<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [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-11(c) or 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):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
DEERE & COMPANY
JOHN DEERE ROAD
MOLINE, ILLINOIS 61265
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 26, 1997
The annual meeting of stockholders of Deere & Company will be held at the
principal office of the Company, on John Deere Road, near Moline, Rock Island
County, Illinois, on Wednesday, February 26, 1997 at 10:00 A.M. to:
1. Elect directors.
2. Transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on December 31, 1996 are enti-
tled to vote at the meeting.
To be sure that your shares are represented at the meeting, please vote, sign,
date and promptly mail the enclosed proxy card in the envelope provided for
this purpose.
For the Board of Directors,
LOGO
Frank S. Cottrell
Secretary
Moline, Illinois
January 10, 1997
LOGO
<PAGE>
PROXY STATEMENT
- -------------------------------------------------------------------------------
TO THE STOCKHOLDERS: The Board of Directors of Deere & Company solicits your
proxy, and asks that you vote, sign, date and promptly mail the enclosed proxy
card for use at the annual meeting of stockholders to be held February 26,
1997, and at any adjournment of such meeting. Whether you own few or many
shares, your proxy is important in helping to achieve good representation at
the meeting. If you wish, at any time before your proxy is voted, you may
revoke it by written notice to the Company, or by delivery of a later dated
proxy, or by voting in person at the meeting. The shares represented by all
properly executed proxies will be voted as specified by you. In the absence of
direction, properly executed proxies will be voted for the nominees to the
Board set forth below.
The holders of a majority of the Company's outstanding shares, present in
person or by proxy, are required for a quorum at the meeting. The Company had
255,921,723 shares of common stock outstanding on December 31, 1996. Each
share has one vote on each matter to be voted on at the meeting and one vote
for each directorship to be filled on the Board of Directors.
If any nominee is unable or declines to accept nomination or election for
any reason, the persons designated in your proxy may vote for a substitute.
A plurality of the votes cast at the meeting is required to elect directors.
Abstentions and broker non-votes are counted as present for purposes of
determining the presence or absence of a quorum for the transaction of
business. Abstentions and broker non-votes will have no effect on the outcome
of the election of directors.
It is the policy of the Company that shareholders be provided privacy in
voting. All proxy cards and ballots that identify votes of stockholders are
held confidential, except: (i) as may be necessary to meet applicable legal
requirements; (ii) to allow independent third-parties to solicit, receive,
tabulate, and certify the results of the vote; (iii) in cases where
shareholders write comments on their proxy cards; and (iv) in contested proxy
solicitations in which the opposing party does not also agree to comply with
this policy. The tabulator of the votes and at least one of the inspectors of
the election are independent of the Company, its officers and directors. The
tabulator, the Company's proxy solicitation agent and the inspectors of the
election, including those who are Company employees, are required to sign
confidentiality agreements which prohibit disclosure of votes to the Company.
Stockholders of record at the close of business on December 31, 1996 are
entitled to vote. This notice of meeting, proxy statement and proxy card are
being mailed to stockholders on or about January 10, 1997.
ELECTION OF DIRECTORS
- -------------------------------------------------------------------------------
Four directors are to be elected for terms expiring at the annual meeting in
2000. The persons named below were recommended by the Nominating Committee and
nominated by the Board of Directors. Their principal occupations during the
past five or more years, positions with the Company, directorships in other
companies, ages, and beneficial ownership of shares and of exercisable options
to purchase shares of the Company at December 31, 1996 appear in that order
after their names. As used below "restricted stock" refers to non-transferable
stock, issued pursuant to the John Deere Restricted Stock Plan, the John Deere
Equity Incentive Plan or the Nonemployee Director Stock Ownership Plan, which
is subject to risk of forfeiture if certain conditions are not met. No nominee
owned beneficially more than .1% of the shares outstanding on December 31,
1996.
1
<PAGE>
NOMINEES FOR TERMS EXPIRING AT ANNUAL MEETING IN 2000
Mr. Leonard A. Hadley Chairman and Chief Executive Officer of Maytag
Corporation (appliances) since 1992; prior thereto, President and Chief
Operating Officer. Director of Deere & Company since 1994; member of Audit
Review and Pension Plan Oversight Committees. Director of Maytag Corporation
and Norwest Bank Iowa, N.A. Age 62. Shares owned, 1,500 (includes 1,500 shares
of restricted stock).
Mr. Samuel C. Johnson Chairman of S. C. Johnson & Son, Inc. (home care and
specialty products). Director of Deere & Company since 1973; member of
Committee on Compensation and Nominating Committee. Director of Mobil
Corporation, H.J. Heinz Company and Johnson Worldwide Associates, Inc. Age 68.
Shares owned, 60,000 (includes 2,400 shares of restricted stock).
Mr. Arthur L. Kelly Managing Partner of KEL Enterprises L.P. (holding and
investment partnership) since 1983. Director of Deere & Company since 1993;
Chair of Pension Plan Oversight Committee and member of Audit Review
Committee. Director of Bayerische Motoren Werke (BMW) A.G., Nalco Chemical
Company, The Northern Trust Corporation, Snap-on Incorporated and Tejas Gas
Corporation. Age 59. Shares owned, 6,399 (includes 2,199 shares of restricted
stock).
Mr. William A. Schreyer Retired Chairman and Chief Executive Officer of
Merrill Lynch & Co., Inc. (securities and investment banking). Director of
Deere & Company since 1994; member of Committee on Compensation, Special
Subcommittee of Committee on Compensation and Nominating Committee. Director
of Callaway Golf Company, Schering-Plough Corporation, True North
Communications Inc. and Willis Corroon Group, plc. Age 68. Shares owned, 4,800
(includes 1,800 shares of restricted stock).
