fiscal 2018 Potential Payments upon Change in Control” and the corresponding table.

Other Potential Post-Employment Payments
Deere’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 under Executive Compensation Tables entitled “Fiscal 2018 Potential Payments upon Termination of Employment Other than Following a Change in Control.”

Compensation Methodology and Process

Independent Review and Approval of Executive Compensation
The Committee is responsible for reviewing and approving goals and objectives related to incentive compensation for the majority of salaried employees. In particular, the Committee evaluates the NEOs’ performance in relation to established goals and ultimately approves compensation for the NEOs (except for the CEO). All substantive responsibilities related to the determination of compensation of the NEOs are undertaken exclusively by the members of the Committee, all of whom are independent under current NYSE listing standards.

The Committee periodically reviews the components of our compensation program to ensure the program is aligned with our business strategy, Deere’s performance, and the interests of our employees and shareholders. In addition, the Committee regularly reviews market practices for all significant elements of executive compensation and approves necessary adjustments to ensure Deere’s compensation remains competitive.

Generally, at the Board meeting in August, the full Board (in executive session without the CEO present) evaluates the CEO’s performance. The Committee considers the results of that evaluation when providing recommendations to the independent members of the Board for the CEO’s compensation, which they then approve. 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. At the Committee meeting in December, the CEO evaluates each NEO’s individual performance and recommends changes to the NEOs’ base salaries and LTI awards. (The CEO is not involved in setting the STI and LTIC awards because they are calculated using predetermined factors.) The Committee has the discretion to accept, reject, or modify the CEO’s recommendations. No other executive officers play a substantive role in setting an NEO’s compensation.

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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
Compensation Methodology and Process

The Role of the Compensation Consultant
The Committee has retained Pearl Meyer, LLC (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 the fees paid to Pearl Meyer, determining the nature and scope of its services, and evaluating its performance and can terminate Pearl Meyer’s engagement or hire another compensation consultant at any time.

Pearl Meyer periodically meets independently with the Chair of the Committee and regularly participates in executive sessions with the Committee (without any executives or other Deere personnel present) to review compensation data and discuss compensation matters. While the Committee values this expert advice, 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, such as competitive market assessments and summaries of current legal and regulatory developments, which are essential to the Committee’s compensation determinations.

During fiscal 2018, Pearl Meyer performed the following specific services:

Provided information on executive compensation trends and external developments, including regulatory changes
Provided a competitive evaluation of total compensation for the NEOs, as well as overall compensation program share usage, dilution, and LTI expense
Reviewed the peer group used for market analyses
Reviewed the competitiveness of actual pay delivered in relation to performance as compared to the peer group, as further discussed in the following section
Provided recommendations on CEO total compensation
Reviewed recommendations for our CEO’s compensation in relation to the other NEOs
Reviewed Committee agendas and supporting materials in advance of each meeting and raised questions or issues with management and the Committee Chair, as appropriate
Provided guidance and recommendations on incentive plan design, including rigor of metrics and goals
Reviewed drafts and commented on this CD&A and the related compensation tables

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 Deere’s management.

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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
Compensation Methodology and Process

Market Analysis
PEER GROUP
The companies in the peer group for our fiscal 2018 market analysis process, listed in the chart below, are similar to Deere in terms of sales volume, products, services, market capitalization, and global presence.

Company       Fiscal year       Employees*       Revenue*
(MM)
      Market Value 10/31/18
(MM)
3M Company Dec ’17 91,536 $31,657 $110,786
Arconic Dec ’17 41,500 $12,961 $9,823
Boeing Company Dec ’17 140,800 $93,392 $201,520
Caterpillar Inc. Dec ’17 98,400 $45,462 $71,592
Cummins Inc. Dec ’17 58,600 $20,428 $21,947
DowDuPont Dec ’17 98,000 $62,374 $124,414
Eaton Corp. plc Dec ’17 96,000 $20,404 $31,062
Emerson Electric Co. Sep ’18 87,500 $17,408 $42,660
General Dynamics Corporation Dec ’17 98,600 $30,973 $51,110
Honeywell International Inc. Dec ’17 131,000 $40,519 $107,209
Illinois Tool Works Inc. Dec ’17 50,000 $14,314 $42,781
Johnson Controls International plc Sep ’18 122,000 $31,400 $29,542
Lockheed Martin Corporation Dec ’17 100,000 $51,048 $83,579
PACCAR Inc Dec ’17 25,000 $19,469 $20,012
United Technologies Corporation Dec ’17 205,000 $59,798 $99,490
Whirlpool Corporation Dec ’17 92,000 $21,253 $7,004
75th Percentile 105,500 $46,859 $101,420
Median 97,000 $31,187 $46,945
25th Percentile 80,275 $20,170 $27,643
Deere & Company Oct ‘18 74,400 $37,358 $43,568
Deere Percentile 24th 64th 47th

Source: Factset Research Systems, Inc.
* Reflects employees and revenues for most recent 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 to confirm that it remains an appropriate point of reference for NEO compensation.

