Deere & Company
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DEF 14A 1 de3809451-def14a.htm DEFINITIVE PROXY STATEMENT

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

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.            )
 
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[   ]   Soliciting Material Pursuant to §240.14a-12

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

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John Deere is focused on delivering intelligent, connected machines and solutions to revolutionize our customers’ agriculture and construction businesses, unlocking economic value across the full lifecycle of our products in ways that are sustainable for all.


WE RUN SO LIFE CAN LEAP FORWARD OUR CORE VALUES
     

We conduct business essential to life. Running for the people who trust us and the planet that sustains us, we create products and solutions that enable lives to leap forward.

We have been innovating to solve customer challenges since our founding in 1837. And we have continued to lead and innovate on behalf of our customers for nearly two centuries. Every day, our employees use their creativity to solve some of the biggest problems facing our world.

In 2020, John Deere embarked on a pivotal journey of transforming our business to operate in a manner that aligns with how our customers operate their businesses. Through this new Smart Industrial Operating Model, we will ensure that we continue to revolutionize agriculture and construction through the rapid introduction of new technologies and services that deliver outcomes to our customers that are both more productive and more sustainable. When we do, we will create more sustainable outcomes for all our stakeholders – our customers, employees, dealers, suppliers, shareholders, and the communities we serve.

     

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

We apply those values in everything we do, from designing and manufacturing our products and services to delivering solutions to our customers that enable them to be more productive, profitable, and sustainable.

 



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January 8, 2021
 

DEAR FELLOW SHAREHOLDERS,

On behalf of the Board of Directors and the senior management team, we cordially invite you to attend Deere & Company’s Annual Meeting of Shareholders, which will be held Wednesday, February 24, 2021, at 10 a.m. Central Standard Time at www.virtualshareholdermeeting.com/DE2021. As part of our precautions regarding the coronavirus and to support the health and well-being of our shareholders, the 2021 Annual Meeting of Shareholders will be held exclusively online. There will not be a physical location for the Annual Meeting and you will not be able to attend the meeting in person.

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

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

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

Sincerely,

John C. May Charles O. Holliday, Jr.
Chairman of the Board Presiding Director
   



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Notice of 2021 Annual Meeting of Shareholders

DATE      TIME      WHERE
Wednesday, February 24, 2021 10 a.m. Central Standard Time www.virtualshareholdermeeting.com/DE2021

As part of our precautions regarding the coronavirus and to support the health and well-being of our shareholders, the 2021 Annual Meeting of Shareholders (the “Annual Meeting”) will be held exclusively online. There will not be a physical location for the Annual Meeting, and you will not be able to attend the meeting in person. To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/DE2021, you must enter the control number on your proxy card, voting instruction form, or Notice of Internet Availability you previously received. See additional instructions on page 76.

Your opinion is very important. Please vote on the matters described in the accompanying Proxy Statement as soon as possible, even if you plan to participate in the online Annual Meeting. You can find voting instructions below and on page 74.

In addition to the Proxy Statement, we are sending you our Annual Report, which includes our fiscal 2020 financial statements. If you wish to receive future proxy statements and annual reports electronically rather than receiving paper copies in the mail, please turn to the section entitled “Electronic Delivery of Proxy Statement and Annual Report” on page 78 for instructions.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE VIRTUAL ANNUAL MEETING TO BE HELD ON FEBRUARY 24, 2021:
The Proxy Statement and Annual Report are available on our website at www.JohnDeere.com/stock.


   At the Annual Meeting, shareholders will be asked to:   
   
1.  Elect the 11 director nominees named in the Proxy Statement (see page 7).      2.  Approve the compensation of Deere’s named executives on an advisory basis (“say-on-pay”) (see page 26).      3.  Ratify the appointment of Deloitte & Touche LLP as Deere’s independent registered public accounting firm for fiscal 2021 (see page 71).      4.  Consider any other business properly brought before the meeting.

   Please vote your shares   
   
If you were a Deere shareholder of record at the close of business on December 31, 2020, we encourage you to vote promptly in one of the following ways:

BY TELEPHONE       BY MAIL       BY INTERNET       DURING MEETING
In the U.S. or Canada, you can vote your shares by calling 1-800-690-6903. You can vote by mail by marking, dating, and signing your proxy card or voting instruction form and returning it in the postage-paid envelope. You can vote your shares online at www.proxyvote.com. You will need the 16-digit control number on the Notice of Internet Availability or proxy card. You can vote electronically at the Annual Meeting.See page 74 for information on how to vote.
             

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

For the Board of Directors,

Todd E. Davies, Corporate Secretary
Moline, Illinois, January 8, 2021


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This Proxy Statement is issued in connection with the solicitation of proxies by the Board of Directors of Deere & Company for use at the Annual Meeting and at any adjournment or postponement thereof. On or about January 8, 2021, we will begin distributing print or electronic materials regarding the Annual Meeting to each shareholder entitled to vote at the meeting. Shares represented by a properly executed proxy will be voted in accordance with instructions provided by the shareholder.


Proxy Summary
2        Proxy Summary
 
Election of Directors
7 Item 1 – Election of Directors
15 Corporate Governance
21 Compensation of Directors
23 Security Ownership of Certain Beneficial Owners and Management
25      Review and Approval of Related Person Transactions
25      Delinquent Section 16(a) Reports
 
Advisory Vote on Executive Compensation
26 Item 2 – Advisory Vote on Executive Compensation
27 Compensation Discussion and Analysis
29 Executive Summary
31 2020 Compensation Overview
34 Direct Compensation Elements
47 Indirect Compensation Elements
49      Compensation Methodology and Process
53      Risk Assessment of Compensation Policies and Practices
54 Compensation Committee Report
55 Executive Compensation Tables
70 Pay Ratio Disclosure
70 Equity Compensation Plan Information


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Proxy Summary
Meeting Agenda and Voting Recommendations

Proxy Summary

This summary highlights selected information contained in this Proxy Statement, but it does not contain all the information you should consider. We urge you to read the whole Proxy Statement before you vote. You also may wish to review Deere’s Annual Report on Form 10-K for the fiscal year ended November 1, 2020. Deere uses a 52/53 week fiscal year ending on the last Sunday in the reporting period. Deere’s 2020, 2019, and 2018 fiscal years ended on November 1, 2020, November 3, 2019, and October 28, 2018, respectively. Unless otherwise stated, all information presented in this Proxy Statement is based on Deere’s fiscal calendar.

Meeting Agenda and Voting Recommendations

Item     Voting Standard     Vote
Recommendation
    Page Reference
1. Annual election of directors Majority of votes cast FOR
each nominee
7
2. Advisory vote on executive compensation Majority of votes present in person or by proxy FOR 26
3. Ratification of independent registered public accounting firm Majority of votes present in person or by proxy FOR 71

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

Committee Memberships
Name Age Director Since Executive Audit Review Compensation Corporate
Governance
Finance
Tamra A. Erwin
Executive Vice President and Group CEO, Verizon Business Group
   56    2020               
Alan C. Heuberger
Senior Manager, BMGI
47 2016
Charles O. Holliday, Jr.
Chairman of Royal Dutch Shell plc
72 2007-2016;
since 2018
Dipak C. Jain
President (Europe), China Europe International Business School
63 2002
Michael O. Johanns
Retired United States Senator from Nebraska
70 2015
Clayton M. Jones
Retired Chairman, Rockwell Collins
71 2007 CHAIR
John C. May
Chairman, Chief Executive Officer, and President Deere & Company
51 2019 CHAIR
Gregory R. Page
Chairman, Corteva, Inc.
69 2013 CHAIR
Sherry M. Smith
Former Executive VP and CFO, SuperValu
59 2011 CHAIR
Dmitri L. Stockton
Retired Special Advisor to Chairman and Senior VP, GE and Former Chairman, President, and CEO, GE Asset Management
56 2015 CHAIR
Sheila G. Talton
President and CEO, Gray Matter Analytics
68 2015

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Proxy Summary
Director Nominee Highlights

The board regularly assesses the diversity of its members and nominees as part of its annual evaluation process. We believe the 11 director nominees represent a diverse and broad range of attributes, qualifications, experiences, and skills to provide an effective mix of viewpoints and knowledge.

STRONG BOARD DIVERSITY

DIVERSE REPRESENTATION

GLOBAL & GOVERNANCE PERSPECTIVE
 
 
 
 

3 female directors
3 ethnically diverse directors
2 Board committees
led by diverse directors

RANGE OF TENURES*

     

BALANCED MIX OF AGES*

      INDEPENDENT OVERSIGHT

0-4

45-55

5-10

56-65

>10

66+

10 of 11 independent director nominees
4 Board committees led by independent directors

Average Tenure: 7 years
7 joined in the last 7 years.

Average Age: 62

* Tenure and age are as of January 8, 2021.

DIVERSE AND BALANCED MIX OF ATTRIBUTES AND EXPERIENCE


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Proxy Summary
Fiscal 2020 Performance Highlights

Annual Meeting of Shareholders
You are entitled to vote at the meeting if you were a holder of record of our common stock at the close of business on December 31, 2020. Please see “Additional Information – Voting and Meeting Information – How Do I Vote?” for instructions on how to vote your shares and other important Annual Meeting information. If you wish to attend the virtual only shareholder meeting see “Additional Information – Voting and Meeting Information – Virtual Meeting Information” for additional instructions.

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

CORPORATE GOVERNANCE

We adopted a bylaw in 2016 allowing shareholders meeting certain requirements to nominate directors and have such nominees included in the proxy statement, commonly referred to as “proxy access.”
In 2017, we increased the retirement age for board members to 75 to reflect recent industry trends and to provide stability in the composition of our board.
In 2020, shareholders approved and we adopted a bylaw providing that certain legal actions involving the Company will be litigated exclusively in the courts located in the State of Delaware, where the company is incorporated.
     

COMPENSATION

The performance goals for our short-term incentive plan were significantly increased in 2018 to align more appropriately to our current enterprise strategy.
A downward TSR Modifier for LTIC was implemented for the performance periods ending in FY2017, FY2018, and FY2019. If TSR performance was below the 50th percentile, the payout would be reduced by the modifier. For performance periods ending in FY2020 and FY2021, the TSR modifier will be multiplicative and could adjust upward or downward based upon TSR performance as compared to the peer group.
Performance Stock Units (PSUs) are now based solely on a revenue growth metric. TSR as a standalone metric applies only to the cash portion of the long-term award.
The consolidated financials of the Wirtgen acquisition are excluded from the Equipment Operations Operating Return on Operating Assets (OROA) and Shareholder Value Added (SVA) for calculating variable compensation for fiscal 2018, 2019, and 2020 to allow for integration and to determine appropriate incentive metrics. Wirtgen is included in the revenue component of the variable pay metrics to incent executive leadership to drive for successful integration and continued growth of the business.

Fiscal 2020 Performance Highlights
Despite the global pandemic, Deere reported strong financial results in 2020. Deere & Company (Deere or the Company) achieved net sales and revenues of $35.540 billion in fiscal 2020 compared with $39.258 billion in fiscal 2019.

Fiscal 2020 net income attributable to Deere & Company was $2.751 billion, the sixth best year in company history. This equated to $8.69 per share, compared with $3.253 billion, or $10.15 per share, in fiscal 2019. Common stock closed at $225.91 on Oct. 30, 2020, an increase of 28 percent compared to $176.11 in 2019.

In 2020, Deere introduced a new operating model that will be effective in 2021 that could have a transformative impact on the business. It focuses on our customers’ production systems, advanced technologies, and aligning resources with

the products and services that deliver the highest return. At the same time, customers responded positively to our new products and adopted precision technologies at a high rate.

Other financial highlights for the year include:

Generating nearly $1.556 billion in economic profit, or Shareholder Value Added
Delivering an 18% increase in Ag & Turf division operating profit for the full year
Returning nearly $1.706 billion to stockholders in the form of dividends and share repurchases

For more information regarding our fiscal 2020 financial performance, please see our Annual Report, which is available at www.JohnDeere.com/stock.


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Proxy Summary
Fiscal 2020 Performance Highlights

NET SALES
AND REVENUES
(Millions)

     

NET INCOME (1)
(Millions)

     

SHAREHOLDER
VALUE ADDED (2)

(Millions)

     

(1) Net income attributable to Deere & Company.
(2) SVA is a non-GAAP measure and excludes Wirtgen. See Appendix B for details.
 
Net sales and revenues declined 9% over fiscal 2019 due in part to declines in Construction & Forestry (C&F) and Ag & Turf (A&T) equipment sales.

 

Net income decreased 15% to $2.751 billion, from $3.253 billion in 2019. Earnings per share declined 14% to $8.69, from $10.15 in 2019. Enterprise Shareholder Value Added (SVA) increased 3% for the year. Ag & Turf and Financial Services both delivered positive SVA. SVA represents operating profit less an implied charge for capital.
 

A&T OROA*

C&F OROA*

EQUIPMENT OPERATIONS
OROA*

FINANCIAL SERVICES
RETURN ON EQUITY

* As reported, OROA with inventories at standard cost. Normal means mid-cycle. OROA is a non-GAAP measure. See Appendix B for details.
 

CASH FLOW FROM OPERATING ACTIVITIES
(Millions)

Consolidated cash flow from operations totaled $7.5 billion. Cash flow funded important strategic projects and paid roughly $1.7 billion to investors in 2020 in the form of dividends and share repurchases. The company declared $3.04 in dividends per share for the year.


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Proxy Summary
Fiscal 2020 Executive Compensation Highlights

Fiscal 2020 Executive Compensation Highlights
Our compensation programs and practices are designed to create incentive opportunities for advancing our shareholders’ long-term interests. We use metrics that align with our business strategy and motivate our executives to create value for shareholders at all points in the business cycle. For fiscal 2020, we had three separate variable pay components (described below) — Short-Term Incentive (STI), Long-Term Incentive Cash (LTIC), and Long-Term Incentive (LTI) — which stimulate complementary behaviors.

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

sustainable, profitable growth
Total Shareholder Return (TSR) exceptional equity appreciation
Revenue growth Long-term equity
(known within Deere as LTI)
sustainable growth

(1)

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

(2)

Wirtgen is excluded from both the Equipment Operations OROA and SVA calculations for FY20 variable pay to allow time for integration and assimilation. See Appendix B for details.