OTHER BUSINESS
- -------------------------------------------------------------------------------
The Board of Directors is not aware of any other matters that will come
before the meeting. However, if any other proper business should come before
the meeting, your proxy, if signed and returned, will give to the persons
designated in it discretionary authority to vote according to their best
judgment.
DIRECTORS CONTINUING IN OFFICE
- -------------------------------------------------------------------------------
The seven persons named below are now serving as directors of the Company
for terms expiring at the annual meetings in 1998 and 1999 as indicated. Their
principal occupations during the past five or more years, positions with the
Company, directorships in other companies, ages and beneficial ownership of
shares, including restricted shares, and of exercisable options to purchase
shares of the Company at December 31, 1996 appear in that order after their
names. As used below "restricted stock" refers to non-transferable stock
issued pursuant to the John Deere Restricted Stock Plan, the John Deere Equity
Incentive Plan or the Nonemployee Director Stock Ownership Plan, which is
subject to risk of forfeiture if certain conditions are not met. No director
continuing in office owned beneficially more than .1% of the shares
outstanding on December 31, 1996.
TERMS EXPIRING AT ANNUAL MEETING IN 1998
Mr. Hans W. Becherer Chairman and Chief Executive Officer of Deere & Company
since 1990; prior thereto, President. Director of Deere & Company since 1986;
Chair of Executive Committee. Director of Schering-Plough Corporation and
AlliedSignal Inc. Age 61. Shares owned, 213,187 (includes 120,253 shares of
restricted stock); under option, 56,255.
2
<PAGE>
Mr. Agustin Santamarina V. Of Counsel and Retired Senior Partner of the law
firm of Santamarina y Steta since 1991; prior thereto, Senior Partner.
Director of Deere & Company since 1991; Chair of Nominating Committee and
member of Audit Review and Executive Committees. Director of a wide variety of
corporations in Mexico and The Mexico Fund Inc. Age 70. Shares owned, 4,200
(includes 3,000 shares of restricted stock).
Mr. David H. Stowe, Jr. Retired President and Chief Operating Officer of
Deere & Company since May, 1996; prior thereto, President and Chief Operating
Officer. Director of Deere & Company since 1982; member of Executive Commit-
tee. Age 60. Shares owned, 40,254 (includes 40,254 shares over which Mr. Stowe
shares the power over voting and disposition); under option, 36,099.
Mr. John R. Walter President and Chief Operating Officer of AT&T Corp.
(telecommunications) since November, 1996; prior thereto, Chairman and Chief
Executive Officer of R. R. Donnelley & Sons Company (print and digital infor-
mation management, reproduction and distribution). Director of Deere & Company
since 1991; Chair of Committee on Compensation and member of Executive and
Nominating Committees. Director of Abbott Laboratories, AT&T Corp. and Dayton
Hudson Corporation. Age 49. Shares owned, 3,900 (includes 3,000 shares of re-
stricted stock).
TERMS EXPIRING AT ANNUAL MEETING IN 1999
Mr. John R. Block President of Food Distributors International (formerly the
National-American Wholesale Grocers' Association) since 1986; prior thereto,
United States Secretary of Agriculture. Director of Deere & Company since
1986; Chair of Audit Review Committee and member of Executive and Pension Plan
Oversight Committees. Director of Archer-Daniels-Midland Company and
Arcadian Partnership, L.P. Age 61. Shares owned, 4,200 (includes 3,600 shares
of restricted stock).
Prof. Regina E. Herzlinger Nancy R. McPherson Professor of Business Adminis-
tration at the Harvard Business School. Director of Deere & Company since
1993; member of Audit Review and Executive Committees. Director of Cardinal
Health, Inc., C. R. Bard, Inc., Manor Care, Inc. and Schering-Plough Corpora-
tion. Age 53. Shares owned, 3,900 (includes 3,600 shares of restricted stock).
Dr. Arnold R. Weber Chancellor of Northwestern University, Evanston, Illi-
nois since 1995; prior thereto, President. Director of Deere & Company since
1994; member of Committee on Compensation, Special Subcommittee of Committee
on Compensation and Pension Plan Oversight Committee. Director of Aon Corpora-
tion, Burlington Northern Santa Fe Corporation, Inland Steel Industries, Inc.,
Pepsico, Inc. and Tribune Company. Age 67. Shares owned, 3,300 (includes 2,700
shares of restricted stock).
At December 31, 1996, directors and executive officers as a group (20 per-
sons), had a beneficial interest in an aggregate of 1,330,963 shares (.52%) of
common stock of the Company. This total includes: 272,915 shares held with
sole power over voting and disposition; 136,071 shares held with shared power
over voting or disposition; 131,522 shares of restricted stock under the John
Deere Restricted Stock Plan; 279,420 shares of restricted stock under the John
Deere Equity Incentive Plan; 23,799 shares of restricted stock under the Non-
employee Director Stock Ownership Plan; and 487,236 shares represented by ex-
ercisable stock options.
3
<PAGE>
COMMITTEES
- -------------------------------------------------------------------------------
The Board of Directors of the Company, which met five times during the 1996
fiscal year, has delegated some of its authority to six committees of the
Board. These are the Executive Committee, the Committee on Compensation, the
Special Subcommittee of the Committee on Compensation, the Nominating
Committee, the Audit Review Committee and the Pension Plan Oversight
Committee. During the 1996 fiscal year, all of the directors attended 75% or
more of the meetings of the Board of Directors and Committees on which they
served.
The Committee on Compensation, which met four times during the 1996 fiscal
year, consists of John R. Walter (Chair), Samuel C. Johnson, William A.