REVIEW OF PAY FOR PERFORMANCE RELATIVE TO PEER GROUP
To ensure that total compensation for our NEOs aligns with the market, we compared our compensation and performance against the companies in our peer group. As part of this comparison, we evaluate our peers’ mix of cash versus equity and short-term versus long-term components.

In addition, we reviewed the relationship between total realizable compensation and our performance for the three fiscal years ended with fiscal year 2017 — the most recent fiscal year-end for which we can obtain corresponding compensation information for our peer companies. This review helps the Committee understand whether total compensation delivered to our NEOs aligns with our performance relative to our peer group. For purposes of this review, we use TSR to measure performance.

The analysis, as shown in the following graphs, reveals that realizable pay for Deere’s CEO and other NEOs was reasonably aligned with Deere’s relative TSR over the relevant time period. Based on these results and the results of similar past comparisons of pay and performance alignment, we believe our pay programs ensure that compensation for our executives is aligned with performance and market norms.

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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
Compensation Methodology and Process

DEERE 3-YEAR PAY FOR PERFORMANCE
REALIZABLE PAY VS. TOTAL SHAREHOLDER RETURN

CEO OTHER NEOS
       

 

“Total realizable pay” for Deere’s NEOs is defined as the sum of the following components:

1.         Actual base salaries paid over the three-year period from 2015-2017
2. Actual STI awards paid over the three-year period
3. Actual LTIC awards paid over the three-year period
4. The Black-Scholes value as of October 29, 2017, of any stock options granted over the three-year period
5. The value as of October 29, 2017, of RSUs granted over the three-year period
6. The value as of October 29, 2017, of PSUs (reflecting actual performance for the 2015-2017 performance cycle and the in-process 2016-2018 and 2017-2019 performance cycles)

For peer companies, total realizable pay includes cash- and equity-based long-term incentive plan and performance share plan payouts for performance cycles that are completed within the three-year period. Award values are then multiplied by a factor that reflects grant frequency and long-term incentive pay mix.

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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
Risk Assessment of Compensation Policies and Practices

Risk Assessment of Compensation Policies and Practices

As shown in the adjacent diagram, management conducted a comprehensive risk assessment of Deere’s compensation policies and practices, as we have done each year since 2010.

The inquiries in the risk assessment questionnaire focus on: pay-for-performance comparison against our peer group, balance of compensation components, program design and pay leverage, program governance, and factors that mitigate program risks.

Based on its most recent review, the Risk Assessment Team concluded that Deere’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, reviewed the risk assessment and concurred with that conclusion. The Committee believes the following key factors support the Risk Assessment Team’s conclusion:
 

the performance metrics for our STI and LTIC incentive plans are based on enterprise publicly reported metrics with only minor adjustments and, therefore, are not easily susceptible to manipulation

the metrics for our STI and LTIC compensation and the related potential payouts are capped to reduce the risk that executives might be motivated to attain excessively high “stretch” goals to maximize payouts

 

In addition, Deere maintains stock ownership requirements that are designed to motivate our management team to focus on Deere’s long-term sustainable growth and a Recoupment Policy designed to prevent misconduct relating to financial reporting.
Convened a Risk Assessment Team comprising management personnel representing relevant areas of oversight.
Completed an inventory of Deere’s compensation programs globally for both executive and non-executive employees.
Updated our existing detailed risk assessment questionnaire to take account of any relevant changes in our compensation structure or philosophy.
Applied the updated questionnaire to the compensation programs that, due to their size, potential payout, or structure, could have a material adverse effect on Deere.

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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis

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 or under the Securities Exchange Act of 1934, except to the extent that Deere specifically incorporates the information by reference, and will not otherwise be deemed filed under these statutes.

Compensation Committee Report

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 Charles O. Holliday, Jr.
Clayton M. Jones
Dmitri L. Stockton

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Advisory Vote on Executive Compensation
Executive Compensation Tables


Executive Compensation Tables

In this section, we provide tabular and narrative information regarding the compensation of our NEOs for fiscal 2018.