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

The table below highlights the 2020 compensation for the Chairman and CEO and, on average, for all the other named executive officers (NEOs) as disclosed in the Fiscal 2020 Summary Compensation Table. The table also shows how much compensation was delivered in cash (versus equity) and the significant portion that is performance-based and therefore at risk.

Summary Compensation
Table Elements
Salary STI LTIC Performance
Stock Units
Restricted
Stock Units and
Stock Options
Retirement
and Other
Compensation
Total
Chairman and CEO(a)
Compensation $1,199,245 $2,180,768 $1,560,484 $5,003,327 $4,499,825 $1,144,735 $15,588,384
% of Total 8% 14% 10% 32% 29% 7% 100%
Cash vs. Equity Total Cash 32% Total Equity 61% Other 7% 100%
Short-Term vs. Long-Term Short-Term 22% Long-Term 78% 100%
Fixed vs. Performance-Based Fixed 8% Performance-Based 85% Other 7% 100%
 
Average Other NEO
Compensation $769,352 $932,686 $1,364,587 $1,316,352 $1,183,991 $739,366 $6,306,334
% of Total 12% 15% 22% 21% 19% 11% 100%
Cash vs. Equity Total Cash 49% Total Equity 40% Other 11% 100%
Short-Term vs. Long-Term Short-Term 27% Long-Term 73% 100%
Fixed vs. Performance-Based Fixed 12% Performance-Based 77% Other 11% 100%

(a)

John C. May became the company’s Chief Executive Officer on November 4, 2019, and assumed the position of Chairman of the Board of Directors on May 1, 2020.


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Item 1 – Election of Directors

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

The Corporate Governance Committee considers candidates recommended by shareholders, directors, officers, and third-party search firms. Third-party search firms may be used to identify and provide information on director candidates. Tamra A. Erwin was recommended as a director by non-management directors and a third-party search firm. If you wish to nominate a director, please review the procedures described under “Additional Information – 2022 Shareholder Proposals and Nominations” in this Proxy Statement. The Corporate Governance Committee evaluates all candidates in the same manner, regardless of the source of the recommendation.

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

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

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Election of Directors
Board Diversity

Director Nominees
The Corporate Governance Committee has recommended and the Board has nominated each of Tamra A. Erwin, Alan C. Heuberger, Charles O. Holliday, Jr., Dipak C. Jain, Michael O. Johanns, Clayton M. Jones, John C. May, Gregory R. Page, Sherry M. Smith, Dmitri L. Stockton, and Sheila G. Talton to be elected for terms expiring at the Annual Meeting in 2022. All of the nominees are current members of the Board, but Deere’s Certificate of Incorporation and good governance practices require all members of the Board to be elected annually.

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

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ALL 11 NOMINEES.

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

DIVERSE BOARD REPRESENTATION
 
3 female directors
3 ethnically diverse directors
2 Board committees led by diverse directors
 
RANGE OF TENURES*
* Tenure and age are as of January 8, 2021.

Average Tenure: 7 years
7 joined in the last 7 years.

 
BALANCED MIX OF AGES

Average Age: 62


BOARD MEMBER SKILLS

Executive Manufacturing International Government/
Academic
Agriculture Technology/Data Finance Risk
Management
Corporate
Governance
Tamra A. Erwin
Alan C. Heuberger
Charles O. Holliday, Jr.
Dipak C. Jain
Michael O. Johanns
Clayton M. Jones
John C. May
Gregory R. Page
Sherry M. Smith
Dmitri L. Stockton
Sheila G. Talton
Audit committee financial expert under Securities and Exchange Commission (SEC) rules

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Election of Directors
Item 1 – Election of Directors


Age: 56

Director since:
2020

Committees:
Compensation,
Corporate Governance

     

TAMRA A. ERWIN

Executive Vice President and Group Chief Executive Officer of Verizon Business Group
(since 2019)

Past Positions at Verizon Communications Inc.
(communications, information and entertainment products and services)

Executive Vice President and Chief Operating Officer, Verizon Wireless Group – 2016 to 2019
Group President, Consumer and Mass Business Markets Sales and Service – 2015 to 2016
President, National Operations, Wireline/Consumer and Mass Business Markets – 2013 to 2015
Corporate Chief Marketing Officer – 2012 to 2013
President, West Area – 2008 to 2011
     

 

Key Qualifications, Experiences, and Attributes
In addition to her professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Ms. Erwin should serve on Deere’s Board of Directors: her leadership qualities developed from her experience while serving as a senior executive and as Executive Vice President, Chief Executive Officer and Chief Operating Officer of Verizon Group businesses; the breadth of her experiences in product and service development, customer service operations and support, marketing, sales, and strategic planning, and other areas of oversight while serving as an executive officer of Verizon Communications Inc.; and her subject matter knowledge in the areas of advanced communications and information technology products and services, customer relations, and human resources.


Age: 47

Director since:
2016

Committees:
Audit Review, Finance

     

ALAN C. HEUBERGER

Senior Manager, BMGI (since 2004)

Past Positions at BMGI (private investment management)

Investment Analyst — 1996 to 2004
     

 

Key Qualifications, Experiences, and Attributes
In addition to his professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Mr. Heuberger should serve on Deere’s Board of Directors: his leadership qualities developed from his service as Senior Manager of BMGI; the breadth of his experience in governance, strategy, and other areas of oversight while serving as a member of the boards of directors and advisors of various asset management entities and privately-held corporations; and his subject matter knowledge in the areas of agriculture industry investments, asset management, finance, and economics.

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Election of Directors
Item 1 – Election of Directors


Age: 72

Director since:
2007 to 2016; 2018

Committees:
Compensation,
Corporate Governance

     

CHARLES O. HOLLIDAY, JR.

Chairman of Royal Dutch Shell plc
(oil and natural gas exploration, refining, and product sales) (since 2015)

Past Positions

Chairman of the National Academy of Engineering (nonprofit engineering institution) — 2012 to 2016
Chairman of Bank of America Corporation (banking, investing, and asset management) — 2010 to 2014
Chairman from 1999 to 2009 and Chief Executive Officer from 1998 through 2008 of DuPont (agricultural, electronics, material science, safety and security, and biotechnology)
     

Other Current Directorships

HCA Healthcare, Inc.
Royal Dutch Shell plc

Previous Directorships

CH2M HILL Companies, Ltd.
Key Qualifications, Experiences, and Attributes
In addition to his professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Mr. Holliday should serve on Deere’s Board of Directors: his leadership qualities developed from his experiences while serving as Chairman of Royal Dutch Shell, Chairman of the National Academy of Engineering, Chairman of Bank of America Corporation, and Chairman and Chief Executive Officer of DuPont; the breadth of his experiences in auditing, compensation, and other areas of oversight while serving as a member of the boards of directors of other global corporations; and his subject matter knowledge in the areas of engineering, finance, business development, and corporate responsibility.


Age: 63

Director since: 2002

Committees:
Compensation, Finance

     

DIPAK C. JAIN

President (Europe), China Europe International Business School (since 2018)

Past Positions

Co-President/Global Advisor, China Europe International Business School (international graduate business school) – 2017 to 2018
Director, Sasin Graduate Institute of Business Administration — 2014 to 2017
Chaired Professor of Marketing, INSEAD (international graduate business school) — 2013 to 2014
Dean, INSEAD — 2011 to 2013
Dean and Associate Dean for Academic Affairs, Kellogg School of Management, Northwestern University — 1996 to 2009
Sandy and Morton Goldman Professor of Entrepreneurial Studies and Professor of Marketing, Kellogg School of Management, Northwestern University — 1994 to 2001 and since 2009
     

Other Current Directorships

Reliance Industries Limited, India

Previous Directorships

Global Logistics Properties Ltd., Singapore
Northern Trust Corporation
Key Qualifications, Experiences, and Attributes
In addition to his professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Mr. Jain should serve on Deere’s Board of Directors: his leadership qualities developed from his experiences while serving as Director or Dean at several prominent graduate business schools and as a foreign affairs advisor for the Prime Minister of Thailand; the breadth of his experiences in compensation, corporate governance, and other areas of oversight while serving as a member of the boards of directors of other global corporations; and his subject matter knowledge in the areas of marketing, global product diffusion, and new product forecasting and development.

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Election of Directors
Item 1 – Election of Directors


Age: 70

Director since: 2015

Committees:
Compensation,
Corporate Governance

     

MICHAEL O. JOHANNS

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

Past Positions

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

Other Current Directorships

Corteva, Inc.
Key Qualifications, Experiences, and Attributes
In addition to his professional background and prior Deere Board experience, the following qualifications l ed the Board to conclude that Mr. Johanns should serve on Deere’s Board of Directors: his leadership qualities developed from his service in state and federal government, including serving as Governor of Nebraska; the breadth of his experiences in law, governance, and other areas of oversight while serving as a partner of a law firm and a member of the U.S. Senate and various Senate committees; and his subject matter knowledge in the areas of agriculture, banking, commerce, and foreign trade.


Age: 71

Director since: 2007

Committees:
Corporate
Governance (Chair),
Audit Review, Executive

     

CLAYTON M. JONES

Retired Chairman and Chief Executive Officer of Rockwell Collins, Inc.

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

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

Other Current Directorships

Motorola Solutions, Inc.

Previous Directorships

Cardinal Health, Inc.
Key Qualifications, Experiences, and Attributes
In addition to his professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Mr. Jones should serve on Deere’s Board of Directors: his leadership qualities developed from his service as Chairman and Chief Executive Officer of Rockwell Collins; the breadth of his experiences in corporate governance, finance, compensation, and other areas of oversight while serving as a member of the boards of directors of other global corporations; and his subject matter knowledge in the areas of technology, government affairs, and marketing.

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Item 1 – Election of Directors


Age: 51

Director since: 2019

     

JOHN C. MAY

Chairman, Chief Executive Officer and President of Deere & Company (since 2020)

Past Positions at Deere & Company

Chief Executive Officer and President – November 2019 to May 2020
President and Chief Operating Officer — April 2019 to November 2019
President, Worldwide Agriculture & Turf Division, Global Harvesting and Turf Platforms, Ag Solutions (Americas and Australia) — 2018 to 2019
President, Agricultural Solutions & Chief Information Officer — 2012 to 2018
Vice President, Agriculture & Turf Global Platform, Turf & Utility — 2009 to 2012
Factory Manager, John Deere Dubuque Works — 2007 to 2009
Director, China Operations — 2004 to 2007
Key Qualifications, Experiences, and Attributes
In addition to his professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Mr. May should serve on Deere’s Board of Directors: his leadership experience as an officer of Deere since 2009; the breadth of his management experiences within, and knowledge of, Deere’s global operations, precision agriculture, and information technology; and his subject matter knowledge in the areas of leadership, manufacturing, and information technology.


Age: 69

Director since: 2013

Committees:
Finance (Chair),
Audit Review, Executive

     

GREGORY R. PAGE

Chairman of Corteva, Inc. (agricultural seeds, crop protection products, and digital solutions) (since 2019)

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

Executive Director — 2015 to 2016
Executive Chairman — 2013 to 2015
Chairman and Chief Executive Officer — 2011 to 2013
Chairman, Chief Executive Officer, and President — 2007 to 2011
     

Other Current Directorships

Eaton Corporation plc
3M Company
Corteva, Inc.

Previous Directorships

Cargill, Incorporated
Key Qualifications, Experiences, and Attributes
In addition to his professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Mr. Page should serve on Deere’s Board of Directors: his leadership qualities developed from his experiences while serving as Chairman of Corteva, Inc. and Chairman and Chief Executive Officer of Cargill; the breadth of his experiences in auditing, corporate governance, and other areas of oversight while serving as a member of the boards of directors of other global corporations; and his subject matter knowledge in the areas of commodities, agriculture, operating processes, finance, and economics.

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Age: 59

Director since: 2011

Committees:
Audit Review (Chair),
Finance, Executive

     

SHERRY M. SMITH

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

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

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

Other Current Directorships

Piper Sandler Companies
Realogy Holdings Corp.
Tuesday Morning Corp.
Key Qualifications, Experiences, and Attributes
In addition to her professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Ms. Smith should serve on Deere’s Board of Directors: her leadership qualities developed from her experience while serving as a senior executive and as Chief Financial Officer of SuperValu; the breadth of her experiences in auditing, finance, accounting, compensation, strategic planning, and other areas of oversight while serving as a member of the boards of directors of other public corporations; her family farming background; and her subject matter knowledge in the areas of finance, accounting, and food and supply chain management.


Age: 56

Director since: 2015

Committees:
Compensation (Chair),
Finance, Executive

     

DMITRI L. STOCKTON

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

Past Positions

Special Advisor to the Chairman and Senior Vice President of GE (power and water, aviation, oil and gas, healthcare, appliances and lighting, energy management, transportation and financial services) — 2016 to 2017
Chairman, President, and Chief Executive Officer of GE Asset Management Incorporated (global investments) and Senior Vice President of General Electric Company — 2011 to 2016
President and Chief Executive Officer of GE Capital Global Banking and Senior Vice President of GE London — 2008 to 2011
     

Other Current Directorships

Ryder System, Inc.
Stanley Black & Decker, Inc.
Target Corp.

Previous Directorships

GE Asset Management Incorporated
GE RSP U.S. Equity Fund and GE RSP Income Fund
Elfun Funds (six directorships)
Key Qualifications, Experiences, and Attributes

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


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Item 1 – Election of Directors


Age: 68

Director since: 2015

Committees:
Audit Review,
Corporate Governance

     

SHEILA G. TALTON

President and Chief Executive Officer of Gray Matter Analytics
(healthcare analytics for healthcare providers, payers, and pharma companies) (since 2013)

Past Positions

President and Chief Executive Officer of SGT Ltd. (strategy and technology consulting services) — 2011 to 2013
Vice President of Cisco Systems, Inc. (information technology and solutions) — 2008 to 2011
     

Other Current Directorships

OGE Energy Corp.
Sysco Corp.