Schreyer and Arnold R. Weber. The Committee has responsibility with respect to
compensation matters involving officers of the Company.
The Special Subcommittee of the Committee on Compensation, which was
established in August, 1996 and met once during the 1996 fiscal year, consists
of William A. Schreyer and Arnold R. Weber. The Subcommittee has
responsibility for reviewing and approving compensation plans, grants, and
awards involving officers of the Company. The Subcommittee also may consider
such other matters referred to it by the Committee on Compensation.
The Nominating Committee, which met three times during the 1996 fiscal year,
consists of Agustin Santamarina V. (Chair), Samuel C. Johnson, William A.
Schreyer and John R. Walter. The responsibilities of the Nominating Committee
are to recommend to the Board individuals for election to the Board, to ensure
that the Chair periodically reviews the Company's plans regarding succession
of senior management with the Committee and with all other outside directors,
and to make recommendations concerning the size, composition, committee
structure and fees for the Board and criteria relating to tenure and retention
of directors. The Committee will consider individuals recommended for
nomination by stockholders in accordance with the procedures described under
"Stockholder Proposals And Nominations."
The Pension Plan Oversight Committee, which met three times during the 1996
fiscal year, consists of Arthur L. Kelly (Chair), John R. Block, Leonard A.
Hadley and Arnold R. Weber. The Committee reviews the activities of the
Company with respect to asset allocation, funding policies, and the
performance of trustees, investment managers and actuaries, for the Company's
pension and retirement plans. The Committee also has responsibility for making
substantive amendments and modifications to the pension and retirement plans.
The Committee reports to the Board on its activities.
The Audit Review Committee, which met three times during the 1996 fiscal
year, consists of John R. Block (Chair), Leonard A. Hadley, Regina E.
Herzlinger, Arthur L. Kelly and Agustin Santamarina V. The Committee
recommends to the Board a firm of independent certified public accountants to
audit the annual financial statements, discusses with the auditors and
approves in advance the scope of the audit, reviews with the independent
auditors the financial statements and their audit report, consults with the
internal audit staff and reviews management's administration of the system of
internal accounting controls, and reviews the Company's procedures relating to
business ethics. The Committee reports to the Board on its activities and
findings.
In accordance with the recommendation of the Audit Review Committee, the
firm of Deloitte & Touche llp has been appointed by the Board of Directors as
independent certified public accountants to examine the financial statements
of the Company for the 1997 fiscal year. A representative of Deloitte & Touche
llp is expected to be present at the stockholders' meeting; this individual
will have an opportunity to make a statement and will be available to respond
to appropriate questions.
4
<PAGE>
COMPENSATION OF DIRECTORS
- -------------------------------------------------------------------------------
Directors who are not employees of the Company receive an annual retainer of
$28,000 for serving as directors, and an annual retainer of $3,000 for each
Board committee of which they are members, except the Audit Review Committee,
for which the retainer is $4,000 for members. An additional fee of $2,000 per
year is paid to the chair of each Board committee. The directors also receive
a meeting fee of $1,000 for each Board or committee meeting attended. At the
1993 annual meeting, stockholders approved the adoption of the Nonemployee
Director Stock Ownership Plan. Pursuant to such plan, upon election and each
re-election to the Board, non-employee directors are awarded 1,800 restricted
shares of common stock of the Company for each three-year term. A person who
becomes a non-employee director between annual meetings or who serves a
partial term will receive a prorated grant. The restricted shares may not be
sold, pledged, assigned, gifted, or otherwise alienated or hypothecated and
are subject to forfeiture until the expiration of the restriction period,
which ends upon the nonemployee directors' retirement from the Board,
permanent and total disability, death or a change in control of the Company.
While the restrictions are in effect, the nonemployee directors are entitled
to vote the shares and receive dividends.
The Company also has a pension benefit plan for outside directors who are
not employees or retirees of the Company. Each such outside director with at
least five years of service, who retires at age 65 or older, will receive a
quarterly retirement benefit equal to one-fourth of the annual retainer
payable to the director at the time of his retirement. Each outside director
with at least five years of service, who terminates service prior to age 65,
will receive a quarterly benefit, commencing at age 65, for a period equal to
such director's period of service. In the event of the director's death prior
to retirement or prior to the expiration of a period following retirement
equal to his years of service, the director's beneficiary will be paid a death
benefit.
In December 1996, the Board of Directors approved the following changes to
the compensation of non-employee directors. The present annual and committee
retainers and meeting fees were replaced by a single annual retainer of
$60,000. The pension benefit plan has been eliminated for outside directors
not retired from the Board as of December 31, 1996. The present value of
pension benefits accrued by current outside directors was deposited into each
director's deferred compensation account, which now includes an investment
alternative based on the return on Company stock.
5
<PAGE>
-------------------------
The report of the Committee on Compensation and the performance graph that
follow shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933 or under the Securities Exchange Act of 1934, except to
the extent that the Company specifically incorporates the information by
reference, and shall not otherwise be deemed filed under such Acts.
-------------------------
COMMITTEE ON COMPENSATION
REPORT ON EXECUTIVE COMPENSATION
- -------------------------------------------------------------------------------
COMPENSATION PHILOSOPHY
The Committee on Compensation of the Board (the "Committee") is committed to
providing a total compensation program that supports the Company's business
strategy and culture, and creates a commonality of interest with the Company's
shareholders. The Committee is responsible for the oversight of executive
compensation and reviews the Company's compensation program on an ongoing
basis. No member of the Committee is a former or current officer of the
Company or any of its subsidiaries.
