SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. ___)
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[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
DEERE & COMPANY
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(Name of Registrant as Specified In Its Charter)
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statement number, or the Form or Schedule and the date of its filing.
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[JONH DEERE LOGO]
DEERE & COMPANY
One John Deere Place
Moline, Illinois 61265
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 27, 2002
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 27, 2002, 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 Nonemployee Director Stock Ownership Plan.
3. Transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on December 31, 2001, 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. The bank's or broker's procedures
should be described on the voting form sent to you.
Most stockholders can elect to view future proxy statements and annual reports
over the Internet instead of receiving paper copies in the mail. Please refer
to page 22 of the proxy statement and your proxy card for further information.
For the Board of Directors,
/s/ MICHAEL A. HARRING
Moline, Illinois MICHAEL A. HARRING
January 18, 2002 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.
TABLE OF CONTENTS
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Page
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Proxy Statement .......................................................... 1
Election of Directors .................................................... 2
Approval of the Deere & Company Nonemployee Director Stock Ownership Plan 2
Other Matters ............................................................ 5
Directors Continuing in Office ........................................... 5
Named Executive Officers Who Are Not Directors ........................... 7
Certain Business Relationships ........................................... 7
Principal Holders of Voting Securities ................................... 8
Committees ............................................................... 8
Compensation of Directors ................................................ 9
Audit Review Committee Report ............................................ 10
Audit and Non-Audit Fees ................................................. 11
Committee on Compensation Report on Executive Compensation ............... 11
Comparison of Five-Year Cumulative Total Return .......................... 15
Compensation of Executive Officers ....................................... 16
Stockholder Proposals and Nominations .................................... 21
Cost of Solicitation ..................................................... 21
Annual Report ............................................................ 22
Electronic Access to Proxy Statement and Annual Report ................... 22
Appendix A--Deere & Company Nonemployee Director Stock Ownership Plan .... A-1
Appendix B--Audit Review Committee Charter ............................... B-1
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 27,
2002, and at any adjournment of such meeting. Most stockholders have a choice
of voting by using a toll-free telephone number, by voting 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 stockholders of record
will close at 11:59 p.m. eastern standard time on February 26, 2002. 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 22, 2002, 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 and for the Deere &
Company Nonemployee Director Stock Ownership 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 237,659,231 shares of common stock outstanding on December 31, 2001. 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 the
stock ownership 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 stock ownership plan proposal. Under the current rules of 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 and on the stock ownership plan proposal. Broker
non-votes will have no effect on the outcome of the election of directors or
the stock ownership plan proposal.
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 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, 2001, are
entitled to vote. This notice of meeting, proxy statement, and proxy card are
being mailed to stockholders on or about January 18, 2002.
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ELECTION OF DIRECTORS
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Three directors are to be elected for terms expiring at the annual meeting
in 2005. 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, 2001, 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, 2001.
Dr. Dipak C. Jain, Dean of the Kellogg School of Management, Northwestern
University, Evanston, Illinois is nominated for election as a director for the
first time. The terms of Professor Regina E. Herzlinger and Doctor Arnold R.
Weber, directors of the Company since 1993 and 1994 respectively, expire at the
annual meeting and they are retiring from the Board. Mr. John R. Stafford, a
director of the Company since 1997 has also announced that he intends to retire
from the Board following the annual meeting. The size of the Board is being
reduced accordingly.
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 2005
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; part owner and operator of
Block Farms (farming). Director of Deere & Company since 1986; member of
Committee and Special Subcommittee on Compensation and Pension Plan Oversight
Committee. Director of Hormel Foods Corporation. Age 66. Shares owned, 8,003
(includes 7,403 shares of restricted stock). Share units owned, 8,997.
Mr. T. Kevin Dunnigan Chairman, President and Chief Executive Officer of
Thomas & Betts Corporation (electrical components) since August 2000; Retired
Chairman of Thomas & Betts Corporation May 2000 to August 2000; Chairman 1997
to May 2000; prior thereto, Chairman and Chief Executive Officer. Director of
Deere & Company since May 2000; member of Audit Review and Corporate Governance
Committees. Director of C. R. Bard, Inc. and Thomas & Betts Corporation. Age
63. Shares owned, 4,569 (includes 2,569 shares of restricted stock).
Dr. Dipak C. Jain Dean, Kellogg School of Management, Northwestern
University, Evanston, Illinois since July 2001; prior thereto, Associate Dean
for Academic Affairs and the Sandy and Morton Goldman Professor of
Entrepreneurial Studies and Professor of Marketing, Kellogg School of
Management. Also, visiting Professor at Chulalongkorn University, Bangkok,
Thailand; Nijenrode University, The Netherlands; Otto Bescheim Graduate School
of Management, Koblenz, Germany; IIT, Delhi, India; Hong Kong University of
Science and Technology, China; Tel Aviv University, Israel. Age 44.
APPROVAL OF THE NONEMPLOYEE DIRECTOR STOCK OWNERSHIP PLAN
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Summary of the Proposal
The Board of Directors of the Company (the "Board") has approved the Deere
& Company Nonemployee Director Stock Ownership Plan in the form attached hereto
as an appendix (for purposes of this section of the proxy statement, the
"Plan"), subject to approval of the Plan by the stockholders of the Company.
The Plan succeeds the 1993 Deere & Company Nonemployee Director Stock Ownership
Plan under which grants can no longer be made after February 27, 2002. The
description of the Plan which follows is qualified in its entirety by reference
to the text of the Plan as set forth in such appendix. The
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Plan provides for annual awards to each nonemployee director of shares of
Company common stock which will be subject to certain restrictions until the
director's retirement, death or disability. The number of shares of common
stock reserved for all awards under the Plan is 250,000. No awards may be
granted under the Plan after March 7, 2012.
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 DEERE & COMPANY
NONEMPLOYEE DIRECTOR STOCK OWNERSHIP PLAN.
Description of the Plan
Establishment. Subject to stockholder approval, the Plan shall become
effective as of February 27, 2002.
Purpose. The purpose of the Plan is to further the growth, development and
financial success of the Company by strengthening the Company's ability to
attract and retain the services of experienced and knowledgeable nonemployee
directors. The Plan is designed to enable nonemployee directors to participate
in the Company's growth and to link their personal interests to those of
Company stockholders.
Operation. Participant eligibility and the amount and timing of awards
under the Plan are automatic pursuant to Plan provisions. The Plan provides for
annual awards to nonemployee directors of common stock of the Company in an
amount equivalent to $60,000 based on the fair market value of the common stock
as of the date one week following the annual meeting of stockholders. The stock
awarded is subject to risks of forefeiture and other terms and conditions (the
"Restrictions"). Prorata awards will be made to nonemployee directors elected
by the Board between annual meetings.
While the Restrictions remain in effect, the shares are held by the
Company and are non-transferable as well as subject to forfeiture as provided
in the Plan. The participants receive dividends and are entitled to vote the
restricted stock.
In the event of the death, total and permanent disability or retirement of
a participant, the Restrictions attached to any award will lapse and the shares
covered by such award will be delivered to the participant or the decedent's
beneficiary. In the event of any other kind of termination of service, the
participant's award is automatically forfeited and the restricted stock
returned to the Company.
In the event of a change in control of the Company, the Restrictions will
lapse and the shares covered by awards pursuant to the Plan will be delivered
to the participant. A change in control is defined in the Plan generally to
include: (i) the acquisition by any outside person or persons of securities
representing thirty percent or more of the combined voting power of the Company
(other than to vote proxies solicited by the management of the Company); (ii)
during any period of two consecutive years, the majority of the Board ceasing
to be individuals who were on the Board at the beginning of such period or who
were approved for election by at least two-thirds of such directors; and (iii)
shareholder approval of a plan of complete liquidation of the Company, a sale
of substantially all the Company's assets or a merger, consolidation or
reorganization of the Company involving a significant change in voting
securities.
The lapse of Restrictions and delivery of shares in the event of a change
in control may have the incidental effect of increasing the net cost of such
change in control by a relatively small amount, and thus could theoretically
render more difficult or discourage such a change in control, even if such
change in control would be beneficial to stockholders generally.
The total number of shares which may be granted as restricted stock under
the Plan is 250,000. Shares awarded and later forfeited may become available
for subsequent award grants. It is anticipated that at the time of stockholder
approval, nine nonemployee directors will participate in the Plan.
Administration. The Plan is administered by and under the direction of the
Board, which is authorized to interpret the Plan. However, in no event shall
the Board have the power to determine Plan
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eligibility, or to determine the amount, the price, or the timing of awards to
be made under the Plan (all such determinations are automatic pursuant to the
provisions of the Plan). The determinations of the Board are final, binding and
conclusive upon all persons.
