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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
(Rule 14A-101)
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 under Rule 14a-12.
DEERE & COMPANY
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(Name of Registrant as Specified in Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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DEERE & COMPANY
One John Deere Place
Moline, Illinois 61265
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
February 23, 2000
The annual meeting of stockholders of Deere & Company will be held at the
principal office of the Company, at One John Deere Place, near Moline, Rock
Island County, Illinois, on Wednesday, February 23, 2000, at 10 a.m.
Directions to the meeting location appear on the back cover of the Proxy
Statement. The annual meeting is being held to:
1. Elect directors.
2. Consider and vote upon the John Deere Omnibus Equity and Incentive Plan.
3. Re-approve the performance goals under the John Deere Performance Bonus
Plan.
4. Re-approve the performance goals under the John Deere Equity Incentive
Plan.
5. Transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on December 31, 1999, are
entitled to vote at the meeting.
To be sure that your shares are represented at the meeting, please either
complete and promptly mail the enclosed proxy card in the envelope provided
for this purpose or vote through the telephone or internet voting procedures
described on the proxy card. If your shares are registered in the name of a
bank or brokerage firm, telephone or internet voting will be available to you
only if offered by your bank or broker and such procedures are described on
the voting form sent to you.
For the Board of Directors,
Moline, Illinois /s/ Michael A. Harring
January 19, 2000 --------------------------------
Michael A. Harring
Secretary
YOUR VOTE IS IMPORTANT
STOCKHOLDERS ARE URGED TO VOTE BY USING THE CONVENIENCE OF TELEPHONE OR
INTERNET VOTING, IF AVAIlABLE, OR BY SIGNING, DATING AND RETURNING THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED
IF MAILED IN THE UNITED STATES.
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PROXY STATEMENT
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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
23, 2000, and at any adjournment of such meeting. Most stockholders have a
choice of voting by using a toll-free telephone number, over the internet or
by completing a proxy card and mailing it in the postage-paid envelope
provided. Please refer to your proxy card or the information forwarded by your
bank, broker or other holder of record to see which options are available to
you. The telephone and internet voting facilities for shareowners of record
will close at 12:01 a.m. eastern standard time on February 23, 2000. If you
vote over the internet, you may incur costs such as telephone and internet
access charges for which you will be responsible. The telephone and internet
voting procedures are designed to authenticate stockholders by use of a
control number and to allow you to confirm that your instructions have been
properly recorded. If your shares are held through the Company's Savings and
Investment Plan or Tax Deferred Savings Plan For Hourly and Incentive Paid
Employees, your proxy instruction card must be received by February 18, 2000,
or the shares represented by the card will not be voted. 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
(including a telephone or internet vote), 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, for the John Deere
Omnibus Equity and Incentive Plan, for the performance goals under the John
Deere Performance Bonus Plan and for the performance goals under the John
Deere Equity Incentive Plan.
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. 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. The Company
had 233,936,562 shares of common stock outstanding on December 31, 1999. 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 for election as a director 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. The affirmative vote of a majority of the shares of stock present
or represented by proxy and entitled to vote is required for the approval of
each compensation plan proposal. Abstentions will have no effect on the
outcome of the election of directors, and will have the same effect as a vote
against the three compensation plan proposals. Under the current rules and the
New York Stock Exchange, brokers who hold shares in "street" name and who do
not receive instructions from the beneficial owner of those shares will be
able to vote in the election of directors, but will not be able to vote on the
compensation plan proposals. Broker non-votes will have no effect on the
outcome of the election of directors or the compensation plan proposals.
The Company's policy is to provide stockholders 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
stockholders 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
voting are independent
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of the Company, its officers and directors. The tabulator, the Company's proxy
solicitation agent, and the inspectors of voting, including those who are
Company employees, are required to comply with the Company's confidentiality
guidelines which prohibit disclosure of votes to the Company.
Stockholders of record at the close of business on December 31, 1999, are
entitled to vote. This notice of meeting, proxy statement, and proxy card are
being mailed to stockholders on or about January 19, 2000.
ELECTION OF DIRECTORS
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Four directors are to be elected for terms expiring at the annual meeting
in 2003. The persons named below were recommended by the Corporate Governance
Committee and nominated by the Board of Directors. The nominees' principal
occupations during the past five or more years, positions with the Company,
directorships in other companies, ages, and beneficial ownership of shares and
share units of the Company at December 31, 1999, appear in that order after
their names. As used below "restricted stock" refers to non-transferable
stock, issued pursuant to the Nonemployee Director Stock Ownership Plan, which
is subject to risk of forfeiture if certain conditions are not met. "Share
units" represent director compensation and earnings thereon deferred pursuant
to the Nonemployee Director Deferred Compensation Plan and valued as if
invested in shares of the Company. No nominee owned beneficially more than .1%
of the shares outstanding on December 31, 1999.
Mrs. Crandall C. Bowles, a director of the Company from 1990-1994, was re-
appointed to the Board during 1999. Mr. Thomas H. Patrick, Executive Vice
President of Merrill Lynch & Co., Inc. is nominated for election as a director
for the first time. The terms of Mr. Samuel C. Johnson and Mr. William A.
Schreyer, directors of the Company since 1973 and 1994 respectively, expire at
the annual meeting and they are retiring from the Board.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL THE RECOMMENDED NOMINEES
FOR ELECTION AS A DIRECTOR.
NOMINEES FOR TERMS EXPIRING AT ANNUAL MEETING IN 2003
Mrs. Crandall C. Bowles Chairman, President and Chief Executive Officer of
Springs Industries, Inc. (textiles) since April 1998; President and Chief
Executive Officer January 1998 to April 1998; President and Chief Operating
Officer 1997-1998; prior thereto, Executive Vice President. Director of Deere
& Company from 1990-1994 and since 1999. Director of Springs Industries, Inc.
Age 52. Shares owned, 1,332 (includes 332 shares of restricted stock).
Mr. Leonard A. Hadley Retired Chairman and Chief Executive Officer of
Maytag Corporation (appliances) since August 1999; prior thereto Chairman and
Chief Executive Officer of Maytag Corporation. Director of Deere & Company
since 1994; Chair of Audit Review Committee and member of Executive and
Pension Plan Oversight Committees. Director of Snap-on Incorporated. Age 65.
Shares owned, 3,494 (includes 3,494 shares of restricted stock). Share units
owned 9,460.
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 and
Executive Committees. Director of Bayerische Motoren Werke (BMW) A.G., The
Northern Trust Corporation, Snap-on Incorporated and Thyssen-Krupp Industries
A.G. Age 62. Shares owned, 10,283 (includes 4,193 shares of restricted stock).
Share units owned 2,421.
Mr. Thomas H. Patrick Executive Vice President of Merrill Lynch & Co., Inc.
(financial services) since 1989; and Chairman of the Special Advisory Services
Group and Member of the Office of the Chairman of Merrill Lynch & Co., Inc.
since 1993. Director of Baldwin & Lyons, Inc. and Comdisco, Inc. Age 56.
Shares owned 10,000.
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COMPENSATION PROPOSALS
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Under the Internal Revenue Code (the "Code"), publicly-held corporations
such as the Company may not deduct compensation paid to certain executive
officers to the extent that such compensation exceeds $1 million in any year
for each such officer. The regulations provide exceptions for performance-
based compensation which meets specific requirements. The requirements include
seeking stockholder approval of the material terms of performance goals for
such compensation and seeking stockholder re-approval every five years. At the
1995 annual meeting, stockholders approved the John Deere Performance Bonus
Plan and the John Deere Equity Incentive Plan. The Board has adopted the John
Deere Omnibus Equity and Incentive Plan (the "Omnibus Plan"). We are seeking
re-approval of the performance goals for the Performance Bonus Plan and the
Equity Incentive Plan and approval of the Omnibus Plan, in order that
compensation paid under these plans may qualify for a tax deduction by the
Company. Subject to stockholder approval of the Omnibus Plan, the final grants
under the 1991 John Deere Stock Option Plan were made in December 1999 and no
new target awards will be made under the John Deere Restricted Stock Plan or
the Equity Incentive Plan. The Committee may award bonus shares under the
Restricted Stock Plan and the Equity Incentive Plan with respect to
outstanding target grants if Company performance over the performance periods
exceeds target goals.
APPROVAL OF THE JOHN DEERE OMNIBUS EQUITY AND INCENTIVE PLAN
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Summary of the Proposal
The Board of Directors of the Company has approved the John Deere Omnibus
Equity and Incentive Plan in the form attached hereto as an exhibit (for
purposes of this Section of the proxy statement, the "Plan"), subject to
approval of the Plan by the stockholders of the Company. The description which
follows is qualified in its entirety by reference to the Plan as set forth in
such exhibit. Subject to stockholder approval, the Plan is intended to succeed
the 1991 John Deere Stock Option Plan, the John Deere Equity Incentive Plan,
and the John Deere Restricted Stock Plan. In general, the Plan authorizes the
Company to award, to select salaried employees, stock options, stock
appreciation rights, shares of the Company's common stock or an amount based
on the value thereof and other awards. Certain awards will be subject to risks
of forfeiture unless performance goals are achieved or restrictions are
removed. The number of shares of common stock reserved for all awards under
the Plan is 9,500,000 plus approximately 4,900,000 unused shares authorized
for the prior plans. The maximum number of shares of common stock for which
performance, restricted, and awards other than options and stock appreciation
rights may be awarded under the Plan is 1,000,000.
Stockholder approval of the Plan requires the affirmative vote of a
majority of the shares present or represented and entitled to vote at the
meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE JOHN DEERE OMNIBUS EQUITY
AND INCENTIVE PLAN.
Description of the Plan
Purpose. The Board believes that, like the prior stock option and stock
plans, the Plan will successfully advance the Company's long-term financial
success by enabling it to attract and retain outstanding talent and motivate
superior performance by encouraging and providing a means for participating
employees to obtain an ownership interest in the Company.
Administration. The Plan will be administered by the Committee on
Compensation of the Board or a subcommittee thereof (the "Committee") which
shall consist of two or more members of the Board. The Company presently
intends for each of these directors to be a "nonemployee director"
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within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934
(the "Act") or any similar rule that may subsequently be in effect and an
"outside director" within the meaning of Code Section 162(m) and the
regulations promulgated thereunder. The Committee is responsible for
interpreting and administering the Plan, including making all determinations
necessary or advisable for such administration. Except for its authority to
amend, suspend or terminate the Plan and as prohibited by law, the Committee
is authorized to delegate any of its authority under the Plan to such persons,
such as officers of the Company, as it thinks is appropriate.
Eligibility and Participation. The Committee is authorized from time to
time to grant awards under the Plan to such salaried employees (including
executive officers) of the Company and its subsidiaries as the Committee, in
its discretion, selects. During fiscal 1999, approximately 2,068 employees
received grants under the 1991 John Deere Stock Option Plan covering
approximately 4,630,350 shares, approximately 83 employees received awards
under the John Deere Equity Incentive Plan covering approximately 398,008
shares, and approximately 20 employees received awards under the John Deere
Restricted Stock Plan covering approximately 300,506 shares. In December 1999
approximately 3,350 employees were granted options under the 1991 John Deere
Stock Option Plan covering approximately 5,200,000 shares. These awards are
not necessarily indicative of the number of participants or the number of
awards which might be made under the proposed Plan. The Company cannot at this
time identify the persons to whom awards will be granted, or would have been
granted if the Plan had been in effect during 1999; nor can the Company state
the form or value of any such awards.
Share Limits. The aggregate number of shares of the Company's common stock
issuable under all awards under the Plan is approximately 14,400,000. This
includes approximately 4,900,000 shares that were authorized, but not issued
under the prior plans. Shares awarded under the Plan will be made available
from authorized but unissued common stock or from common stock held in the
treasury. The maximum number of shares of common stock issuable under
performance share, performance unit, restricted stock, restricted stock
equivalent, and other awards under the Plan is 1,000,000. The balance of the
shares available under the Plan will be available for awards of stock options
and stock appreciation rights. The maximum number of shares of common stock
that an executive officer may receive upon exercise of all stock options and
stock appreciation rights awarded during any fiscal year is 0.5% of the number
of shares outstanding at the beginning of such fiscal year. The maximum number
of shares of common stock that an executive officer may receive in any fiscal
year pursuant to performance awards, restricted stock awards, restricted stock
equivalent awards, and other awards is 300,000.
Options and Appreciation Rights. The Plan authorizes the Committee to grant
to employees options to purchase the Company's common stock which may be in
the form of statutory stock options, including "incentive stock options"
("ISOs") or other types of tax-qualified options which may subsequently be
authorized under the federal tax laws or in the form of non-statutory options.
The exercise price of options granted under the Plan (subject to amendment as
discussed herein under the caption "Amendment and Adjustment") may not be less
than the fair market value of such stock at the time the option is granted and
once established may not be modified. Fair market value on any given date for
this and other purposes of the Plan will be the mean between the highest and
the lowest sale prices reported on the Composite Tape of the New York Stock
Exchange on such date or the last previous date reported (or, if not so
reported, on any domestic stock exchange on which the Company's common stock
is then listed). Commissions and other expenses connected with the exercise of
options and stock appreciation rights will be payable by the optionee as part
of the exercise price. Commissions and other expenses connected with the sale
of any related stock also will be payable by the optionee.
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The Plan permits optionees, with certain exceptions, to pay the exercise
price of options in cash, common stock of the Company (valued at its fair
market value on the date of exercise and including stock received upon
exercise of options or stock appreciation rights under any Company option
plan) or a combination thereof. Accordingly, any optionee who owns any Company
common stock may generally, by using stock in payment of the exercise price of
an option, receive, in one transaction or a series of essentially simultaneous
transactions, without any cash payment of the purchase price, (i) Company
common stock equivalent in value to the excess of the fair market value of the
shares subject to exercised option rights over the exercise price of the
option, plus (ii) a number of shares equal to that used to pay the exercise
price.
The Plan also authorizes the Committee to grant appreciation rights. An
appreciation right entitles the grantee to receive upon exercise the excess of
(a) the fair market value of a specified number of shares of the Company's
common stock at the time of exercise over (b) a price specified by the
Committee which may not be less than the fair market value of the common stock
at the time the appreciation right was granted (subject to amendment as
discussed herein under the caption "Amendment and Adjustment"). The Company
will pay such amount to the holder in the form of the Company's common stock
(valued at its fair market value on the date of exercise), cash or a
combination thereof, as determined by the Committee.
Appreciation rights may be either unrelated to any option or an alternative
to a previously or contemporaneously granted option. Appreciation rights
granted as an alternative to a previously or contemporaneously granted option
will entitle the optionee, in lieu of exercising the option, to receive the
excess of the fair market value of a share of the Company's common stock on
the date of exercise over the option price multiplied by the number of shares
as to which such optionee is exercising the appreciation right. If an
appreciation right is an alternative to an option, such option shall be deemed
canceled to the extent that the appreciation right is exercised and the
alternative appreciation right shall be deemed canceled to the extent that
such option is exercised.
Options and appreciation rights will become exercisable six months or
longer after the date of grant and the term shall not extend later than ten
years after the date of grant. Unless the Committee establishes otherwise at
the time of the award, in the event of termination of employment because of
death, stock options and stock appreciation rights may be exercised by the
participant's beneficiary within twelve months after death without regard to
any holding period. Unless the Committee establishes otherwise at the time of
the award, in the event of termination of employment with the consent of the
Committee or because of disability or retirement, options and stock
appreciation rights generally may be exercised by the participant within five
years after the termination of employment upon the same terms as if the holder
remained an employee of the Company. In the event of any other kind of
termination, a participant's options and stock appreciation rights immediately
expire.
Performance Awards. The Plan authorizes the Committee to grant performance
awards to employees in the form of either grants of performance shares (each
performance share representing one share of the Company's common stock) or
performance units representing an amount established by the Committee at the
time of the award (which amount can be but does not have to be equal to the
fair market value of one share of the Company's common stock). Performance
awards are earned over a performance period (which shall not be less than one
year) determined by the Committee at the time of the award. There may be more
than one performance award in existence at any one time, and the performance
periods may differ or overlap.
At the time a performance award is made, the Committee will establish
minimum, target, and maximum performance goals measuring the Company's
performance over the performance period. The portion of the performance award
earned by the participant will be determined by the Committee, based on the
degree to which the performance goals are achieved. No performance awards will
be earned by the participant unless the minimum performance goals are met.
When earned, performance
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awards will be paid in a lump sum or installments in cash, common stock or a
combination thereof as the Committee may determine.
The Committee may establish performance goals for each performance period
from among any of the following factors, or any combination of the following,
as the Committee deems appropriate: (a) total stockholder return; (b) growth
in revenues, sales, settlements, market share, customer conversion, net
income, stock price and/or earnings per share of common stock; (c) return on
assets, net assets, and/or capital; (d) return on stockholders' equity; (e)
economic value added; (f) improvements in costs and/or expenses; or (g) any
similar performance measure established by the Committee. Such factors may be
measured, as applicable, either before or after income taxes, and on a
corporate wide, division, subsidiary or individual basis, and including or
excluding interest, depreciation, amortization, goodwill, extraordinary items,
other material non-recurring gains or losses, discontinued or added
operations, the cumulative effect of changes in accounting policies and the
effects of any tax law changes. The Plan also authorizes the Committee to
reduce grants or adjust performance goals in the event of certain acquisitions
or dispositions of assets or securities by the Company, subject to the
restrictions of Section 162(m) of the Code.
If a participant ceases to be an employee of the Company or its
subsidiaries during the performance period due to death, disability,
retirement or with the consent of the Committee, each performance award will
continue to be subject to the performance goals for the performance period or
the Committee may authorize payment of all or a portion of the amount the
participant would have been paid if such participant had continued as an
employee to the end of the performance period provided such amount is based on
the Company's progress toward achieving the performance goals and is
discounted to reflect the early payment. In all other cases, all unearned
performance awards will be forfeited.
Restricted Stock or Restricted Stock Equivalents. The Plan authorizes the
Committee to grant restricted common stock of the Company or restricted stock
equivalents to employees with such restriction periods and price goals as the
Committee may designate at the time of the award. Restriction periods shall be
at least three years for time-based restrictions and at least one year for
performance-based restrictions. A maximum of five percent of the aggregate
shares authorized for the Plan may be restricted awards with no minimum
vesting periods. In lieu of restricted stock the Committee may grant
restricted stock equivalents. Each restricted stock equivalent would represent
the right to receive an amount determined by the Committee at the time of the
award, which value may be equal to the full monetary value of one share of
common stock. Any restricted award to an executive officer intended to qualify
as performance based compensation must include a stock price goal during the
restriction period.
If a holder of restricted stock or restricted stock equivalents ceases to
be employed by the Company or any subsidiary due to death, disability or with
the consent of the Committee, the Committee may waive all or a portion of the
restrictions on a number of shares or share equivalents provided, however,
that goals for restricted awards intended to qualify as performance based
compensation may not be waived. In all other cases, all restricted shares or
restricted stock equivalents will be forfeited to the Company.
Other Awards. The Plan authorizes the Committee to grant other forms of
equity-based awards consistent with the purposes of the Plan. Such awards may
be based on the value of the common stock of the Company or other criteria
determined by the Committee. Other awards with a performance goal may not vest
in less than one year. Other awards without a performance goal may not vest in
less than three years. Subject to the Plan's limits on authorized shares, the
Plan also authorizes the Committee to grant awards in substitution for awards
granted by an entity acquired by or combined with the Company. Substitute
awards are not subject to the minimum holding period and minimum exercise
price provisions of the Plan.
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Stockholder Rights. The participant shall have the right to receive
dividends upon and to vote shares of common stock awarded during the
performance or restriction period. Optionees however, will not have rights as
a stockholder prior to exercise. With limited exceptions, participants may not
transfer, assign, pledge, or encumber awards under the Plan.
Cash Equivalents and Deferral. The Committee may permit participants to
elect to receive performance and restricted stock awards in cash instead of
shares. The Committee may also award cash equivalent awards or other
alternative forms of awards to employees of foreign subsidiaries or branches.
Cash equivalent payments will be applied against the Plan's authorized share
limits based on the fair market value of the common stock. The Committee may
also permit participants eligible for the Company's voluntary deferred
compensation plan to elect within certain time limits to defer cash payments
of performance and restricted awards.
Participant Agreements. Awards under the Plan may be evidenced by written
agreements, certificates, award letters or other form of record. Participants
have thirty calendar days to notify the Company of any issues or disagreements
regarding the terms and conditions of an award. Upon the resolution of such
issues or the expiration of such period, the participant will be deemed to
have agreed to the terms and conditions of the award and the Plan.
Participants who leave the Company holding unexercised stock options or
appreciation rights, unearned performance awards or restricted awards may
forfeit such awards if they fail to honor consulting or noncompetition
obligations to the Company.
Change of Control. In the event of a change of control or potential change
of control of the Company, the restrictions and vesting requirements of awards
may lapse and the value of other awards may be paid to the participants in
cash (at a "change of control price" as defined in the Plan).