The overall philosophy of the Committee regarding executive compensation can
be summarized as follows:
. Provide a target total reward opportunity that is sufficiently
competitive to attract and retain high caliber executives. In general,
this involves a target total pay structure that is at or moderately
above the median pay levels available at a comparable group of large,
diversified companies;
. Link a meaningful portion of the total compensation opportunity to
performance-based incentives consistent with the creation of shareholder
value and the Company's long-term strategic goals;
. Provide for meaningful risk as well as reward opportunity in order to
penalize substandard performance while encouraging superior performance
and recognizing the cyclical nature of the Company's core businesses;
and
. Structure the program to be positively regarded by the Company's
shareholders, employees, the financial community and the public in
general, as well as by the eligible executive management.
The Revenue Reconciliation Act of 1993 placed certain limits on the tax
deductibility of non-performance-based executive compensation. The Committee
intends that, to the extent practicable, executive compensation be deductible
for federal income tax purposes provided doing so would be consistent with the
other compensation objectives. One of the requirements for tax deductibility
is shareholder approval. For this reason, at the 1995 annual meeting
shareholders approved the John Deere Performance Bonus Plan (the "Bonus Plan")
and the John Deere Equity Incentive Plan (the "Equity Incentive Plan") and at
the 1996 annual meeting shareholders approved amendments to the 1991 John
Deere Stock Option Plan (the "Option Plan") and the John Deere Restricted
Stock Plan (the "Restricted Stock Plan"). Each of these plans were designed to
meet the compensation objectives and, in the case of the Bonus Plan, Equity
Incentive Plan and Option Plan, to comply with the requirements for tax
deductibility.
The specific practices surrounding each component of the Company's executive
compensation program are described in the following paragraphs.
6
<PAGE>
BASE SALARY
It is the Committee's policy to position the base salaries of the Company's
executives at approximately the median level of salaries provided to
comparable positions within a peer group of companies which share some
combination of the following characteristics with the Company: comparable
sales volumes or employment levels; similar products and services; a similar
commitment to manufacturing as a core activity; and a comparable global
presence. Currently, this peer group consists of 17 companies, three of which
are also included among the ten companies that comprise the S&P Diversified
Machinery Group Index used in the performance graph following this report. It
is the Committee's view that this larger peer group provides a more
appropriate benchmark for assessing competitive levels of compensation than
the limited number of companies within the S&P Diversified Machinery Group
Index.
The Committee annually reviews the base salary of each executive officer of
the Company, including Mr. Becherer, the Chief Executive Officer (CEO). In
determining salary adjustments for the Company's executives (including Mr.
Becherer and the other executive officers named in the Summary Compensation
Table), the Committee takes into consideration various factors, including
individual performance; the financial and operational performance of the
activities directed by the executive (including profitability under prevailing
business conditions, performance against budget, customer satisfaction, and
innovation); experience; time in position; future potential; responsibility;
and the executive's current salary in relation to the executives' salary range
and the median salary practices of the peer group. These factors are
considered subjectively in the aggregate and none of the factors is accorded a
specific weight. In selected cases, other factors may also be considered. Peer
group salary data for comparable-level positions are provided annually to the
Committee by an outside compensation consultant.
For 1996, the base salaries of Mr. Becherer and the other executive officers
named in the Summary Compensation Table were slightly below the peer group
median, but generally consistent with the base salary philosophy established
by the Committee. Mr. Becherer received a base salary of $817,086 for fiscal
1995 and $864,091 for fiscal 1996.
SHORT-TERM INCENTIVES
A substantial portion of the Company's executive compensation package is
contingent upon the Company attaining preestablished financial goals under the
Bonus Plan. Each year in which these goals are achieved, the compensation of
all salaried employees (including Mr. Becherer and the other executive
officers named in the Summary Compensation Table) is supplemented by fiscal
year-end payments under the Bonus Plan. The amount of these payments (if any)
depends upon the Company's pre-bonus and pre-extraordinary item return on
average assets for the year and the position and salary of the employee. In
addition, the Committee can decrease or eliminate awards to designated senior
officers of the Company, and can increase or decrease awards to other salaried
employees
The maximum annual performance bonus for executive officers under the Bonus
Plan is available when the return on assets is 11.5% or more and no bonus
payment is available when the return on assets is below 5%. For 1996, the
Company's return on average assets calculated in accordance with the Bonus
Plan was 12%. Accordingly, for 1996, Mr. Becherer received a maximum annual
performance bonus payment of $1,255,001, or approximately 150% of his base
salary. When added to base salary, target awards under the Bonus Plan for the
Company's executives are structured to provide median annual cash compensation
relative to the peer group companies.
In addition to the above performance Bonus Plan payments, the CEO is
authorized to grant discretionary bonuses to selected employees in recognition
of outstanding achievement. Such bonuses may not exceed 20% of annual base
salary except in highly unusual circumstances. No such discretionary bonuses
were granted in fiscal 1995 or 1996.
7
<PAGE>
LONG-TERM INCENTIVES
During 1996, the Company's long-term incentives for executive officers were
comprised of grants of market-priced stock options under the Option Plan.
During 1995, the Company's long-term incentives for executive officers were
comprised of grants of market-priced and premium-priced stock options under
the Option Plan and grants of equity incentive shares under the Equity
Incentive Plan. Grants under these plans were intended to promote the creation
of sustained shareholder value, encourage ownership of company stock, foster
teamwork and retain high caliber executives.
Senior officers participate in the Equity Incentive Plan, approved by
shareholders in 1995, under which participants receive periodic grants of
Company stock subject to vesting and forfeiture provisions based on Company
achievement of long-term performance goals established by the Committee. It is
the Committee's view that the addition of performance features to the senior
officer stock grants in the Equity Incentive Plan will serve to promote
greater focus on actions that enhance shareholder value.