Federal Income Tax Consequences. The restricted stock is not taxable to
the participant at the time of the grant of award, unless the participant
elects, under Internal Revenue Code Section 83(b), to be taxed on the value of
the stock at the time of award. If this election is made, the Company is
entitled to a corresponding deduction and dividends on the stock are taxable to
the participant and are no longer deductible by the Company. If such an
election is not made, dividends received on the stock are taxable to the
participant as compensation during the period of the Restrictions and also are
deductible by the Company as compensation during such period. If such an
election is not made, the participant is taxed when the Restrictions lapse, on
the then current fair market value of the stock and the Company is entitled to
a tax deduction at the same time and in the same amount.
Participants may be required to pay in cash to the Company any taxes
required to be withheld when the shares become taxable. The participant may
elect to satisfy withholding, in whole or in part, by having the Company
withhold shares of common stock having a value equal to the amount required to
be withheld.
Accounting Treatment. The fair market value of the restricted stock at the
time of grant is amortized evenly over the estimated period of the
Restrictions. There is no additional expense or income to the Company if the
stock increases or decreases in value.
Amendment. The Board may at any time amend or terminate the Plan but may
not amend the amount, price or timing of awards more than once every six
months, except to conform with changes in other laws. The Board also may not
materially increase the maximum number of shares that may be issued under the
Plan, may not materially increase total benefits under the Plan, and may not
materially change eligibility requirements without such further approval of the
stockholders as is required by law. No amendment or termination of the Plan may
materially impair the rights of a participant under an award without the
participant's consent. The Plan provides for adjustment of awards and the
maximum number of shares available for awards in the event of a stock dividend
or split; a merger, reorganization, consolidation or recapitalization; or
similar events.
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Plan Benefits
The number of restricted shares that will be received in the future under
the Plan by any participant is not determinable at this time. As described
above, under the Plan, each nonemployee director will receive annual awards of
restricted stock equivalent to $60,000 based on the the market value of the
Company's common stock on the date of grant. The table below shows the
restricted shares granted in fiscal 2001 under the predecessor plan to the
individuals and groups indicated.
Number of
Restricted
Name and Position Dollar Value(1) Shares
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Robert W. Lane
Chairman, President and Chief Executive Officer(2) ............ None None
Fred F. Korndorf
Retired President, Worldwide Agricultural Division(2) ......... None None
Pierre E. Leroy
President, Worldwide Construction & Forestry Division and John
Deere Power Systems(2) ........................................ None None
John K. Lawson
Senior Vice President(2) ...................................... None None
Michael P. Orr
President, Financial Services Division(2) ..................... None None
Nathan J. Jones
Senior Vice President and Chief Financial Officer(2) .......... None None
Executive Group(2) ............................................. None None
Non-Executive Director Group ................................... $579,476 12,984
Non-Executive Officer Employee Group(2) ........................ None None
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(1) Represents the fair market value based on the mean of the high and low
sales prices of Company common stock on the grant date, without giving
effect to the diminution in value attributable to the restrictions on the
shares.
(2) Employees of the Company are not eligible to participate in the Plan.
OTHER MATTERS
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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 ("Exchange Act"), Mr. Melroy Buhr submitted a proposal to
form a stockholders overview committee. If properly brought before the meeting,
the persons named in the proxy will vote against the proposal.
The Board of Directors is not aware of any other matters that will come
before the meeting. However, if any other proper business should come before
the meeting, your proxy, if signed and returned, will give to the persons
designated in it discretionary authority to vote according to their best
judgment.
DIRECTORS CONTINUING IN OFFICE
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The eight persons named below are now serving as directors of the Company
for terms expiring at the annual meetings in 2003 and 2004 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, 2001, 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 .2% of the shares
outstanding on December 31, 2001.
5
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 of Springs Industries, Inc. December 1997 to April 1998;
President and Chief Operating Officer January to December 1997; prior thereto,
Executive Vice President. Director of Deere & Company from 1990 to 1994 and
since 1999; member of Committee on Compensation and Corporate Governance
Committee. Age 54. Shares owned, 4,741 (includes 3,341 shares of restricted
stock). Share units owned, 2,363.
Mr. Leonard A. Hadley Retired President and Chief Executive Officer of
Maytag Corporation (appliances) since June 2001; President and Chief Executive
Officer of Maytag Corporation November 2000 to June 2001; Retired Chairman and
Chief Executive Officer August 1999 to November 2000; prior thereto, Chairman
and Chief Executive Officer. Director of Deere & Company since 1994; Chair of
Audit Review Committee and member of Executive and Pension Plan Oversight
Committees. Director of H Power Corp., Maytag Corporation and Snap-on
Incorporated. Age 67. Shares owned, 6,503 (includes 6,503 shares of restricted
stock). Share units owned, 13,075.
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 BASF Aktiengesellschaft, Bayerische Motoren
Werke (BMW) A.G., The Northern Trust Corporation and Snap-on Incorporated. Age
64. Shares owned, 13,292 (includes 7,202 shares of restricted stock). Share
units owned, 2,849.
Mr. Thomas H. Patrick Executive Vice President and Chief Financial Officer
of Merrill Lynch & Co., Inc. (financial services) since February 2000;
Executive Vice President of Merrill Lynch & Co., Inc. 1989 to February 2000;
and Chairman of the Special Advisory Services Group and Member of the Office of
the Chairman of Merrill Lynch & Co., Inc. from 1994 to 1999. Director of Deere
& Company since February 2000; member of Committee on Compensation and Pension
Plan Oversight Committee. Director of Baldwin & Lyons, Inc. and Comdisco, Inc.
Age 58. Shares owned, 13,009 (includes 3,009 shares of restricted stock). Share
units owned, 2,783.
TERMS EXPIRING AT ANNUAL MEETING IN 2004
Mr. Robert W. Lane Chairman, President and Chief Executive Officer of
Deere & Company since August 2000; Chief Executive Officer and President of
Deere & Company May 2000 to August 2000; President January 2000 to May 2000;
President, Worldwide Agricultural Equipment Division September 1999 to January
2000; prior thereto, Senior Vice President. Director of Deere & Company since
May 2000; Chairman of Executive Committee. Age 52. Shares owned, 66,930
(includes 11,835 shares of restricted stock); and shares under exercisable
option, 405,255.
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 a variety of
corporations in Mexico and a member of the International Advisory Council of J.
P. Morgan Chase & Co. Age 64. Shares owned, 4,702 (includes 4,702 shares of
restricted stock). Share units owned, 3,007.
Mr. John R. Stafford Chairman of American Home Products Corporation
(pharmaceuticals and consumer health care) since May 2001; prior thereto,
Chairman and Chief Executive Officer of American Home Products Corporation.
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, Honeywell
International Inc., J. P. Morgan Chase & Co. and Verizon Communications, Inc.
Age 64. Shares owned, 11,853 (includes 4,853 shares of restricted stock). Share
units owned, 3,528.
Mr. John R. Walter Chairman of Ashlin Management Corporation (private
investments) since December 1997; Chairman of Manpower Inc. (temporary
staffing) April 1999 to March 2001; President and Chief Operating Officer of
AT&T Corp. (telecommunications) November 1996 to July 1997; prior thereto,
Chairman, President and Chief Executive Officer of R. R. Donnelley & Sons
Company (print and digital information management, reproduction and
distribution). Director of Deere & Company since
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1991; member of Committee and Special Subcommittee on Compensation and
Corporate Governance Committee. Director of Abbott Laboratories, Applied
Graphics Technologies, Inc., Jones Lang LaSalle Incorporated, Manpower Inc. and
SNP Corporation (Singapore). Age 54. Shares owned, 8,303 (includes 7,403 shares
of restricted stock).
NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
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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, 2001, 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, 2001.
Mr. Fred F. Korndorf Retired President, Worldwide Agricultural Equipment
Division since August 2001; President, Worldwide Agricultural Equipment
Division January 2000 to August 2001; President, Worldwide Commercial and
Consumer Equipment Division and Deere Power Systems Group 1996 to 2000; prior
thereto President, Worldwide Industrial Equipment Division. Age 52. Shares
owned, 73,585 (includes 36,067 shares of restricted stock); and shares under
exercisable option, 345,367.
Mr. Pierre E. Leroy President, Worldwide Construction & Forestry Division
and John Deere Power Systems since July 2001; President, Worldwide Construction
Equipment Division and Deere Power Systems Group February 2000 to July 2001;
President, Worldwide Construction Equipment Division 1996 to 2000; prior
thereto, Senior Vice President and Chief Financial Officer. Age 53. Shares
owned, 91,738 (includes 36,067 shares of restricted stock); and shares under
exercisable option, 305,450.
Mr. John K. Lawson Senior Vice President since 1996; prior thereto,
President, Worldwide Lawn & Grounds Care Division and Deere Power Systems
Group. Age 61. Shares owned, 56,774 (includes 26,459 shares of restricted stock
and 7,680 shares over which Mr. Lawson shares the power over voting and
disposition); and shares under exercisable option, 284,968.