For purposes of the Plan, a change of control is generally considered to
have occurred if any of the following occur: (i) a third party acquires 30% or
more of the combined voting power of the Company's outstanding securities;
(ii) there is a change in majority of the incumbent Board of Directors of the
Company (other than through election of nominees who are approved by a vote of
at least two-thirds of the directors then in office and whose election is not
the result of an actual or threatened election contest); (iii) the
stockholders approve a merger or consolidation of the Company (other than
certain transactions that do not result in a substantial change in
proportional ownership of the Company); (iv) the stockholders approve a plan
of complete liquidation or a sale of all or substantially all of the Company's
assets or (v) any other change in control required to be disclosed in a proxy
statement governed by the rules of the Securities and Exchange Commission. A
potential change of control is defined generally to include the entering into
of an agreement the consummation of which would result in a change of control,
or the acquisition by a third party of securities representing 5% or more of
the combined voting power of the Company accompanied by a determination by the
Board of Directors of the Company that a potential change of control has
occurred for purposes of the Plan.
The lapse of limitations and payment of the value of incentive shares in
cash in the event of a change or potential change of control may have the
incidental effect of increasing the net cost of such change of control and
thus theoretically could render more difficult or discourage such a change of
control, even if such change of control would be beneficial to stockholders
generally.
Amendment and Adjustment. The Committee may suspend or terminate the Plan
or any portion thereof at any time. In general, the Committee may amend the
Plan from time to time, without the approval of the Company's stockholders.
The following amendments, however, may only be made with the approval of the
Company's stockholders (to the extent such approval is required by law,
agreement or the rules of any exchange upon which the Company's common stock
is listed): (i) materially increase the maximum amount of shares of common
stock subject to the Plan (other than pursuant to adjustment provisions
discussed below), (ii) materially modify the requirements as to eligibility
for participation in the Plan, (iii) materially increase the benefits accruing
to participants under the Plan or (iv) extend the term of the Plan. No
amendment, suspension or termination of the Plan may materially and adversely
affect outstanding awards without the consent of the participant.
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The Plan provides that in the event of a stock dividend or stock split, or
a combination or other increase or reduction in the number of issued shares of
the Company's common stock, the Board of Directors or the Committee may make
adjustments in the number and type of shares authorized by the Plan and
covered by outstanding awards under the Plan.
Duration of the Plan. The Plan will become effective upon approval by the
stockholders of the Company. The Plan terminates when all awards under the
Plan have been forfeited or are no longer subject to restrictions, but no
awards may be granted after December 31, 2005.
Federal Income Tax Consequences of Stock Options and Stock Appreciation
Rights. The following briefly summarizes the federal income tax consequences
of the issuance and exercise of stock options and stock appreciation rights
under the Plan. The following discussion does not purport to be complete and
does not cover, among other things, the state, local, and foreign tax
treatment associated with the grant and exercise of options.
Nonstatutory Options and Stock Appreciation Rights. With respect to
nonstatutory options granted under the Plan, the Company understands that
under existing federal income tax law: (i) no income will be recognized to the
optionee at the time of grant; (ii) upon exercise of an option, the optionee
will be required to treat as ordinary income the difference between the option
price and fair market value of the stock purchased on the date of exercise,
and the Company will be entitled to a deduction equal to such amount; and
(iii) assuming the shares received upon exercise of such option constitute
capital assets in the optionee's hands, any gain or loss upon disposition of
the shares (measured by reference to the fair market value of the shares on
the date of exercise) will be treated as capital gain or loss, which will be
long-term if the shares have been held longer than one year. Any costs
incurred in disposing of the shares will reduce the gain or increase the loss
upon disposition of the shares.
With respect to stock appreciation rights granted under the Plan, the
Company understands that: (i) no income will be recognized to the grantee at
the time of grant; and (ii) upon exercise of a stock appreciation right, the
grantee must treat the cash and the fair market value of any stock received
upon such exercise as ordinary income. The Company will be entitled to a
deduction equal to such amount.
Incentive Stock Options. Incentive options under the Plan are intended to
constitute "incentive stock options" under Section 422 of the Code. The
Company understands that, if shares purchased pursuant to the exercise of an
incentive stock option for cash are not disposed of by the optionee within two
years from the date of grant of the option or within one year after the
transfer of the shares to him, then for federal income tax purposes: (i) no
income will be recognized to the optionee upon either the grant or the
exercise of the option; (ii) any gain or loss will be recognized to the
optionee only upon ultimate disposition of the shares, and assuming the shares
constitute capital assets in the optionee's hands, will be treated as long-
term capital gain or loss; and (iii) the Company will not be entitled to a
federal income tax deduction in connection with the grant or the exercise of
the option. The difference between the option price and the fair market value
of the shares acquired upon exercise of such an option is considered an item
of adjustment for purposes of the Alternative Minimum Tax under the Code.
The Company further understands that, if the optionee disposes of the
shares acquired by exercise of an incentive stock option before the expiration
of the required holding period, the optionee must treat as ordinary income in
the year of such disposition an amount equal to the difference between the
option price and the lesser of the fair market value of the shares on the date
of exercise or the selling price. The balance of the optionee's gain on such
disposition, if any, will be taxed as capital gain. The Company will be
entitled to a deduction in the year of the disposition equal to the amount of
ordinary income recognized to the optionee.
Exercise by Delivery of Previously Acquired Shares. Generally, no gain or
loss will be recognized by an optionee upon the transfer to the Company of
previously acquired shares of common stock (the
8
<PAGE>
"Old Shares") in payment of all or a portion of the exercise price of shares
of common stock (the "New Shares") acquired through the exercise of an option.
The optionee's basis and holding period in the Old Shares are transferred to
that number of New Shares that equals the number of Old Shares tendered in
payment of the exercise price. Additional New Shares have a basis equal to any
income recognized by the optionee on exercise plus any cash paid in payment of
the exercise price. However, if Old Shares are used to exercise an incentive
stock option, the disposition of the Old Shares will be taxable generally in
accordance with the rules discussed above if the Old Shares were acquired
pursuant to the exercise of an incentive stock option and have not been held
for the requisite holding period.
Tax Considerations for Transferable Options. The Committee may, in its
discretion, authorize the transfer by gift (or domestic relations order) of
options to and among an optionee's family members and certain trusts,
foundations or other entities controlled by them. The following paragraphs
briefly summarize the tax considerations of transferring options. Participants
should seek professional financial and tax planning advice prior to
transferring options.
Income Tax to the Employee/Optionee Upon Exercise. When an option is
exercised following transfer, the original employee option recipient (rather
than the transferee) will be required to treat as ordinary taxable income the
difference between the option price and the fair market value of the stock
purchased on the date of exercise, and the Company will be entitled to a
deduction in an equivalent amount. The employee option recipient (rather than
the transferee) will be responsible for the payment of applicable federal,
social security, and state withholding taxes. The Company may require the
optionee to make appropriate provision for the payment of withholding taxes as
a condition to exercise of the option by the transferee.
The transferee's tax basis in the shares issued upon exercise of the option
will equal the fair market value of the shares on the date of exercise.
Assuming that the shares constitute capital assets in the hands of the
transferee, gain or loss upon disposition of the shares will be treated as
capital gain or loss which will be long-term if the shares have been held
longer than one year.
Tax Withholding. Under the Code, tax withholding by the Company is required
with respect to the amount of compensation realized by optionees under the
Plan. Under the Plan, the Company may permit the optionee to have the Company
withhold all or a portion of the shares of the Company which the optionee
acquires upon the exercise of an option to satisfy estimated or actual
federal, state or local income taxes. The Company may also permit the optionee
(under the current rules and regulations under the Exchange Act) to deliver
other previously acquired shares (other than restricted stock) for the purpose
of tax withholding. The election to withhold must be made prior to or on the
date on which the tax obligation arises.
RE-APPROVAL OF PERFORMANCE GOALS UNDER
THE JOHN DEERE PERFORMANCE BONUS PLAN
- -------------------------------------------------------------------------------
Summary of the Proposal
The performance goals of the John Deere Performance Bonus Plan (for
purposes of this Section of the proxy statement, the "Plan") are being
submitted for stockholder re-approval to meet the requirements for tax
deductibility under Section 162(m) of the Code. The Plan was initially
approved by the stockholders in 1995. The Plan provides annual cash bonuses to
salaried employees of the Company and its subsidiaries if performance goals
are achieved. The description which follows is qualified in its entirety by
reference to the Plan.
Stockholder re-approval of the performance goals requires the affirmative
vote of a majority of the shares present or represented and entitled to vote
at the meeting.
9
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RE-APPROVAL OF THE
PERFORMANCE GOALS UNDER THE JOHN DEERE PERFORMANCE BONUS PLAN.
Description of the Plan and Performance Goals
Purpose. The purpose of the Plan is to provide Participants with a
meaningful annual incentive opportunity geared toward the achievement of
specific performance goals.
Administration. The Plan is administered by the Committee on Compensation
of the Board or a subcommittee thereof (the "Committee"), which shall be
comprised of at least two members of the Board who are not current or former
officers or employees of the Company. Each member of the Committee shall be an
"outside director" within the meaning of Section 162(m) of the Code. The
Committee has the authority to interpret the Plan and maintain administrative
guidelines relating to the Plan.
Eligibility and Participation. All full-time, salaried employees who are
actively employed by the Company during the Company's fiscal year are eligible
to participate in the Plan for such fiscal year. From those persons eligible,
the Committee determines annually those who will participate in the Plan.
Based on current participation levels, it is anticipated that at the time of
stockholder re-approval, approximately 12,500 employees will be eligible to
participate in the Plan.
To meet the requirements of Section 162(m), certain more restrictive
provisions of the Plan apply only to "executive officers." For purposes of the
Plan, "executive officers" shall be those employees designated by the
Committee from year to year for purposes of qualifying payouts under the Plan
for exemption from Section 162(m).
Award Determination. Prior to each fiscal year, or as soon as practicable
thereafter, the Committee will establish performance goals which may be based
on any combination of consolidated Company, business unit, division, product
line, other segment, and individual performance measures. Performance measures
with respect to executive officers, as designated by the Committee, will be
determined annually from among the following factors, or any combination of
the following, as the Committee deems appropriate: (a) total stockholder
return; (b) growth in revenues, sales, settlements, market share, customer
conversion, net income, stock price, and/or earnings per share; (c) return on
assets, net assets, and/or capital; (d) return on stockholders' equity; (e)
economic value added; or (f) improvements in costs and/or expenses. Prior to
each fiscal year, or as soon as practicable thereafter, the Committee will
also establish, for each job classification, various levels of award payments
depending upon the level of achievement of the performance goals. Final awards
will be based on the level of achievement of the performance goals, the
participant's job classification and the predetermined award payout levels.
Except with respect to executive officers, the Committee has the discretion to
adjust performance goals and payout levels during a fiscal year. With respect
to executive officers, the Committee can reduce or eliminate the amount of the
final award and can exercise such other discretion as on the advice of tax
counsel will not adversely affect the deductibility for federal income tax
purposes of any amount paid under the Plan. The maximum amount payable under
the Plan to a participant for any year will be $2,000,000.
Payments. All awards will be payable in cash as soon as practicable after
the end of the fiscal year and after the Committee certifies in writing that
the performance goals and any other relevant terms of the awards have been
satisfied.
Termination of Employment. In the event of the death, disability,
retirement or transfer of a participant to a non-participating business unit,
the final award of such participant will be reduced to reflect participation
prior to the termination only. In the event of any other kind of termination
of
10
<PAGE>
service, the participant's award for the fiscal year of termination is
forfeited. However, the Committee has discretion to pay a partial award for
the portion of the year that the participant was employed by the Company.
Change in Control. In the event of a change in control of the Company,
participants employed by the Company as of the date of the change in control
will be entitled to the greater of an award based on actual performance to
such date or an award based on targeted performance. Awards will be paid
within thirty days after a change in control. A change in control is defined
as a dissolution, liquidation, merger, or consolidation in which the Company
is not the surviving corporation, or the acquisition of thirty percent or more
of the Company's common stock by one individual, corporation, or other entity.
The payment of awards in the event of a change in control may have the
incidental effect of increasing the net cost of such change in control and,
thus, theoretically could render more difficult or discourage such a change in
control, even if such change in control would be beneficial to stockholders
generally.
Duration of the Plan. The Plan shall remain in effect until it is
terminated by the Committee or the Board of Directors of the Company.
Amendment. The Committee may, at any time, amend any or all of the
provisions of the Plan or suspend or terminate it entirely. No amendment,
suspension or termination may reduce the rights of a participant under an
award without the participant's consent.
RE-APPROVAL OF PERFORMANCE GOALS UNDER
THE JOHN DEERE EQUITY INCENTIVE PLAN
- -------------------------------------------------------------------------------
Summary of the Proposal
The performance goals of the John Deere Equity Incentive Plan (for purposes
of this Section of the proxy statement, the "Plan") are being submitted for
stockholder re-approval to meet the requirements for tax deductibility under
Section 162(m) of the Code. The Plan was initially approved by the
stockholders in 1995. In general, the Plan authorizes the Company to award, to
key employees, shares of its common stock which will be subject to risks of
forfeiture unless the Company achieves certain long-term performance goals.
The Plan also provides for awards to key employees of additional bonus shares
of common stock, which are not subject to forfeiture, if the Company exceeds
its performance goals. Subject to stockholder approval of the Omnibus Plan, no
new target awards will be made under the Plan. Additional bonus shares may be
awarded with respect to outstanding target grants if Company performance over
the performance periods exceeds target goals. A maximum of approximately
610,000 bonus shares in the aggregate may be awarded if Company performance
exceeds the targets by 100% or more. The description which follows is
qualified in its entirety by reference to the Plan.
Stockholder re-approval of the performance goals requires the affirmative
vote of a majority of the shares present or represented and entitled to vote
at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RE-APPROVAL OF THE
PERFORMANCE GOALS UNDER THE JOHN DEERE EQUITY INCENTIVE PLAN.
Description of the Plan and Performance Goals
Purpose. The purposes of the Plan are to retain the key employees of the
Company and to direct their attention to the long-term performance of the
Company by relating a portion of remuneration to the Company's long-term
success. The Plan is also designed to reward and motivate such key employees
and to encourage identification with the interests of stockholders.
11
<PAGE>
Administration. The Plan will be administered by the Committee on
Compensation of the Board or a subcommittee thereof (the "Committee"), which
shall be comprised of at least two members of the Board who are not current or
former officers or employees of the Company. Each member of the Committee
shall be an "outside director" within the meaning of Section 162(m) of the
Code, as amended, and a "nonemployee director" as defined in Rule 16b-3 under
the Securities Exchange Act of 1934 (the "Act"), as in effect from time to
time. The Committee is responsible for interpreting and administering the
Plan, including making all determinations necessary or advisable for such
administration, to the extent not contrary to the express provisions of the
Plan.
Eligibility and Participation. The Plan authorizes the Committee to grant
performance-based equity incentive shares to key employees of the Company and
its subsidiaries as designated by the Committee. During fiscal 1999,
approximately 83 key employees received grants under the Plan. The Plan
initially permitted the issuance of 1,000,000 shares. The Plan provides for
appropriate adjustments in the number and kind of shares issuable pursuant to
the Plan and to any outstanding awards, in the event of a stock split, stock
dividend, recapitalization or similar corporate transactions. A three-for-one
stock split of the Company's shares in 1995 proportionately increased this
limit to 3,000,000 shares. As of December 31, 1999, approximately 2,200,000 of
the shares previously authorized for the Plan remain available for grant. The
Plan provides that no employee may receive grants of more than 225,000 target
award shares and more than 225,000 bonus award shares over a four fiscal year
period (subject to certain adjustments described above).
Award Determination. In making award determinations, the Committee may take
into account the nature of the services rendered by the key employees, their
present and potential contributions to the Company's success, the Company's
performance, and such other factors as the Committee in its discretion shall
deem relevant. Shares of common stock covered by incentive grants are subject
to forfeiture, but may be freed of such forfeiture provisions as described
below.
The Plan requires the Committee to establish a performance period over
which the Company's performance will be measured for purposes of the Plan. The
Committee made grants in fiscal 1995, 1997, and 1999 establishing a
performance period of four consecutive fiscal years for each grant. If the
Omnibus Plan is approved, no future target grants will be made under the Plan.
The Plan also requires the Committee to set performance goals for each
performance period from among any of the following factors, or any combination
of the following, as the Committee deems appropriate: (a) total stockholder
return; (b) growth in revenues, sales, net income, stock price and/or earnings
per share of common stock; (c) return on assets, net assets, and/or capital;
(d) return on stockholders' equity; and (e) economic value added. Such factors
may be measured, as applicable, either before or after income taxes, and
including or excluding interest, depreciation, and amortization, extraordinary
items and other material non-recurring gains or losses, discontinued or added
operations, the cumulative effect of changes in accounting policies, and the
effects of any tax law changes. The performance goals for the awards to date
have been based on growth of the Company's revenues (including growth in the
Company's revenues due to acquisitions by the Company) and return on the
Company's assets, in each case over the related performance period. The Plan
also authorizes the Committee to reduce grants or adjust performance goals in
the event of certain acquisitions or dispositions of assets or securities by
the Company, subject to the restrictions of Section 162(m) of the Code.
Vesting. If the Company achieves the performance goals established by the
Committee, a participant's stock grants will no longer be subject to
forfeiture. If the Company achieves a percentage of such performance goals, a
portion of the participant's stock grant (generally equal to the percentage of
the performance goal achieved by the Company) will no longer be subject to
forfeiture. If any shares covered by a stock grant are not freed from
forfeiture provisions within the performance periods established by the
Committee, such shares shall automatically be forfeited.
12
<PAGE>
If the Company exceeds the performance goals established by the Committee
for any performance period, participants may receive bonus stock awards that
are not subject to forfeiture. The number of shares of common stock covered by
a bonus stock award may equal the maximum for such award (as established by
the Committee at the beginning of a performance period), multiplied by the
percentage over the performance target achieved by the Company for the
performance period, up to a maximum of 100%. However, the Plan provides that
no person may receive more than 225,000 shares as bonus stock awards over a
four fiscal year period (subject to certain adjustments described above). The
Committee may permit participants to elect to receive bonus awards in cash in
lieu of shares. The Committee may permit cash bonus awards to be deferred.
Cash payments are applied against the Plan limits based on the average market
price of Company shares on the date of grant.
The participant shall have the right to receive dividends upon and to vote
the common stock which is the subject of an incentive stock grant, and to
enjoy all other stockholder rights, except that the Company shall retain
custody of the stock while it is subject to limitations. With limited
exceptions, the participant may not transfer, give or otherwise alienate or
hypothecate the shares until they are freed of such limitations.
Change of Control. In the event of a change of control of the Company, the
limitations shall lapse and the value of the awards may be paid to the
participants in cash (at a "change of control price" as defined in the Plan).
In the event of a potential change of control, upon a determination by the
Committee or the Board of Directors, the limitations shall be deemed to lapse
and the value of the incentive shares may be paid to the participant in cash
at such change of control price. Change of control and potential change of
control are defined in substantially the same manner as in the Omnibus Plan
described above.
The lapse of limitations and payment of the value of incentive shares in
cash in the event of a change or potential change of control may have the
incidental effect of increasing the net cost of such change of control and
thus theoretically could render more difficult or discourage such a change of
control, even if such change of control would be beneficial to shareholders
generally.
Termination of Employment. In the event of a participant's death,
disability or normal retirement from the Company, the participant will retain
his or her stock grants, and may continue to receive bonus stock awards for
any performance period during which the participant was employed by the
Company. In the event of a participant's early retirement, the participant
will forfeit a portion of his or her stock grants which have not previously
been freed of limitations (in proportion to the participant's retirement
during the performance period), unless the Committee waives such forfeiture.
The participant may continue to receive bonus awards for any performance
period during which the participant was employed (which will be similarly
prorated). In the event of normal or early retirement the Committee may waive
the forfeiture of a number of shares based on the Company's progress in
reaching the performance targets. Generally, if any participant ceases to be
an employee of the Company for any other reason, he or she will forfeit all
stock grants which have not previously been freed of limitations, and be
ineligible to receive bonus stock awards.
Duration of the Plan. The Plan terminates when all stock granted under the
Plan has been forfeited or is no longer subject to limitations, but no stock
may be granted and no bonus stock awards may be established after December 31,
2004.
Amendments. The Committee may from time to time amend or terminate the
Plan, although no amendment or termination may materially and adversely affect
a participant's rights under a previous stock grant without the participant's
consent. Any amendment to the Plan which would increase the maximum number of
shares that may be issued pursuant to the Plan (except for such adjustments as
are provided for in the Plan), materially increase the benefits accruing to
participants under the Plan or modify the requirements as to eligibility for
participation in the Plan, or which requires stockholder approval in order for
the Plan to continue to comply with Section 162(m) of the Code, must be
approved by the Company's stockholders.
13
<PAGE>
PLAN BENEFITS
- -------------------------------------------------------------------------------
The benefits or amounts that will be received or allocated in the future
under the John Deere Omnibus Equity and Incentive Plan, the John Deere
Performance Bonus Plan, and the John Deere Equity Incentive Plan are not
determinable at this time. The table below shows stock options granted,
bonuses earned, and equity incentive shares granted in fiscal 1999 to the
individuals and groups indicated. These awards are not necessarily indicative
of awards which may be made in the future.