Under each plan, grants to executives are based on criteria established by
the Committee, including responsibility level, base salary, current market
practice and the market price of the Company's stock at the time of grant.
Grant guidelines for market-priced options and equity incentive shares are
established for all participants (including Mr. Becherer) with the objective
of providing a target total compensation opportunity, including base salary
and the target annual profit sharing bonus, equal to the median of the peer
group. Depending on stock price performance and Company performance, actual
total compensation for any given year could be at, above or below the median
of the peer group. The number of options or restricted shares previously
granted to or held by an executive is not a factor in determining individual
grants.
Market-priced stock options granted under the Option Plan are not
exercisable until one year after grant and have a ten-year term. During fiscal
1996, Mr. Becherer was awarded options for 56,255 shares of Company common
stock.
The Committee made the initial award of equity incentive shares to executive
officers early in fiscal 1995. Vesting of these shares was conditioned on the
Company satisfying performance goals based on revenue growth and return on
assets over the four fiscal years commencing November 1, 1994 and any
additional performance periods established by the Committee. If any incentive
shares are not vested within eight years of the grant, such shares are
automatically forfeited. The incentive shares are also subject to possible
forfeiture in the event of termination or resignation from the Company prior
to vesting. No additional equity incentive shares were awarded to the named
executive officers in fiscal 1996. The Committee made a second award of equity
incentive shares to the current senior executive officer group early in fiscal
1997. Vesting of these shares was also conditioned on satisfying performance
goals based on revenue growth and return on assets, over a four-year
performance period commencing November 1, 1996.
Beginning in fiscal 1995, to further sharpen the focus on strengthening the
commonality of interest between senior management and the Company
shareholders, the "core" compensation program for the Company's senior
officers was supplemented with grants by the Committee of premium-priced stock
options with exercise prices in excess of the market price of the Company's
stock on the date of grant. Moreover, exercise of these options prior to an
extended future date depends on the Company's achievement of a sustained
median total shareholder return exceeding the median of companies traded on
the New York Stock Exchange. Grants of premium-priced options are structured
to provide a target total compensation opportunity for participants
approximately equal to the 60th to 70th percentile of the peer group when
added to the median peer group level of the other components of compensation.
It is the Committee's view that this above-market positioning is justified by
the nature of the premium-priced grants under which no value is generated
unless the stock appreciates meaningfully above its price on the date of
grant.
8
<PAGE>
The premium priced options granted in fiscal 1995 do not vest for four or
more years after the date of grant depending on the Company's achievement of a
sustained total shareholder return exceeding the median of that of companies
on the New York Stock Exchange. All premium priced options vest nine years and
six months after the date of grant. During fiscal 1995, Mr. Becherer was
awarded options for 420,000 shares with each one-third of such options having
an exercise price of 25%, 37.5% and 50%, respectively, above the prior 90 day
average price for the Company's shares. No additional premium priced options
were awarded to the named executive officers in fiscal 1996. The Committee
does not intend to make any additional premium priced option awards to the
current senior executive officers prior to December 1997, although grants may
be made sooner to newly elected senior executive officers.
Finally, during fiscal 1995, the Committee introduced stock ownership
guidelines for members of the Company's senior management team to encourage
the retention of stock acquired through the Company's various equity incentive
plans. These guidelines are based on a multiple of each officer's base salary.
CEO COMPENSATION
Mr. Becherer has been Chairman and CEO of the Company since May 1990. Mr.
Becherer's base salary, annual performance bonus and option and equity
incentive stock grants have been targeted to provide total compensation,
assuming achievement of targeted levels of Company performance, approximately
equal to the median CEO compensation of the peer group companies. In fiscal
1996, Mr. Becherer's compensation exceeded this level due to the continued
record performance of the Company. As explained above, the fiscal 1996 profit
sharing payments were based exclusively on return on assets and payout levels
established by the Committee at the beginning of the year, as determined by
actual 1996 results. It is the Committee's view that this relationship between
pay and performance is appropriate and serves shareholders' interests.
COMMITTEE ON COMPENSATION
John R. Walter (Chair)
Samuel C. Johnson
Arthur L. Kelly
William A. Schreyer
Dr. Arnold R. Weber
9
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG DEERE & COMPANY, THE S&P 500 INDEX
AND THE S&P DIVERSIFIED MACHINERY GROUP INDEX
- -------------------------------------------------------------------------------
The following performance graph compares cumulative total return for Company
stockholders over the past five fiscal years against the cumulative total re-
turn of the Standard & Poor's 500 Stock Index, and against the Standard &
Poor's Diversified Machinery Group Index. The graph assumes $100 is invested
in Company stock and each of the other two indices at the closing market quo-
tation on October 31, 1991 and that dividends are reinvested. The stock price
performance shown on the graph is not necessarily indicative of future price
performance.
LOGO
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Deere & Co. 100 73 148 141 181 260
- ---------------------------------------------------------------------------------------
S&P 500 100 110 126 131 166 206
- ---------------------------------------------------------------------------------------
S&P Mach. 100 95 148 154 163 207
</TABLE>
LOGO
10
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
- -------------------------------------------------------------------------------
The following table shows the remuneration from the Company and its
subsidiaries during the past three fiscal years to the Company's Chief
Executive Officer (the "CEO") and each of the five most highly compensated
executive officers of the Company other than the CEO:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
------------------- -----------------------------
RESTRICTED SECURITIES
NAME AND STOCK UNDERLYING ALL OTHER
PRINCIPAL FISCAL SALARY(1) BONUS(2) AWARDS(3) OPTIONS/SARS(4) COMPENSATION(5)
POSITION YEAR ($) ($) ($) (#) ($)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Hans W.