Mr. Michael P. Orr President, Financial Services Division since 1997;
prior thereto, Vice President of Deere & Company and President and Chief
Operating Officer of John Deere Credit Company. Age 54. Shares owned, 65,494
(includes 34,619 shares of restricted stock); and shares under exercisable
option, 151,341.
Mr. Nathan J. Jones Senior Vice President and Chief Financial Officer
since February 1998; prior thereto, Vice President and Treasurer. Age 45.
Shares owned, 12,625, (includes 8,454 shares of restricted stock); and shares
under exercisable option, 117,683.
At December 31, 2001, directors and executive officers as a group (22
persons), beneficially owned an aggregate of 2,046,464 shares (0.86%) of common
stock of the Company. This total includes: 199,493 shares held with sole power
over voting and disposition; 49,053 shares held with shared power over voting or
disposition; 66,734 shares of restricted stock under the John Deere Restricted
Stock Plan; 72,558 shares of restricted stock under the John Deere Equity
Incentive Plan; 60,891 shares of restricted stock under the Nonemployee Director
Stock Ownership Plan; 1,574,521 shares subject to exercisable stock options; and
23,214 shares subject to stock options that will become exercisable within 60
days of the date of the proxy statement.
CERTAIN BUSINESS RELATIONSHIPS
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Mr. Thomas H. Patrick, a director of the Company, is an Executive Vice
President and Chief Financial Officer of Merrill Lynch & Co., Inc. During
fiscal 2001, 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 2002.
7
PRINCIPAL HOLDERS OF VOTING SECURITIES
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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, 2001, Capital Research and Management Company, 333
South Hope Street, Los Angeles, California 90071 ("Capital"), held 19,873,000
shares (or approximately 8.5%) of the Company. Capital is not the ultimate
owner of these shares, but holds them on behalf of institutional and individual
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, 2001, FMR Corp., 82 Devonshire Street, Boston,
Massachusetts 02109-3614, beneficially owned, on behalf of its subsidiaries
Fidelity Management & Research Company, Fidelity Management Trust Company and
Fidelity International Limited, 15,668,320 shares (or approximately 6.7%) of
the Company. This number includes: 15,135,030 shares beneficially owned by
Fidelity Management & Research Company, as a result of its serving as
investment adviser to various registered investment companies; 399,290 shares
beneficially owned by Fidelity Management Trust Company, as a result of its
serving as investment manager for institutional accounts; and 134,000 shares
beneficially owned by Fidelity International Limited, as a result of it
providing investment and advisory services to foreign investment companies and
institutional investors. 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.
COMMITTEES
--------------------------------------------------------------------------------
The Board of Directors of the Company, which met four times during the
2001 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 Pension Plan Oversight Committee, and the Audit Review
Committee. During the 2001 fiscal year, all of the directors, except Mrs.
Herzlinger 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 2001
fiscal year, currently consists of John R. Stafford (Chair), John R. Block,
Crandall C. Bowles, Thomas H. Patrick, John R. Walter, and Dr. Arnold R. Weber.
The Committee has responsibility with respect to compensation matters involving
senior officers of the Company. The annual report of the Committee on
Compensation is set forth below.
The Special Subcommittee of the Committee on Compensation, which met three
times during the 2001 fiscal year, currently consists of John R. Stafford
(Chair), John R. Block, 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 meet
specific requirements of the Internal Revenue Code or federal securities laws
to approve certain compensation grants and awards. 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 once during the 2001 fiscal
year, currently consists of Regina E. Herzlinger (Chair), Crandall C. Bowles,
T. Kevin Dunnigan, 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
8
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 three times during the
2001 fiscal year, currently consists of Arthur L. Kelly (Chair), John R. Block,
Leonard A. Hadley, Antonio Madero B., Thomas H. Patrick 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 four times during the 2001 fiscal
year, currently consists of Leonard A. Hadley (Chair), T. Kevin Dunnigan,
Regina E. Herzlinger, Arthur L. Kelly, and Antonio Madero B. Each of the
members is independent as defined under the rules of the New York Stock
Exchange. The Committee recommends to the Board a firm of independent certified
public accountants to audit the annual financial statements, determines whether
to recommend that the financial statements be included in the Company's annual
report filed with the Securities and Exchange Commission, considers whether the
provision by the external auditors of services not related to the annual audit
and quarterly reviews is compatible with maintaining the auditors'
independence, 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, reviews the Company's
procedures relating to business ethics, consults with the internal audit staff
and reviews management's administration of the system of internal accounting
controls, and reviews the adequacy of the Committee charter. The Committee
reports to the Board on its activities and findings. The Board has adopted a
written charter for the Audit Review Committee. A copy of the charter is
attached hereto as an appendix. The report of the Audit Review Committee is set
forth below.
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 2002 fiscal year. A representative of Deloitte & Touche LLP
is expected to be present at the stockholders' meeting. This representative
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.
Nonemployee directors also are awarded $60,000 of restricted shares of
common stock of the Company upon election to the Board and annually thereafter.
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 director's 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 Audit Review Committee, 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 or future filings into any filing under the Securities Act
of 1933 or under the Securities Exchange Act of 1934, except to the extent that
the Company specifically incorporates the information by reference, and shall
not otherwise be deemed filed under such Acts.
-------------------------
9
AUDIT REVIEW COMMITTEE REPORT
--------------------------------------------------------------------------------
To the Board of Directors: December 4, 2001
The Audit Review Committee consists of the following members of the Board
of Directors: Leonard A. Hadley (Chair), T. Kevin Dunnigan, Regina E.
Herzlinger, Arthur L. Kelly, and Antonio Madero B. Each of the members is
independent as defined under the rules of the New York Stock Exchange (NYSE).
The Audit Review Committee is responsible for assisting the Board of Directors
in fulfilling its oversight responsibilities pertaining to the accounting,
auditing and financial reporting processes of the Company. Management is
responsible for establishing and maintaining the Company's internal financial
controls and for preparing financial statements in accordance with accounting
principles generally accepted in the United States of America. Deloitte & Touche
LLP, the external auditor for the Company, is responsible for performing an
independent audit of those financial statements and for issuing an opinion as to
whether the Company's annual financial statements are, in all material respects,
presented fairly in conformity with accounting principles generally accepted in
the United States of America.
While financially literate under the applicable NYSE rules, members of the
Audit Review Committee are not full-time employees of the Company and are not
professionally engaged in the practice of auditing or accounting and do not
represent that they are experts in the fields of accounting or auditing,
including in respect of auditor independence. Members of the Audit Review
Committee rely, without independent verification, on the information provided
to them by management and on the representations made to them by the external
auditor. Accordingly, the oversight provided by the Audit Review Committee
should not be considered as providing an independent basis for determining that
management has established and maintained appropriate internal financial
controls, that the financial statements have been prepared in accordance with
accounting principles generally accepted in the United States, or that the
audit of the Company's financial statements by the external auditor has been
carried out in accordance with auditing standards generally accepted in the
United States.
In this context, we have reviewed and discussed with management the
Company's audited financial statements as of and for the year ended October 31,
2001.
We have discussed with Deloitte & Touche LLP, the matters required to be
discussed by Statement on Auditing Standards No. 61, Communication with Audit
Committees, as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter from
Deloitte & Touche LLP required by Independence Standard No. 1, Independence
Discussions with Audit Committees, as amended, by the Independence Standards
Board, and have discussed with the external auditors their independence.
Based on the reviews and discussions referred to above, and exercising our
business judgment, we recommend to the Board of Directors that the financial
statements referred to above be included in the Company's Annual Report on Form
10-K for the fiscal year ended October 31, 2001 for filing with the Securities
and Exchange Commission.
We have also considered whether the provision by Deloitte & Touche LLP of
services not related to the audit of the financial statements included in the
Company's Form 10-K and the reviews of the interim financial statements
included in the Company's Forms 10-Q for such year is compatible with
maintaining their independence.
Audit Review Committee
Leonard A. Hadley (Chair)
T. Kevin Dunnigan
Regina E. Herzlinger
Arthur L. Kelly
Antonio Madero B.
10
AUDIT AND NON-AUDIT FEES
--------------------------------------------------------------------------------
Audit Fees
The aggregate fees, including expenses, billed by Deloitte & Touche LLP,
the member firms of Deloitte Touche Tohmatsu, and their respective affiliates
(collectively, "Deloitte") for professional services rendered for the audit of
the consolidated financial statements of the Company and its subsidiaries for
fiscal 2001 and the reviews of the Company's quarterly financial statements
during fiscal 2001 were $2.3 million.
Financial Information Systems Design and Implementation Fees
Deloitte did not provide any information technology services relating to
financial information systems design and implementation to the Company and its
subsidiaries in fiscal 2001.
All Other Fees
The aggregate fees, including expenses, billed by Deloitte for services
rendered to the Company and its subsidiaries, other than the services described
above, for fiscal 2001 were $6.8 million. Of these amounts, approximately $4.5
million or approximately 66% relate to the statutory audits of the Company's
foreign subsidiaries, due diligence and pre-acquisition services, services
related to the Company's registration of securities, tax compliance services,
and audits of the Company's employee benefit plans and healthcare subsidiaries
required by regulatory authorities.