<TABLE>
<CAPTION>
Stock Performance Equity Incentive
Options Bonus Shares
---------- ----------- --------------------
Number of
Number of Equity
Options Dollar Dollar Incentive
Name and Position Granted(1) Value $(2) Value $(3) Shares
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Hans W. Becherer,
Chairman & Chief Executive Officer. 845,380 None $1,501,489 46,111
Bernard L. Hardiek,
President, Worldwide Agricultural
Division........................... 97,391 None $ 508,691 15,622
Pierre E. Leroy,
President, Worldwide Construction
Division........................... 82,270 None $ 423,703 13,012
Fred F. Korndorf,
President, Worldwide Commercial and
Consumer Division.................. 82,270 None $ 423,703 13,012
Joseph W. England,
Senior Vice President.............. 74,730 None $ 411,785 12,646
John K. Lawson,
Senior Vice President.............. 72,333 None $ 385,377 11,835
Executive Group.................... 1,530,133 None $5,022,277 154,235
Non-Executive Director Group(4).... None None None None
Non-Executive Officer Employee
Group.............................. 3,100,217 $17,745,742 $8,003,448 243,773
- --------------------------------------------------------------------------------
</TABLE>
(1) Represents the total of market-value and premium-priced options granted
during the 1999 fiscal year. See the "Option/SAR Grants In Last Fiscal Year"
table that follows for further details and restrictions on these option
grants.
(2) Represents the amount earned for fiscal 1999 under the John Deere
Performance Bonus Plan.
(3) Represents the closing market value of the shares granted, without giving
effect to the diminution in value attributable to the restrictions on such
shares.
(4) Non-employee directors are not eligible to participate in the plans.
OTHER MATTERS
- -------------------------------------------------------------------------------
After the deadline for inclusion of stockholder proposals in the Company's
proxy statement established by Rule 14a-8 ("Rule 14a-8") under the Securities
Exchange Act of 1934, Mr. Andrew Grober submitted a proposal that the Company
form a committee of directors and stockholders, in addition to the Company's
current after-market service staff, to review situations involving
dissatisfied customers. If properly brought before the meeting, the persons
named in the proxy will vote against the proposal. Mr. Melroy Buhr submitted a
nomination of Mr. Steve Baugher for election to the Board of Directors. The
persons named in the proxy will vote for the individuals nominated by the
Board of Directors.
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.
14
<PAGE>
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 2001 and 2002 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, share units, and of exercisable options
to purchase shares of the Company at December 31, 1999, appear in that order
after their names. As used below "restricted stock" refers to non-transferable
stock issued pursuant to 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. "Share units" represent director
compensation and earnings thereon deferred pursuant to the Nonemployee
Director Deferred Compensation Plan and valued as if invested in shares of the
Company. No director continuing in office owned beneficially more than .5% of
the shares outstanding on December 31, 1999.
TERMS EXPIRING AT ANNUAL MEETING IN 2001
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 Honeywell International
Inc., The Chase Manhattan Corporation and Schering-Plough Corporation. Age 64.
Shares owned, 230,974 (includes 75,626 shares of restricted stock); and shares
under exercisable option, 754,132.
Mr. Antonio Madero B. Chairman, President, and Chief Executive Officer of
SANLUIS Corporacion, S.A. de C.V. (automotive components manufacturing and
mining) since 1979. Director of Deere & Company since 1997; member of Audit
Review and Pension Plan Oversight Committees. Director of Federal-Mogul
Corporation, a variety of corporations in Mexico and a member of the
International Advisory Council of The Chase Manhattan Corporation. Age 62.
Shares owned, 2,293 (includes 2,293 shares of restricted stock). Share units
owned 2,879.
Mr. John R. Stafford Chairman, President, and Chief Executive Officer of
American Home Products Corporation (pharmaceuticals, consumer health care, and
agricultural products) since 1986. Director of Deere & Company since 1997;
Chair of Committee and Special Subcommittee on Compensation and member of
Corporate Governance and Executive Committees. Director of American Home
Products Corporation, Bell Atlantic Corporation, Honeywell International Inc.
and The Chase Manhattan Corporation. Age 62. Shares owned, 9,444 (includes
2,444 shares of restricted stock). Share units owned 1,849.
Mr. John R. Walter Chairman of Manpower Inc. (temporary staffing) since
April 1999; President and Chief Operating Officer of AT&T Corp.
(telecommunications) from November 1996 to July 1997; prior thereto, Chairman
and Chief Executive Officer of R. R. Donnelley & Sons Company (print and
digital information management, reproduction, and distribution). Director of
Deere & Company since 1991; member of Committee and Special Subcommittee on
Compensation and Corporate Governance Committee. Director of Abbott
Laboratories, Celestica Inc., LaSalle Partners Incorporated, Manpower Inc. and
Prime Capital Corporation. Age 52. Shares owned, 5,894 (includes 4,994 shares
of restricted stock).
TERMS EXPIRING AT ANNUAL MEETING IN 2002
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; member of Committee and Special Subcommittee on Compensation and
Pension Plan Oversight Committee. Director of Archer-Daniels-Midland Company
and Hormel Foods Corporation. Age 64. Shares owned, 6,194 (includes 5,594
shares of restricted stock). Share units owned 7,084.
15
<PAGE>
Prof. Regina E. Herzlinger Nancy R. McPherson Professor of Business
Administration at the Harvard Business School since 1971. Director of Deere &
Company since 1993; member of Audit Review and Corporate Governance
Committees. Director of Cardinal Health, Inc., C. R. Bard, Inc. and Schering-
Plough Corporation. Age 56. Shares owned, 5,594 (includes 5,594 shares of
restricted stock). Share units owned 6,799.
Dr. Arnold R. Weber President Emeritus of Northwestern University,
Evanston, Illinois since 1998; Chancellor 1995-1998; prior thereto, President.
Director of Deere & Company since 1994; member of Committee and Special
Subcommittee on Compensation and Pension Plan Oversight Committee. Director of
Aon Corporation, Burlington Northern Santa Fe Corporation, Diamond Technology
Partners Incorporated, Pepsico, Inc. and Tribune Company. Age 70. Shares
owned, 5,294 (includes 4,694 shares of restricted stock). Share units owned
1,063.
NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
- -------------------------------------------------------------------------------
The five persons named below are the executive officers named in the
Summary Compensation Table who are not directors of the Company. Their
positions with the Company during the past five or more years, ages and
beneficial ownership of shares, including restricted shares and of exercisable
options to purchase shares of the Company at December 31, 1999, 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 or
the John Deere Equity Incentive Plan, which is subject to risk of forfeiture
if certain conditions are not met. No named executive officer owned
beneficially more than .2% of the shares outstanding on December 31, 1999.
Mr. Bernard L. Hardiek Retired President, Worldwide Agricultural Equipment
Division since September 1999; President, Worldwide Agricultural Equipment
Division 1995-1999; prior thereto, Executive Vice President. Age 59. Shares
owned, 80,588 (includes 25,052 shares of restricted stock and 34,605 shares
over which Mr. Hardiek shares the power over voting and disposition); and
shares under exercisable option 312,934.
Mr. Pierre E. Leroy President, Worldwide Construction Equipment Division
since January 1996; prior thereto, Senior Vice President and Chief Financial
Officer. Age 51. Shares owned, 105,868 (includes 67,626 shares of restricted
stock); and shares under exercisable option 240,926.
Mr. Fred F. Korndorf President, Worldwide Commercial and Consumer Equipment
Division and Deere Power Systems Group since January 1996; President,
Worldwide Industrial Equipment Division 1995-1996; prior thereto, Senior Vice
President. Age 50. Shares owned, 88,155 (includes 67,239 shares of restricted
stock); and shares under exercisable option 280,486.
Mr. Joseph W. England Senior Vice President since 1981. Age 59. Shares
owned, 70,011 (includes 21,999 shares of restricted stock and 5,412 shares
over which Mr. England shares the power over voting and disposition); and
shares under exercisable option 231,402.
Mr. John K. Lawson Senior Vice President since 1996; prior thereto,
President, Worldwide Lawn & Grounds Care Division and Deere Power Systems
Group. Age 59. Shares owned, 62,345 (includes 20,338 shares of restricted
stock and 9,718 shares over which Mr. Lawson shares the power over voting and
disposition); and shares under exercisable option 258,374.
At December 31, 1999, directors and executive officers as a group (20
persons), had a beneficial interest in an aggregate of 3,102,513 shares
(1.31%) of common stock of the Company. This total includes: 389,139 shares
held with sole power over voting and disposition; 33,413 shares held with
shared power over voting or disposition; 191,024 shares of restricted stock
under the John Deere
16
<PAGE>
Restricted Stock Plan; 223,995 shares of restricted stock under the John Deere
Equity Incentive Plan; 41,820 shares of restricted stock under the Nonemployee
Director Stock Ownership Plan; and 2,223,122 shares represented by exercisable
stock options.
CERTAIN BUSINESS RELATIONSHIPS
- -------------------------------------------------------------------------------
Mr. Thomas H. Patrick is an Executive Vice President, Chairman of the
Special Advisory Services Group and a Member of the Office of the Chairman of
Merrill Lynch & Co., Inc. During fiscal 1999, the Company engaged Merrill
Lynch & Co., Inc. and certain of its subsidiaries to provide, in the ordinary
course of business, investment banking, financial advisory and other services.
The Company expects to engage such firm for similar services during fiscal
2000.
PRINCIPAL HOLDERS OF VOTING SECURITIES
- -------------------------------------------------------------------------------
Listed below are certain persons who, to the knowledge of the Company, own
beneficially more than five percent of the Company's Common Stock. This
information is based on information supplied by such persons and in reports of
institutional investment managers filed with the Securities and Exchange
Commission.
As of September 30, 1999, Capital Research and Management Company, 333
South Hope Street, Los Angeles, California 90071 ("Capital"), held 19,325,000
shares (or approximately 8.3%) of the Company. Capital is not the ultimate
owner of these shares, but holds them on behalf of institutional investors.
Capital disclaims beneficial ownership of such shares and has no voting power
with respect to such shares. Capital has the sole power to dispose or direct
the disposition of such shares.
As of September 30, 1999, FMR Corp., 82 Devonshire Street, Boston,
Massachusetts 02109-3614, beneficially owned, on behalf of its subsidiaries
Fidelity Management & Research Company and Fidelity Management Trust Company,
14,669,660 shares (or approximately 6.3%) of the Company. This number
includes: 13,925,400 shares beneficially owned by Fidelity Management &
Research Company, as a result of its serving as investment adviser to various
registered investment companies and funds; and 744,260 shares beneficially
owned by Fidelity Management Trust Company, as a result of its serving as
investment manager for institutional accounts. FMR Corp.'s beneficial
ownership of Company shares arises in the context of passive investment
activities only by various institutional investment accounts managed by FMR
Corp. and its subsidiaries. FMR Corp. has sole voting power with respect to
744,260 shares and sole dispositive power with respect to all the shares it
beneficially owns.
COMMITTEES
- -------------------------------------------------------------------------------
The Board of Directors of the Company, which met nine times during the 1999
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 Corporate
Governance Committee, the Audit Review Committee, and the Pension Plan
Oversight Committee. During the 1999 fiscal year, all of the directors, except
Mr. Johnson and Mr. Madero, attended 75% or more of the meetings of the Board
of Directors and Committees on which they served.
The Committee on Compensation, which met three times during the 1999 fiscal
year, currently consists of John R. Stafford (Chair), John R. Block, Samuel C.
Johnson, William A. Schreyer, John R. Walter, and Dr. Arnold R. Weber. The
Committee has responsibility with respect to compensation matters involving
senior officers of the Company.
17
<PAGE>
The Special Subcommittee of the Committee on Compensation, which met three
times during the 1999 fiscal year, currently consists of John R. Stafford
(Chair), John R. Block, William A. Schreyer, John R. Walter, and Dr. Arnold R.
Weber. The Subcommittee was established to assure continued compliance with
regulations regarding executive compensation approval and consists of
directors who are independent of the Company. 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 as are referred to it by the Committee on Compensation.
The Corporate Governance Committee, which met twice during the 1999 fiscal
year, currently consists of William A. Schreyer (Chair), Regina E. Herzlinger,
Samuel C. Johnson, John R. Stafford, and John R. Walter. The responsibilities
of the Corporate Governance Committee are to recommend and monitor policies
and procedures relating to corporate governance, to recommend to the Board
individuals for nomination or 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 independent directors, to
make recommendations concerning the size, composition, committee structure,
and fees for the Board and criteria relating to tenure and retention of
directors and to review and report to the Board on the performance and
effectiveness of the Board. 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 twice during the 1999
fiscal year, currently consists of Arthur L. Kelly (Chair), John R. Block,
Leonard A. Hadley, Antonio Madero B., and Dr. Arnold R. Weber. The Committee
reviews asset allocation, actuarial assumptions, funding policies, and the
performance of trustees, investment managers, and actuaries, for the Company's
pension and retirement plans. The Committee also has authority to make
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 twice during the 1999 fiscal year,
currently consists of Leonard A. Hadley (Chair), Regina E. Herzlinger, Arthur
L. Kelly, and Antonio Madero B. The Committee recommends to the Board a firm
of independent certified public accountants to audit the annual financial
statements, approves in advance the scope of the audit, reviews the
independence of the certified public accountants, 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 2000 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.
COMPENSATION OF DIRECTORS
- -------------------------------------------------------------------------------
Directors who are not employees of the Company receive a single annual
retainer of $60,000 for serving as directors. There are no additional
committee retainers or meeting fees. Directors may elect to defer a part or
all of their annual retainers pursuant to the Company's Nonemployee Director
Deferred Compensation Plan. Deferrals are invested in an interest-bearing
account or in a Company stock equivalent investment alternative at the
election of the director.
18
<PAGE>
Effective in December 1999, nonemployee directors are awarded $60,000 of
restricted shares of common stock of the Company upon election to the Board
and annually thereafter. Previously, upon election and each re-election to the
Board, nonemployee directors were awarded 1,800 restricted shares of the
Company for each three-year term. The restricted stock award was modified
based on an assessment of competitive total compensation for outside
directors. A person who becomes a nonemployee 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 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
stockholders. 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 between the median
and 75th percentile of 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 stockholder
value and the Company's long-term strategic goals;
. Provide for meaningful risk as well as reward in order to penalize
substandard performance while encouraging superior performance and
recognizing the cyclical nature of the Company's core businesses;
. Provide flexibility to recognize, differentiate and reward individual
performance; and
. Structure the program to be positively regarded by the Company's
stockholders, employees, the financial community and the public in
general, as well as by the eligible executive management.
19
<PAGE>
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. For this reason, at the 1995 annual meeting
stockholders approved the John Deere Performance Bonus Plan (the "Bonus Plan")
and the John Deere Equity Incentive Plan (the "Equity Incentive Plan"). One of
the requirements for continued tax deductibility is stockholder re-approval of
the material terms of the performance goals no later than five years following
the year in which stockholders last approved the goals. In accordance with
these requirements, the Committee recommends that stockholders approve the
John Deere Omnibus Equity and Incentive Plan (the "Omnibus Plan") and re-
approve the material terms of the performance goals of the Bonus Plan and the
Equity Incentive Plan. Each of these plans was designed to meet the
compensation objectives and 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.
Base Salary
It is the Committee's policy to position the base salaries of the Company's
executives at approximately the median level of base 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; similar products and services; a similar commitment to
manufacturing as a core activity; and a comparable global presence. Currently,
this peer group consists of 30 companies, one of which is also included among
the eight 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 and reliable
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 executive's 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 fiscal 1999, the base salaries of Mr. Becherer and the other executive
officers named in the Summary Compensation Table were essentially equal to the
peer group median and generally consistent with the base salary philosophy
established by the Committee. No salary increase was awarded to Mr. Becherer
for fiscal 1999. Mr. Becherer received a base salary of $1,042,313 for fiscal
1998 and $1,029,789 for fiscal 1999.
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
20
<PAGE>
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, the position and salary of the employee
and any other performance goals established by the employee's division. 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.
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. The target award is 75% of base salary
for the CEO and 54% of base salary for other senior officers. For 1999, the
maximum annual performance bonus for executive officers under the Bonus Plan
was available if the return on consolidated assets was 11.5% or more; no bonus
payment was available for executive officers if the return on consolidated
assets was below 5%. For 1999 the Company's return on average consolidated
assets calculated in accordance with the Bonus Plan was 3.51%. Accordingly,
for 1999, Mr. Becherer and the executive officers received no annual
performance bonus payment. Bonus payments were made to employees of business
units that met or exceeded the unit's performance goals.
For fiscal 2000, the target award under the Bonus Plan is 100% of base
salary for the CEO and 60% to 65% of base salary for other senior officers.
Also for fiscal 2000, the return on asset calculation has been revised to take
into account growth through acquisitions. In addition, cost reduction has been
added as a performance goal and the equipment divisions have each also
established goals based on increasing sales or market share. Subject to
minimum thresholds, the cost reduction goal provides the potential for a bonus
payment regardless of the business cycle. For fiscal 2000, the maximum return
on assets goal is 10.5%. Bonuses available for the cost reduction and division
goals are limited only by the Bonus Plan maximum bonus per participant. No
bonus payment is available if minimum performance thresholds are not achieved.
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 for fiscal 1999.
Long-Term Incentives
The Company's long-term incentives for executive officers have been
comprised of annual grants of market-priced and premium-priced stock options
under the Option Plan and biennial grants of equity incentive restricted
shares under the Equity Incentive Plan. Grants under these plans are intended
to promote the creation of sustained stockholder value, encourage ownership of
Company stock, foster teamwork and retain high caliber executives.
Under the Equity Incentive Plan, approved by stockholders in 1995,
executives received 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 executive stock grants in the Equity
Incentive Plan serves to promote greater focus on actions that enhance
stockholder 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
21
<PAGE>
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.
Subject to stockholder approval of the Omnibus Plan, the Committee made the
final biennial target award of equity incentive shares to executive officers
early in fiscal 1999. Vesting of these shares is conditioned on the Company
satisfying performance goals based on revenue growth and return on assets over
the four fiscal years commencing November 1, 1998. During fiscal 1999, Mr.
Becherer was awarded 46,111 shares of equity incentive stock. If any of the
target shares are not vested within four years of the grant, such shares are
automatically forfeited. Depending on Company performance above target goals
over the performance periods, the Committee may award bonus equity incentive
shares to executive officers with respect to the fiscal 1997 and fiscal 1999
target grants. Stockholders are being asked to re-approve the performance
goals of the Equity Incentive Plan so that such bonus awards, if any, qualify
as performance-based compensation for tax deductibility.
Beginning in fiscal 1995, to further sharpen the focus on, and strengthen,
the commonality of interest between senior management and the Company
stockholders, 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. Grants of premium-priced options were 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.
In order to continue to achieve the grant guidelines for market-priced
options, during fiscal 1999 grants of stock options to senior officers were
comprised of approximately one-half market-priced stock options and one-half
premium-priced stock options. The market-priced stock options are not
exercisable until one to two years after grant and have a ten-year term. The
premium exercise price was set at 150% of the 90 day average price for the
Company's shares prior to the grant. The premium-priced options have a ten
year term and their exercise prior to an extended future date depends on the
Company's shares achieving a market price equal to or greater than the premium
exercise price for ten consecutive trading days within five years from grant.
If any of the premium-priced options granted in fiscal 1999 are not
exercisable within five years of the grant, such options become exercisable
for three months, then they terminate. In recognition of his performance and
in anticipation of a successful succession transition, Mr. Becherer received
in fiscal 1999 a front-loaded grant of 422,690 market-priced options and
422,690 premium-priced options.
Beginning in fiscal 2000, grants of market-priced options which vest over
several years will be the primary vehicle for long-term incentive awards.
Market-priced options are viewed as a method of providing an incentive
opportunity throughout the business cycle and are easier to compare with the
peer group and employment marketplace. Also beginning in fiscal 2000, the
target total compensation opportunity for executives, including base salary,
performance bonus and market-priced options, is approximately equal to the
65th to 75th percentile of the peer group. In December 1999, the long-term
incentive award to senior executives consisted solely of market-priced options
which vest in one to three years. Subject to approval of the Omnibus Plan by
stockholders, future annual market-priced option grants will be made to
executives under the Omnibus Plan. The Committee also resolved to recognize,
differentiate and reward individual performance to a greater degree.
In addition to the long-term incentives for executive officers described
above, in December 1998 the Committee approved a one-time grant of 46,111
shares of restricted stock under the Restricted Stock Plan to each of the five
senior operating officers of the Company other than Mr. Becherer. This grant
is intended as a combination retention plan and communication of the
importance to the Company of their continued service to ensure a smooth
transition in Company leadership. The restricted shares vest in four equal
annual increments beginning in December 2000 and are subject to possible
forfeiture in the event of termination or resignation from the Company prior
to vesting.
22
<PAGE>
Finally, during fiscal 1998, the Committee introduced revised 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 65th percentile of CEO compensation of the peer group companies.
In fiscal 1999, Mr. Becherer's total compensation exceeded this level due to
the front-loaded grant of options made in recognition of his decade of
superior leadership as CEO. Mr. Becherer's fiscal 1999 cash compensation fell
significantly below target levels due to no salary increase and no payout
under the Bonus Plan. As explained above, the availability of a fiscal 1999
bonus payment was based exclusively on return on assets and payout levels
established by the Committee at the beginning of the year, as determined by
actual 1999 results. It is the Committee's view that this relationship between
pay and performance is appropriate and serves stockholders' interests.