Previous Directorships

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

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Election of Directors
Corporate Governance

Corporate Governance

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

INDEPENDENCE
All of our director nominees, except our Chairman and CEO, are independent
The independent Presiding Director has a role with significant governance responsibilities
All standing Board committees other than the Executive Committee are composed wholly of independent directors
Independent directors meet regularly in executive session without management present
     
BEST PRACTICES
Directors may not stand for re-election after their 75th birthday, absent Board approval under rare circumstances
Our recoupment policy requires an executive to return any incentive compensation found to have been awarded erroneously due to accounting misconduct
Directors and executives are subject to stock ownership requirements
Directors and executives are prohibited from hedging or pledging their Deere stock
 
ACCOUNTABILITY
All directors are elected annually
In uncontested elections, directors are elected by majority vote
The Board and each Board committee conducts an annual performance self-evaluation
Shareholders have the ability to include nominees in our proxy statement (so-called proxy access rights)
RISK OVERSIGHT
The Board oversees Deere’s overall risk-management structure
Individual Board committees oversee certain risks related to their specific areas of responsibility
We have robust risk management processes throughout the company

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

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

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Corporate Governance

In November 2020, we reviewed the independence of each then-sitting director, applying the independence standards set forth in our Corporate Governance Policies. The reviews considered relationships and transactions between each director (and the director’s immediate family and affiliates) and Deere, Deere’s management, and Deere’s independent registered public accounting firm. Based on this review, the Board affirmatively determined at its regular December 2020 meeting that no director other than Mr. May has a material relationship with Deere and its affiliates and that each director other than Mr. May is independent as defined in our Corporate Governance Policies and the NYSE’s listing standards. Mr. May is not independent because of his employment relationship with Deere.

Board Leadership Structure
John C. May currently serves as Deere’s Chairman, Chief Executive Officer and President. The position of Chairman has traditionally been held by Deere’s Chief Executive Officer. The Board believes the decisions as to who should serve as Chairman and as Chief Executive Officer and whether the offices shall be combined or separated is the proper responsibility of the Board. The Board also believes that having an independent Chairman is unnecessary in normal circumstances. The Board’s governance processes preserve Board independence by ensuring discussion among independent directors and independent evaluation of and communication with members of senior management. Additionally, the enhanced role of the independent Presiding Director provides a strong counterbalance to the non-independent Chairman and Chief Executive Officer roles.

Presiding Director
Charles O. Holliday, Jr. has served as our independent Presiding Director since the 2020 Annual Meeting.

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

The Board has assigned the Presiding Director the following duties and responsibilities:

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

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

Board Meetings
Under Deere’s bylaws, regular meetings of the Board are held at least quarterly. Our typical practice is to schedule at least one Board meeting per year at a company location other than our World Headquarters so directors have an opportunity to observe different aspects of our business first-hand. The Board met four times during fiscal 2020.

Directors are expected to attend Board meetings, meetings of committees on which they serve, and shareholder meetings. More to the point, directors are expected to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities. During fiscal 2020, all incumbent directors attended 75% or more of the meetings of the Board and committees on which they served. Overall attendance at Board and committee meetings was 98%. All directors then in office attended the Annual Meeting of Shareholders in February 2020.

Each Board meeting normally begins or ends with a session between the CEO and the independent directors. This provides a platform for discussions outside the presence of the non-Board management attendees. The independent directors may meet in executive session, without the CEO, at any time, but such non-management executive sessions are scheduled and typically occur at each regular Board meeting. The Presiding Director presides over these executive sessions.

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Corporate Governance

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

Periodically, the Board approves the rotation of certain directors’ committee memberships. The Board believes that committee rotation is generally desirable to ensure that committees regularly benefit from new perspectives. Effective November 2020, Dipak C. Jain was appointed to the Compensation Committee and left the Audit Review Committee, and Clayton M. Jones was appointed to the Audit Review Committee and left the Compensation Committee.

Each of our Board committees has adopted a charter that complies with current NYSE rules relating to corporate governance matters. Copies of the committee charters are available at www.JohnDeere.com/corpgov and may also be obtained upon request to the Deere & Company Shareholder Relations Department. Each committee (other than the Executive Committee, which did not meet in 2020 and of which Mr. May serves as chair) is composed solely of independent directors.

The committee structure and memberships described below reflect the changes that become effective in November 2020. Every committee other than the Executive Committee regularly reports on its activities to the full Board.

EXECUTIVE COMMITTEE

2020 meetings: 0
Members:
John C. May (Chair)
Clayton M. Jones
Gregory R. Page
Sherry M. Smith
Dimitri L. Stockton

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

AUDIT REVIEW COMMITTEE

2020 meetings: 5
Members:
Sherry M. Smith (Chair)
Alan C. Heuberger
Clayton M. Jones
Gregory R. Page
Sheila G. Talton

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

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Corporate Governance

COMPENSATION COMMITTEE

2020 meetings: 5
Members:
Dimitri L. Stockton (Chair)
Tamra A. Erwin
Charles O. Holliday, Jr.
Dipak C. Jain
Michael O. Johanns

     
Makes recommendations to the Board regarding incentive and equity-based compensation plans
Evaluates and approves the compensation of our executive officers (except for the compensation of our CEO, which is approved by the full Board), including reviewing and approving the performance goals and objectives that will affect that compensation
Evaluates and approves compensation granted pursuant to Deere’s equity-based and incentive compensation plans, policies, and programs
Retains, oversees, and assesses the independence of compensation consultants and other advisors
Oversees our policies on structuring compensation programs for executive officers relative to tax deductibility
Reviews and discusses the CD&A with management and determines whether to recommend to the Board that the CD&A be included in our filings with the SEC
All members have been determined to be independent under current NYSE listing standards, including those standards applicable specifically to compensation committee members

CORPORATE GOVERNANCE
COMMITTEE

2020 meetings: 4
Members:
Clayton M. Jones (Chair)
Tamra A. Erwin
Charles O. Holliday, Jr.
Michael O. Johanns
Sheila G. Talton

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

FINANCE COMMITTEE

2020 meetings: 4
Members:
Gregory R. Page (Chair)
Alan C. Heuberger
Dipak C. Jain
Sherry M. Smith
Dmitri L. Stockton

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

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

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

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

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

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

Who is responsible?        
Primary areas of risk oversight
Full Board
Oversees overall risk management function and regularly receives and evaluates reports and presentations from the chairs of the individual Board committees on risk-related matters falling within each committee’s oversight responsibilities.
Audit Review Committee
Monitors operational, strategic, and legal and regulatory risks by regularly reviewing reports and presentations given by management, including our Senior Vice President and General Counsel, Senior Vice President and Chief Financial Officer, and Vice President, Internal Audit, as well as other operational personnel.
Regularly reviews our risk management practices and risk-related policies (for example, Deere’s risk management and insurance portfolio, and legal and regulatory reviews, evaluates potential risks related to internal control over financial reporting and information system risks, and shares with the full Board oversight responsibility for cyber security risks).
Compensation Committee
Monitors potential risks related to the design and administration of our compensation plans, policies, and programs, including our performance-based compensation programs, to promote appropriate incentives that do not encourage executive officers or employees to take unnecessary and/or excessive risks.
Corporate Governance Committee
Monitors potential risks related to our governance practices by, among other things, reviewing succession plans and performance evaluations of the Board and CEO, monitoring legal developments and trends regarding corporate governance practices, monitoring the Code of Business Conduct, and evaluating potential related person transactions.
Monitors product safety and other compliance matters.
Finance Committee
Monitors operational and strategic risks related to Deere’s financial affairs, including capital structure and liquidity risks, and reviews the policies and strategies for managing financial exposure and contingent liabilities.
Monitors potential risks related to funding our U.S. qualified pension plans (other than the defined contribution savings and investment plans) and monitors compliance with applicable laws and internal policies and objectives.

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Shareholder Outreach
To ensure the continued delivery of sustainable, long-term value to our shareholders, we engage in regular dialogue with them. During 2020, we discussed governance, executive compensation, sustainability, and other issues with shareholders representing more than 40% of our outstanding shares. The Board considers feedback from these conversations during its deliberations, and we regularly review and adjust our corporate governance structure and executive compensation policies and practices in response to comments from our shareholders.

Communication with the Board
If you wish to communicate with the Board, you may send correspondence to: Corporate Secretary, Deere & Company, One John Deere Place, Moline, Illinois 61265-8098. The Corporate Secretary will submit your correspondence to the Board or the appropriate committee, as applicable.

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

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

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

Leadership Biographies
Core Values
Code of Ethics
Corporate Governance Policies
Charters for our Board Committees
Code of Business Conduct
Supplier Code of Conduct
Support of Human Rights in Our Business Practices
Conflict Minerals Policy

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

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Election of Directors
Compensation of Directors

Compensation of Directors

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

Recognize the substantial investment of time and expertise necessary for the directors to discharge their duties to oversee Deere’s global affairs
Align the directors’ interests with the long-term interests of our shareholders
Ensure that compensation is easy to understand and is regarded positively by our shareholders and employees

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

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

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

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

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

Under our Non-employee Director Deferred Compensation Plan, directors may choose to defer some or all of their annual retainers until they retire from the Board. For deferrals through December 2016, a director could elect to have these deferrals invested in either an interest-bearing account or an account with a return equivalent to an investment in Deere common stock. For deferrals effective in January 2017 and later, directors may choose from a list of investment options, none of which yields an above-market earnings rate.

Our stock ownership guidelines require each non-employee director to own Deere common stock equivalent in value to at least three times the director’s annual cash retainer. This ownership level must be achieved within five years of the date the director joins the Board. Restricted shares (regularly granted to non-employee directors prior to 2008), RSUs, and any common stock held personally by the non-employee director are included in determining whether the applicable ownership threshold has been reached. Each non-employee director, except Ms. Erwin, who was appointed on May 1, 2020, has achieved stockholdings in excess of the applicable multiple as of the date of this Proxy Statement.

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Compensation of Directors

We require non-employee directors to hold all equity awards until the occurrence of one of the following triggering events: retirement from the Board, total and permanent disability, death, or a change in control of Deere combined with a qualifying termination of the director’s service with the company. Directors may not sell, gift, or otherwise dispose of their equity awards before the occurrence of a triggering event. While the restrictions are in effect, non-employee directors may vote their restricted shares (but not shares underlying RSUs) and receive dividends on the restricted shares and dividend equivalents on the RSUs.

During fiscal 2020, Samuel R. Allen served as our Executive Chairman until he elected to resign as Executive Chairman and as a Director, effective April 30, 2020. In his capacity as an Executive Officer during fiscal 2020, Mr. Allen received base salary of $551,894, STI of $802,873, LTIC for the performance period ended in fiscal 2020 of $2,944,374, a Long-Term Incentive Restricted Stock Unit award of $999,872 and other compensation of $300,135. Mr. Allen did not qualify as a Named Executive Officer for fiscal 2020. Mr. Allen did not receive any additional compensation for his service as a Director.

In fiscal 2020, we provided the following compensation to our non-employee directors:

Name       Fees Earned or
Paid in Cash
(1)
      Stock Awards
(2)
      Nonqualified
Deferred Compensation
Earnings
(3)
      Total
Tamra A. Erwin (4) $67,500 $113,597 $0 $ 181,097
Alan C. Heuberger $135,000 $159,855 $0 $ 294,855
Charles O. Holliday, Jr. $155,000 $159,855 $0 $ 314,855
Dipak C. Jain $135,000 $159,855 $51,814 $ 346,669
Michael O. Johanns $135,000 $159,855 $0 $ 294,855
Clayton M. Jones $150,000 $159,855 $0 $ 309,855
Gregory R. Page $150,000 $159,855 $970 $ 310,825
Sherry M. Smith $160,000 $159,855 $2,697 $ 322,552
Dmitri L. Stockton $148,334 $159,855 $0 $ 308,189
Sheila G. Talton $135,000 $159,855 $0 $ 294,855

(1) All fees earned in fiscal 2020 for services as a director, including committee chairperson and Presiding Director fees, whether paid in cash or deferred under the Non-employee Director Deferred Compensation Plan, are included in this column.
(2) Represents the aggregate grant date fair value of RSUs computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation and does not correspond to the actual value that will be realized by the non-employee directors. The values in this column exclude the effect of estimated forfeitures. All grants are fully expensed in the fiscal year granted based on the grant price (the average of the high and low price for Deere common stock on the grant date). For fiscal 2020, the grant date was March 4, 2020, and the grant price was $161.96.
The non-employee director grant date is seven calendar days after the Annual Meeting. The assumptions made in valuing the RSUs reported in this column are discussed in Note 23, “Stock Option and Restricted Stock Awards,” of our consolidated financial statements filed with the SEC as part of our annual report on Form 10-K for the fiscal year 2020. The following table lists the cumulative restricted shares and RSUs held by the non-employee directors as of November 1, 2020:

         Director Name       Restricted Stock         RSUs            Director Name       Restricted Stock         RSUs
Tamra A. Erwin - 811 Clayton M. Jones 824 18,941
Alan C. Heuberger - 4,476 Gregory R. Page - 9,393
Charles O. Holliday, Jr. - 3,121 Sherry M. Smith - 11,543
Dipak C. Jain 13,234 18,941 Dmitri L. Stockton - 6,687
Michael O. Johanns - 7,203 Sheila G. Talton - 6,687

(3) Directors are eligible to participate in the Non-employee Director Deferred Compensation Plan. Under this plan, participants may defer part or all of their annual cash compensation. Through December 2016, two investment choices were available for these deferrals:
an interest-bearing alternative that pays interest at the end of each calendar quarter (i) for amounts deferred between fiscal 2010 through December 2016, at a rate based on the Moody’s “A”-rated Corporate Bond Rate and (ii) for amounts deferred prior to fiscal 2010, at a rate based on the prime rate as determined by the Federal Reserve Statistical Release plus 2%
an equity alternative denominated in units of Deere common stock that earns additional shares each quarter at the quarterly dividend rate on Deere common stock
Amounts included in this column represent the above-market earnings on any amounts deferred under the Non-employee Director Deferred Compensation Plan. Above-market earnings represent the difference between the interest rate used to calculate earnings under the applicable investment choice and 120% of the applicable federal long-term rate.
(4)Ms. Erwin was elected to the Board effective May 1, 2020. Her compensation amounts reflect a pro-rated retainer fee for the period from May 2020 through October 2020 and a pro-rated RSU award granted in May 2020.

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Election of Directors
Security Ownership of Certain Beneficial Owners and Management

Security Ownership of Certain Beneficial Owners and Management

The following table shows the number of shares of Deere common stock beneficially owned as of December 31, 2020, (unless otherwise indicated) by:

each person who, to our knowledge, beneficially owns more than 5% of our common stock
each individual who was serving as a non-employee director as of December 31, 2020
each of the named executive officers listed in the Summary Compensation Table of this Proxy Statement
all individuals who served as directors or executive officers on December 31, 2020, as a group

A beneficial owner of stock (represented in column (a)) is a person who has sole or shared voting power (meaning the power to control voting decisions) or sole or shared investment power (meaning the power to cause the sale or other disposition of the stock). A person also is considered the beneficial owner of shares to which that person has the right to acquire beneficial ownership (within the meaning of the preceding sentence) within 60 days. For this reason, the following table includes exercisable stock options (represented in column (b)), restricted shares, and RSUs that could become exercisable or be settled within 60 days of December 31, 2020, at the discretion of an individual identified in the table (represented in column (c)).