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 overseeing 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:
o 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;
o 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;
o 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;
o Provide flexibility to recognize, differentiate and reward individual
performance; and
o 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.
The Revenue Reconciliation Act of 1993 placed certain limits on the tax
deductibility of compensation paid to the chief executive officer and certain
other executive officers, unless the compensation is performance-based. 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 Company's other compensation objectives. At the 2000 annual
meeting, stockholders approved the John Deere
11
Omnibus Equity and Incentive Plan (the "Omnibus Plan") and re-approved the
performance goals under the John Deere Performance Bonus Plan (the "Bonus
Plan") and the John Deere Equity Incentive Plan (the "Equity Incentive Plan").
Each of these plans was designed to meet the Company's 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 26 companies, two of which are also included among
the four 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. Lane, the Chief Executive Officer ("CEO"). In
determining salary adjustments for the Company's executives (including Mr. Lane
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; 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 Company by an
outside compensation consultant.
Mr. Lane's base salary for fiscal 2001 was below the peer group median as
it was his initial full year as Chairman, President and CEO. Mr. Lane was
elected CEO in May 2000. Mr. Lane received a base salary of $635,951 for fiscal
2000 and $824,132 for fiscal 2001. For fiscal 2001, the base salaries of 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.
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. Lane and the other executive officers
named in the Summary Compensation Table) is supplemented by fiscal year-end
payments under the Bonus Plan. The amount of these payments (if any) depends
upon the Company's pre-bonus and pre-extraordinary item return on average
assets for the year, the Company's achievement of cost reduction goals, the
position and salary of the employee and any other performance goals established
by the employee's division. For fiscal 2001, the Committee and the Special
Subcommittee of the Committee (the "Subcommittee") also established for each of
the equipment divisions goals based on increasing sales or market share. 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 100% of base salary
for the CEO and 65% to 70% of base salary for other senior officers. No bonus
payment is available if minimum performance thresholds are not achieved.
12
For fiscal 2001, the maximum return on assets goal was 10.5%. The
Company's return on average consolidated assets for 2001 calculated in
accordance with the Bonus Plan was below the minimum performance threshold. The
minimum cost reduction goals and the target sales goals were exceeded for some
divisions. Based on these results, the pre-established Bonus Plan formula
resulted in an annual performance bonus payment for Mr. Lane of $241,893, and
the Committee and Subcommittee determined to pay Mr. Lane the amount calculated
under the Bonus Plan. This amount represents approximately 29.4% of base
salary. The other senior officers also received annual performance bonus
payments calculated under the pre-established Bonus Plan formula ranging from
15.5% to 20.2% of base salaries.
For fiscal 2002, in order to increase the focus on cost reduction and move
toward common performance bonus metrics among divisions, the Bonus Plan
performance goals established by the Committee will consist exclusively of
return on average asset and cost reduction goals. In all other respects, the
annual performance Bonus Plan for fiscal 2002 is the same as for fiscal 2001.
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 2001.
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 John Deere Stock Option Plan and the Omnibus 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, from
fiscal 1995 to 1999 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 and Subcommittee, 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 executive participants (including Mr. Lane) with
the objective of providing a target total compensation opportunity, including
base salary and the target annual profit sharing bonus, equal to the 65th to
75th percentile of the peer group. Depending on stock price performance and
Company performance, actual total compensation for any given year could be at,
above or below the target 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.
The Committee and Subcommittee made the final biennial target award of
equity incentive shares to executive officers in December 1998. 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 ending
October 31, 2002. Any of the target shares not vested following the four year
performance period are automatically forfeited.
Beginning in fiscal 2000, grants of market-priced options which vest over
several years have been the primary vehicle for long-term incentive awards to
executive officers. 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. In fiscal 2001, the
long-term incentive award to senior executives consisted of market-priced
options which vest over three years, have a maximum term of ten years, and are
subject to the other terms and conditions of the Omnibus Plan. During fiscal
2001, Mr. Lane was awarded 400,000 market-priced options which become
exercisable in three equal annual installments
13
beginning in December 2001. For fiscal 2002, in order to allocate available
options over the remaining expected life of the Omnibus Plan, the Committee and
Subcommittee have approved a reduced grant of market-priced options.
Accordingly, the numbers of options granted will be below the target of the
peer group.
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. Lane has served as Chairman, President and Chief Executive Officer of
the Company since August 2000. Mr. Lane's base salary, annual performance bonus
and option 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. For fiscal
2001, Mr. Lane's total compensation fell well below this target due to the
small payout under the Bonus Plan and Mr. Lane's base salary being below the
peer group median. As explained above, the availability of a fiscal 2001 bonus
payment was based exclusively on return on assets, cost reductions, sales goals
and payout levels established by the Committee and Subcommittee at the
beginning of the year, as determined by actual 2001 results. It is the
Committee's view that this relationship between pay and Company performance is
appropriate and serves stockholders' interests.
COMMITTEE ON COMPENSATION
John R. Stafford (Chair)
John R. Block
Crandall C. Bowles
Thomas H. Patrick
John R. Walter
Dr. Arnold R. Weber
14
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 $100 is invested
in Company stock and each of the other two indices at the closing market
quotation on October 31, 1996 and that dividends are reinvested. The stock
price performance shown on the graph is not necessarily indicative of future
price performance.
[GRAPHIC OMITTED]
1996 1997 1998 1999 2000 2001
Deere & Co. 100.00 128.24 88.14 91.84 95.50 98.12
S&P Mach 100.00 138.08 114.22 137.00 111.25 117.91
S&P 500 100.00 132.11 161.16 202.54 214.87 161.36
15
COMPENSATION OF EXECUTIVE OFFICERS
--------------------------------------------------------------------------------
The following table shows the remuneration from the Company and its
subsidiaries during the past three fiscal years to the Company's Chief
Executive Officer (the "CEO") and each of the five most highly compensated
executive officers of the Company other than the CEO:
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation Awards
-------------------- --------------------------
Restricted Securities
Stock Underlying All Other
Name and Fiscal Salary(1) Bonus(2) Awards(3) Options/SARS(4) Compensation(5)
Principal Position Year ($) ($) ($) (#) ($)
--------------------------------------------------------------------------------------------------------------
Robert W. Lane, 2001 $824,132 $241,893 $ 0 400,000 $ 27,624
Chairman, President & 2000 $635,951 $670,932 $ 0 79,094 $ 23,694
Chief Executive Officer 1999 $370,958 $ 0 $1,886,867 78,328 $ 26,431
Fred F. Korndorf, 2001 $463,456 $ 93,611 $ 0 77,727 $1,202,013
Retired President, Worldwide 2000 $443,661 $338,436 $ 0 58,459 $ 57,358
Agricultural Equipment (6) 1999 $395,681 $ 0 $1,925,193 82,270 $ 54,094
Pierre E. Leroy, 2001 $432,852 $ 82,949 $ 0 76,657 $ 61,440
President, Worldwide 2000 $418,440 $299,202 $ 0 58,459 $ 51,421
Construction & Forestry 1999 $406,245 $ 0 $1,925,193 82,270 $ 48,386
John K. Lawson, 2001 $418,259 $ 77,483 $ 0 60,256 $ 70,493
Senior Vice 2000 $402,562 $279,617 $ 497,216 53,677 $ 55,564
President 1999 $375,338 $ 0 $ 385,377 72,333 $ 48,739
Michael P. Orr, 2001 $413,077 $ 77,201 $ 0 69,526 $ 15,490
President, Financial 2000 $394,580 $278,160 $ 0 57,826 $ 6,570
Services Division 1999 $372,714 $ 0 $1,878,042 76,194 $ 11,664
Nathan J. Jones 2001 $402,112 $ 77,158 $ 0 75,493 $ 11,498
Senior Vice 2000 $350,412 $246,821 $ 0 57,873 $ 5,617
President 1999 $274,704 $ 0 $ 275,283 56,198 $ 11,847
-------------------------------------------------------------------------------------------------------------
(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 performance 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 and
the position and salary of the employee. The amount of the bonus for fiscal
2001 and 2000 also depended upon achievement of division cost reduction goals
and sales or market share goals.
(3) No restricted stock awards were made to the named executive officers
during fiscal 2001. The 2000 amount reported in the table for Mr. Lawson
represents a grant of 14,624 shares under the John Deere Restricted Stock Plan.