Committee on Compensation
John R. Stafford (Chair)
John R. Block
Samuel C. Johnson
William A. Schreyer
John R. Walter
Dr. Arnold R. Weber
23
<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 return of the Standard & Poor's 500 Stock Index, and against the
Standard & Poor's Diversified Machinery Group Index. The graph assumes $100 is
invested in Company stock and each of the other two indices at the closing
market quotation on October 31, 1994 and that dividends are reinvested. The
stock price performance shown on the graph is not necessarily indicative of
future price performance.
1994 1995 1996 1997 1998 1999
- ----------------------------------------------------------------------
Deere & Co. 100.00 128.44 184.43 236.52 162.56 169.39
S&P Mach. 100.00 105.66 134.10 185.16 153.16 183.71
S&P 500 100.00 126.44 156.91 207.30 252.89 317.80
- ----------------------------------------------------------------------
24
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
- -------------------------------------------------------------------------------
The following table shows the remuneration from the Company and its
subsidiaries during the past three fiscal years to the Company's Chief
Executive Officer (the "CEO") and each of the five most highly compensated
executive officers of the Company other than the CEO:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------- -------------------------------------
Awards Payouts
-------------------------- ----------
Restricted Securities
Stock Underlying LTIP All Other
Name and Fiscal Salary(1) Bonus(2) Awards(3) Options/SARs(4) Payouts(5) Compensation(6)
Principal Position Year ($) ($) ($) (#) ($) ($)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Hans W. Becherer, 1999 $1,029,789 $ 0 $1,501,489 845,380 $ 0 $120,933
Chairman & Chief 1998 $1,042,313 $1,487,511 $ 0 191,149 $1,333,600 $ 71,352
Executive Officer 1997 $ 921,558 $1,342,500 $1,254,388 75,000 $ 0 $ 42,637
Bernard L. Hardiek, 1999 $ 411,443 $ 0 $ 514,781 97,391 $ 0 $ 22,927
President, Worldwide 1998 $ 449,822 $ 477,184 $ 0 66,726 $ 424,289 $ 18,838
Agricultural Division
(7) 1997 $ 416,583 $ 429,878 $ 409,912 20,000 $ 0 $ 11,083
Pierre E. Leroy, 1999 $ 406,245 $ 0 $1,925,193 82,270 $ 0 $ 48,386
President, Worldwide 1998 $ 393,341 $ 403,604 $ 0 54,792 $ 368,955 $ 34,234
Construction Division 1997 $ 355,300 $ 348,381 $ 361,378 19,000 $ 0 $ 18,667
Fred F. Korndorf, 1999 $ 395,681 $ 0 $1,925,193 82,270 $ 0 $ 54,094
President, Worldwide 1998 $ 388,231 $ 402,272 $ 0 53,792 $ 318,143 $ 42,197
Commercial and 1997 $ 352,335 $ 338,436 $ 344,930 19,000 $ 0 $ 30,919
Consumer Division
Joseph W. England, 1999 $ 385,957 $ 0 $ 411,785 74,730 $ 0 $ 30,027
Senior Vice 1998 $ 386,882 $ 401,944 $ 0 51,397 $ 444,783 $ 25,410
President 1997 $ 373,812 $ 370,260 $ 397,502 18,000 $ 0 $ 18,637
John K. Lawson, 1999 $ 374,463 $ 0 $ 385,377 72,333 $ 0 $ 48,739
Senior Vice 1998 $ 362,937 $ 375,276 $ 0 49,695 $ 414,562 $ 44,842
President 1997 $ 350,057 $ 344,594 $ 361,378 17,000 $ 0 $ 30,758
- ---------------------------------------------------------------------------------------------------------
</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) for the past three fiscal years depended 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) The 1999 amounts reported in the table represent grants under the John
Deere Equity Incentive Plan and the John Deere Restricted Stock Plan. The
vesting of shares under the Equity Incentive Plan is conditioned on satisfying
performance goals based on growth of the Company's revenues and return on the
Company's assets over the performance periods established by the Committee.
The shares granted under the Restricted Stock Plan vest in four equal annual
increments beginning in December 2000 and are subject to possible forfeiture
in the event of termination or resignation from the Company prior to vesting.
The amounts for Mr. Hardiek represent the reduced amounts actually received
upon his retirement. No restricted stock awards were made to the named
executive officers during fiscal 1998. The amounts in the table represent the
closing market value of the shares granted on the date of grant, without
giving effect to the diminution in value attributable to the restrictions and
performance
25
<PAGE>
conditions on such stock. Dividends are paid on the restricted shares at the
same time and rate as dividends paid to stockholders of unrestricted shares.
At October 31, 1999, the total number and market value (based on the closing
market price on October 29, 1999) 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 (75,626; $2,741,442); Mr. Hardiek
(25,052; $908,135); Mr. Leroy (67,626; $2,451,442); Mr. Korndorf (67,239;
$2,437,414); Mr. England (21,999; $797,464); and Mr. Lawson (20,338;
$737,252).
(4) The 1999 and 1998 amounts represent the total of market-priced options and
premium-priced options granted in December 1998 and December 1997,
respectively. The 1997 amounts represent market-priced options granted in
December 1996. Additional details on the fiscal 1999 grant are included in the
"Option/SAR Grants In Last Fiscal Year" table that follows.
(5) The payouts for 1998 represent the award of bonus shares under the John
Deere Equity Incentive Plan approved by stockholders at the 1995 annual
meeting. Under the Equity Incentive Plan, if the Company exceeds the
performance goals established by the Committee at the beginning of a
performance period, participants may receive bonus stock awards based on the
percentage over the performance target achieved by the Company for the
performance period. The amounts in the table represent the average of the high
and low market values of the bonus shares on the date of grant.
(6) Amounts shown for 1999 consist of: (i) vested Company contributions to the
Company 401(k) Savings and Investment Plan during the fiscal year for each of
the named executive officers of $10,000; and (ii) above-market earnings on
deferred compensation for Mr. Becherer $110,933, Mr. Hardiek $12,927, Mr.
Leroy $38,386, Mr. Korndorf $44,094, Mr. England $20,027, and Mr. Lawson
$38,739. The contribution to the Company's 401(k) Savings and Investment Plan
for all employees during the past fiscal year was $47,774,179.
(7) Mr. Hardiek retired as President, Worldwide Agricultural Division in
September 1999.
The following table shows information concerning individual grants of stock
options made during fiscal 1999 to each of the named executive officers of the
Company and the potential realizable values of the grants assuming annually
compounded stock price appreciation rates of five and ten percent per annum
respectively, over the option term. The five and ten percent rates of
appreciation are set by the rules of the Securities and Exchange Commission
and are not intended to forecast possible future appreciation, if any, of the
Company's stock price.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value
at Assumed Annual
Rates of
Stock Price
Appreciation For
Individual Grants Option Term(7)
---------------------------------------------- ----------------------
Number of % of Total
Securities Options/SARs Exercise
Underlying Granted to or Base
Options/SARs Employees in Price Expiration 5% 10%
Name Granted(1)(#) Fiscal Year ($/Sh) Date(5) ($) ($)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Hans W. Becherer........ 422,690(2) 9.13% $32.53 12/9/08 $8,647,368 $21,914,127
422,690(3) 9.13% $50.97 (6) $ 852,964 $14,119,724
Bernard L. Hardiek...... 51,234(4) 1.11% $32.53 12/9/08 $1,048,142 $ 2,656,198
46,157(3) 1.00% $50.97 (6) $ 93,142 $ 1,541,849
Pierre E. Leroy......... 43,826(4) 0.95% $32.53 12/9/08 $ 896,590 $ 2,272,135
38,444(3) 0.83% $50.97 (6) $ 77,578 $ 1,284,200
Fred F. Korndorf........ 43,826(4) 0.95% $32.53 12/9/08 $ 896,590 $ 2,272,135
38,444(3) 0.83% $50.97 (6) $ 77,578 $ 1,284,200
Joseph W. England....... 37,365(4) 0.81% $32.53 12/9/08 $ 764,411 $ 1,937,168
37,365(3) 0.81% $50.97 (6) $ 75,400 $ 1,248,157
John K. Lawson.......... 37,365(4) 0.81% $32.53 12/9/08 $ 764,411 $ 1,937,168
34,968(3) 0.76% $50.97 (6) $ 70,563 $ 1,168,087
- ----------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
(1) 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.
(2) Market-priced options 50% of which are exercisable between one and ten
years after the date of grant and 50% of which are exercisable between two and
ten years after the date of grant.
(3) In December 1998, senior executive officers were granted options with an
exercise price set at 150% of the prior 90 day average closing price for the
Company's shares. The options become exercisable when the price of the
Company's shares on the New York Stock Exchange equals or exceeds the premium
exercise price during each of ten consecutive trading days prior to December
9, 2003. If the price target is not achieved, the options become exercisable
on December 9, 2003.
(4) Market-priced options exercisable between one and ten years after the date
of grant.
(5) 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.
(6) If the price target described in footnote (3) above is achieved, the
options expire on December 9, 2008. If the price target is not achieved, the
options expire on March 9, 2004.
(7) The total potential realizable value for all stockholders as a group based
on 233,764,895 outstanding shares as of October 31, 1999, would be
$4,782,348,712 and $12,119,410,594 at the 5% and 10% assumed annual rate of
appreciation, respectively. Mr. Becherer's total potential realizable value is
0.2% and 0.3% of the potential realizable value of all stockholders at the 5%
and 10% assumed annual rates of appreciation, respectively. The total
potential realizable value of all the named executives to that of all
stockholders is 0.3% and 0.4% at the 5% and 10% assumed annual rates of
appreciation, respectively.
The following table shows information for the named executives concerning
exercises of options and SARs during fiscal 1999 and the number and value of
unexercised options (and tandem SARs) held at October 31, 1999:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-
Shares Options/SARs at Fiscal the- Money Options/SARs
Acquired on Year-End(1) (#) at Fiscal Year-End(2) ($)
Exercise Value ------------------------- -------------------------
Name (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Hans W. Becherer........ 0 $ 0 542,787 988,742 $2,108,400 $1,572,407
Bernard L. Hardiek...... 0 $ 0 261,700 144,117 $1,428,330 $ 190,590
Pierre E. Leroy......... 0 $ 0 197,100 121,562 $ 757,962 $ 163,033
Fred F. Korndorf........ 0 $ 0 236,660 121,562 $1,350,392 $ 163,033
Joseph W. England....... 0 $ 0 194,037 75,913 $ 759,209 $ 138,998
John K. Lawson.......... 0 $ 0 221,009 108,428 $1,177,584 $ 138,998
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) Market-priced options and SARs awarded by the Company are not exercisable
until one to two years after grant and have a ten-year term. Premium-priced
options granted in December 1994 became exercisable in December 1998 when the
total stockholder return goal for the four year performance period was
satisfied. Premium-priced options granted in December 1997 and December 1998
may not be exercised until one year or more after the date of grant depending
on if the price of the Company's shares on the New York Stock Exchange equals
or exceeds the premium exercise price during each of ten consecutive trading
days prior to the fifth anniversary of the grant date. If such price target is
27
<PAGE>
achieved, the options expire on the tenth anniversary of the grant date. If
the price target is not achieved, the options become exercisable on the fifth
anniversary of the grant date and expire three months thereafter.
(2) Represents the difference between the option exercise price and the
closing market price for the Company's stock on October 31, 1999. The in-the-
money options at October 31, 1999, pertain to the market-priced option grants
in December of 1993, 1994, 1995, and 1998 with exercise prices of $23.56,
$21.02, $34.13, and $32.53, respectively and the premium-priced option grant
in December of 1994 with exercise prices of $28.39, $31.23, and $34.07. The
closing market price for the Company's stock at the end of the 1999 fiscal
year was $36.25.
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 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, awards under the
restricted stock plan, or after 1998 a prorated amount of awards under the
equity incentive 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. In addition, for salaried
employees hired prior to 1997, career average compensation under the executive
pension program 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, for new participants in the
executive program, average pensionable pay is based exclusively on the career
average compensation 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
pension 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
compensation is calculated by adding the employee's salary to any bonus
awarded under the Company's performance bonus plan. In addition, for employees
hired prior to 1997, 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,
average pensionable pay for new salaried employees not entitled to the
executive pension is based exclusively on career average salary and
performance bonuses. For salaried employees participating in the career
average earning option, enhanced Company contributions to the employee'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
retirement with full benefits may be increased.
The estimated annual pensions payable upon retirement at age 65 for each of
the named executive officers of the Company is: Mr. Becherer, $1,393,997; Mr.
Hardiek, $301,018; Mr. Leroy, $413,462; Mr. Korndorf, $414,847; Mr. England,
$448,206; and Mr. Lawson, $435,133. The estimated annual
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<PAGE>
pensions shown are on a straight-life annuity basis and have been computed
assuming (i) that the Company's pension plans are continued without further
amendment; (ii) that each of the named officers (except for Mr. Hardiek who
retired as an executive during 1999) continues as an executive of the Company
until retirement at age 65; (iii) that salaries continue at 1999 levels; and
(iv) that bonuses are paid at target earnings goals. Pension benefits are not
subject to deductions 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
performance 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 Omnibus
Plan provides that in the event of a change in control, unless otherwise
determined by the Board, all vesting requirements terminate, all stock options
become exercisable for the remainder of their term, and the value of other
awards will be cashed out in an amount determined under the Omnibus Plan. The
Supplemental Pension Benefit Plan provides that, in the event of a change in
control, participants 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.
STOCKHOLDER PROPOSALS AND NOMINATIONS
- -------------------------------------------------------------------------------
Proposals of stockholders submitted pursuant to Rule 14a-8 for inclusion in
the proxy statement for the annual meeting of stockholders to be held February
28, 2001, must be received by the Company at its principal executive offices
not later than September 21, 2000. 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. Stockholder
proposals submitted other than pursuant to Rule 14a-8 for the annual meeting
to be held February 28, 2001, must be received by the Secretary not earlier
than October 31, 2000, and not later than November 30, 2000. 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
stockholder making the proposal. Notice of a nomination shall set forth the
name, address, and the class and number of shares owned by the stockholder
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 who are age 70
or older are not eligible for election to the Board. Directors of the Company
are required to tender their resignation from the Board upon any material
change in their occupation, career or principal business activity, including
retirement.
Stockholder proposals and recommendations for nomination as a director
should be submitted in writing to the Secretary of the Company, Deere &
Company, One John Deere Place, Moline, Illinois 61265, who will submit them to
the Board or the Corporate Governance Committee, as applicable, for its
consideration.
29
<PAGE>
COST OF SOLICITATION
- -------------------------------------------------------------------------------
The Company will bear the cost of soliciting proxies in the form enclosed.
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 Shareholder
Communications Inc. to solicit proxies held by brokers and nominees at a cost
of $14,000 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,
/s/ Michael A. Harring
----------------------------
Michael A. Harring
Secretary
Moline, Illinois
January 19, 2000
30
<PAGE>
EXHIBIT A
JOHN DEERE OMNIBUS EQUITY AND INCENTIVE PLAN
- -------------------------------------------------------------------------------
Article I--General
1.1 Purpose
Deere & Company, a Delaware corporation (the "Corporation"), hereby adopts,
subject to stockholder approval, this plan which shall be known as the JOHN
DEERE OMNIBUS EQUITY AND INCENTIVE PLAN (the "Plan"). The Corporation and its
Subsidiaries are severally and collectively referred to hereinafter as the
"Company." The purpose of the Plan is to foster and promote the long-term
financial success of the Company and materially increase stockholder value by:
(a) strengthening the Company's capability to develop, maintain, and direct an
outstanding employee team; (b) motivating superior performance by means of
long-term performance related incentives; (c) encouraging and providing for
obtaining an ownership interest in the Company; (d) attracting and retaining
outstanding talent by providing incentive compensation opportunities
competitive with other major companies; and (e) enabling eligible employees to
participate in the long-term growth and financial success of the Company.
1.2 Administration
(a) The Plan shall be administered by and under the direction of the Board
Committee on Compensation of the Corporation or such other committee of
directors as is designated by the Board of Directors of the Corporation (the
"Committee"), which shall consist of two or more members. The members shall be
appointed by the Board of Directors, and any vacancy on the Committee shall be
filled by the Board of Directors.
(b) Subject to the limitations of the Plan, the Committee shall have the
sole and complete authority to: (i) select from eligible employees of the
Company, those who shall participate in the Plan (a "Participant" or
"Participants"); (ii) make awards in such forms and amounts as it shall
determine; (iii) impose such limitations, restrictions and conditions upon
such awards as it shall deem appropriate; (iv) interpret the Plan and adopt,
amend, and rescind administrative guidelines and other rules and regulations
relating to the Plan; (v) correct any defect or omission or reconcile any
inconsistency in this Plan or in any award granted hereunder; and (vi) make
all other determinations and take all other actions deemed necessary or
advisable for the implementation and administration of the Plan. The
Committee's determinations on matters within its authority shall be conclusive
and binding upon the Company and all other persons.
(c) Except as provided below, the Committee may, to the extent that any
such action will not prevent the Plan from complying with Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act") or any similar rule which
may subsequently be in effect ("Rule 16b-3") or the outside director
requirement of Section 162(m) of the Internal Revenue Code of 1954, as it may
be amended from time to time (the "Code"), or any other law, delegate any of
its authority hereunder to such persons as it deems appropriate. The Committee
shall not delegate its authority to amend, suspend or terminate the Plan.
(d) The provisions of this Plan are intended to qualify awards made to
certain Participants (hereinafter identified as "Covered Participants") under
the Plan under the "performance-based" exception to the Code Section 162(m)
deduction limitation.
1.3 Types of Awards Under the Plan
Awards under the Plan may be in the form of any one or more of the
following: (a) Statutory stock options ("ISOs", which term shall be deemed to
include Incentive Stock Options as defined in
A-1
<PAGE>
Section 2.5 and any future type of tax-qualified option which may subsequently
be authorized), Non-statutory Stock Options ("NSOs" and, collectively with
ISOs, "Options"), and Stock Appreciation Rights ("SARs") as described in
Article II; (b) Performance Units and Performance Shares ("Performance Units"
and "Performance Shares") as described in Article III; (c) Restricted Stock
and Restricted Stock Equivalents ("Restricted Stock" and "Restricted Stock
Equivalents") as described in Article IV; (d) Other Awards ("Other Awards") as
described in Article V; and (e) Substitute Awards as defined in Article IX
(collectively, "Awards").
1.4 Shares Subject to the Plan
(a) Shares of stock covered by Awards under the Plan may be in whole or in
part authorized and unissued or treasury shares of the Corporation's common
stock, $1.00 par value per share, or such other shares as may be substituted
pursuant to Section 1.6 ("Common Stock").
(b) The maximum number of shares of Common Stock which may be awarded for
all purposes under the Plan shall be the aggregate of:
(i) 9,500,000 shares;
(ii) the number of shares previously authorized but not reserved as of
the date the Plan is approved for awards under the John Deere Equity
Incentive Plan, the John Deere Restricted Stock Plan and the 1991 John
Deere Stock Option Plan (collectively, the "Prior Plans"); and
(iii) any shares corresponding to awards under the Prior Plans that are
forfeited after the date the Plan is approved.
(c) Subject to the above limits, the maximum number of shares of Common
Stock for which Performance Awards, Restricted Stock and Restricted Stock
Equivalents, Other Awards, and Substitute Awards may be awarded under the Plan
shall be 1,000,000 shares (subject to adjustment pursuant to Section 1.6).
(d) Any shares of Common Stock subject to an Option which for any reason is
canceled (excluding shares subject to an Option canceled upon the exercise of
a related SAR to the extent shares are issued upon exercise of such SAR) or
terminated without having been exercised; or any shares corresponding to other
Awards under the Plan, which are forfeited before delivery of such shares,
shall again be available for Awards under the Plan.
(e) No fractional shares shall be issued, and the Committee shall determine
the manner in which fractional share value shall be treated.
1.5 Maximum Awards Per Participant
(a) The aggregate number of shares of Common Stock (including any cash
equivalents thereof) that may be subject to Options and SARs awarded during
any fiscal year to a Covered Participant shall not exceed .5% of the number of
shares outstanding as of the beginning of such fiscal year.
(b) The aggregate number of (i) all Performance Units and Performance
Shares and (ii) all Restricted Stock and Restricted Stock Equivalents; (iii)
all Other Awards; and (iv) all Substitute Awards, awarded to a Covered
Participant in any fiscal year shall not exceed the equivalent of 300,000
shares or the cash equivalent thereof (based on the Fair Market Value of
Common Stock as of the date of the Award).
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<PAGE>
1.6 Adjustments Upon Certain Changes
In the event of a stock dividend or stock split, recapitalization, merger,
consolidation, combination, exchange of shares or other increase or reduction
in the number of issued shares of Common Stock, the Board of Directors or the
Committee may, in order to prevent the dilution or enlargement of rights under
Awards (including Deferred Amounts), make such adjustments in the number and
type of shares authorized by this Plan, the number and type of shares covered
by, or with respect to which payments are measured under, outstanding Awards
and the exercise prices specified therein as may be determined to be
appropriate and equitable.
1.7 Eligible Participants
Participants shall be selected by the Committee from salaried employees of
the Corporation and its Subsidiaries.