All individuals listed in the table have sole voting and investment power over the shares unless otherwise noted.
As of December 31, 2020, Deere had no preferred stock issued or outstanding.

  Shares Beneficially
Owned and Held
(a)
   Exercisable Options
(b)
   Options,
Restricted Shares,
and RSUs Available
Within 60 Days
(c)
   Total    Percent of Shares
Outstanding

Greater Than 5% Owners
Cascade Investment, L.L.C. (1)
2365 Carillon Point
Kirkland, WA 98033

31,510,573 31,510,573 10.0%
 
The Vanguard Group, Inc. (2)
100 Vanguard Blvd.
Malvern, PA 19355
23,636,226 23,636,226 7.5%
 
BlackRock, Inc.(3)
55 East 52nd Street
New York, NY 10055
18,403,744 18,403,744 5.9%
 
Wellington Management Group, LLP(4)
280 Congress St.
Boston, MA, 02210
16,762,167 16,762,167 5.3%
 

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Election of Directors
Security Ownership of Certain Beneficial Owners and Management

   Shares Beneficially
Owned and Held
(a)
   Exercisable Options
(b)
   Options, Restricted Shares,
and RSUs Available
Within 60 Days
(c)
   Total    Percent of Shares
Outstanding
Non-Employee Directors (5)
Tamra A. Erwin 811 811 *
Alan C. Heuberger 100 4,476 4,576 *
Charles O. Holliday, Jr. 11,905 3,121 15,026 *
Dipak C. Jain 32,175 32,175 *
Michael O. Johanns 7,203 7,203 *
Clayton M. Jones 19,765 19,765 *
Gregory R. Page 9,393 9,393 *
Sherry M. Smith 11,543 11,543 *
Dmitri L. Stockton 6,687 6,687 *
Sheila G. Talton 6,687 6,687 *
                     
Named Executive Officers (6)
John C. May 50,420 39,336 - 89,756 *
Ryan D. Campbell 4,223 12,033 - 16,256 *
Mary K. W. Jones 42,889 84,184 - 127,073 *
Rajesh Kalathur 48,961 115,960 - 164,921 *
Cory J. Reed 17,504 36,380 - 53,884 *
James M. Field 52,531 72,365 17,138 124,896 *
All directors and executive officers as a group
(19 persons) (7)
306,284 517,963 149,147 973,394 *

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

(1) The ownership information for Cascade Investment, L.L.C. is based on information supplied by Cascade in an initial statement of beneficial ownership on Form 3 filed with the SEC on September 6, 2019. All shares of common stock held by Cascade may be deemed beneficially owned by William H. Gates III as the sole member of Cascade. Cascade has sole voting power and sole dispositive power over 31,510,573 shares owned.
(2) The ownership information for The Vanguard Group, Inc. is based on information supplied by Vanguard in a statement on Amendment No. 5 to Schedule 13G filed with the SEC on February 12, 2020. Vanguard holds the shares in its capacity as a registered investment advisor on behalf of numerous investment advisory clients, none of which is known to own more than five percent of Deere’s shares. Vanguard has sole voting power over 463,523 shares owned and sole dispositive power over 23,116,498 shares owned.
(3) The ownership information for BlackRock, Inc. (“BlackRock”) is based on information supplied by BlackRock in a statement on Amendment No. 3 to Schedule 13G filed with the SEC on February 2, 2020. BlackRock holds the shares in its capacity as a registered investment advisor on behalf of numerous investment advisory clients, none of which is known to own more than five percent of Deere’s shares. BlackRock has sole voting power over 15,710,923 shares owned and sole dispositive power over 18,403,744 shares owned.
(4) The ownership information for Wellington Management Group LLP (“Wellington”) is based on information supplied by Wellington in a statement on Schedule 13G filed with the SEC on January 28, 2020. Wellington holds the shares in its capacity as a registered investment advisor on behalf of numerous investment advisory clients, none of which is known to own more than five percent of Deere’s shares. Wellington has sole voting power over 0 shares owned and sole dispositive power over 0 shares owned.
(5) The table includes restricted shares and RSUs awarded to directors under the Deere & Company Non-employee Director Stock Ownership Plan (see footnote (2) to the Fiscal 2020 Director Compensation Table). Restricted shares and RSUs may not be transferred prior to retirement as a director. RSUs are payable only in Deere common stock following retirement and have no voting rights until they are settled in shares of stock. In addition, directors own the following number of deferred stock units, which are payable solely in cash under the terms of the Non-employee Director Deferred Compensation Plan:
Director       Deferred Units
Dipak C. Jain 9,133
Michael O. Johanns 3,149
Gregory R. Page 4,107
Dmitri L. Stockton 2,530
(6) See the Outstanding Equity Awards table for additional information regarding equity ownership for NEOs.
(7) The number of shares shown for all directors and executive officers as a group includes 85,381 shares owned jointly with family members over which the directors and executive officers share voting and investment power.

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Election of Directors
Review and Approval of Related Person Transactions

Review and Approval of Related Person Transactions

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

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

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

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

When evaluating potential related person transactions, the Corporate Governance Committee or its Chairperson, as applicable, considers all reasonably available relevant facts and circumstances and approves only those related person transactions determined in good faith to be in compliance with or not inconsistent with our Code of Ethics and Code of Business Conduct and in the best interests of our shareholders.

The sister of Mary K. W. Jones, Senior Vice President, General Counsel, and Worldwide Public Affairs is an employee in the Company’s corporate communications department. Ms. Jones does not directly or indirectly supervise her sister. During fiscal 2020, the employee earned approximately $147,369 in direct cash compensation along with customary employee benefits available to salaried employees generally. The employee’s compensation is consistent with that of other employees at the same grade level. Pursuant to the Related Person Transactions Approval Policy, this transaction was approved by the Corporate Governance Committee after determining that it is not inconsistent with our Code of Ethics or Code of Business Conduct.

Delinquent Section 16(a) Reports

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

To assist with these required reports, we have established procedures whereby directors and officers provide us with the relevant information regarding their transactions in Deere shares and we prepare and file the ownership reports on their behalf. In addition, our directors and officers have provided written statements regarding their Deere stock ownership and reports. Based solely upon a review of these statements and reports, we believe that all Section 16(a) filing requirements applicable to our insiders were complied with during fiscal 2020 except for the following: an annual statement of change in beneficial ownership on Form 5 for Gregory R. Page was not timely filed for his gift of company common stock on September 26, 2019. A Form 4 for Mr. Page reporting the gift was filed on October 27, 2020.

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Item 2 – Advisory Vote on Executive Compensation

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

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

PROGRAM DESIGN
The CD&A offers a detailed description of our compensation programs and philosophy. Our compensation approach is supported by the following principles, among others, as fully described in the CD&A:

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

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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis

At our 2020 Annual Meeting, we held a shareholder advisory vote on executive compensation in which shareholders approved the advisory vote on the compensation of our NEOs.

The Board believes that the executive compensation as disclosed in the CD&A, the accompanying tables, and other disclosures in this Proxy Statement is consistent with our compensation philosophy and aligns with the pay practices of our peer group.

FOR THE REASONS STATED, THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE FOLLOWING NON-BINDING RESOLUTION:

“RESOLVED, that the shareholders approve the compensation of the NEOs as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC, including the CD&A, tabular disclosures, and other narrative executive compensation disclosures.”

Effect of Proposal
The say-on-pay resolution is non-binding, but the Board values your opinion as expressed through your votes and other communications. Therefore, the Board and the Compensation Committee will carefully consider the outcome of the advisory vote and those opinions when making future compensation decisions. However, the Board believes that the Compensation Committee is in the best position to consider the extensive information and factors necessary to make independent, objective, and competitive compensation recommendations and decisions that are in the best interests of Deere and its shareholders. Therefore, the final decision regarding the compensation and benefits of our executive officers and whether and how to address shareholder concerns remains with the Board and the Compensation Committee.

Compensation Discussion and Analysis

We design our compensation plans to reward planning and behavior that:

Help us pivot quickly in a chronically cyclical sector;
Emphasize research and development in an ever-changing global economy; and
Enable us to benefit from the diversity of our products, services, and geographic locations.

Our competitive base pay promotes stable planning and prudent risk taking. In addition, our benefits plans are designed to secure a healthy, loyal, and long-term focused employee base. Our business strategy emphasizes achieving superior operating and financial performance throughout the business cycle. This includes maintaining aggressive goals for operating margin and asset turns, while achieving sustained Shareholder Value Added growth through disciplined expansion. Our at-risk pay is designed to motivate NEOs to execute this strategy. We have demonstrated our ability to operate profitably even with the additional challenges presented by the global pandemic in fiscal 2020. Compensation was reviewed in light of the 2020 business conditions and it was determined to not make adjustments to the 2020 compensation measures or performance goals applicable to the NEOs due to strong company performance while also protecting employees and delivering customer solutions.

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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis

Following is a detailed description of our compensation programs, including the underlying philosophy and strategy, the individual elements, the Board’s and the Compensation Committee’s (“Committee”) methodology and processes used to make compensation decisions, and the relationship between our performance and compensation delivered in fiscal 2020. We focus on the compensation of our named executive officers for fiscal 2020, as noted in the chart directly below:

Name       Title at the Close of Fiscal 2020
John C. May Chairman and Chief Executive Officer(1)
Ryan D. Campbell Senior Vice President and Chief Financial Officer
Mary K. W. Jones Senior Vice President, General Counsel & Worldwide Public Affairs
Rajesh Kalathur President, John Deere Financial and Chief Information Officer
Cory J. Reed President, Worldwide Agriculture & Turf Division, Production & Precision Agriculture, Americas and Australia
James M. Field Former President, Worldwide Construction & Forestry and Power Systems(2)

(1) Effective November 4, 2019, Mr. May became Chief Executive Officer. Effective May 1, 2020, Mr. May was elected Chairman of the Board.
(2) Mr. Field is included as a sixth NEO as he was an executive officer during 2020 and as a result of compensation earned in 2020. Effective July 1, 2020, Mr. Field became Senior Advisor, Office of the Chairman, and is no longer an executive officer.

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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
Executive Summary

Executive Summary

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

NET SALES &
REVENUES

NET INCOME
(attributable to Deere & Company)

SHAREHOLDER
VALUE ADDED
$35.54 $2.75 $1.56
BILLION BILLION BILLION
DOWN 9% DOWN 15% UP 3%

In fiscal 2020, net sales and revenues reached $35.54 billion while net income attributable to Deere & Company totaled $2.751 billion, sixth highest in company history. Net income was negatively affected by impairment charges and employee-separation costs of $211 million and $458 million after-tax, respectively. Shareholder Value Added, our measure of economic profit, increased to $1.556 billion, up 2.7%.

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

Financial Performance and Compensation Metrics
As outlined below, the metrics Deere uses to measure success in its business strategy are the same used in our compensation programs to ensure that employees are working in aligned, high-performance teams. Further details below illustrate how the company’s compensation plans and payouts are sensitive to fluctuations in business conditions. Despite the global pandemic driving uncertain market conditions, Deere demonstrated the ability to drive strong business results while also delivering differentiated solutions to our customers. Compensation was reviewed in light of the challenging business conditions. Due to strong company performance and the ability to meet customer needs, it was determined to make no changes to the compensation metrics, weightings or performance goals applicable to NEOs in fiscal 2020 as a result of the global pandemic. As part of the integration process, Wirtgen financials were excluded from the OROA and SVA compensation metrics for fiscal 2020. As we look ahead for fiscal 2021, Wirtgen financials will be included in the OROA and SVA compensation metrics.

DRIVERS OF ONE-YEAR OROA, ROE, AND REVENUE GROWTH (STI)

Operating margin focus
Disciplined asset management
Efficient use of equity
Near-term business execution
     

DRIVERS OF THREE-YEAR SVA (LTIC)

Margin management across the cycle with a long-term focus
Efficient use of long-term assets
Long-term investment decisions for capital and research and development
World-class distribution systems
Technology innovation
     

DRIVERS OF TSR (LTIC) AND REVENUE GROWTH (LTI)

Market share
Successful execution of business strategy
Stock price appreciation over the long term
Market conditions

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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
Executive Summary

        2019     2020     % Change     Fiscal 2020 Actions and Results
STI OROA (1) 21.55% 21.86% 1% The STI payout was 121% of target, resulting in an award of $2.2 million for the CEO and awards ranging from $0.8 million to $1.0 million for the other NEOs.
ROE 10.70% 11.11% 4%
Net Sales and Revenues $39.26B $35.54B -9%
Payout as a % of Target 69% 121% 76%
LTIC 3-Year Accumulated SVA (1) $4.68B $4.98B 6% The LTIC payout for the 2018-2020 performance period was 159% of target. With TSR performance at the 95th percentile, there was an adjustment of 25% to the payout due to the TSR modifier. This resulted in an award of $1.6 million for the CEO (2) and awards of approximately $1.4 million for each of the other NEOs.
3-Year TSR as of 31 Oct. 27.83% 79.54% +51.71 pts
TSR Performance Results as Compared to a Subset of the S&P Industrial Sector (3) 88th
percentile
95th
percentile
TSR Modifier 100% 125% 25%
Payout as a % of Target 117% 159% 37%
LTI-Revenue
Growth
Deere Growth Rate 13.79% 6.12% -7.67pts The LTI grant for the 2020-2022 performance period was received in December 2019 and was based solely on Revenue Growth. The CEO received an LTI award valued at $7.5 million, a 20% increase over the base-level award; LTI awards for the other NEOs were increased an average of 9%, valued at $1.8 million; adjustments reflect strong operating performance and rapid response to challenging business conditions.
Revenue Growth Performance as Compared to a Subset of the S&P Industrial Sector (4) 89th
percentile
84th
percentile
PSU Payout as a % of Target 200% 200% 0%
LTI-TSR Stock Price as of 31 Oct. $174.14 The TSR component of LTI was discontinued in fiscal 2019. TSR continues as part of the LTIC metrics as noted above.
3-Year TSR as of 31 Oct. 27.83%
TSR Performance Results as Compared to S&P Industrial Sector 88th
percentile
PSU Payout as a % of Target 200%

(1)

Wirtgen financials were excluded from the OROA and SVA compensation metrics for fiscal 2019 and 2020.