Becherer, 1996 $864,091 $1,255,001 $ 0 56,255 $14,628
Chairman &
Chief 1995 $817,086 $ 996,081 $1,132,840 505,632 $11,456
Executive
Officer 1994 $764,130 $ 874,500 $ 413,940 57,291 $ 3,914
Eugene L.
Schotanus, 1996 $406,130 $ 430,058 $ 0 22,994 $ 9,457
Executive
Vice 1995 $396,361 $ 399,027 $ 417,957 200,907 $ 8,395
President 1994 $384,975 $ 360,040 $ 151,489 24,024 $ 3,914
Bernard L.
Hardiek, 1996 $376,164 $ 399,880 $ 0 20,100 $ 9,457
President,
Worldwide 1995 $331,230 $ 334,191 $ 360,426 201,600 $ 8,395
Agricultural
Division 1994 $310,630 $ 264,594 $ 124,378 18,777 $ 3,914
David H.
Stowe, Jr., 1996 $348,234 $ 408,012 $ 0 36,099 $ 5,498
President &
Chief 1995 $565,500 $ 633,897 $ 634,365 294,945 $ 8,395
Operating
Officer (6) 1994 $534,771 $ 556,500 $ 237,016 35,646 $ 3,914
Michael S.
Plunkett, 1996 $370,045 $ 370,465 $ 0 21,130 $12,108
Senior Vice 1995 $363,130 $ 345,730 $ 385,826 175,647 $ 9,594
President 1994 $354,965 $ 313,908 $ 139,820 22,176 $ 3,914
Joseph W.
England, 1996 $363,373 $ 363,495 $ 0 20,688 $13,901
Senior Vice 1995 $354,656 $ 337,530 $ 377,825 174,954 $ 9,569
President 1994 $343,996 $ 305,865 $ 136,885 20,877 $ 3,914
- ----------------------------------------------------------------------------------------
</TABLE>
(1) Amounts shown include cash and non-cash compensation earned and received
by the executive officer as well as amounts earned but deferred at the
election of the officer.
(2) Each year in which earnings goals are reached, the compensation of
salaried employees is supplemented by fiscal year-end cash bonus payments. The
amount of the bonus (if any) depends upon the pre-bonus and pre-extraordinary
item return on average assets for the year, the position and salary of the
employee and any other performance goals established by the employee's
division.
(3) No restricted stock awards were made to the named executive officers
during fiscal 1996. The 1995 grant reported in the table represents the
initial grant under the John Deere Equity Incentive Plan approved by
shareholders at the 1995 annual meeting. The vesting of such shares is
conditioned on satisfying performance goals based on growth of the Company's
revenues and return on the Company's assets over the four fiscal years
commencing November 1, 1994 and any additional performance periods established
by the Committee. The amounts for 1994 represent grants under the John Deere
Restricted Stock Plan which do not vest until four years after the date of the
grant. The amounts in the table represent the closing market value of the
shares granted, without giving effect to the diminution in value attributable
to the restrictions and performance conditions on such stock.
11
<PAGE>
Dividends are paid on the restricted shares at the same time and rate as
dividends paid to shareholders of unrestricted shares. At October 31, 1996, the
total number and market value (based on the closing market price on October 31,
1996) of shares of restricted stock, including the Equity Incentive shares
reported above, held by each of the named executive officers were as follows:
Mr. Becherer (90,738; $3,799,654); Mr. Schotanus (33,366; $1,397,201); Mr.
Hardiek (27,930; $1,169,569); Mr. Stowe (0; $0); Mr. Plunkett (30,546;
$1,279,114); and Mr. England (29,910, $1,252,481).
(4) The amounts for 1996 and 1994 represent market-priced options granted in
December, 1995 and December, 1993, respectively. The amounts for 1995 represent
the total of market-priced options and premium-priced options granted in
December, 1994. Additional details on the fiscal 1996 grant are included in the
"Option/SAR Grants In Last Fiscal Year" table that follows.
(5) Amounts shown for 1996 consist of: (i) vested Company contributions to the
Company 401(k) Savings and Investment Plan during the fiscal year with respect
to each named executive officer as follows; Mr. Becherer $9,457, Mr. Schotanus
$9,457, Mr. Hardiek $9,457, Mr. Stowe $5,498, Mr. Plunkett $9,457, and Mr.
England $9,457; and (ii) above-market earnings on deferred compensation for Mr.
Becherer $5,171, Mr. Plunkett $2,651, and Mr. England $4,444. The contribution
to the Company Savings and Investment Plan for all employees during the past
fiscal year was $31,404,720.
(6) Mr. Stowe retired as President & Chief Operating Officer of the Company in
May, 1996.
The following table shows information concerning the individual grants of
stock options made during fiscal 1996 to each of the named executive officers
of the Company and the potential realizable values of the grants assuming
annually compounded stock price appreciation rates of five and ten percent per
annum respectively, over the option term. The five and ten percent rates of
appreciation are set by the rules of the Securities and Exchange Commission and
are not intended to forecast possible future appreciation, if any, of the
Company's stock price.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL
RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (3)
- ----------------------------------------------------------------------- ---------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION 5% 10%
NAME GRANTED(1)(#) FISCAL YEAR ($/SH) DATE(2) ($) ($)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Hans W. Becherer........ 56,255 3.35% $34.13 12/13/05 $1,207,467 $3,059,959
Eugene L. Schotanus..... 22,994 1.37% $34.13 12/13/05 $ 493,547 $1,250,746
Bernard L. Hardiek...... 20,100 1.20% $34.13 12/13/05 $ 431,430 $1,093,328
David H. Stowe, Jr...... 36,099 2.15% $34.13 12/13/05 $ 774,835 $1,963,585
Michael S. Plunkett..... 21,130 1.26% $34.13 12/13/05 $ 453,538 $1,149,354
Joseph W. England....... 20,688 1.23% $34.13 12/13/05 $ 444,051 $1,125,312
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) The market-priced options are exercisable between one and ten years after
the date of grant. Subject to plan restrictions, the exercise price and tax
withholding obligations related to exercises of options granted in the period
may be paid by delivery of already owned shares or by offset of the underlying
shares. No stock appreciation rights (SARs) were granted during the fiscal
year.