FISCAL 2018 SUMMARY COMPENSATION TABLE

Name and 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
Chairman and
Chief Executive Officer
2018 $1,500,000 $9,247,170 $3,191,963 $3,722,861 $286,516 $577,157 $18,525,667
2017 $1,500,000 $5,479,540 $2,929,134 $4,404,082 $1,270,046 $469,390 $16,052,192
2016 $1,500,000 $6,246,874 $2,926,317 $4,492,426 $3,005,568 $471,686 $18,642,871
Rajesh Kalathur
Senior Vice President and
Chief Financial Officer (7)
2018 $656,497 $1,739,879 $600,568 $1,130,603 $36,918 $172,386 $4,336,851
2017 $632,241 $1,124,684 $601,227 $1,292,041 $271,898 $141,307 $4,063,398
2016 $615,312 $1,167,110 $546,760 $1,269,406 $352,821 $155,296 $4,106,705
James M. Field
President, Worldwide Ag & Turf Division:
Global Harvesting & Turf Platforms,
Americas & Australia (7)
2018 $724,217 $1,818,823 $627,864 $1,197,219 $24,692 $186,782 $4,579,597
2017 $700,553 $1,124,684 $601,227 $1,398,643 $418,443 $165,166 $4,408,716
2016 $686,266 $1,167,110 $546,760 $1,352,171 $632,142 $185,457 $4,569,906
Jean H. Gilles
Senior Vice President, John Deere Power
Systems, Worldwide Parts Services,
Advanced Technology & Engineering, and
Global Supply Management & Logistics (7)
  2018 $678,314   $1,739,879 $600,568 $1,152,064 $288,449 $174,488 $4,633,762
2017 $653,242 $1,124,684 $601,227 $1,324,813 $841,531 $150,536 $4,696,033
2016 $639,416 $1,145,793 $536,818 $1,297,522 $1,197,119 $182,664 $4,999,332
John C. May
President, Agricultural Solutions
and Chief Information Officer (7)
2018 $644,930 $1,739,879 $600,568 $1,119,225 $1,606 $167,788 $4,273,996
2017 $620,606 $1,124,684 $601,227 $1,273,884 $275,458 $149,905 $4,045,764
2016 $599,840 $1,273,139 $596,455 $1,251,358 $388,506 $162,727 $4,272,025

(1) Includes amounts deferred by the NEO under the John Deere Voluntary Deferred Compensation Plan. Salary amounts deferred in fiscal 2018 are included in the first column of the Fiscal 2018 Nonqualified Deferred Compensation Table.
(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 28, 2018 (“2018 Form 10-K”). For PSUs, the value at the grant date is based on the probable outcome of the performance metrics over the three-year performance period. If the highest level of payout were achieved, the value of the PSU awards as of the grant date would be as follows: $6,967,312 (Allen); $1,310,924 (Kalathur); $1,370,419 (Field); $1,310,924 (Gilles); $1,310,924 (May). RSUs will vest three years after the grant date, at which time they may be settled in Deere common stock. Refer to the Fiscal 2018 Grants of Plan-Based Awards table and footnote (7) 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 appear in Note 24, “Stock Option and Restricted Stock Awards,” of our consolidated financial statements filed with the SEC in the 2018 Form 10-K. Refer to the Fiscal 2018 Grants of Plan-Based Awards table and footnote (7) for a detailed description of the grant date fair value of option awards.

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Advisory Vote on Executive Compensation
Executive Compensation Tables

(4)

Non-equity incentive plan compensation includes cash awards under the STI and LTIC plans. Cash awards earned under the STI and LTIC plans for the performance period ended in fiscal 2018 were paid to the NEOs on December 14, 2018, unless deferred under the Voluntary Deferred Compensation Plan. Deferred STI and LTIC amounts are included in the first column of the Fiscal 2018 Nonqualified Deferred Compensation Table.