(2)

Effective November 4, 2019, Mr. May became CEO. His LTIC award was based upon the median of his position as of September 30, 2019.

(3)

For the period ended 2019, TSR performance as compared to S&P Industrial Sector.

(4) For the period ended 2019, Revenue Growth as compared to S&P Industrial Sector.

Shareholder Outreach
At the February 2020 Annual Meeting, Deere received a 94.9% For favorable Say on Pay Vote. As part of our ongoing annual review in 2020, we invited our top shareholders to participate in discussions regarding executive compensation, sustainability, and governance issues. During the year, we met with shareholders representing over 40% of our outstanding shares, to ensure changes to our program were understood and aligned with their expectations. We discussed our approach to executive compensation programs, as well as various sustainability and corporate governance topics important to investors. Discussions with shareholders did not indicate any significant issues with current compensation programs.

Our learnings included:

Deere has strong alignment between business strategy and compensation design

Our shareholders understand how OROA, ROE, and SVA are linked to successful operating performance


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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
2020 Compensation Overview

The STI and LTIC programs contribute to successful operating performance, drive the right employee behavior and promote the creation of long-term value throughout the business cycle; shareholders have expressed Deere’s variable pay programs are complex
Shareholders understand the exclusion of Wirtgen in certain 2020 STI and LTIC program metrics recognizing the ongoing efforts to integrate Wirtgen financials to Deere performance metrics
Shareholders appreciate the linkage between our strategy and ability to deliver sustainable outcomes to our stakeholders
Topics of specific interest by shareholders included the impact of COVID-19 on Deere’s performance and compensation programs as well as Environmental, Social and Governance (ESG) focus and potential integration with compensation

We regularly analyze our practices to ensure we remain a leader in executive compensation best practices and remain aware of shareholder concerns. We recognize the value of the ongoing feedback and will continue regular shareholder engagement activities to gain their perspective firsthand.

2020 Compensation Overview

Deere is committed to a compensation philosophy that incorporates the principles of paying for performance, supporting business strategies, and paying competitively. The Committee believes this philosophy continues to drive our NEOs and salaried employees to produce sustainable, positive results for Deere and our shareholders.

Snapshot of Compensation Governance

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

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

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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
2020 Compensation Overview

Snapshot of Compensation Elements
The components of our 2020 compensation program are:

  Total Direct
Compensation
Total Indirect
Compensation
  Short-Term Compensation Long-Term Compensation Other
Compensation
and Benefits
  Base Salary Short-term Incentive
(STI)
Cash
(LTIC)
Equity
(LTI)
Purpose
Based on level of responsibility, experience, and sustained individual performance
Annual cash award for profitability and efficient operations during the fiscal year
Cash award for sustained profitable growth during a three-year period
Equity award for creating shareholder value as reflected by stock price and revenue growth
Perquisites, retirement benefits, deferred compensation benefits, additional benefits payable upon a change in control
Characteristics
Fixed cash component generally targeted at the peer group median
A target STI award is designed to contribute to annual cash compensation and overall compensation at the peer group median
A target LTIC award is designed to contribute to overall compensation at the peer group median
Awarded in a combination of RSUs, PSUs, and stock options, a base-level LTI award is designed to contribute to overall compensation at the peer group median
Metrics
- CEO: Increase to $1.2M for 2020
- Other NEOs: Various increases to align with market median
- Operating Return on Operating Assets (OROA), Return On Equity (ROE), and net sales and revenues in current-year performance(1)
- Shareholder Value Added (SVA)(1) and Total Shareholder Return (TSR) modifier to the payout
- Revenue Growth(2)
- LTI awards can be increased by up to 20% to recognize individual performance

(1)

Wirtgen is excluded from both the Equipment Operations OROA and SVA calculations for FY20 variable pay to allow time for integration and assimilation. See Appendix B for details.

(2)

The equity award for performance periods starting in FY2018 will only be based on revenue growth. Prior to FY2018, PSUs were based on revenue growth and TSR.

As this table suggests, we compare each component of compensation to the median level for that component awarded by our peers. In addition, we strive to have each NEO’s total annual cash compensation and overall compensation at target compare favorably to the median levels for comparable executives.

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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
2020 Compensation Overview

2020 Target Direct Compensation Mix
Pay for performance is an essential element of our compensation philosophy. We believe compensation should motivate our executives to substantially contribute — both individually and collaboratively — to Deere’s long-term, sustainable growth. To that end, our performance-based compensation program consists of three components (STI, LTIC, and LTI), all driven by metrics that align with Deere’s business strategy and reflect the cyclical nature of the industries in which Deere operates.

To enhance the connection between pay and performance, as our NEOs assume greater responsibility, we award a larger portion of their total compensation in the form of “at risk” incentive awards and a larger portion of their incentive awards in the form of equity. This practice is apparent in the following charts, which illustrate the allocation of all fiscal 2020 Direct Compensation components at target for our CEO and for our other NEOs as a group.

CEO TARGET COMPENSATION MIX      NEO TARGET COMPENSATION MIX

(a) ”At risk” implies awards that are subject to performance conditions and stock price performance
(b) Variable pay that is metric driven
(c) Variable pay that is stock price driven

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

Direct Compensation Elements

As shown in the Target Compensation Mix charts under 2020 Compensation Overview, the majority of direct compensation for the CEO and NEOs is based on “at-risk,” variable pay. Our performance-based compensation programs fall into two categories: short-term incentives based on annual metrics and long-term incentives based on a three-year performance period. Long-term performance based incentives are awarded in the form of cash and equity (RSUs, PSUs, and stock options). The following information describes each direct compensation element, including the applicable performance metrics.

Base Salary
In determining salary levels for each of our NEOs, the Committee considers factors such as financial and operational performance, leadership, development of people, time in position, internal equity, and potential. The Committee also considers each NEO’s current salary as compared to the salary range and median salary practices of our peer group. The following increases reflect the Committee’s assessment of the NEO’s favorable performance as well as competitive positioning as compared to peers. The increase for John May includes consideration of his performance and expanded leadership responsibilities to CEO on November 4, 2019. Ryan Campbell, being new to the role of CFO in April 2019, received increases to reflect strong performance as well as to continue to strive for competitive positioning of his salary. Deere has a multi-year plan to deliver compensation at market competitive rates assuming continued favorable performance by the senior officer.

Officer Base Salary as of Apr. 1, 2019 Fiscal 2020 Salary Increase % Base Salary as of Dec. 1, 2019
John C. May     $1,000,764     20%     $1,200,000
Ryan D. Campbell $567,768 20% $681,322
Mary K. W. Jones $717,060 10% $788,772
Rajesh Kalathur $724,476 10% $796,932
Cory J. Reed $701,400 10% $771,540
James M. Field $798,900 5% $838,845

Short-Term Incentive (STI)
PERFORMANCE METRICS FOR STI

The Committee believes that operating margins, efficient deployment of our assets (both fixed and working capital), and growth are key drivers in creating long-term shareholder value. For this reason, the Committee has designed the STI program to motivate our executives and most other salaried employees to focus on profitability, asset optimization, and capital efficiency no matter where we are in the business cycle each fiscal year.

OROA (for our Equipment Operations segments) supports our strategic approach to sound investment of capital and asset utilization. ROE (for our financial service segment) effectively measures the efficient use of equity.
Net sales and revenues measure our growth.

By consistently managing OROA results through all points in the business cycle, we have paid out more than half of cash flow from our operations to investors through dividends and net share repurchases since 2004.

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

For fiscal 2020, the performance results for these metrics are combined to determine STI awards as follows:

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

 

(a)

Appendix B, “Deere & Company Reconciliation of Variable Compensation Measures to Non-GAAP Measures” illustrates in detail how OROA and ROE are calculated.

(b)

Equipment Operations reflects the consolidated results of the Agriculture and Turf operations and Construction and Forestry operations.

The emphasis on the OROA performance of the Equipment Operations in calculating STI reflects the critical position these operations have as drivers of our business: Equipment Operations’ net sales accounted for 88% of our net sales and revenues in fiscal 2020. The 50% weighting for the combined Equipment Operations reflects the importance of employees’ aligning with the overall business strategies, including working together to develop technology and drive synergies.

Recognizing the complexity of the plan, for fiscal 2021, the Enterprise OROA/ROE metric weighting will be simplified to be 90% based upon Equipment operations OROA and 10% on Financial Services ROE.

OROA – Equipment Operations Metric
OROA goals are formulaically adjusted to reflect the cyclical nature of our end markets. As a smart industrial company, our business requires high investment in fixed assets, such as buildings and machinery, and significant expenses with longer-term payoffs, such as research and development.

Our long-term strategy will continue to focus on OROA performance, which is designed to enable management to respond promptly and purposefully to changing business conditions to drive sustained operational results. The Committee sets a range of OROA goals for a range of potential conditions rather than for a static forecast. This allows us to be agile, encourages us to prepare in advance for a variety of business conditions, and to quickly make necessary structural changes, such as those related to costs, capacity, and assets (especially inventory) as business conditions change during the year.

WHAT IS MID-CYCLE?

We calculate mid-cycle sales for each product line by annually gathering historical information on the size of the industry (for example, the total number of tractors sold in the U.S. market) and our market share for every product line (in this example, the number of tractors sold by Deere).

At the peak of a typical business cycle, actual sales constitute 120% of mid-cycle sales; at the trough, actual sales constitute 80% of mid-cycle sales, generally speaking. OROA goals vary each year to reflect where we are on this spectrum.


To maintain the rigor of the program, the specific goals for any year are determined based on where we are in the business cycle. This ensures that our employees are not unduly rewarded when the economy is strong and penalized for poor economic conditions. The Committee fixes threshold, target, and maximum OROA goals that are more ambitious at the peak of a business cycle, when it is easier to cover fixed costs and achieve a higher asset turnover (and thus a better OROA), and lower at the trough.

Our position in the business cycle is calculated by comparing current sales to projected mid-cycle sales. Performance targets are adjusted accordingly based upon position to the mid-cycle.


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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
Direct Compensation Elements
Equipment Operations sales are at 88% of mid-cycle
Construction & Forestry sales are at 84% of mid-cycle
Agriculture & Turf sales are at 89% of mid-cycle

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

OROA GOALS INCREASED IN 2018 TO ENSURE THEIR RIGOR
To continue to improve operational performance and seize the benefits of our structural transformation, the Committee raised OROA goals for STI purposes to align more appropriately to the current business strategy. As the following charts show, the OROA goals implemented in fiscal 2018 are significantly more rigorous at mid-cycle and peak than they have been historically.

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Compensation Discussion and Analysis
Direct Compensation Elements

OROA GOAL


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

* Current goals established in 2018.

ROE – Financial Services Metric
The ROE metric is the STI performance metric for the Financial Services business, a key differentiator for how we deliver value to our dealers and customers. ROE was selected because it effectively measures the efficient use of the segment’s equity. We have two distinct business models within Financial Services and we use different ROE goals for each.

Subsidized business: Historically, approximately 70% of Financial Services’ business has been subsidized by the Equipment Operations to reduce the interest rates that our customers and dealers would otherwise pay on financial products. The ROE goal for the subsidized business — 10% — is the same regardless of the business cycle as maximizing profitability is not the purpose of this segment. The goal is rigorous; however, our threshold goal, which is based on the implied after-tax cost of equity, represents upper-quartile performance compared to other financial institutions.

Non-subsidized business: The remaining offerings, which are non-subsidized, are intended to utilize equity to earn a profitable return. Consequently, this business has more traditional (and progressively more challenging) goals. The threshold goal equals the implied after-tax cost of equity for Financial Services; the ROE goals of 13% at target and 16% at maximum represent an even greater level of stretch both internally and compared to our peers.

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Compensation Discussion and Analysis
Direct Compensation Elements

ROE goals are weighted based on the actual mix of subsidized versus non-subsidized business in a fiscal year. The Committee approved the following ROE goals at the beginning of fiscal 2020:

Fiscal 2020 ROE Goals        Subsidized business        Non-subsidized business        Weighted Goals
% of Business 72% 28%
Maximum 10% 16% 12%
Target 10% 13% 11%
Threshold 10% 10% 10%

Net Sales and Revenues – Corporate Metric
Company wide net sales and revenues together account for one-third of the STI payout. This metric was added in 2017 to incorporate a growth factor into the incentive calculation.

For 2020, our net sales and revenues target goal is $36.39B. Net sales and revenues that fall more than 15% below target will result in no payout on that metric. Conversely, net sales and revenues that exceeds target by at least 15% will result in a maximum (200%) payout on that metric.

APPROVAL OF STI AWARD RATES
At the beginning of the fiscal year, after review and consideration of Deere’s peer group data for target cash bonuses, the Committee approves target STI rates as a percentage of each NEO’s base salary. The target STI rates for fiscal 2020 are as follows:

2020
Target Rate
CEO 150%
Other NEOs 100%

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

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Compensation Discussion and Analysis
Direct Compensation Elements

FISCAL 2020 PERFORMANCE RESULTS AND PAYOUT AMOUNTS
The chart below shows OROA results for the Agriculture & Turf Operations, the Construction & Forestry Operations, and Equipment Operations as a whole, based on actual sales volumes:

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

Fiscal 2020 Performance Results for STI       Fiscal 2020 
Performance
Results
      Performance
as % of Target
      Fiscal 2020
OROA/ROE
Award Weighting
      Weighted
Award Results
      Fiscal 2020
Award STI
Weighting
      Actual
Performance
Results
Equipment Operations OROA 21.9% 144% 50% 72%
Agriculture & Turf Operations OROA 25.9% 200% 25% 50%
Construction & Forestry Operations OROA 8.9% 0% 15% 0%
Financial Services ROE 11.1% 134% 10% 13%
Enterprise OROA/ROE Metric (1) 136% 67% 91%
Net Sales and Revenues $35.54B 92% 33% 30%
Actual Performance as % of Target 121%

(1)

The Equipment Operations OROA calculation excludes the assets from our captive financial services and Wirtgen. ROE is based soley on the Financial Services segment. See Appendix B for details.