These shares will vest on February 27, 2002 and are subject to possible
forfeiture in the event of termination or resignation from the Company prior to
vesting. 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 and
Subcommittee. 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. During fiscal 1999, Mr. Lane was granted under the Restricted Stock
Plan 46,111 shares of restricted stock to vest in four equal annual increments
beginning in December 2000. Upon Mr. Lane's appointment as Chairman of the
Board this retention grant was fully vested. 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
16
in value attributable to the restrictions and performance 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, 2001, the
total number and market value (based on the closing market price) of shares of
restricted stock, including equity incentive shares, held by each of the named
executive officers were as follows: Mr. Lane (11,835; $437,777); Mr. Korndorf
(47,595; $1,760,539); Mr. Leroy (47,595; $1,760,539); Mr. Lawson (26,459;
$978,718); Mr. Orr (46,147; $1,706,978); and Mr. Jones (8,454; $312,713).
(4) The 2001 and 2000 amounts represent market-priced options granted in
December 2000 and December 1999, respectively. The 1999 amounts represent the
total of market-priced options and premium-priced options granted in December
1998. Additional details on the fiscal 2001 grant are included in the
"Option/SAR Grants In Last Fiscal Year" table that follows.
(5) Amounts shown for 2001 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 $5,040; (ii) for Mr. Korndorf, a cash payment
of $1,139,010 in connection with his early retirement agreement which is
described under "Change In Control Severance Agreements and Other Arrangements"
which follows; and (iii) above-market earnings on deferred compensation for Mr.
Lane $22,584, Mr. Korndorf $57,963, Mr. Leroy $56,400, Mr. Lawson $65,453, Mr.
Orr $10,450, and Mr. Jones $6,458. The Company's contribution to the 401(k)
Savings and Investment Plan for all employees during the past fiscal year was
$31,546,532.
(6) Mr. Korndorf retired as President, Worldwide Agricultural Equipment
Division in August 2001.
The following table shows information concerning individual grants of
stock options made during fiscal 2001 to each of the named executive officers
of the Company and the potential realizable values of the grants assuming
annually compounded stock price appreciation rates of five and ten percent per
annum respectively, over the maximum option term. The options are subject to
the terms and conditions of the Omnibus Plan which will, in certain
circumstances, cause the option term to be shorter than the maximum term. The
five and ten percent rates of appreciation are set by the rules of the
Securities and Exchange Commission and are not intended to forecast possible
future appreciation, if any, of the Company's stock price.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term(3)
--------------------------------------------------- ----------------------------
Number of % of Total
Securities Options/SARS Exercise
Underlying Granted to or Base
Options/SARS Employees in Price Expiration 5% 10%
Name Granted(1)(#) Fiscal Year ($/SH) Date(2) ($) ($)
----------------------------------------------------------------------------------------------------------------
Robert W. Lane ........... 400,000 8.95% $ 42.07 12/13/10 $10,583,039 $26,819,498
Fred F. Korndorf ......... 77,727 1.74% $ 42.07 12/13/10 $ 2,056,470 $ 5,211,498
Pierre E. Leroy .......... 76,657 1.72% $ 42.07 12/13/10 $ 2,028,160 $ 5,139,756
John K. Lawson ........... 60,256 1.35% $ 42.07 12/13/10 $ 1,594,229 $ 4,040,089
Michael P. Orr ........... 69,526 1.56% $ 42.07 12/13/10 $ 1,839,491 $ 4,661,631
Nathan J. Jones .......... 75,493 1.69% $ 42.07 12/13/10 $ 1,997,363 $ 5,061,711
----------------------------------------------------------------------------------------------------------------
(1) Market-priced options which become exercisable in three equal increments
one, two and three years after the date of grant. The options have a maximum
term of ten years. 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) The options expire if the option holder's employment with the Company
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. Upon retirement the options are exercisable within five years of
retirement or within one year of death, if later.
17
(3) The total potential realizable value for all stockholders as a group based
on 237,331,723 outstanding shares as of October 31, 2001, would be
$6,279,227,070 and $15,912,794,246 at the 5% and 10% assumed annual rate of
appreciation, respectively. Mr. Lane's total potential realizable value is
0.17% of the potential realizable value of all stockholders at the 5% and 10%
assumed annual rates of appreciation. The total potential realizable value of
all the named executives to that of all stockholders is 0.3% at the 5% and 10%
assumed annual rates of appreciation.
The following table shows information for the named executives concerning
exercises of options and SARs during fiscal 2001 and the number and value of
unexercised options (and tandem SARs) held at October 31, 2001.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARS at Fiscal In-the-Money Options/SARS
Shares Year-End(1) (#) at Fiscal Year-End(2) ($)
Acquired on Value ----------------------------- ----------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
------------------------------------------------------------------------------------------------------------------
Robert W. Lane ........... 0 $ 0 251,057 519,556 $ 214,072 $ 0
Fred F. Korndorf ......... 0 $ 0 299,972 194,436 $1,696,195 $ 0
Pierre E. Leroy .......... 0 $ 0 260,412 193,366 $1,073,750 $ 0
John K. Lawson ........... 9,095 $174,078 246,991 167,104 $1,040,741 $ 0
Michael P. Orr ........... 0 $ 0 108,891 177,123 $ 453,225 $ 0
Nathan J. Jones .......... 0 $ 0 73,228 162,882 $ 161,268 $ 0
------------------------------------------------------------------------------------------------------------------
(1) Market-priced options and SARs awarded by the Company are not exercisable
until one to three years after grant and have a maximum term of ten years
subject to plan provisions. Premium-priced options granted in December 1997 and
December 1998 are not exercisable 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 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, 2001. The
in-the-money options at October 31, 2001, 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 2001 fiscal
year was $36.99.
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% 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
after 2000 the target amount of short-term bonuses; 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.
18
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 following named executive officers of the Company is: Mr. Lane,
$1,081,755; Mr. Leroy, $513,242; Mr. Lawson, $456,948; Mr. Orr, $448,281; and
Mr. Jones, $259,096. The estimated annual pension payable to Mr. Korndorf at
age 55 is $164,596. The estimated annual 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. Korndorf who retired during 2002) continues as an
executive of the Company until retirement at age 65; (iii) that salaries
continue at 2001 levels; and (iv) that bonuses are paid at target earnings
goals. Pension benefits are not subject to reduction for social security
benefits or other offset amounts.
CHANGE IN CONTROL SEVERANCE AGREEMENTS AND OTHER ARRANGEMENTS
The Company has entered into severance agreements with its executive
officers, including each of the currently-employed executive officers named in
the Summary Compensation Table in this proxy statement, which are intended to
provide for continuity of management in the event of a change in control of the
Company. The agreements have an initial term of three years and provide that
they are to be automatically extended in one year increments, unless, not later
than six months prior to expiration, the Company has given prior notice of
termination. In such event, each of the agreements will continue to be
effective until the end of its then remaining term. However, no notice of
termination of the agreement may be given within six months following a
"potential change in control" (as defined in the agreements) and if a "change
in control" (as defined in the agreements) occurs, the agreements will continue
in effect for the longer of: (i) twenty-four months beyond such change in
control; or (ii) until all obligations of the Company under the agreements have
been satisfied. A change in control is defined generally as any change in
control of the Company that is required to be reported in a proxy statement by
Regulation 14A under the Exchange Act. Change in control events include,
without limitation: (i) any "person", as defined in the Exchange Act (with
certain exceptions), acquiring 30 percent or more of the Company's voting
securities; (ii) a majority of the Company's directors being replaced during
the term of the agreements without the approval of at least two-thirds of
existing directors or directors previously approved by such directors; (iii)
the consummation of any merger or business combination of the Company unless in
any case the voting securities of the Company outstanding prior to such
transaction continue to represent at least 60% of the voting securities of the
resulting entity; or (iv) the complete liquidation of the Company or the sale
or disposal of all or substantially all of the Company's assets. A potential
change in control is
19
defined as (i) the entering into of an agreement that would result in a change
in control as defined above; or (ii) any person acquiring 15 percent or more of
the Company's voting securities and the Board resolving that a potential change
in control has occurred.
If, within 6 months preceding or within 24 months following a change in
control, the covered executive officer is terminated by the Company for any
reason, other than for death, disability or for cause (as defined in the
agreements), or if, within 24 months following a change in control, such
executive officer terminates his or her employment for good reason (as defined
in the agreements), then the executive officer is entitled to a lump sum
severance payment equal to three times the sum of (a) the executive's then base
salary, and (b) the greater of (i) the mean of the bonuses paid to the
executive under the Company's Performance Bonus Plan for the three complete
fiscal years immediately prior to the termination; and (ii) the target bonus
amount for the fiscal year in which the termination occurs. In addition, the
executive would also receive a pro-rated bonus, calculated through the date of
termination and his earned but unpaid base salary, and vacation pay. Upon
termination the executive will also receive in a single payment an amount equal
to the excess of the supplemental retirement benefit he would have been
entitled to had he remained employed for an additional three years over the
supplemental retirement benefit the executive is entitled to based on his
actual age and credited service. The executive will also receive an amount
equal to three times the Company's contributions on behalf of the executive
under the Company's defined contribution plans for the preceding plan year (or,
if greater, for the plan year immediately prior to the change in control). In
addition, the executive will receive an amount equal to the number of the
executive's then outstanding unexercisable stock options multiplied by the
positive difference, if any, between the price per share of the Company's stock
on the termination date over the per share option exercise price.