       

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

STI (a) LTIC (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                150%                   98% $ 2,213,325                  121%                     83% $ 1,509,536                 $ 3,722,861
Rajesh Kalathur 100% 98% $ 645,796 93% 83% $ 484,807 $ 1,130,603
James M. Field 100% 98% $ 712,412 93% 83% $ 484,807 $ 1,197,219
Jean H. Gilles 100% 98% $ 667,257 93% 83% $ 484,807 $ 1,152,064
John C. May 100% 98% $ 634,418 93% 83% $ 484,807 $ 1,119,225

        (a) Based on actual performance, as discussed in the CD&A under “Fiscal 2018 Performance Results for STI,” the NEOs earned an STI award equal to 98% of the target opportunity.
(b) Based on actual performance, as discussed in the CD&A under “Fiscal 2018 Performance Results for LTIC,” the NEOs earned an LTIC award equal to 83% of the target opportunity.
(5) The following table shows the change in pension value and above-market earnings on nonqualified deferred compensation during fiscal 2018.

        Name       Change in
Pension Value
(a)
      Nonqualified Deferred
Compensation Earnings (b)
      Total
Samuel R. Allen              $ 286,516             $  $ 286,516
Rajesh Kalathur $ 36,918 $ $ 36,918
James M. Field $ 24,692 $ $ 24,692
Jean H. Gilles $ 213,137 $ 75,312 $ 288,449
John C. May $ 1,606 $ $ 1,606

        (a) Represents the change in the actuarial present value of each NEO’s accumulated benefit under all defined benefit plans year over year. 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 2018 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 Internal Revenue Code. See the Fiscal 2018 Nonqualified Deferred Compensation Table for additional information.

Over the past two years, modifications have been made for the investment options available under the Nonemployee Director Deferred Compensation Plan and the Voluntary Deferred Compensation Plan for employees to ensure that participants cannot earn above-market returns on new deferrals. Minimal amounts may be reported in future years for prior years’ deferrals.

(6)

The following table provides details about each component of the “All Other Compensation” column in the Fiscal 2018 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      $ 76,740 $     $ 18,650               $ 2,995                     $ 478,772           $ 577,157
Rajesh Kalathur $       $ 10,000 $ 840 $ 1,611 $ 159,935 $ 172,386
James M. Field $ $ $ 5,904 $ 3,983 $ 176,895 $ 186,782
Jean H. Gilles $ $ 1,976 $ 5,408 $ 1,856 $ 165,248 $ 174,488
John C. May $ $ 2,615 $ 6,460 $ 1,670 $ 157,043 $ 167,788

        (a) Per IRS regulations, the NEOs recognize imputed income on the personal use of Deere’s aircraft. 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, we calculate 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 2018 amounted to approximately 38 hours of travel, which represents less than 0.5% of the total hours flown by company aircraft.
(b) This column contains amounts Deere paid for financial planning assistance to the NEOs. Each year, the CEO may receive up to $15,000 of assistance and the other NEOs may receive up to $10,000.
(c) This column contains the amounts Deere paid for annual medical exams for the NEOs.
(d) Miscellaneous perquisites include spousal attendance at company events.
(e) Deere makes contributions to the John Deere Savings and Investment Plan for all eligible employees. Deere also credits contributions to the John Deere Defined Contribution Restoration Plan for all employees covered by the Contemporary Option under our tax-qualified pension plan whose earnings exceed relevant IRS limits. All of our current NEOs are covered by the Contemporary Option.
(7) See Compensation Discussion & Analysis footnotes on page 26 for title changes effective in fiscal 2019.

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Executive Compensation Tables

The following table provides additional information regarding fiscal 2018 grants of RSU, PSU, and stock option awards under the Omnibus Plan and the potential range of awards that were approved in fiscal 2018 under the STI and LTIC plans for payout in future years. These awards are further described in the CD&A under “Direct Compensation Elements.”

FISCAL 2018 GRANTS OF PLAN-BASED AWARDS


Grant Date (1)