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

STI AWARD CALCULATIONS

Base salary for
the fiscal year
× Target STI rate × Actual performance
as a percentage
of target
= STI award amount

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Compensation Discussion and Analysis
Direct Compensation Elements

Actual STI awards paid to the NEOs are shown in the table to the right and detailed in the Fiscal 2020 Summary Compensation Table under footnote (4).

For fiscal 2020, STI awards paid to the NEOs consisted of approximately 2% of the total amount of STI awards paid to all eligible employees.

Officer       Fiscal 2020 STI Award Payout
John C. May $ 2,180,768
Ryan D. Campbell $ 814,495
Mary K. W. Jones $ 948,984
Rajesh Kalathur $ 958,801
Cory J. Reed $ 928,252
James M. Field                                 $ 1,012,896


Long-Term Incentive Cash (LTIC)
LTIC is a long-term cash award based on our performance against ambitious goals for Shareholder Value Added (SVA) over a three-year performance period.

SHAREHOLDER VALUE ADDED PERFORMANCE METRIC
SVA, which essentially measures earnings in excess of our cost of capital, was selected as the LTIC performance metric because the Committee believes we should:

earn, at a minimum, the weighted average cost of capital each year
ensure that investments earn their cost of capital

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

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

SETTING RIGOROUS SVA GOALS
Our SVA performance targets are intended to incentivize superior performance. Our goal for a maximum payout is calculated based on estimated enterprise SVA at mid-cycle sales levels for the first year of the performance period. We assume a compounded 7% annual growth rate for the remaining two years (our historical sales growth rate) to arrive at a cumulative three-year SVA goal, given limited visibility.

Once the maximum SVA goal is set, the target SVA goal is set at half of that amount. Our target goals are challenging to achieve. The threshold accumulated goal is set at $5 million.

The chart below details the threshold, target, and maximum accumulated SVA goals for each performance period that includes fiscal 2020. The SVA goals at all levels have had no adjustments due to the global pandemic. The SVA goals have increased at a compounded annual growth rate of 9% since the LTIC plan was introduced in 2004.

SVA Goals for LTIC       Fiscal 2018
through Fiscal 2020
      Fiscal 2019
through Fiscal 2021
      Fiscal 2020
through Fiscal 2022
Threshold SVA Required for Payout $5 million $5 million $5 million
SVA Goal for Target Payout $3,900 million $3,335 million $3,955 million
SVA Goal for Maximum Payout $7,800 million $6,670 million $7,910 million

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Compensation Discussion and Analysis
Direct Compensation Elements

MODIFICATION OF AWARDS BASED ON RELATIVE TSR
LTIC payouts may be modified based on relative TSR performance to a subset of the S&P 500 Industrial Sector. If our TSR is at or below the 25th percentile of the comparator group, which comprises around 40 companies, the final LTIC payout for our senior executives will be reduced by 25%. If our TSR is between the 25th and 50th percentiles, the final LTIC payout for our senior executives will be reduced by up to 25%, as shown in the graph below. When performance is between the 50th and 75th percentile the LTIC payout will be increased.

Beginning with the three-year performance period starting with fiscal 2018, which paid out in 2020, the TSR modifier was amended to include an upside opportunity when performance is between the 50th and 75th percentile and also to create a steeper reduction when TSR performance is below the 50th percentile. In addition, in 2018 the performance peer group for TSR purposes was amended from the S&P Industrials peer group to a subset of the S&P Industrial Sector. This smaller group of around 40 peer companies is more closely aligned by industry or related to agricultural and construction business cycles. The same smaller peer group is used as the comparator group for PSU metrics. The payout factor based on SVA performance will be multiplied by the modifier to calculate a final payout factor. The chart below shows how the modifier operates at different TSR rankings. The TSR modifier will apply a multiplicative percentage to the payout factor.

TSR MODIFIER FOR LTIC AWARD


APPROVAL OF LTIC AWARD RATES
At the beginning of each performance period, after considering data for our peer group, the Committee approves target LTIC payout rates as a percentage of the median salary for each NEO’s salary grade. For the performance period that ends in 2020, the target rates were increased to align closer to peers and market changes.

      Effective with Performance
Period Ending in 2020
CEO 135%
Other NEOs 105%

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

FISCAL 2020 PERFORMANCE RESULTS FOR LTIC
The following table shows our accumulated SVA, calculated as described in Appendix B, for the three-year performance period ended in 2020, which resulted in a payout of 159%.


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Compensation Discussion and Analysis
Direct Compensation Elements

The payout percentage for fiscal 2020 was calculated as follows:

Fiscal Year       SVA (in millions)
2018 $1,885
2019 $1,535
2020 $1,556
Accumulated SVA for 2018-2020 performance period $4,975
SVA Goal for Target Payout $3,900
TSR Modifier 125%
Actual Performance as % of Target (See table below) 159%

HISTORICAL ACCUMULATED SVA, LTIC GOALS, AND LTIC PAYOUTS

The following table shows historical LTIC information and how SVA for fiscal 2020 will affect LTIC awards for the performance periods ending in 2020, 2021, and 2022. Maximum payout is based upon 200% of SVA goal at target.

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Compensation Discussion and Analysis
Direct Compensation Elements

CALCULATION OF LTIC AWARDS

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

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

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

Actual LTIC awards paid to the NEOs are shown in the table to the right and detailed in the Fiscal 2020 Summary Compensation Table under footnote (4).

The results for the performance period ended in 2020 are also used to determine the LTIC awards for other eligible employees worldwide. LTIC awards paid to the NEOs for fiscal 2020 consisted of approximately 8% of the total amount of LTIC awards paid to all eligible employees.

Officer       Fiscal 2020 LTIC Award Payout
John C. May                                    $ 1,560,484
Ryan D. Campbell $ 1,364,587
Mary K. W. Jones $ 1,364,587
Rajesh Kalathur $ 1,364,587
Cory J. Reed $ 1,364,587
James M. Field $ 1,364,587


Long-Term Incentive (LTI)
LTI is designed to reward the NEOs for creating sustained shareholder value, to encourage the ownership of Deere stock, to foster teamwork, and to retain and motivate high-caliber executives while aligning their interests with those of our shareholders. LTI awards consist of the following three components awarded annually under the John Deere Omnibus Equity and Incentive Plan (Omnibus Plan):

Performance Stock Units (PSUs)
Restricted Stock Units (RSUs)
Market-priced stock options

The John Deere 2020 Equity and Incentive Plan was approved by our shareholders at the Annual Meeting in February 2020. This plan will replace the Omnibus Plan for annual awards beginning in fiscal 2021.

FISCAL 2020 LTI AWARD OVERVIEW FOR NEOS

PSUs

RSUs

Stock Options

LTI Mix

40%

25%

35%

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

* Based on Deere’s compounded annual growth rate

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Compensation Discussion and Analysis
Direct Compensation Elements

APPROVAL OF LTI AWARD VALUES
The Committee established LTI grants for the NEOs based on the following criteria:

level of responsibility
individual performance
current market practice
peer group data
the number of shares available under the Omnibus Plan

Awards granted in previous years are not a factor in determining the current year’s LTI award, nor is potential accumulated wealth.

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

The Committee can increase (up to 20%) or decrease (down to $0) an individual NEO’s base-level award to distinguish that executive’s performance, deliver a particular LTI value, or reflect other adjustments as the Committee deems appropriate. For fiscal 2020, the Committee approved adjustments to base-level award values ranging up to 20% to recognize the accomplishments of the individual NEOs. LTI awards were approved for the NEOs as follows:

      Adjusted Award Values(a)
John C. May                            $ 7,500,000
Ryan D. Campbell $ 1,883,700
Mary K. W. Jones $ 1,973,400
      Adjusted Award Values(a)
Rajesh Kalathur                            $ 2,063,100
Cory J. Reed $ 1,973,400
James M. Field(b) $ 1,973,400


(a)

The amounts shown include PSUs valued at the grant price on the date of grant assuming a 100% payout. These amounts differ from the value of equity awards shown in the fiscal year 2020 Summary Compensation Table and Grants of Plan-Based Awards table because those tables reflect the probable outcome of the performance metrics for PSUs.

(b)

Mr. Field was also granted a special equity award in March 2019, which was scheduled to vest over a three-year period. Mr. Field forfeited the award with his change in position effective July 1, 2020.

See the Fiscal 2020 Grants of Plan-Based Awards table and footnotes for more information on LTI awards delivered, as well as the terms of the awards.

For fiscal 2020, the number of RSUs and PSUs granted to the NEOs represented 8% and 54%, respectively, of the total RSUs and PSUs granted to all eligible salaried employees; stock options granted to the NEOs represented 30% of the total stock options granted to eligible salaried employees.

CONVERSION OF PSUs TO DEERE STOCK
For the PSU performance period ending in 2020, the actual number of shares to be issued was based on Deere’s revenue growth, as compared to a subset of companies in the S&P Industrial Sector.

For PSUs granted in fiscal 2020 (December 2019), the actual number of shares to be issued upon conversion will be based on Deere’s revenue growth for the three-year performance period ending in 2022 and measured relative to a subset of the companies in the S&P Industrial Sector as of the end of the performance period.

PERFORMANCE TARGETS FOR PERFORMANCE PERIOD ENDING IN 2020

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

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Compensation Discussion and Analysis
Direct Compensation Elements

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

Deere’s Revenue Growth Relative to
a subset of the S&P Industrial Sector
            % of Target Shares
Earned (Payout %) *
Below 25th percentile 0%
At 25th percentile 25%
At 50th percentile 100%
At or above 75th percentile 200%

* Interim points are interpolated

These performance targets reflect the Committee’s belief that median levels of relative performance should lead to median levels of compensation.

PERFORMANCE PERIOD 2018-2020 PSUS

The performance period for PSUs granted in fiscal 2018 ended on October 31, 2020. The final number of shares earned was based on Deere’s revenue growth relative to a subset of the S&P Industrial Sector over the three-year performance period. The Committee made its final payout determination in December 2020 following a review of the relative performances of Deere and the subset of the S&P Industrial Sector. Deere’s revenue growth was comparable to the 84th percentile. This resulted in an overall payout of 200% of target. This payout compared to an overall payout of PSUs relative to target for each of the five prior three-year performance periods ending in fiscal 2015 through fiscal 2019 of 0%, 33.5%, 100%, 200%, and 200%, respectively.

Deere’s Revenue Growth Relative to
the Subset of the S&P Industrial Sector
Revenue Growth for
Fiscal 2018 through Fiscal 2020
Performance Results
for Performance Period Relative to
Subset of the S&P Industrial Sector
% of Target Shares Earned
Revenue Growth 6.12% 84th percentile 200%

LTI REPORTED VERSUS REALIZABLE VALUE
The values for Stock and Option Awards included on the Summary Compensation Table are presented in accordance with SEC requirements. Although this allows for comparison across companies, the Committee feels the prescribed calculation does not fully represent the Committee’s annual decision and does not support a valid CEO pay-for-performance assessment. To calculate the realizable value, the stock units from the LTI awards granted in 2018, 2019, and 2020 are valued using the fiscal year end stock price. The value of PSUs also takes into consideration the current year payout and the current performance for the performance cycles in-process (2019-2021 and 2020-2022). The value of options is calculated using the Black-Scholes value as of fiscal year end. The following chart compares the LTI values reported on the Summary Compensation Table to Mr. May’s realizable LTI value for each of the grants in 2018, 2019, and 2020.

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Compensation Discussion and Analysis
Direct Compensation Elements

REPORTED VS. REALIZABLE LTI VALUE





(a) See footnotes (2) and (3) to the Summary Compensation Table for an explanation of these valuations.
(b) Realizable LTI is calculated as:
The value of stock options that were granted in 2018, 2019, and 2020 using the Black-Scholes value as of November 1, 2020.
The value of RSUs that were granted in 2018, 2019, and 2020 using the stock price as of November 1, 2020 of $225.91.
The value of PSUs granted in 2018, 2019, and 2020 using the stock price as of November 1, 2020, of $225.91 and reflecting actual payout for the 2018-2020 performance and projected payouts for the in-process performance cycles of 200% for 2019-2021 and of 176% for 2020-2022.
(c) Values reported based upon former CEO, Samuel R. Allen.

Summary of Direct Compensation
The Committee believes each pay element included in Direct Compensation is consistent with our compensation philosophy. The Committee reviews Direct Compensation for the NEOs in the aggregate (excluding the CEO) as well as for each NEO individually and compares this compensation to the market position data of our peer group. This market position data takes into account the level of responsibility (including the level of sales volume) for each NEO’s respective operations.

A key element of these individual performance evaluations is a careful analysis of each NEO’s collaboration and contribution to the success of a high-performing team. Thus, while the market data for each position is a factor in reviewing Direct Compensation, the Committee also considers individual fulfillment of duties, teamwork, development, time in position, experience, and internal equity among NEOs other than the CEO. The Committee recognizes individual performance through adjustments to base salary and LTI.

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

Other Compensation Matters
RULES RELATED TO STOCK OWNERSHIP, HOLDING REQUIREMENTS, AND ANTI-HEDGING AND ANTI-PLEDGING POLICIES
NEOs are required to hold a certain amount of Deere stock. The CEO is expected to hold stock equivalent to 6.0 times base salary and the other NEOs are expected to hold stock equivalent to 3.5 times base salary. These ownership levels must be achieved within five years of the date the NEO is first appointed as CEO or as an executive officer. NEOs who have not achieved the requisite ownership level may not transfer any of the stock they acquire through our equity incentive plan. Only vested RSUs and any common stock held personally by a NEO are included in determining whether the applicable ownership requirement has been met. Once a NEO achieves the appropriate ownership level, the number of shares held at that time becomes that individual’s fixed stock ownership requirement for three years, even if base salary increases or Deere’s stock price decreases.

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

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Compensation Discussion and Analysis
Direct Compensation Elements

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

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

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

contributed to the need for a restatement of all or a portion of Deere’s financial statements filed with the SEC; or
contributed to an incorrect calculation of operating metrics that are used to determine incentive plan payouts.

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

Indirect Compensation Elements

Perquisites
We offer our NEOs various perquisites that the Committee believes are reasonable in order to remain competitive. These perquisites, which are described in footnote (6) to the Fiscal 2020 Summary Compensation Table, constitute a small percentage of the NEOs’ total compensation. The Committee conducts an annual review of the perquisites offered to the NEOs. In addition to the items listed in footnote (6), NEOs, as well as other selected employees, are provided indoor parking at no incremental cost to Deere.