In the event that any payments made in connection with a change in control
would be subjected to the excise tax imposed on excess parachute payments by
the Internal Revenue Code, the aggregate payments to the executive would be
capped at the excise tax threshold, except the Company will "gross-up" the
executive officer's compensation for such excise taxes and any federal, state
and local income tax applicable to such excise tax, penalties and interest
thereon if such gross-up payment would result in the executive receiving an
amount which would exceed the capped amount by at least ten percent.
For three years from the date of a covered termination, the Company would
continue the executive's coverage under the Company's welfare benefits for
health care, life and accidental death and dismemberment, and disability
insurance coverage. Such benefits may be discontinued if the executive has
substantially similar benefits available from another employer. The agreements
also provide that the Company will pay reasonable legal fees and expenses
incurred by the executive in enforcing the agreement. The executive agrees not
to disclose nor use for his own purposes confidential and proprietary
information of the Company, and for a period of two years not to induce Company
employees to leave the Company nor to interfere in a similar manner with the
business of the Company.
In addition to the above described executive severance agreements, several
of the Company's compensation plans have change in control provisions. 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.
20
After 29 years of service, Fred F. Korndorf, formerly President of the
Worldwide Agricultural Equipment Division, elected to take early retirement. He
relinquished his duties as President of the Division on August 1, 2001 and will
officially retire effective February 28, 2002. The Company entered into an
early retirement agreement with Mr. Korndorf. Under the retirement agreement,
Mr. Korndorf will receive a cash payment of $1,139,010, representing
approximately thirty months of current base salary and continuation of health,
accident, and life insurance benefits at the employee-contributory rate through
August 2004. Mr. Korndorf continues to be eligible for bonuses under the
Company's Bonus Plan on a prorated basis through February 2002, if a bonus is
paid for fiscal 2002, and for March 2002 through August 2004 bonuses to be paid
at the greater of seventy percent of final base salary or the actual
performance bonus for each year. In lieu of the annual market-priced stock
option grant in December 2001, Mr. Korndorf elected to receive a cash payment
in January 2002 of $1,729,352. The Board Committee on Compensation waived
forfeiture provisions on the remaining 23,055 unvested restricted shares
granted to Mr. Korndorf in December 1998. Mr. Korndorf will also receive up to
twelve months of career continuation services, continued use up to September
2004 of certain loaned equipment and, unless provided by a subsequent employer,
certain relocation expenses through August 2004 and supplemental life insurance
coverage in the amount of approximately $715,000 through August 2009. The
Company and Mr. Korndorf also agreed to certain confidentiality, non-compete,
release and indemnification provisions.
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 26, 2003, must be received by the Company at its principal executive
offices not later than September 20, 2002. 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 and nominations for the annual
meeting to be held February 26, 2003, must be received by the Secretary not
earlier than October 29, 2002, and not later than November 28, 2002. 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 Exchange Act, 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 61265-8098, who will submit
them to the Board or the Corporate Governance Committee, as applicable, for its
consideration.
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 $10,000 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.
21
ANNUAL REPORT
--------------------------------------------------------------------------------
Unless you have previously elected to view annual reports over the
Internet, a copy of the Company's annual report for the year ended October 31,
2001, has been mailed to you with this proxy statement. The Company's audited
financial statements, along with other financial information, are included in
the annual report.
The Company's Form 10-K annual report to the Securities and Exchange
Commission may be obtained without charge by writing to Deere & Company
Stockholder Relations, One John Deere Place, Moline, Illinois 61265-8098. A
copy of the Company's Form 10-K and other periodic filings also may be obtained
from the Securities and Exchange Commission's EDGAR database at www.sec.gov.
ELECTRONIC ACCESS TO PROXY STATEMENT AND ANNUAL REPORT
--------------------------------------------------------------------------------
This proxy statement and the 2001 annual report are available on the
Company's Internet site at www.deere.com/stock. Most stockholders can elect to
view future proxy statements and annual reports over the Internet instead of
receiving paper copies in the mail.
Stockholders of record can choose this option and save the Company the
cost of producing and mailing these documents by marking the appropriate box on
the proxy card or by following the instructions provided if voting over the
Internet or by telephone. Stockholders can also choose between receiving paper
documents and viewing future documents electronically by calling the Deere &
Company Stockholder Relations Department at (309) 765-4539 or writing to them
at One John Deere Place, Moline, Illinois 61265-8098.
Stockholders who choose to view future proxy statements and annual reports
over the Internet will receive a proxy card in the mail next year with
instructions containing the Internet address of those materials. The election
will remain in effect until the stockholder writes or calls the Deere & Company
Stockholder Relations Department and tells us otherwise. Stockholders do not
need to elect Internet access each year.
Stockholders who hold their Company stock through a bank, broker or other
holder of record, should refer to the information provided by that entity for
instructions on how to elect to view future proxy statements and annual reports
over the Internet.
Some stockholders who hold their Company stock through a bank, broker or
other holder of record and who elect electronic access will receive an e-mail
next year containing the Internet address to use to access the Company's proxy
statement and annual report.
For the Board of Directors,
/s/ Michael A. Harring
Moline, Illinois Michael A. Harring
January 18, 2002 Secretary
22
APPENDIX A
DEERE & COMPANY NONEMPLOYEE DIRECTOR STOCK OWNERSHIP PLAN
---------------------------------------------------------
Article 1. Establishment, Purpose, and Duration
1.1 Establishment of the Plan
Deere & Company, a Delaware corporation, hereby establishes an incentive
compensation plan to be known as the "Deere & Company Nonemployee Director
Stock Ownership Plan" (the "Plan"), as set forth in this document. The Plan
provides for the grant of Restricted Stock to Nonemployee Directors, subject to
the terms and provisions set forth herein.
Upon approval by the Board of Directors of the Company, subject to
ratification within six (6) months by an affirmative vote of a majority of
Shares, the Plan shall become effective as of February 27, 2002 (the "Effective
Date"), and shall remain in effect as provided in Section 1.3 herein. Each
amendment to the Plan shall become effective as of the date set forth in such
amendment.
1.2 Purpose of the Plan
The purpose of the Plan is to further the growth, development, and
financial success of the Company by strengthening the Company's ability to
attract and retain the services of experienced and knowledgeable Nonemployee
Directors by enabling them to participate in the Company's growth and by
linking the personal interests of Nonemployee Directors to those of Company
shareholders.
1.3 Duration of the Plan
The Plan shall commence on the Effective Date and shall remain in effect,
subject to the right of the Board of Directors to terminate the Plan at any
time pursuant to Article 8 herein, until all Shares subject to it have been
acquired according to the Plan's provisions. However, in no event may an Award
be granted under the Plan on or after March 8, 2012.
Article 2. Definitions
2.1 Definitions
Whenever used in the Plan, the following terms shall have the meaning set
forth below:
(a) "Award" means a grant of Restricted Stock under the Plan.
(b) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange
Act.
(c) "Board" or "Board of Directors" means the Board of Directors of the
Company, and includes a committee of the Board of Directors designated
by the Board to administer part or all of the Plan.
(d) "Change in Control" of the Company shall be deemed to have occurred as
of the first day that any one or more of the following conditions
shall have been satisfied:
(1) Any person as the term is defined 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) (but not
including the Company, any subsidiary of the Company, a trustee
or other fiduciary holding securities under an employee benefit
plan of the Company or of any subsidiary of the Company, or any
person or entity organized or established by the Company in
connection with or pursuant to any such benefit plan), becomes
the Beneficial Owner, directly or indirectly, of securities of
the Company representing thirty percent (30%) or more of the
A-1
combined voting power of the Company's then outstanding
securities, provided, that there shall not be included among the
securities as to which any person is a Beneficial Owner
securities as to which the power to vote arises by virtue of
proxies solicited by the management of the Company;
(2) During any period of two (2) consecutive years (not including any
period prior to the Effective Date), individuals who at the
beginning of such period constitute the Board (and any new
Director, whose election by the Company's shareholders 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 so
approved), cease for any reason to constitute a majority thereof;
(3) The shareholders of the Company approve: (A) a plan of complete
liquidation of the Company; or (B) an agreement for the sale or
disposition of all or substantially all the Company's assets; or
(C) a merger, consolidation, or reorganization of the Company
with or involving any other corporation, other than a merger,
consolidation, or reorganization that would result in the voting
securities of the Company 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 Company (or such surviving entity)
outstanding immediately after such merger, consolidation, or
reorganization.
(e) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(f) "Company" means Deere & Company, a Delaware corporation, (including
any and all subsidiaries), or any successor thereto as provided in
Section 9.7 herein.
(g) "Director" means any individual who is a member of the Board of
Directors of the Company.