12
<PAGE>
(2) The options expire if employment by the Company of the option holder
terminates during the term of the option for any reason other than for death,
disability, or retirement pursuant to disability or retirement plans of the
Company.
(3) The total potential realizable value for all shareholders as a group based
on 257,217,263 outstanding shares as of October 31, 1996 would be
$5,520,955,986 and $13,991,186,458 at the 5% and 10% assumed annual rate of
appreciation, respectively. Mr. Becherer's total potential realizable value is
0.02% of the potential realizable value of all shareholders at the assumed
annual rates of appreciation. The total potential realizable value of all the
named executives to that of all shareholders is 0.07%.
The following table shows information for the named executives concerning
exercises of options and SARs during fiscal 1996 and the number and value of
unexercised options (and tandem SARs) held at October 31, 1996:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-
OPTIONS/SARS AT MONEY OPTIONS/SARS AT
SHARES FISCAL YEAR-END(1)(#) FISCAL YEAR-END(2)($)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Hans W. Becherer........ 142,923 $2,073,194 0 476,255 $ 0 $4,906,595
Eugene L. Schotanus..... 63,210 $1,205,760 35,907 187,994 $748,840 $1,934,514
Bernard L. Hardiek...... 24,507 $ 263,827 36,600 185,100 $763,293 $1,912,100
David H. Stowe, Jr...... 142,446 $1,916,362 0 36,099 $ 0 $ 279,587
Michael S. Plunkett..... 33,147 $ 654,839 0 163,630 $ 0 $1,680,564
Joseph W. England....... 32,454 $ 641,148 0 163,188 $ 0 $1,677,141
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) Market-priced options and SARs awarded by the Company are not exercisable
until one year after grant and have a ten-year term. Premium-priced options
granted by the Company may not be exercised until four or more years after the
date of grant depending on the Company's total shareholder return from the
date of grant relative to that of the group composed of New York Stock
Exchange listed companies. All premium-priced options automatically vest and
are exercisable nine years and six months after the date of grant and expire
ten years after the date of grant.
(2) Represents the difference between the option exercise price and the
closing market price for the Company's stock on October 31, 1996. The in-the-
money options at October 31, 1996 pertain to the market-priced and premium-
priced option grants in December of 1994 with exercise prices of $21.02,
$28.39, $31.23, and $34.07 and the market-priced option grant in December of
1995 with an exercise price of $34.13. The closing market price for the
Company's stock at the end of the 1996 fiscal year was $41.875.
PENSION BENEFITS
Under the Company's pension program, employees in executive salary grades
("executives") are entitled to receive an annual pension determined by adding
the amount obtained by multiplying 1.5% times the employee's number of years
of non-executive service times average pensionable pay to the amount obtained
by multiplying 2.0% times the number of years served as an executive times
average pensionable pay, with a maximum annual pension of 66 2/3% of average
pensionable pay. Average pensionable pay for employees participating in the
executive program prior to 1997 is based on one of
13
<PAGE>
the following two options, as elected by the executive: (1) the executive's
compensation for the five highest years, not necessarily consecutive, during
the 10 years immediately prior to the date of retirement where compensation is
calculated by adding the executive's salary to the larger of (a) the sum of
short-term bonuses, or (b) any payments under the Company's long-term
incentive plan or awards under the restricted stock plan; or (2) the
executive's compensation over his entire career with the Company where
compensation is calculated by adding the executive's salary to any short-term
bonuses. Effective January 1, 1997, for new participants in the executive
program, average pensionable pay is based exclusively on the career average
earnings formula described above. All amounts used in calculating average
pensionable pay are determined before giving effect to any salary or bonus
deferral under any plan sponsored by the Company.
Salaried employees not entitled to the executive pension receive annual pen-
sion benefits determined by multiplying 1.5% times the employee's number of
years of service times average pensionable pay. Average pensionable pay for
employees hired prior to 1997 is based on one of the following two options, as
elected by the employee: (1) the employee's salary for the five highest years
during the 10 years immediately prior to the date of retirement; or (2) the
employee's compensation over his entire career with the Company where compen-
sation is calculated by adding the employee's salary to any bonus awarded un-
der the Company's performance bonus plan. In addition, for current employees
including executives, career average compensation generally will include the
average of compensation from the five anniversary years prior to 1997 plus all
future compensation until retirement with bonuses paid in 1992 through 1996
phased into the computation over five years. Effective January 1, 1997, aver-
age pensionable pay for new salaried employees not entitled to the executive
pension is based exclusively on career average salary and performance bonuses.
For new salaried employees and current employees who elected to participate in
the career average earning option, enhanced Company contributions to the em-
ployee's 401(k) retirement savings account will be made and, depending on the
employee's years of service as of January 1, 1997, the minimum age to retire-
ment with full benefits may be increased.