Estimated Future Payouts Under

Non-Equity Incentive Plan Awards
(2)
Estimated Future Payouts Under
Equity Incentive Plan Awards (3)
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (4)
    All Other
Option
Awards:
Number of
Securities
Underlying
Options (5)
    Exercise
or Base
Price of
Option
Awards
($/Sh) (6)
    Grant Date Fair
Value of Stock
and Option
Awards (7)
Name Threshold     Target     Maximum     Threshold Target Maximum    
Samuel R. Allen      12/5/17-STI      $ $ 2,250,000 $ 4,500,000
12/5/17-LTIC $ 1,100 $ 2,025,000 $ 4,050,000
12/13/17 15,004 $ 2,279,858
12/13/17 6,001 24,007 48,014 $ 6,967,312
12/13/17 81,738 $ 151.95 $ 3,191,963
$ 1,100 $ 4,275,000 $ 8,550,000 6,001 24,007 48,014 15,004 81,738 $ 12,439,133
Rajesh Kalathur 12/5/17-STI $ $ 656,497 $ 1,312,994
12/5/17-LTIC $ 400 $ 684,458 $ 1,368,916
12/13/17 2,823 $ 428,955
12/13/17 1,129 4,517 9,034 $ 1,310,924
12/13/17 15,379 $ 151.95 $ 600,568
$ 400 $ 1,340,955 $ 2,681,910 1,129 4,517 9,034 2,823 15,379 $ 2,340,447
James M. Field 12/5/17-STI $ $ 724,217 $ 1,448,434
12/5/17-LTIC $ 400 $ 684,458 $ 1,368,916
12/13/17 2,951 $ 448,404
12/13/17 1,180 4,722 9,444 $ 1,370,419
12/13/17 16,078 $ 151.95 $ 627,864
$ 400 $ 1,408,675 $ 2,817,350 1,180 4,722 9,444 2,951 16,078 $ 2,446,687
Jean H. Gilles 12/5/17-STI $ $ 678,314 $ 1,356,628
12/5/17-LTIC $ 400 $ 684,458 $ 1,368,916
12/13/17 2,823 $ 428,955
12/13/17 1,129 4,517 9,034 $ 1,310,924
12/13/17 15,379 $ 151.95 $ 600,568
$ 400 $ 1,362,772 $ 2,725,544 1,129 4,517 9,034 2,823 15,379 $ 2,340,447
John C. May 12/5/17-STI $ $ 644,930 $ 1,289,860
12/5/17-LTIC $ 400 $ 684,458 $ 1,368,916
12/13/17 2,823 $ 428,955
12/13/17 1,129 4,517 9,034 $ 1,310,924
12/13/17 15,379 $ 151.95 $ 600,568
$ 400 $ 1,329,388 $ 2,658,776 1,129 4,517 9,034 2,823 15,379 $ 2,340,447

(1) For the non-equity incentive plan awards, the grant date is the date the Committee approved the range of estimated potential future payouts for the performance periods noted under footnote (2) below. For equity awards, the grant date is seven calendar days after the first regularly scheduled Board meeting of the fiscal year.
(2)
These columns show the range of potential payouts under the STI and LTIC plans. The performance period for STI in this table covers fiscal 2018. For actual performance between threshold, target, and maximum, the earned STI award will be prorated.
The range of the LTIC award covers the three-year performance period beginning in fiscal 2018 and ending in fiscal 2020. Awards will not be paid unless Deere generates at least $5 million of SVA for the performance period. The target LTIC award will be earned if $3,900 million or more of SVA is accumulated and the maximum LTIC award will be earned if $7,800 million or more of SVA is accumulated during the performance period. The LTIC award will be adjusted based on Deere’s TSR for the performance period relative to to the companies in a subset of the S&P Industrial Sector: (i) a reduction up to 25% will be applied if the ranking is below the 50th percentile or (ii) an increase up to 25% will be applied if the ranking is above the 50th percentile. The amounts shown in the table represent potential LTIC awards based on the median salary of the NEOs’ respective salary grades as of September 30, 2018. The actual LTIC award payout will depend on Deere’s actual SVA performance, Deere’s relative TSR performance, and the median salary of the NEOs’ respective salary grades as of September 30, 2019.

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Table of Contents

Advisory Vote on Executive Compensation
Executive Compensation Tables

(3) Represents the potential payout range of PSUs granted in December 2017. The number of shares that vest is based solely on revenue growth performance relative to a subset of companies in the S&P Industrial Sector. 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 in December 2017. RSUs will vest three years after the grant date, at which time they will be settled in Deere common stock. Prior to settlement, RSUs earn dividend equivalents in cash at the same time as dividends are paid on Deere’s common stock.
(5) Represents the number of options granted in December 2017. These options vest in three approximately equal annual installments on the first, second, and third anniversaries of the grant date.
(6) The exercise price is the closing 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 2018 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 $39.05, which was calculated using the binomial lattice option pricing model. The grant date fair value of the PSUs based on the revenue growth metric was $145.11 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 in the 2018 Form 10-K.