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

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Compensation Discussion and Analysis
Indirect Compensation Elements

Retirement Benefits
All NEOs are covered by the same defined benefit pension plans, which include the same plan terms that apply to most qualifying U.S. salaried employees. We also maintain two additional defined benefit pension plans in which NEOs may participate: the Senior Supplementary Pension Benefit Plan (the “Senior Supplementary Plan”) and the John Deere Supplemental Pension Benefit Plan (the “Deere Supplemental Plan”).

The tax-qualified defined benefit pension plans have compensation limits imposed by the Internal Revenue Code. The Senior Supplementary Plan provides participants with the same benefit they would have received without those limits. This avoids the relative disadvantage that participants would experience compared to other qualified plan participants. The Deere Supplemental Plan is designed to reward career service at Deere above a specified grade level by utilizing a formula that takes into account only years of service above that grade level. We believe the defined benefit plans serve as important retention tools, provide a level of competitive income upon retirement, and reward long-term employment and service as an officer of Deere. In addition, the fact that the Senior Supplementary and Deere Supplemental Plans are unfunded (with benefit payments under these plans being made out of the general assets of Deere) and therefore at-risk (if Deere were to seek bankruptcy protection), creates a strong incentive for the NEOs to minimize risks that could jeopardize Deere’s long-term financial health. For additional information, see the Fiscal 2020 Pension Benefits Table, along with the accompanying narrative and footnotes.

We also maintain a tax-qualified defined contribution plan, the John Deere Savings and Investment Plan (SIP), which is available to most of our U.S. employees, including the NEOs. We make matching contributions to participating SIP accounts on up to six percent of an employee’s pay. The actual amount of the company match varies based on two factors: the STI results for the most recently completed fiscal year (see the “Fiscal 2020 Performance Results and Payout Amounts” in the STI section) and the pension option in which the employee participates (see the narrative preceding the Fiscal 2020 Pension Benefits Table). The following table illustrates Deere’s match for calendar 2020, which is reported for our NEOs under the “All Other Compensation” column of the Fiscal 2020 Summary Compensation Table:

Contemporary Option match on first 2% of eligible earnings: 240 %
     
Contemporary Option match on next 4% of eligible earnings:      80 %

Deferred Compensation Benefits
We also maintain certain deferred compensation plans that provide the NEOs with longer-term savings opportunities on a tax-efficient basis. Similar deferred compensation benefits are commonly offered by companies with which we compete for talent.

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

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

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Compensation Discussion and Analysis
Compensation Methodology and Process

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

encourages executives to act in the best interests of shareholders when evaluating transactions that, without a change in control arrangement, could be personally detrimental
keeps executives focused on running the business in the face of real or rumored transactions
protects Deere’s value by retaining key talent despite potential corporate changes
protects Deere’s value after a change in control by including restrictive covenants (such as non-compete provisions) and a general release of claims in favor of Deere
helps Deere attract and retain executives as a competitive practice

For more information, see “Fiscal 2020 Potential Payments upon Change in Control” and the corresponding table.

Other Potential Post-Employment Payments
Deere’s various plans and policies provide payments to NEOs upon certain types of employment terminations that are not related to a change in control. These events and amounts are explained in the section under Executive Compensation Tables entitled “Fiscal 2020 Potential Payments upon Termination of Employment Other than Following a Change in Control.”

Compensation Methodology and Process

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

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

Generally, at the Board meeting in August, the full Board (in executive session without the CEO present) evaluates the CEO’s performance. The Committee considers the results of that evaluation when providing recommendations to the independent members of the Board for the CEO’s compensation, which they then approve. The CEO does not play a role in and is not present during discussions regarding his own compensation.

The CEO plays a significant role in setting the compensation for the other NEOs. In advance of the Committee meeting in December, the CEO evaluates each NEO’s individual performance and recommends changes to the NEOs’ base salaries and LTI awards. The CEO is not involved in setting the STI and LTIC awards because they are calculated using predetermined factors. The Committee has the discretion to accept, reject, or modify the CEO’s recommendations. No other executive officers play a substantive role in setting a NEO’s compensation.

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

The Role of the Compensation Consultant
The Committee has retained Pearl Meyer, LLC (Pearl Meyer) as its compensation consultant. Pearl Meyer reviews our executive compensation program design and assesses our compensation approach relative to our performance and the market. The Committee has sole responsibility for setting and modifying the fees paid to Pearl Meyer, determining the nature and scope of its services, and evaluating its performance and can terminate Pearl Meyer’s engagement or hire another compensation consultant at any time.

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

During fiscal 2020, Pearl Meyer performed the following specific services:

Provided information on executive compensation trends and external developments, including the use of environmental, social, and governance criteria in incentive programs and the impact of COVID-19 on executive compensation
Provided a competitive evaluation of total compensation for the NEOs, as well as overall long-term incentive program share usage, dilution, and expense
Reviewed the peer groups used for market analyses and relative performance comparisons in our long-term incentive programs
Reviewed the competitiveness of actual pay delivered in relation to performance as compared to the peer group, as further discussed in the following section
Reviewed the competitiveness of our NEO perquisites and severance benefits
Provided recommendations on CEO total compensation
Reviewed Committee agendas and supporting materials in advance of each meeting and raised questions or issues with management and the Committee Chair, as appropriate
Assisted with the onboarding of new members of the Committee
Provided guidance and recommendations on incentive plan design, including rigor of metrics and goals
Reviewed drafts and commented on this CD&A and the related compensation tables

Pearl Meyer does not provide other significant services to Deere and has no other direct or indirect business relationships with Deere or any of its affiliates. Taking these and other factors into account, the Committee has determined that the work performed by Pearl Meyer does not raise any conflicts of interest. Additionally, based on its analysis of the factors derived from SEC and NYSE regulations and identified in the Committee’s charter as being relevant to compensation consultant independence, the Committee has concluded that Pearl Meyer is independent of Deere’s management.

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

Market Analysis
PEER GROUP
The companies in the peer group for our fiscal 2020 market analysis process, listed in the chart below, are similar to Deere in terms of sales volume, products, services, market capitalization, and global presence.

Company Fiscal Year Revenue* (MM) Market Value 10/31/2020
(MM)
Employees*
3M Company       Dec ‘19              $ 32,136                        $ 92,268       96,163
Boeing Company Dec ‘19 $ 76,559 $ 81,512 161,100
Caterpillar Inc. Dec ‘19 $ 53,789 $ 85,044 102,300
Cummins Inc. Dec ‘19 $ 23,571 $ 32,545 61,615
DuPont de Nemours, Inc. Dec ‘19 $ 21,512 $ 41,741 35,000
Eaton Corp. plc Dec ‘19 $ 21,390 $ 41,526 101,000
Emerson Electric Co. Sep ‘20 $ 16,790 $ 38,718 83,500
General Dynamics Corporation Dec ‘19 $ 39,350 $ 37,688 102,900
Honeywell International Inc. Dec ‘19 $ 36,706 $ 115,743 113,000
Howmet Aerospace Dec ‘19 $ 14,187 $ 7,523 41,700
Illinois Tool Works Inc. Dec ‘19 $ 14,109 $ 62,000 45,000
Johnson Controls International plc Sep ‘20 $ 22,317 $ 30,653 97,000
Lockheed Martin Corporation Dec ‘19 $ 59,812 $ 97,961 110,000
PACCAR Inc. Dec ‘19 $ 25,621 $ 29,567 27,000
Raytheon Technologies Corporation Dec ‘19 $ 77,097 $ 82,497 243,200
Whirlpool Corporation Dec ‘19 $ 20,423 $ 11,569 77,000
75th Percentile $ 42,960 $ 83,133 104,675
Median $ 24,596 $ 41,634 96,582
25th Percentile $ 21,148 $ 32,072 57,461
Deere & Company Oct ‘20 $ 35,540 $ 70,794 69,200
Deere Percentile 65th 63rd 30th

Source: Factset Research Systems, Inc.

* Reflects employees and revenues for most recent reported fiscal year

Compensation paid by our peer group is representative of the compensation we believe is required to attract, retain, and motivate executive talent. The Committee, in consultation with Pearl Meyer, periodically reviews the peer group to confirm that it remains an appropriate point of reference for NEO compensation.

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

In addition, we reviewed the relationship between total realizable compensation and our performance for the three fiscal years ended with fiscal year 2019 — the most recent fiscal year-end for which we can obtain corresponding compensation information for our peer companies. This review helps the Committee understand whether total compensation delivered to our NEOs aligns with our performance relative to our peer group. For purposes of this review, we use TSR to measure performance.

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

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Compensation Discussion and Analysis
Compensation Methodology and Process

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

CEO OTHER NEOS

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

1.

Actual base salaries paid over the three-year period from 2017-2019

2.

Actual STI awards paid over the three-year period

3.

Actual LTIC awards paid over the three-year period

4.

The Black-Scholes value as of November 3, 2019, of any stock options granted over the three-year period

5.

The value as of November 3, 2019, of RSUs granted over the three-year period

6.

The value as of November 3, 2019, of PSUs (reflecting actual performance for the 2017-2019 performance cycle and the in-process 2018-2020 and 2019-2021 performance cycles)

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

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Compensation Discussion and Analysis
Risk Assessment of Compensation Policies and Practices

Risk Assessment of Compensation Policies and Practices

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

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

Based on its most recent review, the Risk Assessment Team concluded that Deere’s compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the company. The Committee, along with its independent compensation consultant, reviewed the risk assessment and concurred with that conclusion. The Committee believes the following key factors support the Risk Assessment Team’s conclusion:

the performance metrics for our STI and LTIC incentive plans are based on enterprise publicly reported metrics with only minor adjustments and are subject to internal audit and outside consultant review and audit
the metrics for our STI and LTIC compensation and the related potential payouts are capped to reduce the risk that executives might be motivated to attain excessively high “stretch” goals to maximize payouts

In addition, Deere maintains stock ownership requirements that are designed to motivate our management team to focus on Deere’s long-term sustainable growth, a Recoupment Policy designed to prevent misconduct relating to financial reporting and anti-hedging and anti-pledging policies designed to prevent speculation in Deere securities. The Committee and management also have the ability to use negative discretion to determine appropriate payouts for formula-based awards.

Convened a Risk Assessment Team comprised of management personnel representing relevant areas of oversight.

Completed an inventory of Deere’s compensation programs globally for both executive and non-executive employees.

Updated our existing detailed risk assessment questionnaire to take into account any relevant changes in our compensation structure or philosophy.

Applied the updated questionnaire to the compensation programs that, due to their size, potential payout, or structure, could have a material adverse effect on Deere.



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Advisory Vote on Executive Compensation
Compensation Discussion and Analysis
Compensation Committee Report

The reports of the Compensation Committee and the Audit Review Committee that follow do not constitute soliciting material and will not be deemed filed or incorporated by reference by any general statement incorporating by reference this Proxy Statement or future filings into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that Deere specifically incorporates the information by reference, and will not otherwise be deemed filed under these statutes.

Compensation Committee Report

The Compensation Committee of the Board of Directors has reviewed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and discussed it with Deere’s management. Based on the Compensation Committee’s review and discussions with management, the Compensation Committee recommends to the Board of Directors that the Compensation Discussion and Analysis be included in Deere’s Proxy Statement.

Dmitri L. Stockton, Chair
Tamra A. Erwin
Charles O. Holliday, Jr.
Dipak C. Jain
Michael O. Johanns

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Executive Compensation Tables

Executive Compensation Tables

In this section, we provide tabular and narrative information regarding the compensation of our NEOs for fiscal 2020. Fiscal year 2020 is the first year Mary K. W. Jones met the criteria for inclusion. Therefore, data for only fiscal year 2020 is included for Ms. Jones. Ryan D. Campbell and Cory J. Reed were included for the first time in fiscal year 2019. Therefore, data is only reported for fiscal years 2019 and 2020 for those individuals.

FISCAL 2020 SUMMARY COMPENSATION TABLE

Name and Position       Fiscal
Year
      Salary (1)       Stock Awards(2)       Option Awards(3)       Non-Equity
Incentive Plan
Compensation(4)
      Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings(5)
      All Other
Compensation(6)
      Total
John C. May
Chairman and
Chief Executive Officer
2020 $ 1,199,245 $ 6,878,173 $ 2,624,979 $ 3,741,252 $ 834,610 $ 310,125 $ 15,588,384
2019 $ 889,760 $ 1,876,726 $ 655,191 $ 1,421,607 $ 970,162 $ 192,246 $ 6,005,692
2018 $ 644,930 $ 1,739,879 $ 600,568 $ 1,119,225 $ 1,606 $ 167,788 $ 4,273,996
Ryan D. Campbell
Senior Vice President and
Chief Financial Officer
2020 $ 671,859 $ 1,727,552 $ 659,263 $ 2,179,082 $ 293,654 $ 85,601 $ 5,617,011
2019 $ 486,928 $ 414,755 $ 144,873 $ 538,736 $ 266,736 $ 68,954 $ 1,920,982
Mary K. W. Jones
Senior Vice President, General Counsel &
Worldwide Public Affairs
2020 $ 782,796 $ 1,809,670 $ 690,680 $ 2,313,571 $ 686,380 $ 113,996 $ 6,397,093
Rajesh Kalathur
President, John Deere Financial and
Chief Information Officer
2020 $ 790,894 $ 1,891,788 $ 722,062 $ 2,323,388 $ 658,772 $ 125,737 $ 6,512,641
2019 $ 721,732 $ 1,798,637 $ 627,860 $ 1,266,043 $ 872,056 $ 151,131 $ 5,437,459
2018 $ 656,497 $ 1,739,879 $ 600,568 $ 1,130,603 $ 36,918 $ 172,386 $ 4,336,851
Cory J. Reed
President, Worldwide Agriculture & Turf
Division, Production & Precision
Agriculture, Americas and Australia
2020 $ 765,695 $ 1,809,670 $ 690,680 $ 2,292,839 $ 521,036 $ 112,749 $ 6,192,669
2019 $ 669,999 $ 1,798,637 $ 627,860 $ 1,230,497 $ 640,851 $ 124,079 $ 5,091,923
James M. Field
Former President, Worldwide
Construction & Forestry and
Power Systems
2020 $ 835,516 $ 1,809,670 $ 690,680 $ 2,377,483 $ 962,315 $ 136,592 $ 6,812,256
2019 $ 795,874 $ 5,798,425 $ 627,860 $ 1,316,986 $ 1,382,119 $ 165,877 $ 10,087,141
2018 $ 724,217 $ 1,818,823 $ 627,864 $ 1,197,219 $ 24,692 $ 186,782 $ 4,579,597

(1) Includes amounts deferred by the NEO under the John Deere Voluntary Deferred Compensation Plan. Salary amounts deferred in fiscal 2020 are included in the first column of the Fiscal 2020 Nonqualified Deferred Compensation Table.
(2) Represents the aggregate grant date fair value of PSUs and RSUs computed in accordance with FASB ASC Topic 718. The values in this column exclude the effect of estimated forfeitures. Assumptions made in the calculation of these amounts are included in Note 23, “Stock Option and Restricted Stock Awards,” of our consolidated financial statements filed with the SEC on Form 10-K for the fiscal year ended November 1, 2020 (“ 2020 Form 10-K”). For PSUs, the value at the grant date is based on the probable outcome of the performance metric over the three-year performance period. If the highest level of payout were achieved, the value of the PSU awards as of the grant date would be as follows: $5,685,598 (May), $1,427,993 (Campbell), $1,495,855 (Jones), $1,563,716 (Kalathur), $1,495,855 (Reed), $1,495,855 (Field). RSUs will vest three years after the grant date, at which time they may be settled in Deere common stock. Refer to the Fiscal 2020 Grants of Plan-Based Awards table and footnote (7) thereto for a detailed description of the grant date fair value of stock awards. Mr. Field was granted a special equity award in March 2019, which was scheduled to vest over a three-year period. Mr. Field is forfeiting the award with his change in position.
(3) Represents the aggregate grant date fair value of stock options computed in accordance with FASB ASC Topic 718. The values in this column exclude the effect of estimated forfeitures. The assumptions made in valuing option awards reported in this column and a more detailed discussion of the binomial lattice option pricing model appear in Note 23, “Stock Option and Restricted Stock Awards,” of our consolidated financial statements filed with the SEC in the 2020 Form 10-K. Refer to the Fiscal 2020 Grants of Plan-Based Awards table and footnote (7) for a detailed description of the grant date fair value of option awards.