Article II--Stock Options and Stock Appreciation Rights
2.1 Award of Stock Options
The Committee may, from time to time, subject to the provisions of the Plan
and such other terms and conditions as the Committee may prescribe, award to
any Participant ISOs and NSOs to purchase Common Stock.
2.2 Documentation of Stock Option Awards
The award of an Option may be evidenced by a signed written agreement (a
"Stock Option Agreement"), a certificate or an electronic record containing
such terms and conditions as the Committee may from time to time determine.
2.3 Option Price
The purchase price of Common Stock under each Option (the "Option Price")
shall be fixed by the Committee and except for Substitute Awards, shall be not
less than the Fair Market Value of the Common Stock on the date the Option is
awarded. Subject to adjustments pursuant to Section 1.6, the Option Price
fixed by the Committee of outstanding Options shall not be modified.
2.4 Exercise and Term of Options
(a) Options awarded under the Plan shall be exercisable at such times and
be subject to such restrictions and conditions as the Committee shall approve,
either at the time of grant of such Options or pursuant to a general
determination, and which need not be the same for all Participants, provided
that no such Option (other than Substitute Awards) shall be exercisable within
the first six months of its term and the term of each Option shall not extend
later than ten years after the date of grant of the Option. Each Option which
is intended to qualify as an ISO pursuant to Section 422 of the Code, and each
Option which is intended to qualify as another type of ISO which may
subsequently be authorized by law, shall comply with the applicable provisions
of the Code pertaining to such Options.
(b) The Committee shall establish procedures governing the exercise of
Options and shall require that written notice of exercise be given and that
the Option Price be paid in full in cash (including check, bank draft or money
order) at the time of exercise; provided, however, the Participant may
instruct the Corporation to sell shares delivered on exercise as the
Participant's agent pursuant to a "cashless exercise" program or other similar
program established by the Committee. The Committee may permit a Participant,
in lieu of part or all of the cash payment, to make payment in Common Stock
already owned by that Participant, valued at Fair Market Value on the date of
exercise, as partial
A-3
<PAGE>
or full payment of the Option Price; provided, however, that the Committee
may, in any instance, in order to prevent any possible violation of law,
require the Option Price to be paid in cash. As soon as practicable after
receipt of each notice and full payment, the Company shall deliver to the
Participant a certificate or certificates representing the acquired shares of
Common Stock. The exercise of an Option shall cancel any related SAR to the
extent of the number of shares as to which the Option is exercised.
(c) Notwithstanding the foregoing, in respect of Participants who at the
time of award, vesting or exercise of Options are located in a jurisdiction
that would but for this Section 2.4(c) subject such Options to tax prior to
exercise, any exercise shall be subject to the prior written approval of the
Director, Compensation and Benefits or an officer of the Corporation. Such
approval shall be at the sole discretion of the Director, Compensation and
Benefits or the officer. If and when granted, such approval will constitute
the notice to the Corporation referred to above in Section 2.4(b).
2.5 Limitations on ISOs
Notwithstanding anything in the Plan to the contrary, to the extent
required from time to time by the Code, the following additional provisions
shall apply to the grant of Options which are intended to qualify as ISOs (as
such term is defined in Section 422 of the Code):
(a) The aggregate Fair Market Value (determined as of the date the
Option is granted) of the shares of Common Stock with respect to which ISOs
are exercisable for the first time by any Participant during any calendar
year (under all plans of the Company) shall not exceed $100,000 or such
other amount as may subsequently be specified by the Code; provided that,
to the extent that such limitation is exceeded, any excess Options (as
determined under the Code) shall be deemed to be NSOs.
(b) Any ISO authorized under the Plan shall contain such other
provisions as the Committee shall deem advisable, but shall in all events
be consistent with and contain or be deemed to contain all provisions
required in order to qualify the Options as ISOs.
(c) All ISOs must be granted within ten years from the earlier of the
date on which this Plan was adopted by the Board of Directors or the date
this Plan was approved by the stockholders.
(d) Unless sooner exercised, terminated, or canceled, all ISOs shall
expire no later than ten years after the date of grant.
2.6 Loans
The Committee may provide for the Corporation or any Subsidiary to make
loans to finance the exercise of any Option as well as the estimated or actual
amount of any taxes payable by the holder as a result of the exercise or
payment of any Option and may prescribe, or may empower the Corporation or
such Subsidiary to prescribe, the other terms and conditions.
2.7 Award of Stock Appreciation Rights
(a) General. An SAR is a right to receive, without payment (except for
applicable withholding taxes) to the Company, a number of shares of Common
Stock, cash, or a combination thereof, the amount of which is determined
pursuant to the formula set forth in Section 2.7(e). An SAR may be granted (i)
with respect to any Option granted under this Plan, either concurrently with
the grant of such Option, or at such later time as determined by the Committee
(as to all or any portion of the shares of Common Stock subject to the
Option); or (ii) alone, without reference to any related stock option. Each
SAR granted by the Committee under this Plan shall be subject to the terms and
conditions of this Section.
A-4
<PAGE>
(b) Number. Each SAR granted to any Participant shall relate to such number
of shares of Common Stock as shall be determined by the Committee, subject to
adjustment as provided in Section 1.6. In the case of an SAR granted with
respect to a stock option, the number of shares of Common Stock to which the
SAR pertains shall be reduced in the same proportion that the holder of the
option exercises the related stock option.
(c) Duration. The term of each SAR shall be determined by the Committee but
in no event shall an SAR (other than a Substitute Award) be exercisable during
the first six months of its term and the term of each SAR shall not extend
later than ten years after the date of grant of the SAR. Subject to the
foregoing, unless otherwise provided by the Committee, each SAR shall become
exercisable at such time or times, to such extent and upon such conditions as
the stock option, if any, to which it relates is exercisable.
(d) Exercise. An SAR may be exercised, in whole or in part, by giving
written notice to the Company, specifying the number of SARs which the holder
wishes to exercise. Upon receipt of such written notice, the Company shall,
within 90 days thereafter, deliver to the exercising holder a certificate for
the shares of Common Stock or cash or both, as determined by the Committee, to
which the holder is entitled.
(e) Payment. Subject to the right of the Committee to deliver cash in lieu
of shares of Common Stock, the number of shares of Common Stock which shall be
issuable upon the exercise of an SAR shall be determined by dividing:
(i) the number of shares of Common Stock as to which the SAR is
exercised multiplied by the amount of the appreciation in such shares (for
this purpose, the "appreciation" shall be the amount by which the Fair
Market Value of a share of Common Stock subject to the SAR on the exercise
date exceeds (A) in the case of an SAR related to a stock option, the
purchase price of a share of Common Stock under the stock option or (B) in
the case of an SAR granted alone, without reference to a related stock
option, an amount which shall be determined by the Committee at the time of
grant, provided, however, such amount is at least equal to the Fair Market
Value of the Common Stock on the date the SAR is awarded, (subject to
adjustment under Section 1.6); by
(ii) the Fair Market Value of a share of Common Stock on the exercise
date.
In lieu of issuing shares of Common Stock upon the exercise of an SAR, the
Committee may elect to pay the holder of the SAR cash equal to the
appreciation (such appreciation to be determined as set forth in Section
2.7(e)(i) above) on the exercise date of any or all of the shares which would
otherwise be issuable. No fractional shares of Common Stock shall be issued
upon the exercise of an SAR; instead, the holder of the SAR shall be entitled
to receive a cash adjustment equal to the same fraction of the Fair Market
Value of a share of Common Stock on the exercise date.
(f) Documentation of SAR Awards. SARs awarded under the Plan may be
evidenced by either a signed written agreement, a certificate or an electronic
record containing such terms and conditions as the Committee may from time to
time determine.
2.8 Termination of Employment
(a) In the event the Participant ceases to be an employee of the Company
with the consent of the Committee or upon the Participant's death, or
retirement or disability pursuant to applicable disability or retirement plans
of the Company, each of the Participant's outstanding Options and SARs shall
be exercisable by the Participant (or the Participant's legal representative
or designated beneficiary), subject to the vesting requirements of the Options
and SARs, at any time prior to an expiration date established by the Committee
at the time of award (which may be the original expiration date of such
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Option or such earlier time as the Committee may establish) or as set forth in
Section 2.8(b) or (c), but in no event after its respective expiration date.
If the Participant ceases to be an employee of the Company for any other
reason and without such consent, all of the Participant's then outstanding
Options and SARs shall terminate immediately.
(b) Unless the Committee establishes otherwise at the time of the Award, in
the event of termination of employment because of death, the Participant's
outstanding Options and SARs may be exercised by the heirs, legatees or legal
representatives of the holder, as the case may be, within twelve months after
such death. Such exercise shall be upon the same terms at the time of exercise
as would have been available to the original holder, had he or she remained in
the continuous employ of the Company, except that such heirs, legatees or
legal representatives may exercise any Options and SARs held at the date of
such holder's death without regard to the holding period established pursuant
to Section 2.4(a) or 2.7(c) above.
Unless the Committee establishes otherwise at the time of the Award, in the
event of termination of employment of the holder of an Option or SAR with the
consent of the Committee or because of disability or retirement pursuant to
applicable disability or retirement plans of the Company, an Option or SAR may
be exercised by such holder, within five years after such termination, to the
same extent and upon the same terms (including among other things, the holding
period requirement established pursuant to Section 2.4(a) or 2.7(c) above) at
the time of exercise as would have been available had such holder remained in
the continuous employ of the Company. In the event of the death of such holder
of an Option or SAR prior to the expiration of the five-year period specified
in the preceding sentence, an Option or SAR held at death by such holder may
be exercised by the holder's heirs, legatees or legal representatives, as the
case may be, (without regard to the holding period requirement established
pursuant to Section 2.4(a) or 2.7(c) above) within one year after death or
within five years following such termination, whichever is later, but only if
and to the extent the Option or SAR would have been exercisable by the retired
holder of the option at the date of death.
(c) In the event of a termination of employment by the Company of a
Participant with the consent of the Committee or because of the Participant's
death, retirement or disability pursuant to applicable disability or
retirement plans of the Company, the Committee in its sole discretion may
elect to accelerate the date on which certain of the Options and SARs issued
to such Participant become exercisable, which acceleration may be conditioned
on the forfeiture of other Awards issued to such Participant. It is expressly
provided, however, that no such acceleration may permit the exercise of any
Option or SAR in less than six months from the date of grant, nor represent a
material increase in benefits.
(d) Nothing in Section 2.8(b) and 2.8(c) shall make an Option or SAR
exercisable after the stated expiration date of such Option or SAR.
Article III--Performance Shares and Units
3.1 Award of Performance Units and Performance Shares
The Committee may award to any Participant Performance Shares and
Performance Units ("Performance Awards"). Each Performance Share shall
represent one share of Common Stock. Each Performance Unit shall represent the
right of a Participant to receive an amount equal to the value determined in
the manner established by the Committee at the time of award, which value may,
without limitation, be equal to the Fair Market Value of one share of Common
Stock.
3.2 Documentation of Performance Awards
Each Performance Award under the Plan may be evidenced by a signed written
agreement, a certificate or an electronic record containing such terms and
conditions as the Committee may from
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time to time determine. Performance Shares shall be held by the Corporation
while subject to performance targets. Except for restrictions on transfer, the
Participant as owner of such Performance Shares shall have all the rights of a
holder of Common Stock.
3.3 Performance Period and Targets
(a) The performance period for each award of Performance Shares and
Performance Units shall be of such duration as the Committee shall establish
at the time of award; provided, however, that in no event will the performance
period be less than one year (the "Performance Period"). There may be more
than one award in existence at any one time and Performance Periods may
differ.
(b) The Committee shall set performance targets relating to Performance
Units and Performance Shares which shall be based on one or more of the
following performance measures, or any combination of the following: (i) total
stockholder return; (ii) growth in revenues, sales, settlements, market share,
customer conversion, net income, stock price, and/or earnings per share; (iii)
return on assets, net assets, and/or capital; (iv) return on stockholders'
equity; (v) economic value added; (vi) improvements in costs and/or expenses;
or (vii) any similar performance measure established by the Committee. Such
performance targets shall be established in writing by the Committee no later
than the earlier of (i) 90 days after the commencement of the Performance
Period with respect to which the award of Performance Units or Performance
Shares is made and (ii) the date as of which twenty-five percent (25%) of such
Performance Period has elapsed. For purposes of establishing performance
targets, any of the factors set forth above may, as applicable, be measured
either before or after income taxes, and on a corporate, division, subsidiary
or individual basis, and may include or exclude interest, depreciation and
amortization, goodwill, extraordinary items and other material non-recurring
gains or losses, discontinued or added operations, the cumulative effect of
changes in accounting policies and the effect of any tax law changes. At the
time of setting performance targets, the Committee shall establish minimum,
target and maximum performance targets to be achieved within the Performance
Period. Failure to meet the minimum performance target will earn no
Performance Award. Performance Awards will be earned as determined by the
Committee in respect of a Performance Period in relation to the degree of
attainment of performance between the minimum and maximum performance targets.
(c) If the Committee shall determine that an acquisition or disposition of
assets or securities by the Company shall have a material effect (whether
positive or negative) on the Company's ability to meet its performance
target(s) for the applicable Performance Period(s), the Committee shall have
the discretion to take any action that would reduce the amount of an Award, or
to adjust a performance target for a Performance Period, subject to the
limitations of Section 162(m).
(d) Except as provided in Section 3.3(c) above, once established
performance targets for Awards to Covered Participants shall not be changed
during the Performance Period; provided, however, that the Committee retains
the discretion to eliminate or decrease the amount of an Award otherwise
payable to any Participant.
3.4 Payment Respecting Performance Awards
(a) Performance Awards shall be earned to the extent that their terms and
conditions are met. Notwithstanding the foregoing, Performance Awards shall be
payable to the Participant only in accordance with the terms thereof or
otherwise when, if, and to the extent that the Committee determines to make
such payment. All payment determinations shall be made by the Committee during
the first four months following the end of the Performance Period.
(b) The Participant may elect to defer any cash payment respecting a
Performance Award pursuant to Article V hereof.
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(c) Payment for Performance Awards may be made in a lump sum or in
installments. Performance Shares may be paid in cash, Common Stock or in a
combination thereof as the Committee may determine. Performance Units may be
paid only in cash.
3.5 Termination of Employment
In the event the Participant ceases to be an employee of the Company before
the end of any Performance Period with the consent of the Committee, or upon
the Participant's death, or retirement or disability pursuant to applicable
disability or retirement plans of the Company before the end of any
Performance Period: (a) each Performance Award previously granted to the
participant shall continue to be subject to the performance targets for the
Performance Period until such Awards are forfeited or earned pursuant to their
terms and conditions; or (b) the Committee, in its absolute discretion, may
authorize the payment to such Participant (or the Participant's legal
representative or designated beneficiary) of any of the Performance Units and
Performance Shares which would have been paid to the Participant had the
Participant continued as an employee of the Company to the end of the
Performance Period provided that the number of Performance Units and
Performance Shares paid early shall be discounted to reasonably reflect the
time value of money and shall be based on the Company's progress, measured as
of the date of acceleration, with regard to reaching the applicable
performance targets. In the event a Participant ceases to be an employee of
the Company for any other reason and without such consent before the end of
the Performance Period, any unpaid amounts for outstanding Performance Periods
shall be forfeited.
Article IV--Restricted Stock and Restricted Stock Equivalents
4.1 Award of Restricted Stock
The Committee may award to any Participant shares of Common Stock, subject
to this Article IV and such other terms and conditions as the Committee may
prescribe (such shares being herein called "Restricted Stock"). Restricted
Stock shall be held by the Corporation while subject to restrictions. As
restrictions lapse the shares will be delivered to the Participant.
4.2 Documentation of Restricted Stock Awards
Awards of Restricted Stock and Restricted Stock Equivalents under the Plan
may be evidenced by a signed written agreement, a certificate or an electronic
record containing such terms and conditions as the Committee may from time to
time determine.
4.3 Restriction Period
At the time of award there shall be established for each Participant,
subject to Section 4.6, a restriction period (the "Restriction Period") which
shall lapse (a) upon the completion of a period of time ("Time Goal") as shall
be determined by the Committee, or (b) upon the achievement of stock price
goals within certain time limitations ("Price/Time Goal") as shall be
determined by the Committee; provided, however, that, except for maximum
aggregate Restricted Stock or Restricted Stock Equivalent awards of 5% of the
aggregate shares authorized by Section 1.4(b), the Restriction Period on
awards with a Price/Time Goal shall not be less than one year and the
Restriction Period on awards with only a Time Goal shall not be less than
three years. Except for restrictions on transfer, the Participant as owner of
such shares of Restricted Stock shall have all the rights of a holder of
Common Stock. With respect to shares of Restricted Stock which are issued
subject to a Time Goal, the Corporation shall deliver to the Participant (or
the Participant's legal representative or designated beneficiary) the
certificates at the expiration of the Restriction Period. With respect to
shares of Restricted Stock which are issued subject to a Price/Time Goal, the
Corporation shall deliver to the
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Participant (or, if applicable pursuant to Section 4.4 to the Participant's
legal representative or designated beneficiary) the certificates upon the
achievement of the Price/Time Goal on or before the close of the Restriction
Period. With respect to shares of Restricted Stock which are issued subject to
a Price/Time Goal which fail to meet the goal before the end of the
Restriction Period, all such shares shall be forfeited, and the Corporation
shall have the right to return such shares to the Corporation.
4.4 Termination of Employment
In the event the Participant ceases to be an employee of the Company before
the end of any Restriction Period with the consent of the Committee, or upon
the Participant's death, or retirement or disability pursuant to applicable
disability or retirement plans of the Company before the end of any
Restriction Period, the Committee shall have the absolute discretion to waive
all or a portion of the Time Goals and Price/Time Goals established under
Section 4.3 provided that the Price/Time Goals with respect to any Restricted
Stock or Restricted Stock Equivalent awarded to Covered Participants pursuant
to Section 4.6 shall not be subject to waiver or modification after such goals
are established. The shares thereby released, if any, shall thereafter be
delivered to such Participant (or the Participant's legal representative or
designated beneficiary). In the event and to the extent the Committee does not
exercise its discretion to waive the Time Goals and Price/Time Goals or a
Participant ceases to be an employee of the Company for any other reason and
without such consent before achievement of the Time Goal or Price/Time Goal,
each award to such Participant upon which the Restriction Period has not
lapsed shall automatically be forfeited.
4.5 Award of Restricted Stock Equivalents
In lieu of or in addition to the foregoing Restricted Stock Awards, the
Committee may award to any Participant restricted stock equivalents, subject
to the terms and conditions of Sections 4.2, 4.3, and 4.4 being applied to
such awards as if those awards were for Restricted Stock and subject to such
other terms and conditions as the Committee may prescribe ("Restricted Stock
Equivalents"). Each Restricted Stock Equivalent shall represent the right of
the Participant to receive an amount determined in the manner established by
the Committee at the time of award, which value may, without limitation, be
equal to the Fair Market Value of one share of Common Stock. Payment for
Restricted Stock Equivalents may be made only in cash, in a lump sum or in
installments, as the Committee may determine.
4.6 Restricted Stock and Restricted Stock Equivalents Awarded to Covered
Participants
Any Restricted Stock or Restricted Stock Equivalent awarded to a Covered
Participant which the Committee intends to qualify for the performance-based
exception under Code Section 162(m) shall be subject to a Price/Time Goal.
Article V--Other Awards, Cash Equivalent Awards and Deferral
5.1 Other Awards
The Committee shall have the authority to specify the terms and provisions
of other forms of equity-based or equity-related awards not described above
which the Committee determines to be consistent with the purpose of the Plan
and the interests of the Company, which awards may provide for cash payments
based in whole or in part on the value or future value of Common Stock, for
the acquisition or future acquisition of Common Stock, or any combination
thereof ("Other Awards"); provided, that, such Other Awards with a performance
goal shall not vest in less than one year and Other Awards without one or more
performance goals shall not vest in less than three years. Other Awards shall
also include cash payments (including the cash payment of dividend
equivalents) under the Plan which may be based on one or more criteria
determined by the Committee which are unrelated to the value of Common Stock
and which may be granted in tandem with, or independent of, other awards under
the Plan.
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5.2 Cash Equivalent Awards
The Committee may permit Participants, on such terms and conditions as the
Committee may prescribe, to elect to receive Performance Share and Restricted
Stock awards in cash in lieu of Common Stock provided such election is made
prior to the earlier of: (i) the date the shares are issued for the benefit of
the Participant (including when held by the Corporation subject to
restrictions); or (ii) the day prior to the beginning of the calendar year in
which the award would become payable. Any such cash equivalent payments shall
be based on the Fair Market Value of the Common Stock on the date determined
by the Committee and be on such terms as shall not represent an increase in
benefits. Such cash equivalent payments shall be applied against the limits on
the maximum number of shares of Common Stock pursuant to Section 1.4 and 1.5,
based on such Fair Market Value.
5.3 Election To Defer
Participant eligible to also participate in the Deere & Company Voluntary
Deferred Compensation Plan or any successor plan thereto may elect, with the
consent of the Committee and on such terms and conditions as the Committee may
prescribe, no later than the day prior to the beginning of the last calendar
year of the Performance Period, to defer all or a portion of the Participant's
Performance or Restricted Award that is payable in cash (the "Deferred
Amount"). All Deferred Amounts will be subject to the terms and conditions of
the Deere & Company Voluntary Deferred Compensation Plan or any successor plan
thereto.