(h) "Disability" means a permanent and total disability, within the
meaning of Code Section 22(e)(3).
(i) "Employee" means any full-time, nonunion, salaried employee of the
Company.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor Act thereto.
(k) "Fair Market Value" as it relates to common stock of the Company on
any given date means (i) the mean of the high and low sales prices of
the common stock of the Company 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 Company's common stock is not listed on any domestic stock
exchange, the mean of the high and low sales prices of the Company'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 Company's Board of Directors or the
Committee.
(l) "Nonemployee Director" means any individual who is a member of the
Board of Directors of the Company, but who is not otherwise an
Employee of the Company.
(m) "Restricted Stock" or "Restricted Share" means Shares granted to a
Nonemployee Director pursuant to Article 6.
(n) "Shares" means the shares of common stock of the Company, $1.00 par
value.
A-2
Article 3. Administration
3.1 The Board of Directors
The Plan shall be administered by the Board of Directors of the Company,
subject to the restrictions set forth in the Plan.
3.2 Administration By The Board
The Board shall have the full power, discretion, and authority to
interpret and administer the Plan in a manner which is consistent with the
Plan's provisions. However, in no event shall the Board have the power to
determine Plan eligibility, or to determine the amount, the price, or the
timing of Awards to be made under the Plan (all such determinations are
automatic pursuant to the provisions of the Plan). Any action taken by the
Board with respect to the administration of the Plan which would result in any
Nonemployee Director ceasing to be a "nonemployee director" within the meaning
of Rule 16b-3 under the Exchange Act shall be null and void.
3.3 Decisions Binding
All determinations and decisions made by the Board pursuant to the
provisions of the Plan and all related orders or resolutions of the Board of
Directors shall be final, conclusive, and binding on all persons, including the
Company, its shareholders, Employees, Nonemployee Directors, and their estates
and beneficiaries.
Article 4. Shares Subject to the Plan
4.1 Number of Shares
Subject to adjustment as provided in Section 4.3 herein, the total number
of Shares available for grant under the Plan may not exceed 250,000.
4.2 Lapsed Awards
If any Shares granted under this Plan terminate, expire, or lapse for any
reason, such Shares again shall be available for grant under the Plan. However,
in the event that prior to an Award's termination, expiration, or lapse, the
holder of the Award at any time received one or more "benefits of ownership"
pursuant to such Award (as defined by the Securities and Exchange Commission,
pursuant to any rule or interpretation promulgated under Section 16 of the
Exchange Act), the Shares subject to such Award shall not be made available for
regrant under the Plan.
4.3. Adjustments in Authorized Shares
In the event of any merger, reorganization, consolidation,
recapitalization, liquidation, stock dividend, split-up, Share combination, or
other change in the corporate structure of the Company affecting the Shares,
the Board may make such adjustments to outstanding Awards to prevent dilution
or enlargement of rights.
Article 5. Participation
5.1 Participation
Persons participating in the Plan shall include, and be limited to, all
Nonemployee Directors of the Company.
Article 6. Restricted Stock
6.1 Annual Awards
An annual Award of Restricted Shares to each Nonemployee Director will be
made automatically as of the date one week following the date of the annual
meeting for the election of Directors in an amount
A-3
equivalent to $60,000 based on the Fair Market Value on the grant date of
common stock of the Company. Although the period of service shall run from the
date of the annual meeting, the grant date shall be one week following the
annual meeting to permit the dissemination to the market of information coming
out of such meeting.
6.2 Partial Awards
Upon the effective date of any amendment in the amount of any Award, each
Nonemployee Director shall receive a partial Award calculated as if the
Nonemployee Director were serving a partial term as provided in Section 6.3,
below, provided that the Fair Market Value shall be determined as of the grant
date one week following the effective date of the Award. Restricted shares
previously granted to the Nonemployee Director for the same period shall be
deducted from such Award.
6.3 Partial Terms
A Nonemployee Director who is elected by the Board to fill a vacancy
between annual meetings shall automatically be granted a pro rata portion of
the number of Restricted Shares awarded to Nonemployee Directors as of the date
of the most recent annual meeting. Such prorated number of shares shall be
determined by multiplying the number of Restricted Shares awarded as of the
date of the most recent annual meeting by a fraction, the numerator of which is
the number of days remaining until the date of the next annual meeting for the
election of Directors, and the denominator of which is the number of days
between such annual meetings.
6.4 Custody and Transferability
The Shares awarded to a Nonemployee Director may not be sold, pledged,
assigned, transferred, gifted, or otherwise alienated or hypothecated until
such time as the restrictions with respect to such Shares have lapsed as
provided herein. At the time Restricted Shares are awarded to a Nonemployee
Director, shares representing the appropriate number of Restricted Shares shall
be registered in the name of the Nonemployee Director but shall be held by the
Company in custody for the account of such person. As Restrictions lapse on
Shares upon death, Disability or retirement as contemplated by Section 6.8,
certificates therefor will be delivered to the Participant.
6.5 Other Restrictions
The Company may impose such other restrictions on any Shares granted
pursuant to the Plan as it may deem advisable including, without limitation,
restrictions 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 upon death, Disability or
retirement as contemplated by Section 6.8 may bear such legends, if any, as the
Board shall specify.
6.6 Voting Rights
Participants granted Restricted Stock hereunder shall have full voting
rights on such Shares.
6.7 Dividend Rights
Participants granted Restricted Stock hereunder shall have full dividend
rights, with such dividends being paid to Participants. If all or part of a
dividend is paid in Shares, the Shares shall be held by the Company subject to
the same restrictions as the Restricted Stock that is the basis for the
dividend.
6.8 Termination of Service From Board
The restrictions provided for in Sections 6.4 and 6.5 shall remain in
effect until, and shall lapse only upon, the termination of a Nonemployee
Director's service as a Director by reason of death, Disability, or retirement
from the board, and the Shares shall thereafter be delivered to the Nonemployee
Director or the decedent's beneficiary as designated pursuant to Section 9.3.
A-4
In the event the Nonemployee Director's service as a Director is
terminated for any other reason, including, without limitation, any involuntary
termination on account of (a) fraud or intentional misrepresentation, or (b)
embezzlement, misappropriation, or conversion of assets or opportunities of the
Company, all Restricted Shares awarded to such Nonemployee Director prior to
the date of termination shall be immediately forfeited and returned to the
Company.
6.9 Tax Withholding
The Company shall have the right under this Plan to collect cash from
Nonemployee Directors in an amount necessary to satisfy any Federal, state or
local withholding tax requirements. Any Nonemployee Director may elect to
satisfy withholding, in whole or in part, by having the Company withhold shares
of common stock having a value equal to the amount required to be withheld.
Article 7. Change in Control
7.1 Change in Control
Notwithstanding the provisions of Article 6 herein, in the event of a
Change in Control, any and all restrictions on Restricted Shares shall lapse as
of the date of the Change in Control, and the Company shall deliver new
certificates for such Restricted Shares which do not contain the legend of
restrictions required by Section 6.5.
Article 8. Amendment, Modification, and Termination
8.1 Amendment, Modification and Termination
Subject to the terms set forth in this Section 8.1 and Section 8.2, the
Board may terminate, amend, or modify the Plan at any time and from time to
time; provided, however, that the provisions set forth in the Plan regarding
the amount, the price or the timing of Awards to Nonemployee Directors may not
be amended more than once every six (6) months, other than to comport with
changes in laws and regulations.
Without such approval of the shareholders of the Company as may be
required by the Code, by the rules of Section 16 of the Exchange Act, by any
national securities exchange or system on which the Shares are then listed or
reported, or by a regulatory body having jurisdiction with respect hereto, no
such termination, amendment or modification may:
(a) Materially increase the total number of Shares which may be available
for grants of Awards under the Plan, except as provided in Section 4.3
herein; or
(b) Materially modify the requirements with respect to eligibility to
participate in the Plan; or
(c) Materially increase the total benefits accruing to Nonemployee
Directors under the Plan.
8.2 Awards Previously Granted
Unless required by law, no termination, amendment or modification of the
Plan shall materially affect, in an adverse manner, any Award previously
granted under the Plan, without the consent of the Nonemployee Director holding
the Award.
Article 9. Miscellaneous
9.1 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.
A-5
9.2 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.
9.3 Beneficiary Designation
Each Nonemployee Director 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 the event of his or her death.
Each designation will revoke all prior designations by the same Nonemployee
Director, and will be effective only when filed by the Nonemployee Director in
writing with the Company during his or her lifetime. In the absence of any such
designation, benefits remaining unpaid at the Nonemployee Director's death
shall be paid to the Nonemployee Director's estate.
9.4 No Right of Nomination
Nothing in the Plan shall be deemed to create any obligation on the part
of the Board to nominate any Nonemployee Director for reelection by the
Company's shareholders.
9.5 Shares Available
The Shares made available pursuant to Awards under the Plan may be either
authorized but unissued Shares, or Shares which have been or may be reacquired
by the Company, as determined from time to time by the Board.