The estimated annual pensions payable upon retirement at normal retirement
age for each of the named executive officers of the Company is: Mr. Becherer,
$1,104,621; Mr. Schotanus, $475,836; Mr. Hardiek, $294,462; Mr. Stowe,
$464,230; Mr. Plunkett, $428,419; and Mr. England, $384,433. The estimated an-
nual pensions shown are on a straight-life annuity basis and have been com-
puted assuming (i) that the Company's pension plans are continued without fur-
ther amendment; (ii) that each of the named officers (except for Mr. Stowe who
retired during 1996) continues as an executive of the Company until retirement
at age 65; (iii) that salaries continue at 1996 levels; and (iv) that bonuses
are paid at target earnings goals. Pension benefits are not subject to deduc-
tions for social security benefits or other offset amounts.
CHANGE IN CONTROL ARRANGEMENTS
The Company's Bonus Plan provides that employees as of the date of a change
in control will be entitled to the greater of a bonus based on actual perfor-
mance results to such date or their target bonus. The Equity Incentive Plan
and Restricted Stock Plan provide that in the event of a change in control,
unless otherwise determined by the Board, the value of restricted shares will
be cashed out in an amount determined under the plans. The Supplemental Pen-
sion Benefit Plan provides that, in the event of a change in control, partici-
pants who cease being Company employees will be eligible for benefits under
such plan notwithstanding their age at termination of employment. In the event
of certain changes in control, amounts deferred under the Company's Deferred
Compensation Plan may become payable immediately or such plan may be modified
to reflect the impact of the change in control.
14
<PAGE>
STOCKHOLDER PROPOSALS AND NOMINATIONS
- --------------------------------------------------------------------------------
Proposals of stockholders submitted pursuant to Rule 14a-8 of the Securities
and Exchange Commission for the proxy statement for the annual meeting of
stockholders to be held February 25, 1998 must be received by the Company at
its principal executive offices not later than September 12, 1997. Such
proposals and recommendations for nomination as a director should be submitted
in writing to the Secretary of the Company, Deere & Company, John Deere Road,
Moline, Illinois 61265, who will submit them to the Board or the Nominating
Committee, as applicable, for its consideration. This notice of the annual
meeting date also serves as the notice by the Company under the advance notice
Bylaw described below.
Under the Company's Bylaws, a stockholder must give timely written notice to
the Secretary of the Company of a nomination or before bringing any business
before any annual or special meeting of stockholders. Notice must be received
by the Secretary not less than 90 days nor more than 120 days prior to the
stockholders' meeting. The notice shall set forth for each matter a brief
description of the business to be brought before the meeting, the reasons
therefore, the name, address, class and number of shares beneficially owned by,
and any material interest of the shareholder making the proposal. Notice of a
nomination shall set forth the name, address and the class and number of shares
owned by the shareholder making the nomination; the name, age, business and
residence addresses and principal occupation of the nominee and the number of
shares beneficially owned by, and such other information concerning, the
nominee as would be required to be disclosed in the solicitation of proxies for
election of directors under Regulation 14A under the Securities Exchange Act of
1934, as amended. The recommendation must also be accompanied by the consent of
the individual to be nominated, to be elected and to serve. The Company may
require any nominee to furnish such other information as may reasonably be
required to determine the eligibility of the nominee. Persons 70 or older are
not eligible for nomination.
COST OF SOLICITATION
- --------------------------------------------------------------------------------
The cost of soliciting proxies in the form enclosed is being borne by the
Company. In addition to solicitation by mail, arrangements have been made with
brokerage houses, nominees and other custodians and fiduciaries to send proxy
material to their principals and the Company will reimburse them for their
expenses in doing so. The Company has engaged Georgeson & Co., Inc. to solicit
proxies held by brokers and nominees at a cost of $9,000 plus out-of-pocket
expenses. Proxies also may be solicited personally or by telephone or telegraph
by directors, officers, and a few regular employees of the Company in addition
to their usual duties. They will not be specially compensated for these
services.
For the Board of Directors,
LOGO
Frank S. Cottrell
Secretary
Moline, Illinois
January 10, 1997
15
<PAGE>
LOGO
LOGO
Printed on
Recycled Paper
<PAGE>
[LOGO OF DEERE & COMPANY]
DEERE & COMPANY
PROXY -- ANNUAL MEETING / 26 FEBRUARY 1997
- --------------------------------------------------------------------------------
Solicited by the Board of Directors for use at the Annual Meeting of
Stockholders of Deere & Company on February 26, 1997.
The undersigned appoints each of Hans W. Becherer and Frank S. Cottrell attorney
and proxy, with full power of substitution, on behalf of the undersigned and
with all powers the undersigned would possess if personally present, to vote all
shares of Common Stock of Deere & Company that the undersigned would be entitled
to vote at the above Annual Meeting and any adjournment thereof. The shares
represented by this proxy will be voted as specified and in the discretion of
the proxies on all other matters. If not otherwise specified, shares will be
voted in accordance with the recommendations of the Directors.
Please mark, date and sign your name exactly as it appears on this proxy and
return this proxy in the enclosed envelope. When signing as attorney, executor,
administrator, trustee, guardian or officer of a corporation, please give your
full title as such. For joint accounts each joint owner should sign.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
<PAGE>
PLEASE MARK YOUR CHOICE LIKE THIS IN BLUE OR BLACK INK [X]
________________________________________________________________________________
The Directors Recommend a Vote FOR all Nominees.
________________________________________________________________________________
Election as Directors of Leonard A. Hadley, Samuel C. Johnson, Arthur L. Kelly
and William A Schreyer.
VOTE FOR ALL WITHHOLD VOTE FOR VOTE FOR ALL EXCEPT WITHHOLD VOTE
NOMINEES ALL NOMINEES FROM THE FOLLOWING NOMINEE(S):
[_] [_]
_________________________________
________________________________________________________________________________
Date_________________________
_____________________________
Signature
_____________________________
Signature
________________________________________________________________________________