OUTSTANDING EQUITY AWARDS AT FISCAL 2018 YEAR-END
The following table itemizes outstanding options, RSUs, and PSUs held by the NEOs:

Option Awards Stock Awards
Name Grant Date Number of
Securities
Underlying
Unexercised
Options
Exercisable
(1)
Number of
Securities
Underlying
Unexercised
Options

Unexercisable
(1)
Option
Exercise
Price
Intrinsic Value
of Unexercised
Options (2)
Option
Expiration
Date (3)
Number
of Shares
or Units
of Stock
That
Have Not
Vested (4)
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested (5)
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units, or Other
Rights That Have
Not Vested (6)
Equity Incentive
Plan Awards:
Market or Payout
Value Unearned
Shares, Units, or
Other Rights That
Have Not Vested (7)
Samuel R. Allen     12/8/10     114,253     -     $80.61     $5,985,715     12/8/20     -     $0     -     $0
12/14/11 135,897 - $74.24 $7,985,308 12/14/21 - $0 - $0
12/12/12 128,899 - $86.36 $6,011,849 12/12/22 - $0 - $0
12/11/13 123,633 - $87.46 $5,630,247 12/11/23 - $0 - $0
12/10/14 135,263 - $88.19 $6,061,811 12/10/24 - $0 - $0
12/9/15 116,151 57,209 $79.24 $9,319,834 12/9/25 26,375 $3,507,875 84,400 $11,225,200
12/14/16 40,715 79,037 $100.55 $3,885,952 12/14/26 19,888 $2,645,104 66,512 $8,846,096
12/13/17 - 81,738 $151.95 $0 12/13/27 15,004 $1,995,532 48,014 $6,385,862
794,811 217,984 $44,880,716 61,267 $8,148,511 198,926 $26,457,158
Rajesh Kalathur 12/17/08 11,133 - $39.67 $1,039,099 12/17/18 - $0 - $0
12/9/09 12,151 - $52.25 $981,193 12/9/19 - $0 - $0
12/8/10 7,379 - $80.61 $386,586 12/8/20 - $0 - $0
12/14/11 7,996 - $74.24 $469,845 12/14/21 - $0 - $0
12/12/12 24,083 - $86.36 $1,123,231 12/12/22 - $0 - $0
12/11/13 20,086 - $87.46 $914,716 12/11/23 - $0 - $0
12/10/14 27,800 - $88.19 $1,245,857 12/10/24 - $0 - $0
12/9/15 21,701 10,690 $79.24 $1,741,340 12/9/25 4,928 $655,424 15,768 $2,097,144
12/14/16 8,357 16,223 $100.55 $797,621 12/14/26 4,266 $567,378 13,652 $1,815,716
12/13/17 - 15,379 $151.95 $0 12/13/27 2,823 $375,459 9,034 $1,201,522
140,686 42,292 $8,699,488 12,017 $1,598,261 38,454 $5,114,382

58 DEERE & COMPANY 2019 PROXY STATEMENT


Table of Contents

Advisory Vote on Executive Compensation
Executive Compensation Tables

Option Awards Stock Awards
Name Grant Date Number of
Securities
Underlying
Unexercised
Options
Exercisable
(1)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable (1)
Option
Exercise
Price
Intrinsic Value
of Unexercised
Options (2)
Option
Expiration
Date (3)
Number
of Shares
or Units
of Stock
That
Have Not
Vested (4)
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested (5)
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units, or Other
Rights That Have
Not Vested (6)
Equity Incentive
Plan Awards:
Market or Payout
Value Unearned
Shares, Units, or
Other Rights That
Have Not Vested (7)
James M. Field     12/10/14     25,273     -     $88.19     $1,132,609     12/10/24     -     $0     -     $0
12/9/15 21,701 10,690 $79.24 $1,741,340 12/9/25 4,928 $655,424 15,768 $2,097,144
12/14/16 8,357 16,223 $100.55 $797,621 12/14/26 4,266 $567,378 13,652 $1,815,716
12/13/17 - 16,078 $151.95 $0 12/13/27 2,951 $392,483 9,444 $1,256,052
55,331 42,991 $3,671,570 12,145 $1,615,285 38,864 $5,168,912
Jean H. Gilles 12/11/13 22,899 - $87.46 $1,042,820 12/11/23 - $0 - $0
12/10/14 27,800 - $88.19 $1,245,857 12/10/24 - $0 - $0
12/9/15 21,307 10,495 $79.24 $1,709,676 12/9/25 4,838 $643,454 15,480 $2,058,840
12/14/16 8,357 16,223 $100.55 $797,621 12/14/26 4,082 $542,906 13,652 $1,815,716
12/13/17 - 15,379 $151.95 $0 12/13/27 2,823 $375,459 9,034 $1,201,522
80,363 42,097