Article VI--Non-Transferability
6.1 Non-Transferability
Except as provided below, no Award under the Plan (including any Deferred
Amount), and no interest therein, shall be transferable by the Participant
otherwise than by will or, if the Participant dies intestate, by the laws of
descent and distribution and no Award may be sold, transferred, assigned,
pledged, hypothecated or otherwise encumbered in any way (whether by operation
of law or otherwise) or be subject to execution, attachment, or similar
process. Upon any attempt to so transfer, assign, pledge, hypothecate or
otherwise dispose of, or subject to execution, attachment or similar process,
any Award, or any right thereunder, contrary to the provisions hereof, the
Award shall immediately become null and void. Except as provided below, all
Awards shall be exercisable or received during the Participant's lifetime only
by the Participant or his legal representative.
6.2 Permitted Transfers
Notwithstanding the foregoing, the Committee may from time to time permit
Awards to be transferable subject to such terms and conditions as the
Committee may impose.
6.3 Transferability of Stock Options and SARs
Notwithstanding the foregoing, the Committee may, in its discretion,
authorize all or a portion of Options and SARs granted or to be granted to a
Participant to be on terms which permit transfer by gift or domestic relations
orders (i) by such Participant to family members, (ii) by family members to
other family members, and (iii) to such other persons or entities as may be
permitted under Form S-8 under the Securities Act of 1933, as amended from
time to time or any successor form thereto. Following transfer, any such
Options and SARs shall continue to be subject to the same terms and conditions
as were applicable immediately prior to transfer. The events of termination of
employment of Section 2.8 hereof shall continue to be applied with respect to
the employee, following which the options shall be exercisable by the
transferee only to the extent, and for the periods established pursuant to
Section 2.8. Family members, for purposes of this Section, has the meaning
expressed in the instructions to Form S-8 under the Securities Act or 1933, as
amended from time to time or any successor form thereto.
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6.4 Beneficiary Designation
Each Participant under the Plan may name, from time to time, any beneficiary
or beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of the Participant's death before
the Participant receives any or all of such benefit. Each designation will
revoke all prior designations for the Plan by the same Participant, shall be in
a form prescribed by the Corporation, and will be effective only when executed
and filed by the Participant in writing during the Participant's lifetime with
the Corporation at such address specified on the designation form. In the
absence of any such designation, benefits remaining unpaid at the Participant's
death shall be paid to the Participant's estate.
Article VII--Change Of Control
The following acceleration and valuation provisions shall apply in the event
of a "Change of Control" or "Potential Change of Control," as defined in this
Article VII.
(a) In the event that:
(i) a "Change of Control" as defined in paragraph (b) of this
Article VII occurs; or
(ii) a "Potential Change of Control" as defined in paragraph (c) of
this Article VII occurs and the Committee or the Board determines that
the provisions of this paragraph (a) should be invoked;
then, unless otherwise determined by the Committee or the Board in writing
at or after the making of an Award, but prior to the occurrence of such
Change of Control, all restrictions and vesting requirements applicable to
any Award shall terminate; all Options and SARs granted hereunder shall
become immediately exercisable and shall remain exercisable throughout
their entire term; and the value of all other Awards hereunder shall, to
the extent determined by the Committee at or after grant, be cashed out on
the basis of the "Change of Control Price" (as defined in paragraph (d) of
this Article VII).
(b) For purposes of paragraph (a) of this Article VII, a "Change of
Control" means a change in control of a nature that would be required to be
reported in response to Schedule 14A of Regulation 14A promulgated under
the Securities Exchange Act of 1934 (the "Exchange Act") whether or not the
Corporation is then subject to such reporting requirement, provided that,
without limitation, such a Change in Control shall be deemed to have
occurred if:
(i) any "person" (as defined in Sections 13(d) and 14(d) of the
Exchange Act) (other than a Participant or group of Participants, the
Corporation or a Subsidiary, or any employee benefit plan of the
Corporation including its trustee) is or becomes the "beneficial owner"
(as defined in Rule 13(d-3) under the Exchange Act), directly or
indirectly, of securities of the Corporation representing thirty
percent (30%) or more of the combined voting power of the Corporation's
then outstanding securities;
(ii) during any period of two (2) consecutive years, there shall
cease to be a majority of the Board comprised as follows: individuals
who at the beginning of such period constitute the Board and any new
director(s) whose election by the Board or nomination for election by
the Corporation's stockholders was approved by a vote of at least two-
thirds ( 2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved but excluding, for
this purpose, any such new director whose initial assumption of office
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
person other than the Board;
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(iii) the stockholders of the Corporation approve a merger or
consolidation of the Corporation with any other company, other than a
merger or consolidation which would result in the voting securities of
the Corporation outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least eighty percent
(80%) of the combined voting power of the voting securities of the
Corporation or such surviving entity outstanding immediately after such
merger or consolidation; or
(iv) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets.
(c) For purposes of paragraph (a) of this Article VII, a "Potential
Change of Control" means the happening of any of the following:
(i) the entering into an agreement by the Corporation (other than
with a Participant or group of Participants), the consummation of which
would result in a Change of Control of the Corporation as defined in
paragraph (b) of this Article VII; or
(ii) the acquisition of beneficial ownership, directly or
indirectly, by any entity, person or group (other than a Participant or
group of Participants, the Corporation or a Subsidiary, or any employee
benefit plan of the Corporation including its trustee) of securities of
the Corporation representing five percent (5%) or more of the combined
voting power of the Corporation's outstanding securities and the
adoption by the Board of Directors of a resolution to the effect that a
Potential Change of Control of the Corporation has occurred for
purposes of the Plan.
(d) For purposes of this Article VII, "Change of Control Price" means
the highest price per share of Common Stock paid in any transaction
reported on the New York Stock Exchange Composite Tape, or offered in any
transaction related to a Potential or actual Change of Control of the
Corporation at:
(i) the date the Change of Control occurs;
(ii) the date the Potential Change of Control is determined to have
occurred; or
(iii) such other date as the Committee may determine at or after
grant but before the Change of Control occurs or the Potential Change
of Control is determined to have occurred;
or at any time selected by the Committee during the sixty (60) day period
preceding such date.
Article VIII--Miscellaneous
8.1 Participant Agreement to Plan Provisions
The Participant shall notify the Director, Compensation and Benefits or the
Secretary of the Corporation of any issues and disagreements regarding the
terms and conditions of the Award within 30 calendar days of the date the
Company dispatches notice of the terms of the Award to the Participant. Upon
resolution of such issues as determined by the Company or, no such notice
having been received, upon the expiration of such 30 calendar days, the
Participant (and the Participant on behalf of his legal representative and
designated beneficiary) shall be deemed to have agreed to comply with all the
terms and conditions of the Award and the Plan (including without limitation,
the conditions of Section 8.2 below) and any agreements, certificates and
records issued in connection herewith.
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8.2 Conditions on Awards
In the event that the employment of a Participant holding any unexercised
Option or SAR, any unearned Performance Award, any unearned shares of
Restricted Stock, or any unearned Restricted Stock Equivalents shall terminate
with the consent of the Committee or by reason of retirement or disability,
the rights of such Participant to any such Award shall be subject to the
conditions that until any such Option or SAR is exercised, or any such
Performance Award, share of Restricted Stock or Restricted Stock Equivalent is
earned, the Participant shall (a) not engage, either directly or indirectly,
in any manner or capacity as advisor, principal, agent, partner, officer,
director, employee, member of any association or otherwise, in any business or
activity which is at the time competitive with any business or activity
conducted by the Company and (b) be available, unless the Participant shall
have died, at reasonable times for consultations (which shall not require
substantial time or effort) at the request of the Company's management with
respect to phases of the business with which the Participant was actively
connected during the Participant's employment, but such consultations shall
not (except in the case of a Participant whose active service was outside of
the United States) be required to be performed at any place or places outside
of the United States of America or during usual vacation periods or periods of
illness or other incapacity. In the event that either of the above conditions
is not fulfilled, the Participant shall forfeit all rights to any unexercised
Option or SAR, Performance Award, shares of Restricted Stock or Restricted
Stock Equivalents held on the date of the breach of the condition. Any
determination by the Board of Directors of the Corporation, which shall act
upon the recommendation of the Chairman, that the Participant is, or has,
engaged in a competitive business or activity as aforesaid or has not been
available for consultations as aforesaid shall be conclusive.
8.3 Effect on Other Plans
(a) Participation in the Plan shall not affect a Participant's eligibility
to participate in any other benefit or incentive plan of the Company.
(b) Any Awards made pursuant to the Plan shall not be included in the
Participant's remuneration for the purposes of determining the benefits
provided under any other plan of the Company unless specifically provided in
such other plan.
(c) The adoption of the Plan shall not preclude the adoption by appropriate
means of any other stock option or other incentive plan for employees of the
Company.
8.4 Rights of Participants
Nothing in the Plan shall interfere with or limit in any way the right of
the Company to terminate any Participant's employment at any time, nor confer
upon any Participant any right to continue in the employ of the Company for
any period of time or to continue the Participant's present or any other rate
of compensation. No employee shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a
Participant.
8.5 Tax Withholding
(a) The Company shall have the power to withhold, or require a Participant
to remit to the Company, an amount sufficient to satisfy any withholding or
other tax due from the Corporation with respect to any amount payable and/or
shares issuable under the Plan, and the Corporation may defer such payment or
issuance unless indemnified to its satisfaction.
(b) Subject to the consent of the Committee, due to (i) the exercise of a
NSO, (ii) lapse of restrictions on a Restricted Stock Award, or (iii) the
issuance of any other stock award under the Plan, a Participant may make an
irrevocable election (an "Election") to (A) have shares of Common Stock
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otherwise issuable under (i) withheld, or (B) tender back to the Corporation
shares of Common Stock received pursuant to (i), (ii), or (iii), or (C)
deliver back to the Corporation pursuant to (i), (ii), or (iii) previously-
acquired shares of Common Stock of the Corporation having a Fair Market Value
sufficient to satisfy all or part of the Participant's estimated tax
obligations associated with the transaction. Whenever shares are withheld for
taxes and such taxes are not funded by a sale of such shares on the market,
withholding of shares shall be in an amount not to exceed the amount necessary
to satisfy the minimum federal and local statutory withholding requirements.
(c) Such Election must be made by a Participant prior to or on the date on
which the relevant tax obligation arises (the "Tax Date"). The Committee may
disapprove of any Election, may suspend or terminate the right to make
Elections, or may provide with respect to any Award under this Plan that the
right to make Elections shall not apply to such Awards.
8.6 Foreign Alternatives
Notwithstanding the other provisions of the Plan, in the case of any Award
(including any Deferred Amount) to any Participant who is an employee of a
foreign Subsidiary or foreign branch of the Company or held by a Participant
who is in any other category specified by the Committee, the Committee may
specify that such Award shall not be represented by shares of Common Stock or
other securities but shall be represented by rights approximately equivalent
(as determined by the Committee) to the rights that such Participant would
have received if shares of Common Stock or other securities had been issued in
the name of such Participant otherwise in accordance with the Plan (such
rights being hereinafter called "Stock Equivalents"). The Stock Equivalents
representing any such Award may subsequently, at the option of the Committee,
be converted into cash or an equivalent number of shares of Common Stock or
other securities under such circumstances and in such manner as the Committee
may determine. Stock Equivalents shall be applied against the limits on the
maximum number of shares of Common Stock pursuant to Sections 1.4 and 1.5.
8.7 Non-Uniform Determinations
The Committee's determinations under the Plan, including without
limitation, (a) the determination of the Participants to receive Awards, (b)
the form, amount and timing of such Awards, (c) the terms and provisions of
such Awards and (d) agreements evidencing the same, need not be uniform and
may be made by it selectively among Participants who receive, or who are
eligible to receive, Awards under the Plan, whether or not such Participants
are similarly situated.
8.8 Suspensions, Leaves of Absence, and Transfers
The Committee shall be entitled to make such rules, regulations and
determinations as it deems appropriate under the Plan in respect of any
suspension of employment or leave of absence from the Company granted to a
Participant whether such suspension or leave is paid or unpaid and whether due
to a disability or otherwise. Without limiting the generality of the
foregoing, the Committee shall be entitled to determine (a) whether or not any
such suspension or leave of absence shall be treated as if the Participant
ceased to be an employee of the Company and (b) the impact, if any, of any
such suspension or leave of absence on Awards under the Plan. In the event a
Participant transfers within the Company, such Participant shall not be deemed
to have ceased to be an employee of the Company for purposes of the Plan.
8.9 Requirements of Law, Governing Law
(a) The granting of Awards and the issuance of shares of Common Stock shall
be subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required. The Plan, and all agreements hereunder, shall be
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construed in accordance with and governed by the laws of the State of
Illinois, excluding any conflicts or choice of law rule or principle that
might otherwise refer construction or interpretation of such agreement to the
substantive law of another jurisdiction.
(b) Each Award (including Deferred Amounts) shall be subject to the
requirement that if at any time the Committee shall determine, in its
discretion, that the listing, registration, or qualification of such Award, or
any shares of Common Stock or other property subject thereto, upon any
securities exchange or under any foreign, federal, or state securities or
other law or regulation, or the consent or approval of any governmental body
or the taking of any other action to comply with or otherwise with respect to
any such law or regulation, is necessary or desirable as a condition to or in
connection with the granting of such Award or the issue, delivery or purchase
of shares of Common Stock or other property thereunder, no such Award may be
exercised or paid in Common Stock or other property unless such listing,
registration, qualification, consent, approval, or other action shall have
been effected or obtained free of any conditions not acceptable to the
Committee and the holder of the Award will supply the Corporation with such
certificates, representations and information as the Corporation shall request
and shall otherwise cooperate with the Corporation in effecting or obtaining
such listing, registration, qualification, consent, approval or other action.
In the case of Officers and other persons subject to Section 16(b) of the
Exchange Act, the Committee may at any time impose any limitations upon the
exercise, delivery, or payment of any Award (including Deferred Amounts)
which, in the discretion of the Committee, are necessary or desirable in order
to comply with Section 16(b) and the rules and regulations thereunder. If the
Corporation, as part of an offering of securities or otherwise, finds it
desirable because of foreign, federal, or state legal or regulatory
requirements to reduce the period during which Options or SARs may be
exercised, the Committee may, in its discretion and without the holders'
consent, so reduce such period on not less than 15 days' written notice to the
holders thereof.
(c) It is the intent of the Corporation that the Plan comply in all
respects with Section 162(m) of the Code, that any ambiguities or
inconsistencies in construction of the Plan be interpreted to give effect to
such intention and that if any provision of the Plan is found not to be in
compliance with Section 162(m), such provision shall be deemed null and void
to the extent required to permit the Plan to comply with Section 162(m).
8.10 Amendment, Suspension and Termination of Plan
The Committee may suspend or terminate the Plan or any portion thereof at
any time and may amend it from time to time in such respects as the Committee
may deem advisable in order that any Awards thereunder shall conform to or
otherwise reflect any change in applicable laws or regulations, or to permit
the Company or its employees to enjoy the benefits of any change in applicable
laws or regulations, or in any other respect the Committee may deem to be in
the best interests of the Company; provided, however, that no such amendment
shall, without the approval of the stockholders of the Corporation to the
extent required by law, agreement, or the rules of any exchange upon which the
Common Stock is listed, (i) increase the number of shares of Common Stock
which may be issued under the Plan (except as provided in Section 1.6), (ii)
modify the requirements as to eligibility for participation in the Plan, (iii)
materially increase the benefits accruing to Participants under the Plan, or
(iv) extend the termination date of the Plan. No such amendment, suspension or
termination shall materially and adversely affect the rights of Participants
under outstanding Options, SARs, Performance Awards, awards of Restricted
Stock or Restricted Stock Equivalents, or Deferred Amounts without the consent
of the Participants affected thereby.
8.11 Effective Date
The Plan shall become effective upon approval by the stockholders of the
Corporation.
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8.12 Duration of the Plan
The Plan shall remain in effect until all Awards under the Plan are free of
all restrictions imposed by the Plan, but no Awards shall be made hereunder
after December 31, 2005.
Article IX--Definitions and Other General Provisions
(a) The term "Fair Market Value" as it relates to Common Stock on any given
date means (i) the mean of the high and low sales prices of the Corporation's
Common Stock as reported by the Composite Tape of the New York Stock Exchange
(or, if not so reported, on any domestic stock exchanges on which the Common
Stock is then listed); or (ii) if the Common Stock is not listed on any
domestic stock exchange, the mean of the high and low sales prices of the
Corporation's Common Stock as reported by the Nasdaq Stock Market on such date
or the last previous date reported (or, if not so reported, by the system then
regarded as the most reliable source of such quotations) or, if there are no
reported sales on such date, the mean of the closing bid and asked prices as
so reported; or (iii) if the Common Stock is listed on a domestic exchange or
quoted in the domestic over-the-counter market, but there are not reported
sales or quotations, as the case may be, on the given date, the value
determined pursuant to (i) or (ii) above using the reported sale prices or
quotations on the last previous date on which so reported; or (iv) if none of
the foregoing clauses applies, the fair value as determined in good faith by
the Corporation's Board of Directors or the Committee.
(b) The term "fiscal year" shall mean, the 12-month period beginning each
November 1 and ending October 31 of the following year.
(c) The terms "retirement" and "disability" as used under the Plan shall be
construed by reference to the provisions of the pension plan or other similar
plan or program of the Company applicable to a Participant. Unless the
Committee establishes otherwise, the terms "retirement" and "disability" mean
normal retirement, early retirement, total and permanent disability retirement
each has defined in the John Deere Pension Plan for Salaried Employees, and
similar events under other similar plans of the Company applicable to the
Participant. Unless the Committee establishes otherwise, the terms
"retirement" and "disability" do not include Participants entitled only to a
deferred vested pension as defined in the John Deere Pension Plan for Salaried
Employees, or salary continuance under the John Deere Salary Continuance Plan,
and similar events under other similar plans of the Company applicable to the
Participants.
(d) The term "Subsidiary" shall mean, unless the context otherwise
requires, any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation if each of the corporations other
than the last corporation in such chain owns stock possessing at least 50% of
the voting power in one of the other corporations in such chain.
(e) The term "Substitute Award" shall mean an Award granted upon assumption
of, or in substitution for, outstanding awards previously granted by a company
or other entity in connection with a corporate transaction, such as a merger,
combination, consolidation or acquisition of property or stock.
(f) Except when otherwise indicated by the context, words in the masculine
gender when used in the Plan shall include the feminine gender, the singular
shall include the plural, and the plural shall include the singular.
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JOHN DEERE PERFORMANCE BONUS PLAN
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SECTION 1. ESTABLISHMENT AND PURPOSE
1.1 Establishment of the Plan. Deere & Company, a Delaware corporation
(the "Company"), hereby establishes an annual incentive compensation plan to be
known as the "John Deere Performance Bonus Plan" (the "Plan"), as set forth in
this document. The Plan permits the awarding of annual cash bonuses to Employees
of the Company, based on the achievement of pre-established performance goals.
Upon approval by the Board of Directors of the Company, subject to approval
by the shareholders, the Plan shall become effective as of November 1, 1994 (the
"Effective Date") and shall remain in effect until terminated by the Board or
Committee as provided by Section 13 herein.
1.2 Purpose. The purpose of the Plan is to provide Participants with a
meaningful annual incentive opportunity geared toward the achievement of
specific performance goals.
SECTION 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below (unless otherwise expressly provided) and, when the defined meaning
is intended, the term is capitalized.
(a) "Award Opportunity" means the various levels of incentive award
payouts which a Participant may earn under the Plan, as established by the
Committee pursuant to Section 5.1 herein.
(b) "Base Salary" shall mean the regular salary or salary continuance
earned during the Plan Year before any salary reduction contributions made to
the Company's Internal Revenue Code Section 401(k) Plan or other deferred
compensation plans. Among other compensation, "Base Salary" shall not include
awards under this Plan, any suggestions awards, pay for unused vacation, any
bonus or profit sharing benefits, the Company matching contribution under any
plan providing such, overtime or overtime premiums, relocation allowances,
mortgage differential allowances, any premium allowances for overseas service,
moving allowances, or any other special awards.
(c) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
(d) "Board" or "Board of Directors" means the Board of Directors of the
Company.
(e) "Committee" means a committee of two (2) or more individuals,
appointed by the Board to administer the Plan, pursuant to Section 3 herein, who
are not current or former officers or employees of the Company and who are
"outside directors" to the extent required by and within the meaning of Section
162(m) of the Internal Revenue Code of 1986 (the "Code"), as amended.
(f) "Company" means Deere & Company, a Delaware corporation (including any
and all subsidiaries), and any successor thereto.
(g) "Corporate" shall mean Deere & Company and its subsidiaries.
(h) "Disability" shall have the meaning ascribed to such term in
applicable disability or retirement plans of the Company.
(i) "Effective Date" means the date the Plan becomes effective, as set
forth in Section 1.1 herein.
(j) "Employee" means a full-time, salaried employee of the Company.