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(4) Non-equity incentive plan compensation includes cash awards under the STI and LTIC plans. Cash awards earned under the STI and LTIC plans for the performance period ended in fiscal 2020 were paid to the NEOs on December 15, 2020, unless deferred under the Voluntary Deferred Compensation Plan. Deferred STI and LTIC amounts are included in the first column of the Fiscal 2020 Nonqualified Deferred Compensation Table.
  The following table shows the awards earned under the STI and LTIC plans:

STI (a) LTIC (b
Name   Fiscal Year   Target Award
as % of Salary
  Actual
Performance
as % of Target
  Award Amount   Target Award
as % of
Median Salary
  Actual
Performance
as % of Target
  Award Amount   Total Non-Equity
Incentive Plan
Compensation
John C. May(c) 2020 150% 121% $2,180,768 105% 159% $1,560,484 $3,741,252
Ryan D. Campbell 2020 100% 121% $814,495 105% 159% $1,364,587 $2,179,082
Mary K. W. Jones 2020 100% 121% $948,984 105% 159% $1,364,587 $2,313,571
Rajesh Kalathur 2020 100% 121% $958,801 105% 159% $1,364,587 $2,323,388
Cory J. Reed 2020 100% 121% $928,252 105% 159% $1,364,587 $2,292,839
James M. Field 2020 100% 121% $1,012,896 105% 159% $1,364,587 $2,377,483

(a) Based on actual performance, as discussed in the CD&A under “Fiscal 2020 Performance Results and Payout Amounts” in the STI section, the NEOs earned an STI award equal to 121% of the target opportunity.
(b) Based on actual performance, as discussed in the CD&A under “Fiscal 2020 Performance Results for LTIC,” the NEOs earned an LTIC award equal to 159% of the target opportunity.
(c) Mr. May’s LTIC Target Award percentage is based upon his position as of September 30, 2019.

(5) The following table shows the change in pension value and above-market earnings on nonqualified deferred compensation during fiscal 2020.

Name       Fiscal Year       Change in
Pension Value
(a)
      Nonqualified Deferred
Compensation Earnings (b)
      Total
John C. May 2020 $834,610 $0 $834,610
Ryan D. Campbell 2020 $293,654 $0 $293,654
Mary W. Jones 2020 $686,380 $0 $686,380
Rajesh Kalathur 2020 $658,772 $0 $658,772
Cory J. Reed 2020 $521,036 $0 $521,036
James M. Field 2020 $962,315 $0 $962,315

(a) Represents the change in the actuarial present value of each NEO’s accumulated benefit under all defined benefit plans year over year. The pension value calculations include the same assumptions as used in the pension plan valuations for financial reporting purposes. For more information on the assumptions, see footnote (4) under the Fiscal 2020 Pension Benefits Table.
(b) Represents above-market earnings on compensation that is deferred by the NEOs under our nonqualified deferred compensation plans. Above-market earnings represent the difference between the interest rate used to calculate earnings under the applicable plan and 120% of the applicable federal long-term rate prescribed by the Internal Revenue Code. See the Fiscal 2020 Nonqualified Deferred Compensation Table for additional information.
Previously, modifications have been made for the investment options available under the Nonemployee Director Deferred Compensation Plan and the Voluntary Deferred Compensation Plan for employees to ensure that participants cannot earn above-market returns on new deferrals.

(6) The following table provides details about each component of the “All Other Compensation” column in the Fiscal 2020 Summary Compensation Table:

Name     Personal Use of
Company Aircraft
(a)
    Financial Planning (b)     Misc Perquisites (c)     Company Contributions to
Defined Contribution Plans (d)
    Total All Other
Compensation
John C. May                    $ 139,711                        $ 0                        $ 5,343                                   $ 165,071            $ 310,125
Ryan D. Campbell $ 0 $ 0 $ 0 $ 85,601 $ 85,601
Mary K. W. Jones $ 0 $ 0 $ 340 $ 113,656 $ 113,996
Rajesh Kalathur $ 0 $ 10,000 $ 340 $ 115,397 $ 125,737
Cory J. Reed $ 0 $ 0 $ 3,003 $ 109,746 $ 112,749
James M. Field $ 0 $ 3,265 $ 9,072 $ 124,255 $ 136,592

(a) Per IRS regulations, the NEOs recognize imputed income on the personal use of Deere’s aircraft. For SEC disclosure purposes, the cost of personal use of Deere’s aircraft is calculated based on the incremental cost to Deere. To determine the incremental cost, we calculate the variable costs for fuel on a per-mile basis, plus any direct trip expenses such as on-board catering, landing/ramp fees, and crew expenses. Fixed costs that do not change based on usage, such as pilot salaries, depreciation of aircraft, and maintenance costs, are excluded. Mr. May’s personal usage of company aircraft in fiscal 2020 amounted to approximately 45 hours of travel, which represents less than 2.1% of the total hours flown by company aircraft.
(b) This column contains amounts Deere paid for financial planning assistance to the NEOs. Each year, the CEO may receive up to $15,000 of assistance and the other NEOs may receive up to $10,000.
(c) Miscellaneous perquisites include spousal attendance at company events and travel costs associated with annual physicals. NEOs are provided healthcare plans consistent with salary employees.
(d) Deere makes contributions to the John Deere Savings and Investment Plan for all eligible employees. Deere also credits contributions to the John Deere Defined Contribution Restoration Plan for all employees covered by the Contemporary Option under our tax-qualified pension plan whose earnings exceed relevant IRS limits. All of our current NEOs are covered by the Contemporary Option.

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The following table provides additional information regarding fiscal 2020 grants of RSU, PSU, and stock option awards under the Omnibus Plan and the potential range of awards that were approved in fiscal 2020 under the STI and LTIC plans for payout in future years. These awards are further described in the CD&A under “Direct Compensation Elements.”

FISCAL 2020 GRANTS OF PLAN-BASED AWARDS



Estimated Future Payouts Under
Non-Equity Incentive Plan Awards (2)
Estimated Future Payouts Under
Equity Incentive Plan Awards (3)
    All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (4)
    All Other
Option
Awards:
Number of
Securities
Underlying
Options (5)
Exercise
or Base
Price of
Option
Awards
($/Sh) (6)
Grant Date Fair
Value of Stock
and Option
Awards (7)
Name     Grant Date (1)     Threshold     Target     Maximum     Threshold     Target     Maximum        
John C. May 12/3/19-STI $ $ 1,798,868 $ 3,597,736 $
12/3/19-LTIC $ 1,100 $ 2,025,000 $ 4,050,000 $
12/11/19 $ $ $ 11,048 $ 1,874,846
12/11/19 $ $ $ 4,419 17,678 35,356 $ 5,003,327
12/11/19 $ $ $ 73,275 $ 169.70 $ 2,624,979
$ 1,100 $ 3,823,868 $ 7,647,736 4,419 17,678 35,356 11,048 73,275 $ 9,503,152
Ryan D. Campbell 12/3/19-STI $ $ 671,859 $ 1,343,718 $
12/3/19-LTIC $ 400 $ 855,755 $ 1,711,510 $
12/11/19 $ $ $ 2,775 $ 470,918
12/11/19 $ $ $ 1,110 4,440 8,880 $ 1,256,634
12/11/19 $ $ $ —­ 18,403 $ 169.70 $ 659,263
$ 400 $ 1,527,614 $ 3,055,228 1,110 4,440 8,880 2,775 18,403 $ 2,386,815
Mary K. W. Jones 12/3/19-STI $ $ 782,796 $ 1,565,592 $
12/3/19-LTIC $ 400 $ 855,755 $ 1,711,510 $
12/11/19 $ $ $ 2,907 $ 493,318
12/11/19 $ $ $ 1,162 4,651 9,302 $ 1,316,352
12/11/19 $ $ $ 19,280 $ 169.70 $ 690,680
$ 400 $ 1,638,551 $ 3,277,102 1,162 4,651 9,302 2,907 19,280 $ 2,500,350
Rajesh Kalathur 12/3/19-STI $ $ 790,894 $ 1,581,788 $
12/3/19-LTIC $ 400 $ 855,755 $ 1,711,510 $
12/11/19 $ $ $ 3,039 $ 515,718
12/11/19 $ $ $ 1,215 4,862 9,724 $ 1,376,070
12/11/19 $ $ $ 20,156 $ 169.70 $ 722,062
$ 400 $ 1,646,649 $ 3,293,298 1,215 4,862 9,724 3,039 20,156 $ 2,613,850
Cory J. Reed 12/3/19-STI $ $ 765,695 $ 1,531,390 $
12/3/19-LTIC $ 400 $ 855,755 $ 1,711,510 $
12/11/19 $ $ $ 2,907 $ 493,318
12/11/19 $ $ $ 1,162 4,651 9,302 $ 1,316,352
12/11/19 $ $ $ 19,280 $ 169.70 $ 690,680
$ 400 $ 1,621,450 $ 3,242,900 1,162 4,651 9,302 2,907 19,280 $ 2,500,350
James M. Field 12/3/19-STI $ $ 835,516 $ 1,671,032 $
12/3/19-LTIC $ 400 $ 855,755 $ 1,711,510 $
12/11/19 $ $ $ 2,907 $ 493,318
12/11/19 $ $ $ 1,162 4,651 9,302 $ 1,316,352
12/11/19 $ $ $ 19,280 $ 169.70 $ 690,680
$ 400 $ 1,691,271 $ 3,382,542 1,162 4,651 9,302 2,907 19,280 $ 2,500,350

(1) For the non-equity incentive plan awards, the grant date is the date the Committee approved the range of estimated potential future payouts for the performance periods noted under footnote (2) below. For equity awards, the grant date is seven calendar days after the first regularly scheduled Board meeting of the fiscal year.
(2) These columns show the range of potential payouts under the STI and LTIC plans. The performance period for STI in this table covers fiscal 2020. For actual performance between threshold, target, and maximum, the earned STI award will be prorated.
The range of the LTIC award covers the three-year performance period beginning in fiscal 2020 and ending in fiscal 2022. Awards will not be paid unless Deere generates at least $5 million of SVA for the performance period. The target LTIC award will be earned if $3,955 million or more of SVA is accumulated and the maximum LTIC award will be earned if $7,910 million or more of SVA is accumulated during the performance period. The LTIC award will be adjusted based on Deere’s TSR for the performance period relative to the companies in a subset of the S&P Industrial Sector: (i) a reduction up to 25% will be applied if the ranking is below the 50th percentile or (ii) an increase up to 25% will be applied if the ranking is above the 50th percentile. The amounts shown in

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the table represent potential LTIC awards based on the median salary of the NEOs’ respective salary grades as of September 30, 2020. The actual LTIC award payout will depend on Deere’s actual SVA performance, Deere’s relative TSR performance, and the median salary of the NEOs’ respective salary grades as of September 30, 2021.
(3) Represents the potential payout range of PSUs granted in December 2019. The number of shares that vest is based solely on revenue growth performance relative to a subset of companies in the S&P Industrial Sector. At the end of the three-year performance period, the actual award, delivered as Deere common stock, can range from 0% to 200% of the original grant.
(4) Represents the number of RSUs granted in December 2019. RSUs will vest three years after the grant date, at which time they will be settled in Deere common stock. Prior to settlement, RSUs earn dividend equivalents in cash at the same time as dividends are paid on Deere’s common stock.
(5) Represents the number of options granted in December 2019. These options vest in three approximately equal annual installments on the first, second, and third anniversaries of the grant date.
(6) The exercise price is the closing price of Deere common stock on the NYSE on the grant date.
(7) Amounts shown represent the grant date fair value of equity awards granted to the NEOs in fiscal 2020 calculated in accordance with FASB ASC Topic 718. The values in this column exclude the effect of estimated forfeitures. For RSUs, fair value is the market value of the underlying stock on the grant date (which is the same as the exercise price in footnote (6) for stock options). For options, the fair value on the grant date was $35.82, which was calculated using the binomial lattice option pricing model. The grant date fair value of the PSUs based on the probable outcome of the revenue growth metric was $160.81 based on the market price of a share of underlying common stock, excluding dividends.

For additional information on the valuation assumptions, refer to Note 23, “Stock Option and Restricted Stock Awards,” of Deere’s consolidated financial statements filed with the SEC in the 2020 Form 10-K.

OUTSTANDING EQUITY AWARDS AT FISCAL 2020 YEAR-END
The following table itemizes outstanding options, RSUs, and PSUs held by the NEOs:

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