9.6 Additional Compensation
Shares granted under the Plan shall be in addition to any annual retainer,
attendance fees, or other compensation payable to each Nonemployee Director as
a result of his or her service on the Board.
9.7 Successors
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on 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.
9.8 Requirements of Law
The granting of Awards under the Plan 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.
9.9 Governing Law
To the extent not preempted by Federal law, the Plan, and all agreements
hereunder, shall be construed in accordance with and governed by the laws of
the State of Delaware.
9.10 Securities Law Compliance
With respect to any Nonemployee Directors subject to Section 16 of the
Exchange Act, transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange Act.
To the extent any provision of the Plan or action by the Board fails to so
comply, it shall be deemed null and void to the extent permitted by law and
deemed advisable by the Board.
A-6
APPENDIX B
AUDIT REVIEW COMMITTEE CHARTER
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RESOLVED, that the Audit Review Committee Charter is as follows:
RESOLVED, that there be and hereby is created a committee to be known as
the Audit Review Committee to assist the Board of Directors in fulfilling its
oversight responsibilities pertaining to the accounting, auditing and financial
reporting processes of the Company, and that the Audit Review Committee shall
consist of at least three directors who meet the independence and financial
expertise requirements of the New York Stock Exchange. The members of the Audit
Review Committee and the Chairman thereof shall be designated by the Board of
Directors.
FURTHER RESOLVED, that the certified public accountants engaged to audit
the Company (the "external auditors") shall be ultimately accountable to the
Board of Directors and this Audit Review Committee.
FURTHER RESOLVED, that this Audit Review Committee and the Board of
Directors shall have the ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the external auditor.
FURTHER RESOLVED, that the following are the primary responsibilities of
the Audit Review Committee and are set forth only for its guidance. The Audit
Review Committee may, from time to time, adopt procedures as it deems
appropriate in carrying out its oversight functions and may perform such other
functions as may be assigned to it by law, this Charter, the Company's Articles
of Incorporation, or Bylaws, or by the Board of Directors. The Audit Review
Committee shall:
(1) Recommend for approval by the Board of Directors, a firm of certified
public accountants to conduct the audit of the Company's annual
financial statements to be filed with the Securities and Exchange
Commission.
(2) Determine whether to recommend to the Board of Directors that the
Company's financial statements be included in its Annual Report on
Form 10-K for filing with the Securities and Exchange Commission. To
carry out this responsibility, the Audit Review Committee shall:
o review and discuss the results of each external audit of the
Company's audited financial statements with management and the
external auditors;
o discuss with the external auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to
the conduct of the audit;
o review and discuss with the external auditors the written
disclosures required by Independence Standards Board Standard No.
1 regarding their independence and, where appropriate, recommend
that the Board of Directors take appropriate action in response
to the disclosures to satisfy itself of the independence of the
Company's external auditors;
o based upon the reviews and discussions, issue its report for
inclusion in the Company's proxy statement.
(3) Consider whether the provision by the external auditors of services
not related to the audit of the annual financial statements included
in the Company's Form 10-K and the reviews of the interim financial
statements included in the Company's Forms 10-Q for such year is
compatible with maintaining the external auditors' independence.
(4) Review the scope of, and plans for, the annual audit by the external
auditors.
(5) Meet from time to time with representatives of the external auditors,
such meetings to include private sessions with the external auditors.
B-1
(6) Discuss quarterly with management and the external auditors the
quarterly financial information prior to the Company's filing of
quarterly reports on Form 10-Q and any matters to be communicated to
the Audit Review Committee under generally accepted auditing
standards, or to authorize the Chairman of the Audit Review Committee
to conduct such discussions.
(7) Review annually the Company's procedures relating to its Code of
Business Principles and its Business Conduct Guidelines and to meet
with the General Counsel concerning litigation and legal and
regulatory compliance.
(8) Meet at a minimum of once each fiscal year with the Comptroller and
representatives of the internal audit department, and also with other
employees or officers associated with the system of internal control
and the internal audit of the books and records of the Company and its
subsidiaries, and to review and discuss the internal audit function
and the system of internal accounting control, which includes audit
procedures with respect to the Company's Business Conduct Guidelines,
such meetings to include private sessions with the senior executive in
charge of internal auditing.
(9) Review and reassess the adequacy of this Charter annually and submit
it to the Board of Directors for approval.
(10) Report Audit Review Committee activities to the full Board of
Directors.
FURTHER RESOLVED, that in discharging its oversight responsibilities, the
Audit Review Committee shall have unrestricted access to the Company's
management, books and records.
FURTHER RESOLVED, that it is the responsibility of management of the
Company to establish and maintain internal financial controls and to prepare
financial statements in accordance with accounting principles generally
accepted in the United States of America and it is the responsibility of the
external auditors for the Company to audit those financial statements and to
express an opinion on the financial statements. The Audit Review Committee's
responsibility is one of oversight. The Audit Review Committee is not providing
any expert or other special assurance as to the Company's financial statements
or the audit of those financial statements by the external auditors.
FINALLY RESOLVED, that members of the Audit Review Committee shall be
entitled to rely on the representations made to the Audit Review Committee by
the Company's management and the external auditors.
B-2
DIRECTIONS TO THE DEERE & COMPANY ADMINISTRATIVE CENTER
One John Deere Place, Moline, Illinois 61265-8098
--------------------------------------------------------------------------------
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
91/4 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.
[JOHN DEERE LOGO]
[GRAPHIC OMITTED]
Printed on Recycled Paper
[JOHN DEERE LOGO]
Dear Stockholders:
It is a pleasure to invite you to the 2002 Annual Meeting of Stockholders of
Deere & Company. The meeting will be held at 10 A.M. on Wednesday, February 27,
2002 at the Deere & Company Administrative Center, at One John Deere Place,
Moline, Illinois.
The Notice of the meeting and the Proxy Statement enclosed cover the formal
business of the meeting, which includes election of Directors, a director
compensation plan proposal, 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 2002.
Detach Proxy Card Here
--------------------------------------------------------------------------------
DEERE & COMPANY
PROXY-ANNUAL MEETING/27 FEBRUARY 2002
Solicited by the Board of Directors for use at the Annual Meeting of
Stockholders of Deere & Company on February 27, 2002.
The undersigned appoints each of Robert W. Lane 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 Annual Meeting and any adjournment thereof. The shares
represented by this proxy will be voted as specified and in the discretion of
the proxies on all other matters. If not otherwise specified, shares will be
voted in accordance with the recommendations of the Directors.
Please mark, date and sign your name exactly as it appears on this proxy and
return this proxy in the enclosed envelope. When signing as attorney, executor,
administrator, trustee, guardian or officer of a corporation, please give your
full title as such. For joint accounts, each joint owner should sign.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
Change of Address and or Comments:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(If you noted a change of address and or comments above,
please mark box on the reverse side)
[JOHN DEERE LOGO]
DEERE & COMPANY
STOCKHOLDER RELATIONS
ONE JOHN DEERE PLACE
MOLINE, IL 61265-8098
VOTE BY TELEPHONE AND INTERNET
24 HOURS A DAY, 7 DAYS A WEEK
VOTE BY TELEPHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until
11:59P.M. Eastern Time the day before the cut-off date or meeting date. Have
your proxy card in hand when you call. You will be prompted to enter your
12-digit Control Number which is located below and then follow the simple
instructions the Vote Voice provides you.
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before the
cut-off date or meeting date. Have your proxy card in hand when you access the
web site. You will be prompted to enter your 12-digit Control Number which is
located below to obtain your records and to create an electronic voting
instruction form.
VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the postage-paid envelope
we have provided or return it to Deere & Company, c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
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!
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
JOHND1 KEEP THIS PORTION FOR YOUR RECORDS
--------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
================================================================================
DEERE & COMPANY
The Directors Recommend a Vote FOR all Nominees
and FOR Item 2.
1. Election as Directors
Nominees: 01 - John R. Block, 02 - T. Kevin Dunnigan and
03 - Dr. Dipak C. Jain.
For Withhold For All
All All Except
[ ] [ ] [ ]
To withhold authority to vote, mark "For All Except" and write the nominee's
number on the line below.
--------------------------------------------------------------------------------
2. Approval of the Deere & Company Nonemployee Director Stock Ownership Plan.
For Against Abstain
[ ] [ ] [ ]
(Please sign, date and return this proxy in the enclosed postage prepaid
envelope.)
To receive your materials electronically in the future, please go to
www.icsdelivery.com/de to enroll.
If you wish to discontinue receipt of the Annual Report by mail, please mark
this box. [ ]
If you are submitting a change of address and or comments please mark here and
note on the reverse side. [ ]
------------------------------------ ------------
Signature [PLEASE SIGN WITHIN BOX] Date
------------------------------------ ------------
Signature (Joint Owners) Date
================================================================================