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(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
(l) "Executive Officers" shall mean any executive officers designated by
the Committee for purposes of qualifying payouts under the Plan for exemption
from Section 162(m) of the Code.
(m) "Final Award" means the actual award earned during a Plan Year by a
Participant, as determined by the Committee at the end of the Plan Year.
(n) "Non-corporate" shall mean a specified segment of Deere & Company's
operations designated as such by the Chief Executive Officer and approved by the
Committee for purposes of the Plan, such as a business unit, division, product
line, or other such segmentation.
(o) "Participant" means an Employee who is actively participating in the
Plan.
(p) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d).
(q) "Plan" means the Deere & Company Performance Bonus Plan.
(r) "Plan Year" means the Company's fiscal year.
(s) "Retirement" shall have the meaning ascribed to such term in the John
Deere Pension Plan for Salaried Employees, or any successor plan thereto.
(t) "Target Incentive Award" means the award to be paid to a Participant
when planned performance results are achieved, as established by the Committee.
SECTION 3. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee may delegate
to the Company responsibility for day-to-day administration of, the Plan,
following administrative guidelines approved from time to time by the Committee.
Subject to the limitations of the Plan, the Committee shall: (i) select
from the regular, full-time salaried Employees of the Company, those who shall
participate in the Plan, (ii) grant award opportunities in such forms and
amounts as it shall determine, (iii) impose such limitations, restrictions, and
conditions upon such awards as it shall deem appropriate, (iv) interpret the
Plan and adopt, amend, and rescind administrative guidelines and other rules and
regulations relating to the Plan, (v) correct any defect or omission or
reconcile any inconsistency in this Plan or in any award opportunity granted
hereunder, and (vi) make all other necessary determinations and take all other
actions necessary or advisable for the implementation and administration of the
Plan. The Committee's determinations on matters within its authority shall be
conclusive and binding upon all parties.
SECTION 4. ELIGIBILITY AND PARTICIPATION
4.1 Eligibility. All Employees (as defined in Section 2 herein) who are
actively employed by the Company in any Plan Year shall be eligible to
participate in the Plan for such Plan Year, subject to the limitations of
Section 7 herein.
4.2 Participation. Participation in the Plan shall be determined annually
by the Committee based upon the criteria set forth herein. Employees who are
eligible to participate in the Plan shall be so notified in
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writing, and shall be apprised of the performance goals and related award
opportunities for the relevant Plan Year, as soon as is practicable.
4.3 Partial Plan Year Participation. Except as provided in Section 11, in
the event that an Employee becomes eligible to participate in the Plan
subsequent to the commencement of a Plan Year, then such Employee's Final Award
shall be based on the Base Salary earned as an eligible Employee, providing that
the Employee has completed six pay periods of employment in a full-time status.
4.4 No Right to Participate. No Participant or other Employee shall at any
time have a right to be selected for participation in the Plan for any Plan
Year, despite having previously participated in the Plan.
SECTION 5. AWARD DETERMINATION
5.1 Performance Goals. Prior to the beginning of each Plan Year, or as
soon as practicable thereafter, the Committee shall establish performance goals
for that Plan Year. Except as provided in Section 11, the goals may be based on
any combination of Corporate, Non-corporate, and individual performance. After
the performance goals are established, the Committee will align the achievement
of the performance goals with the Award Opportunities (as described in Section
5.2 herein), such that the level of achievement of the preestablished
performance goals at the end of the Plan Year will determine the Final Award
amounts. Except as provided in Section 11, the Committee also shall have the
authority to exercise subjective discretion in the determination of Final
Awards, as well as the authority to delegate the ability to exercise subjective
discretion in this respect.
The Committee also may establish one (1) or more Company-wide performance
goals which must be achieved for any Participant to receive an award for that
Plan Year.
5.2 Award Opportunities. Prior to the beginning of each Plan Year, or as
soon as practicable thereafter, the Committee shall establish an Award
Opportunity for each Participant. The established Award Opportunity shall vary
in relation to the job classification of each Participant. Except as provided in
Section 11, in the event a Participant changes job levels during a Plan Year,
the Participant's Award Opportunity may be adjusted to reflect the amount of
time at each job level during the Plan Year.
5.3 Adjustment of Performance Goals. Except as provided in Section 11, the
Committee shall have the right to adjust the performance goals and the Award
Opportunities (either up or down) during a Plan Year if it determines that
external changes or other unanticipated business conditions have materially
affected the fairness of the goals and have unduly influenced the Company's
ability to meet them. Further, in the event of a Plan Year of less than twelve
(12) months, the Committee shall have the right to adjust the performance goals
and the Award Opportunities accordingly, at its sole discretion.
5.4 Final Award Determinations. At the end of each Plan Year, Final Awards
shall be computed for each Participant as determined by the Committee. Except as
provided in Section 11, each individual award shall be based upon (i) the
Participant's Target Incentive Award percentage, multiplied by his Base Salary,
(ii) Corporate and Non-corporate performance, and (iii) individual performance
(if applicable). Final Award amounts may vary above or below the Target
Incentive Award, based on the level of achievement of the preestablished
Corporate, Non-corporate, and individual performance goals.
5.5 Limitations. The amount payable to a Participant for any calendar year
shall not exceed $2,000,000.
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SECTION 6. PAYMENT OF FINAL AWARDS
6.1 Form and Timing of Payment. Final Award payments shall be payable in
cash, in one (1) lump sum, as soon as practicable after the end of each Plan
Year, or more frequently during the Plan Year, as determined by the Committee in
its sole discretion.
6.2 Payment of Partial Awards. In the event a Participant no longer meets
the eligibility criteria as set forth in the Plan during the course of a
particular Plan Year, the Committee may, in its sole discretion, pay a partial
award for the portion of the Plan Year the Employee was a Participant, computed
as determined by the Committee.
6.3 Unsecured Interest. No participant or any other party claiming an
interest in amounts earned under the Plan shall have any interest whatsoever in
any specific asset of the Company. To the extent that any party acquires a right
to receive payments under the Plan, such right shall be equivalent to that of an
unsecured general creditor of the Company.
SECTION 7. TERMINATION OF EMPLOYMENT
7.1 Termination of Employment Due to Death, Disability, Retirement, or
Transfer to Business Unit Not Included in the Plan. In the event a Participant's
employment is terminated by reason of death, Disability, Retirement, or transfer
to a business unit not included in the Plan, the Final Award determined in
accordance with Section 5.4 herein shall be reduced to reflect participation
prior to termination only. The reduced award shall be based upon the amount of
Base Salary earned during the Plan Year prior to termination. In the case of a
Participant's Disability, the employment termination shall be deemed to have
occurred on the date the Committee determines the definition of Disability to
have been satisfied.
The Final Award thus determined shall be payable as soon as practicable
following the end of the Plan Year in which employment termination occurred, or
sooner (except with respect to Executive Officers), as determined by the
Committee in its sole discretion.
7.2 Termination of Employment for Other Reasons. In the event a
Participant's employment is terminated for any reason other than death,
Disability, or Retirement (of which the Committee shall be the sole judge), all
of the Participant's rights to a Final Award for the Plan Year then in progress
shall be forfeited. However, the Committee, in its sole discretion, may pay a
partial award for the portion of that Plan Year that the Participant was
employed by the Company, computed as determined by the Committee.
SECTION 8. RIGHTS OF PARTICIPANTS
8.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of the
Company.
8.2 Nontransferability. No right or interest of any Participant in the
Plan shall be assignable or transferable, or subject to any lien, directly, by
operation of law, or otherwise, including, but not limited to, execution, levy,
garnishment, attachment, pledge, and bankruptcy.
SECTION 9. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each designation will revoke all
prior designations by the same Participant and will be effective only when filed
by the Participant in writing with
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the Committee during his or her lifetime. In the absence of any such
designation, or if the designated beneficiary is no longer living, benefits
shall be paid to the surviving member(s) of the following classes of
beneficiaries, with preference for classes in the order listed below:
(a) Participant's spouse (unless the parties were divorced or legally
separated by court decree);
(b) Participant's children (including children by adoption);
(c) Participant's parents (including parents by adoption); or
(d) Participant's executor or administrator.
Payments of benefits, in accordance with Section 7.1, shall be made
exclusively to the member(s) of the first class, in the order listed above,
which has surviving member(s). If that class has more than one (1) member,
benefit payments shall be made in equal shares among members of that class.
SECTION 10. DEFERRALS
The Committee may permit a Participant to defer such Participant's receipt
of the payment of cash that would otherwise be due to such Participant at the
end of a Plan Year.
SECTION 11. EXECUTIVE OFFICERS
11.1 Applicability of Section 11. The provisions of this Section 11 shall
apply only to Executive Officers. In the event of any inconsistencies between
this Section 11 and the other Plan provisions, the provisions of this Section 11
shall control.
11.2 No Partial Plan Year Participation. An Executive Officer who becomes
eligible after the beginning of a Plan Year may participate in the Plan for the
succeeding Plan Year.
11.3 Award Determination. Prior to the beginning of each Plan Year, or as
soon as practicable thereafter, the Committee shall establish the Target
Incentive Award percentage for each Executive Officer and performance goals for
that Plan Year. Performance measures to be used shall be chosen from among the
following factors, or any combination of the following, as the Committee deems
appropriate: (a) total stockholder return; (b) growth in revenues, sales,
settlements, market share, customer conversion, net income, stock price, and/or
earnings per share; (c) return on assets, net assets, and/or capital; (d) return
on stockholders' equity; (e) economic value added; or (f) improvements in costs
and/or expenses. The Committee may select among the performance measures
specified from Plan Year to Plan Year which need not be the same for each
Executive Officer in a given year.
At the end of the Plan Year and prior to payment, the Committee shall
certify in writing the extent to which the performance goals and any other
material terms were satisfied. Final Awards shall be computed for each Executive
Officer based on (i) the Participant's Target Incentive Award multiplied by his
Base Salary, and (ii) Corporate and Non-corporate (if applicable) performance.
Final Award amounts may vary above or below the Target Incentive Award
based on the level of achievement of the pre-established Corporate and Non-
corporate performance goals.
11.4 Non-adjustment of Performance Goals. Once established, performance
goals shall not be changed during the Plan Year. Participants shall not receive
any payout when the Company or Non-corporate segment (if applicable) does not
achieve at least minimum performance goals.
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11.5 Individual Performance and Discretionary Adjustments. Individual
performance shall not be reflected in the Final Award. However, the Committee
retains the discretion to eliminate or decrease the amount of the Final Award
otherwise payable to a Participant.
11.6 Possible Modification. If, on advice of the Company's tax counsel,
the Committee determines that Code Section 162(m) and the regulations thereunder
will not adversely affect the deductibility for federal income tax purposes of
any amount paid under the Plan by applying one or more of Sections 2.1(b),
2.1(m), 4.3, 5.1, 5.2, 5.3, or 5.4 to an Executive Officer without regard to the
exceptions to such Section or Sections contained in this Section 11, then the
Committee may, in its sole discretion, apply such Section or Sections to the
Executive Officer without regard to the exceptions to such Section or Sections
that are contained in this Section 11.
SECTION 12. CHANGE IN CONTROL
12.1 Change in Control. In the event of a Change in Control of the
Company, as defined below, a Participant who is an Employee as of the date of
the Change in Control shall be entitled to, for the Plan Year in which the
Change in Control occurs, the greater of:
(a) The Final Award determined using:
(i) The Participant's actual Base Salary rate in effect on the date
of the Change in Control;
(ii) The Participant's Target Incentive Award percentage; and
(iii) Actual Corporate, Non-corporate, and individual results to the
date of the Change in Control; or
(b) The Participant's Target Incentive Award times his actual Base Salary
rate in effect on the date of the Change in Control.
The Committee, as constituted immediately prior to the Change in Control,
shall determine how actual Corporate, Non-corporate, and individual performance
should be measured for purposes of the Final Award calculation in Section
12.1(a). The Committee's determination shall be conclusive and final.
Final Awards shall be payable in cash to the Participant as soon as
administratively possible, but no later than thirty (30) days following a Change
in Control.
12.2 Definition of a Change in Control. A "Change in Control" shall be
defined as a dissolution, liquidation, merger, or consolidation in which the
Company is not the surviving corporation, or the acquisition of thirty percent
(30%) or more of the Company's common stock by one (1) individual, corporation,
or other entity.
SECTION 13. AMENDMENT AND MODIFICATION
The Committee, in its sole discretion, without notice, at any time and from
time to time, may modify or amend, in whole or in part, any or all of the
provisions of the Plan, or suspend or terminate it entirely; provided, however,
that no such modification, amendment, suspension, or termination may, without
the consent of a Participant (or his or her beneficiary in the case of the death
of the Participant), reduce the right of a Participant (or his or her
beneficiary, as the case may be) to a payment or distribution hereunder to which
he or she is otherwise entitled.
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SECTION 14. MISCELLANEOUS
14.1 Governing Law. The Plan, and all agreements hereunder, shall be
governed by and construed in accordance with the laws of the State of Delaware.
14.2 Withholding Taxes. The Company shall have the right to deduct from
all payments under the Plan any Federal, state, or local taxes required by law
to be withheld with respect to such payments.
14.3 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.
14.4 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
14.5 Costs of the Plan. All costs of implementing and administering the
Plan shall be borne by the Company.
14.6 Successors. All obligations of the Company under the Plan shall be
binding upon and inure to the benefit of any successor to the Company, whether
the existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
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JOHN DEERE EQUITY INCENTIVE PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE.
1.1 Establishment. Deere & Company, a Delaware corporation ("Deere"),
hereby establishes a long-term incentive plan for key employees of Deere and its
subsidiaries (the "Company") as described herein, which shall be known as the
John Deere Equity Incentive Plan (the "Plan").
1.2 Purpose. The purposes of the Plan are to retain the key employees of
the Company and to direct their attention to the long-term performance of the
Company by relating a portion of remuneration to the Company's long-term
success. The Plan is also designed to reward and motivate such key employees and
to encourage identification with the interests of shareholders.
1.3 Compliance with Applicable Law. The provisions of this Plan are
intended to comply with all provisions of applicable law, including but not
limited to all applicable conditions of Section 162(m) of the Internal Revenue
Code of 1986, as amended ("Section 162(m)"). With respect to Participants who
are subject to Section 16 of the Securities Exchange Act of 1934 (the "Exchange
Act"), the transactions under this Plan are also intended to comply with all
applicable conditions of Rule 16b-3 of the Securities and Exchange Commission
under the Exchange Act. To the extent any provision of this Plan or action by
the Committee or Board fails to so comply, such provision or action shall be
deemed null and void, to the extent permitted by law and deemed advisable by the
Committee or the Board, and the Committee shall have the authority to take such
actions as may be required to comply with such conditions.
SECTION 2. DEFINITIONS.
2.1 Definitions. Whenever used hereinafter, the following terms shall have
the meanings set forth below:
(a) "Board" means the Board of Directors of Deere.
(b) "Bonus Award" means Shares granted to Participants pursuant to Section
7 of the Plan.
(c) "Committee" means the Compensation Committee of the Board, or a
subcommittee thereof, consisting of two (2) or more individuals,
appointed by the Board to administer the Plan, pursuant to Article 10
herein, who are not current or former officers or employees of the
Company and who are "outside directors" to the extent required by and
within the meaning of Section 162(m) and who are "disinterested
persons" as defined in Rule 16b-3(c)(2)(i) under the Exchange Act.
(d) "Executive" means an employee of the Company determined by the
Committee to hold a key executive, administrative or professional
position.
(e) "Incentive Grant" means Shares granted to Participants pursuant to
Section 4 of the Plan which are subject to Limitations.
(f) "Limitations" means the limitations imposed on Incentive Grants
described in Section 6 of the Plan.
(g) "Maximum Bonus Award" means the maximum number of Shares covered by a
Bonus Award that may be granted to a Participant for a Performance
Period, as determined by the Committee.
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(h) "Participant" means an Executive designated by the Committee to
participate in the Plan.
(i) "Performance Determination Date" means the day on which a Performance
Period ends.
(j) "Performance Period" means a period established by the Committee
pursuant to Section 4 of the Plan over which the Company's performance
will be measured for purposes of the Plan.
(k) "Performance Target" means the performance goals for a Performance
Period as determined by the Committee pursuant to Section 4 of the
Plan.
(l) "Shares" or "Stock" means the common stock, $1 par value per share, of
Deere.
(m) "Subsidiary" means any corporation, a majority of the total combined
voting power of all classes of stock of which is directly or
indirectly owned by the Company.
(n) "Year" means the 12-month period beginning each November 1 and ending
October 31 of the following year.
2.2 Gender. Except when otherwise indicated by the context, any
masculine terminology when used in the Plan shall also include the feminine
gender, and the definition of any term herein in the singular shall also include
the plural.
Section 3. Eligibility.
3.1 Eligibility. Incentive Grants, subject to Limitations hereafter
specified, may be granted to Executives of the Company, as determined by the
Committee. The designation of Participants shall occur before the start of each
Performance Period, or at such other time as deemed appropriate by the
Committee, and shall be communicated to Participants as soon as practicable.
Section 4. Performance Periods and Targets; Grants.
4.1 Establishment of Performance Periods and Performance Targets. The
Committee shall establish Performance Periods over which the Company's
performance will be measured for purposes of this Plan. A Performance Period may
consist of four consecutive Years, or such other period of time as the Committee
deems appropriate. At the time it establishes a Performance Period, or up to
three (3) months thereafter, the Committee shall also establish the Performance
Target for such period. A Performance Target may be based on any of the
following factors, or any combination of the following factors, as the Committee
deems appropriate: (a) total stockholder return; (b) growth in revenues, sales,
net income, stock price, and/or earnings per Share; (c) return on assets, net
assets, and/or capital; (d) return on stockholder's equity; or (e) economic
value added, in each case over the Performance Period. For purposes of
establishing a Performance Target, any of the factors set forth above may, as
applicable, be measured either before or after income taxes, and may include or
exclude interest, depreciation and amortization, extraordinary items and other
material non-recurring gains or losses, discontinued or added operations, the
cumulative effect of changes in accounting policies and the effect of any tax
law changes.
4.2 Incentive Grants. The Committee shall determine the Executives to whom
Incentive Grants will be made, the number of Shares covered by each Incentive
Grant and the time or times when the Incentive Grants will be made, provided
that the number of Shares covered by Incentive Grants to any Participant over
any four consecutive Years shall not exceed 225,000 Shares. The Committee shall
establish an initial Performance Period for an Incentive Grant at or before the
time such award and may, at its discretion, establish subsequent additional
Performance Periods for an Incentive Grant, commencing every two years
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after the date of the Incentive Grant (until the Incentive Grant shall have
terminated pursuant to Section 6 of the Plan), or at such other intervals as the
Committee deems appropriate.
4.3 Communication of Grant. Written notice of a Participant's Incentive
Grant shall be given to the Participant as soon as practicable after the grant
by the Committee. The Committee may require a Participant who receives an
Incentive Grant to execute and deliver an agreement which shall incorporate or
conform to the terms and conditions of this Plan, or any other terms and
conditions not inconsistent with this Plan as imposed by the Committee. The
agreement may require the Participant to pay to the Company an amount equal to
the aggregate par value of all Shares subject to an Incentive Grant.
4.4 Adjustments for Acquisitions and Dispositions. If the Committee shall
determine that an acquisition or disposition of assets or securities by the
Company shall have a material effect (whether positive or negative) on the
Company's ability to meet its Performance Target(s) for the applicable
Performance Period(s), the Committee shall have the discretion to take any
action that would reduce the amount of a Participant's Incentive Grant, or to
adjust a Performance Target for a Performance Period, subject to the limitations
of Section 162(m).
4.5 Non-adjustment of Performance Targets and Incentive Grants. Except as
provided in Section 4.4 above, once established Performance Targets and
Incentive Grants shall not be changed during the Performance Period; provided,
however, that the Committee retains the discretion to eliminate or decrease the
amount of an Incentive Grant otherwise payable to a Participant.
SECTION 5. SHARES SUBJECT TO PLAN.
5.1 Shares Subject to Plan. An aggregate of 3,000,000 Shares shall be
subject to the Plan either from authorized but heretofore unissued Shares or
from Shares reacquired by Deere, including Shares purchased in the open market.
5.2 Stock Splits/Stock Dividends. In the event of any change in the
outstanding Shares of Deere by reason of a stock dividend, recapitalization,
merger, consolidation, split-up, combination, exchange of Shares, or the like,
the aggregate number of and class of securities issuable pursuant to Subsection
5.1 and pursuant to any Incentive Grant hereunder may be appropriately adjusted
by the Committee, whose determination shall be conclusive.
5.3 Reacquired Shares. If Shares issued pursuant hereto shall not be
acquired by Participants because of failure to satisfy the conditions for the
lapse or termination of the Limitations imposed on such Shares pursuant to the
Plan, if permissible pursuant to Rule 16b-3 of the Securities and Exchange
Commission, such Shares again shall become available for issuance under the
Plan.
SECTION 6. INCENTIVE GRANTS.
6.1 Custody and Transferability. Shares subject to an Incentive Grant
shall be held by the Company while subject to Limitations, and no rights thereto
may be transferred, gifted, or otherwise alienated or hypothecated until they
have been freed of Limitations. As Shares are freed of Limitations, they will be
delivered to the Participant.
6.2 Other Limitations. Deere may impose such other limitations on any
Shares granted pursuant to Incentive Grants as it may deem advisable including,
without limitation, limitations intended to achieve compliance with the
Securities Act of 1933, as amended, with the requirements of any stock exchange
upon which such Shares or Shares of the same class are then listed, and with any
blue sky or securities laws applicable to such Shares. Shares delivered to
Participants as Limitation lapse may bear such legends, if any, as the Committee
shall specify.
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6.3 Voting Rights. Participants issued Incentive Grants hereunder shall
have full voting rights on the Shares covered by such Grant.
6.4 Dividend Rights. Participants issued Incentive Grants hereunder shall
have full dividend rights, with such dividends being paid on Shares covered by
such Grants. If all or part of a dividend is paid in Shares, the Shares shall be
held by Deere subject to the same Limitations as the Incentive Grant that is the
basis for the dividend.
6.5 Termination of Limitations. On or after each Performance Determination
Date, the Committee shall determine the Company's financial performance in
relation to the Performance Target for the immediately prior Performance Period
and certify in writing the extent to which the performance goals and any other
material terms were satisfied. A portion of the Participant's Incentive Grants
equal to the product of (i) the total number of Shares covered by all previous
Incentive Grants to the Participant which have not been previously forfeited or
freed of Limitations, and which have been held by the Participant for at least
one Performance Period, times (ii) the percentage of the Performance Target
achieved by the Company (up to 100%), shall be freed of Limitations. If only a
portion of the Participant's Incentive Grant is freed from Limitations on any
particular Performance Determination Date, the Shares that were earliest granted
shall be deemed to be the first Shares freed from Limitations.
6.6 Maximum Number of Shares Freed From Limitations. Notwithstanding the
provisions of Section 6.5, and other than Shares which may be freed from
Limitations pursuant to Section 13, the number of Shares covered by any
Participant's Incentive Grants that may be freed from Limitations over any four
consecutive years shall not exceed 225,000 Shares, subject to the provisions of
Section 5.2.
6.7 Forfeiture. Any Shares covered by an Incentive Grant, which have not
been freed of Limitations within eight (8) years after the date of such grant,
shall automatically be forfeited and rescinded.
SECTION 7. BONUS AWARDS.
7.1 Determination of Maximum Bonus Awards. At the beginning of each
Performance Period, or up to three (3) months thereafter, the Committee may
establish a Maximum Bonus Award for each Participant for such Performance
Period. The number of Shares that may be covered by Maximum Bonus Awards
established for any Participant over any four consecutive years shall not exceed
225,000 Shares, subject to the provisions of Section 5.2.
7.2 Grant of Bonus Awards. On each Performance Determination Date, if the
Company's financial performance over the preceding Performance Period exceeds
the Performance Target for such period previously established by the Committee,
a Participant may receive as a Bonus Award an additional number of Shares equal
to (a) the number of Shares covered by the Participant's Maximum Bonus Award for
such Performance Period, if any, times (b) the percentage over the Performance
Target achieved by the Company (up to 100%) during such Performance Period. A
Participant can receive a Bonus Award only for the first Performance Period
following the date on which the Committee determines the Participant's Maximum
Bonus Award for such Performance Period. Notwithstanding the foregoing, the
number of Shares covered by Bonus Awards that may be granted to a Participant
over any four consecutive years shall not exceed 225,000 Shares, subject to the
provisions of Section 5.2.
7.3 Limitations. All Bonus Awards need not be subject to Limitations.
Notwithstanding the foregoing, Deere may impose such other conditions on any
Shares covered by Bonus Awards as it may deem advisable including, without
limitation, conditions intended to achieve compliance with the Securities Act of
1933, as amended, with the requirements of any stock exchange upon which such
Shares or Shares of the same class are then listed, and with any blue sky or
securities laws applicable to such Shares. Shares
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delivered to Participants covered by Bonus Awards may bear such legends, if any,
as the Committee shall specify.
7.4 Cash Equivalent Awards. The Committee may permit Participants, on such
terms and conditions as the Committee may prescribe, to elect to receive their
Bonus Awards in cash in lieu of Shares. Any such cash equivalent payment shall
be based on the average of the high and low market prices of the Company's stock
on the effective date of the Bonus Award and be on such terms as shall not
represent an increase in benefits. Cash equivalent payments shall be applied
against the limitation on Maximum Bonus Awards pursuant to Sections 7.1 and 7.2
and against the aggregate shares subject to the Plan pursuant to Section 5.1,
based on such average market price.
7.5 Deferral of Cash Bonus Awards. The Committee may permit Participants,
on such terms and conditions as the Committee may prescribe and pursuant to the
terms of any applicable deferral plan or arrangement, to elect prior to the
calendar year in which a Bonus Award would otherwise become payable to defer
receipt of all or a portion of such award that is elected to be received in cash
pursuant to Section 7.4.
SECTION 8. TERMINATION OF EMPLOYMENT.
8.1 Termination of Employment Due to Death, Disability, or Normal
Retirement. In the event a Participant's employment is terminated by reason of
death, total and permanent disability, or normal retirement as defined in the
John Deere Pension Plan for Salaried Employees, each Incentive Grant previously
granted to the Participant which has not previously been freed of Limitations
shall continue to be subject to Limitations until and unless such shares are
forfeited or freed of Limitations pursuant to the terms of Section 6.5 and 6.6
above, and the Participant shall thereafter be ineligible to receive any
Incentive Grants under the Plan. However, the Participant shall thereafter
continue to be eligible to receive a Bonus Award for any Performance Period
covering any period of time during which the Participant was employed by the
Company.
8.2 Termination of Employment Due to Early Retirement. In the event a
Participant's employment is terminated by reason of early retirement as defined
in the John Deere Pension Plan for Salaried Employees, a portion of each
Incentive Grant held by the Participant equal to the product of (a) the total
number of Shares covered by the Incentive Grant which have not previously been
forfeited or freed of Limitations, times (b) a fraction (the "Fraction"), (i)
the numerator of which is the number of months between the last day of the month
in which the Participant's employment was terminated and the Performance
Determination Date for the Performance Period during which the Incentive Grant
was originally granted or, if such date has already passed, the next Performance
Determination Date, and (ii) the denominator of which is the number of months in
the Performance Period ending on such Performance Determination Date, shall
automatically be forfeited and rescinded, provided that the Committee shall have
the authority to waive such forfeiture and rescission with respect to all or any
portion of such Incentive Grants. The remaining portions of the Participant's
Incentive Grants (including any portions as to which forfeiture and rescission
shall have been waived by the Committee) shall continue to be subject to
Limitations until and unless such shares are forfeited or freed of Limitations
pursuant to the terms of Section 6.6 and 6.7 above, and the Participant shall
thereafter be ineligible to receive any Incentive Grants under the Plan.
However, the Participant shall thereafter continue to be eligible to receive a
Bonus Award for any Performance Period covering any period of time during which
the Participant was employed by the Company, provided that any such Bonus Award
shall be limited to the product of (x) the number of Shares that would otherwise
be covered by such Bonus Award, times (y) the result of one minus the Fraction.
8.3 Termination of Employment for Reason Other than Death, Disability, or
Retirement. In the event a Participant's employment with the Company is
terminated for any reason other than set forth in Sections 8.1 and 8.2, each
Incentive Grant previously granted to such Participant which has not been freed
of
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Limitations shall automatically be forfeited and rescinded, and the
Participant shall thereafter be ineligible to receive any Incentive Grants or
Bonus Awards under the Plan.
8.4 Acceleration upon Retirement. Notwithstanding the provisions of
Sections 8.1 and 8.2, upon either normal or early retirement as defined in the
John Deere Pension Plan for Salaried Employees, the Committee may accelerate the
time any Incentive Grant Shares are freed of Limitations or forfeited, provided
that the number of Shares freed of Limitations shall be discounted to reasonably
reflect the time value of money and shall be based on the Company's progress,
measured as of the date of acceleration, with regard to reaching the applicable
Performance Targets. Acceleration shall not represent a material increase in
benefits. In the event that the Committee does not elect to accelerate as to any
Participant, the provisions of Section 8.1 and 8.2 shall apply.
SECTION 9. RIGHTS OF EMPLOYEES, PARTICIPANTS.
9.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Executive's or Participant's
employment at any time, nor confer upon any Executive or Participant any right
to continue in the employ of the Company.
9.2 Non-transferability. Except as permitted pursuant to Rule 16(b)-3 of
the Exchange Act, no right or interest of any Participant in the Plan shall be
assignable or transferable, or subject to any lien, directly, indirectly, by
operation of law, or otherwise, including execution, levy, garnishment,
attachment, pledge, and bankruptcy. In the event of a Participant's death,
distribution of Shares or payments of any amounts due under the Plan shall be
made to the Participant's designated beneficiary, or in the absence of such
designation, to the Participant's estate.
SECTION 10. ADMINISTRATION.
10.1 Administration. The Committee shall be responsible for the
administration of the Plan. The Committee is authorized to interpret the Plan,
to prescribe, amend, and rescind rules and regulations relating to the Plan,
provide for conditions and assurances deemed necessary or advisable to protect
the interests of the Company, and to make all other determinations necessary or
advisable for the administration of the Plan, but only to the extent not
contrary to the express provisions of the Plan. In making Incentive Grants and
Bonus Awards under the Plan, the Committee may take into account, the nature of
the services rendered by such Executives, their present and potential
contributions to the Company's success, the Company's past performance and such
other factors as the Committee in its discretion shall deem relevant.
10.2 Finality of Determination. The determinations, interpretations or
other actions made or taken by the Committee pursuant to the provisions of the
Plan, shall be final and shall be binding and conclusive for all purposes and
upon all persons.
10.3 Expenses. The expenses of administering the Plan shall be borne by
Deere.
SECTION 11. EFFECT ON OTHER PLANS.
11.1 Effect on Other Plans. Participation in the Plan shall not affect a
Participant's eligibility to participate in any other benefit or incentive plan
of the Company and any Grants and Awards made pursuant to the Plan shall not be
included in the Participant's remuneration for the purposes of determining the
benefits provided under any other plan of the Company unless specifically
provided in such other plan.
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Section 12. Amendment and Termination.
12.1 Amendment and Termination. The Plan may be amended or terminated at
any time by the Committee, provided that the approval of the stockholders of
Deere must first be obtained in order to (a) increase the maximum number of
shares that may be issued pursuant to the Plan (except pursuant to Sections 5, 6
and 7 hereof), (b) materially increase the benefits accruing to Participants
under the Plan, or (c) modify the requirements as to eligibility for
participation in the Plan, or for any amendment which would require stockholder
approval in order for the Plan to continue to comply with Section 162(m). No
amendment or termination of the Plan, without the consent of the Participant,
shall materially and adversely affect a Participant's rights under an Incentive
Grant previously made pursuant thereto.
Section 13. Change of Control.
The following acceleration and valuation provisions shall apply in the
event of a "Change of Control" or "Potential Change of Control," as defined in
this Section 13.
(a) In the event that:
(i) a "Change of Control" as defined in paragraph (b) of this Section
13 occurs; or
(ii) a "Potential Change of Control" as defined in paragraph (c) of
this Section 13 occurs and the Committee or the Board determines
that the provisions of this paragraph (a) should be invoked;
then, unless otherwise determined by the Committee or the Board in writing at or
after the making of an Incentive Grant, but prior to the occurrence of such
Change of Control, the Limitation applicable to any Incentive Grant shall
terminate; and the value of all such Incentive Grants shall, to the extent
determined by the Committee at or after grant, be cashed out on the basis of the
"Change of Control Price" (as defined in paragraph (d) of this Section 13).
(b) For purposes of paragraph (a) of this Section 13, a "Change of
Control" means a change in control of a nature that would be required
to be reported in response to Schedule 14A of Regulation 14A
promulgated under the Exchange Act whether or not Deere is then
subject to such reporting requirement, provided that, without
limitation, such a Change in Control shall be deemed to have occurred
if:
(i) any "person" (as defined in Sections 13(d) and 14(d) of the
Exchange Act) other than a Participant or group of Participants
is or becomes the "beneficial owner" (as defined in Rule 13(d-3)
under the Exchange Act), directly or indirectly, of securities of
Deere representing thirty percent (30%) or more of the combined
voting power of Deere's then outstanding securities;
(ii) during any period of two (2) consecutive years, there shall cease
to be a majority of the Board comprised as follows: individuals
who at the beginning of such period constitute the Board and any
new director(s) whose election by the Board or nomination for
election by Deere's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose
election or nomination for election was previously so approved;
(iii) the shareholders of Deere approve a merger or consolidation of
Deere with any other company, other than a merger or
consolidation which would result in
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the voting securities of Deere outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving
entity) at least eighty percent (80%) of the combined voting
power of the voting securities of Deere or such surviving entity
outstanding immediately after such merger of consolidation; or
(iv) the shareholders of Deere approve a plan of complete liquidation
of Deere or an agreement for the sale or disposition by Deere of
all or substantially all of Deere's assets.
(c) For purposes of paragraph (a) of this Section 13, a "Potential Change
of Control" means the happening of any of the following:
(i) the entering into an agreement by Deere (other than with a
Participant or group of Participants), the consummation of which
would result in a Change of Control of Deere as defined in
paragraph (b) of this Section 13; or
(ii) the acquisition of beneficial ownership, directly or indirectly,
by any entity, person or group (other than a Participant or group
of Participants, Deere or a Subsidiary, or any Deere employee
benefit plan including its trustee) of securities of Deere
representing five percent (5%) or more of the combined voting
power of Deere's outstanding securities and the adoption by the
Board of Directors of a resolution to the effect that a Potential
Change of Control of Deere has occurred for purposes of the Plan.
(d) For purposes of this Section 13, "Change of Control Price" means the
highest price per Share paid in any transaction reported on the New
York Stock Exchange Composite Tape, or offered in any transaction
related to a potential or actual change of control of Deere at:
(i) the date the Change of Control occurs;
(ii) the date the Potential Change of Control is determined to have
occurred; or
(iii) such other date as the Committee may determine at or after
grant but before the Change of Control occurs or the Potential
Change of Control is determined to have occurred;
or at any time selected by the Committee during the sixty (60) day period
preceding such date.
SECTION 14. REQUIREMENTS OF LAW.
14.1 Requirements of Law. The delivery of Shares pursuant to the Plan shall
be subject to all applicable laws, rules, and regulations, and shall not be made
until all required approvals of the proper government agencies have been
obtained.
14.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Illinois.
SECTION 15. WITHHOLDING TAXES.
15.1 Withholding Taxes. The Company shall have the right to collect cash
from Participants under the Plan, or to make withholdings from other payments to
such Participants, in an amount necessary to
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satisfy any Federal, state or local withholding tax requirements. Any
Participant may elect, subject to approval by the Committee, to satisfy
withholding, in whole or in part, by having Deere withhold Shares having value
equal to the amount required to be withheld.
SECTION 16. EFFECTIVE DATE OF THE PLAN.
16.1 Effective Date. The Plan shall become effective upon approval by the
shareholders of Deere.
16.2 Duration of the Plan. The Plan shall remain in effect until all Shares
awarded under the Plan are free of all Limitations imposed by the Plan, but no
Incentive Grant shall be made and no Maximum Bonus Award shall be established
after December 31, 2004.
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DIRECTIONS TO THE DEERE & COMPANY ADMINISTRATIVE CENTER
One John Deere Place, Moline, Illinois 61265-8098
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The annual meeting will be held in the auditorium of the Deere & Company
Administrative Center which is located at One John Deere Place, Moline,
Illinois. John Deere Place intersects the north side of John Deere Road east
of 70th Street, Moline. The entrance to the Administrative Center and parking
are on the east side of the building.
From Chicago (or the east)
Take I-290 (Eisenhower Expressway) west to I-88 West (East-West Tollway)
which turns into IL5/John Deere Road. Follow IL5/John Deere Road to John Deere
Place. Turn right onto John Deere Place. Follow for about 1/4 mile. Turn left
onto the Administrative Center grounds. Follow the signs to parking on the
east side of the building.
From Des Moines (or the west)
Take I-80 east to exit number 298. Exit onto I-74 East. Follow for about 9
1/4 miles to the IL5 East/John Deere Road exit (Exit number 4A). Exit onto IL5
East/John Deere Road. Follow IL5/John Deere Road east for 3.3 miles to John
Deere Place. Turn left onto John Deere Place. Follow for about 1/4 mile. Turn
left onto the Administrative Center grounds. Follow the signs to parking on
the east side of the building.
From Peoria (or the south)
Take I-74 west to the I-280 West exit. Exit onto I-280 West. Follow for
about 10 miles to exit number 18A. Exit onto I-74 West. Follow for about 1/2
mile to the IL5 East/John Deere Road exit (Exit number 4B). Exit onto IL5
East/John Deere Road. Follow IL5/John Deere Road east for 3.3 miles to John
Deere Place. Turn left onto John Deere Place. Follow for 1/4 mile. Turn left
onto the Administrative Center grounds. Follow the signs to parking on the
east side of the building.
[LOGO OF JOHN DEER]
[LOGO OF RECYCLED PAPER]
Printed on Recycled Paper
<PAGE>
[LOGO APPEARS HERE]
Dear Stockholders:
It is a pleasure to invite you to the 2000 Annual Meeting of Stockholders of
Deere & Company. The meeting will be held at 10 A.M. on Wednesday, February 23,
2000 at the Deere & Company Administrative Center, at One John Deere Place,
Moline, Illinois.
The Notice of the meeting and the Proxy Statement enclused cover the formal
business of the meeting, which includes election of Directors, three
compensation proposals, and any other business to properly come before the
meeting. The rules of conduct for the meeting include the following:
1. No cameras, sound equipment or recording devices may be brought into the
auditorium.
2. There will be a discussion period at the end of the meeting. If you wish to
present a question or comment, please wait for an attendant to provide a
microphone, then begin by stating your name, indicating the city and state
where you reside, and confirming that you are a stockholder.
3. The Chairman is authorized to impose reasonable time limits on the remarks
of individual stockholders and has discretion to rule on any matters which
arise during the meeting. Personal grievances or claims are not appropriate
subjects for the meeting.
4. Voting results announced at the meeting by the Inspectors of Voting are
preliminary. Final results will be included in the Quarterly Report on Form
10-Q filed with the Securities and Exchange Commission for the second
quarter of fiscal 2000.
Detach Proxy Card Here
- --------------------------------------------------------------------------------
[LOGO APPEARS HERE] DEERE & COMPANY
PROXY-ANNUAL MEETING/23 FEBRUARY 2000
Solicited by the Board of Directors for use at the Annual Meeting of
Stockholders of Deere & Company on February 23, 2000.
The undersigned appoints each of Hans W. Becherer and Michael A. Harring
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 Annuall 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.
DEERE & COMPANY
P.O. BOX 11012
NEW YORK, N.Y. 10203-0012
<PAGE>
[LOGO APPEARS HERE] DEERE & COMPANY VOTE BY TELEPHONE AND INTERNET
24 HOURS A DAY, 7 DAYS A WEEK
TELEPHONE
800-479-4522
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand
when you call. You will be prompted to enter your control number, located in the
box below, and then follow the simple directions.
INTERNET
https://proxy.shareholder.com/de
Use the Internet to vote your proxy. Have your proxy card in hand when you
access the website. You will be prompted to enter your control number, located
in the box below, to create an electronic ballot.
MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we have provided. Make sure the pre-printed address shows through the envelope
window. Do not mail additional cards in the return envelope. The return
envelopes are mechanically opened and additional cards may be accidentally
destroyed.
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned the proxy card.
- --------------------------------------------------------------------------------
If you have submitted your proxy by telephone or the Internet there is no need
for you to mail back your proxy.
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING!
Call Toll-Free To Vote . It's Fast And Convenient
800-479-4522
- ----------------------------
CONTROL NUMBER FOR
TELEPHONE OR INTERNET VOTING
- ----------------------------
PLEASE MARK YOUR CHOICE
LIKE THIS IN BLUE OR BLACK INK [X]
DETACH PROXY CARD HERE IF YOU ARE NOT
VOTING BY TELEPHONE OR INTERNET
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Directors Recommend a Vote FOR all Nominees and FOR items 2, 3 and 4.
- --------------------------------------------------------------------------------
1. Election as Directors FOR all nominees [ ] WITHHOLD AUTHORITY to [ ]
listed below vote for all nominees
listed below
*EXCEPTIONS [ ]
Nominees: 01--Crandall C. Bowles, 02--Leonard A. Hadley, 03--Arthur L. Kelly and
04--Thomas H. Patrick.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided
below.)
*Exceptions
---------------------------------------------------------------------
2. Approval of the John Deere Omnibus
Equity and Incentive Plan. FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Re-approval of the performance goals
under the John Deere Performance
Bonus Plan. FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Re-approval of the performance goals
under the John Deere Equity Incentive
Plan. FOR [ ] AGAINST [ ] ABSTAIN [ ]
- --------------------------------------------------------------------------------
If you are submitting a
change of address and or
comments please mark here. [ ]
Date
------------------------------
-----------------------------------
Signature
-----------------------------------
Signature
(Please sign, date and return this proxy in the enclosed postage prepaid
envelope.)
Please Detach Here
. You Must Detach This Portion of the Proxy Card .
Before Returning it in the Enclosed Envelope
