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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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[X]   Definitive Proxy Statement
[   ]   Definitive Additional Materials
[   ]   Soliciting Material Pursuant to §240.14a-12

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

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NOTICE OF 2022

ANNUAL MEETING AND PROXY STATEMENT

VIRTUAL ANNUAL MEETING  |  MOLINE, ILLINOIS  |  FEBRUARY 23, 2022


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WHO WE ARE

 

LEAPING FORWARD

For more than 180 years, John Deere has led the way in developing innovative solutions to help our customers become more efficient and productive. We conduct business essential to life. Running for the people who trust us and the planet that sustains us.

We produce intelligent, connected machines and applications that are helping revolutionize the agriculture and construction industries – and enable life to leap forward. Our technology-driven efforts are guided by a single, overarching goal – unlocking customer economic value. Our easy-to-use technology helps deliver results our customers see in the field, on the job site, and in their pockets.

Our smart industrial business strategy accelerates the integration of technology with our legacy of manufacturing excellence. We’re focused on delivering intelligent, connected machines and applications that revolutionize production

systems in agriculture and construction to unlock customer value in a sustainable and profitable manner.

We ensure seamless access to parts, services, and performance upgrades from take-home to trade-in by providing world-class support throughout the lifecycle of their equipment with productivity and sustainability always in mind. And we never forget that we’re here to help life leap forward.

OUR CORE VALUES

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.


“I will never put my name on a product that does not have in it the best that is in me.”

– John Deere
Founder, 1837


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January 7, 2022

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 23, 2022, at 10 a.m. Central Standard Time at www.virtualshareholdermeeting.com/DE2022. As part of our continued precautions regarding the coronavirus and to support the health and well-being of our shareholders, the 2022 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. Whether or not you plan to virtually attend the Annual Meeting, please vote by internet, telephone, or mail as soon as possible to ensure your vote is recorded promptly. The instructions set forth in the Proxy Statement and on the proxy card explain how to vote your shares.

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

   
  Sincerely,    
   
       
 

John C. May

Chairman of the Board

 

Charles O. Holliday, Jr.

Presiding Director

       
   

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Notice of 2022 Annual Meeting of Shareholders

DATE TIME PLACE
Wednesday, February 23, 2022 10 a.m. Central Standard Time www.virtualshareholdermeeting.com/DE2022
 
As part of our continued precautions regarding the coronavirus and to support the health and well-being of our employees and shareholders, the 2022 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/DE2022, you must enter the 16-digit control number on your proxy card, voting instruction form, or Notice of Internet Availability you previously received. See additional instructions on page 85.
     

Your opinion is very important. Please vote on the matters described in the accompanying Proxy Statement as soon as possible, whether or not you plan to participate in the online Annual Meeting. You can find voting instructions below and on page 83.

In addition to the Proxy Statement, we are sending you our Annual Report, which includes our fiscal 2021 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 87 for instructions.

    

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE VIRTUAL ANNUAL MEETING TO BE HELD ON FEBRUARY 23, 2022:

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 8).       2.   Approve the compensation of Deere’s named executive officers on an advisory basis (“say-on-pay”) (see page 28).       3.   Ratify the appointment of Deloitte & Touche LLP as Deere’s independent registered public accounting firm for fiscal 2022 (see page 72).       4.   Approve the Deere & Company Nonemployee Director Stock Ownership Plan (see page 75).       5.   Vote on the Shareholder Proposal, if properly presented at the meeting (see page 79).       6.   Consider any other business properly brought before the meeting.
                     

 

Please vote your shares

 

     

Holders of record of shares of Deere common stock as of the close of business on December 31, 2021, the record date, are entitled to vote. 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, voting instruction form, or proxy card.       You can vote electronically at the Annual Meeting. See page 84 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 7, 2022


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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. We began distributing print or electronic materials regarding the Annual Meeting to each shareholder entitled to vote at the meeting on or about January 7, 2022. Shares represented by a properly executed proxy will be voted in accordance with instructions provided by the shareholder.

 

Ratification of Independent Registered Public Accounting Firm
72 Item 3 – Ratification of Independent Registered Public Accounting Firm
74 Audit Review Committee Report
   
Other Matters for Vote
75 Item 4 – Approval of the Deere & Company Nonemployee Director Stock Ownership Plan
79 Item 5 – Shareholder Proposal Regarding Special Shareholder Meeting Improvement
   
Additional Information
83 Voting and Meeting Information
86 Annual Report
86 Householding Information
87 Electronic Delivery of Proxy Statement and Annual Report
87 Information not Incorporated into this Proxy Statement
87 Other Matters
87 2023 Shareholder Proposals and Nominations
88 Cost of Solicitation
   
Appendices
89 Appendix A – Director Independence Categorical Standards of Deere & Company Corporate Governance Policies
91 Appendix B – Deere & Company Reconciliation of Variable Compensation Measures to Non-GAAP Measures
93 Appendix C – Deere & Company Nonemployee Director Stock Ownership Plan


1    DEERE & COMPANY               2022 PROXY STATEMENT


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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 October 31, 2021. Deere uses a 52/53 week fiscal year ending on the last Sunday in the reporting period. Deere’s 2021, 2020, and 2019 fiscal years ended on October 31, 2021, November 1, 2020, and November 3, 2019, 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
     8
2. Advisory Vote on Executive Compensation   Majority of votes present in person or by proxy   FOR   28
3. Ratification of Independent Registered Public Accounting Firm   Majority of votes present in person or by proxy   FOR   72
4. Approval of the Deere & Company Nonemployee Director Stock Ownership Plan   Majority of votes present in person or by proxy   FOR   75
5. Shareholder Proposal Regarding Special Shareholder Meeting Improvement   Majority of votes present in person or by proxy   AGAINST   79

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
Leanne G. Caret
EVP, The Boeing Company and President and CEO, Boeing Defense, Space & Security
      55       2021                                        
Tamra A. Erwin
EVP and Group CEO, Verizon Business Group
  57   2020                  
Alan C. Heuberger
Senior Investment Manager, Cascade Asset Management Company
  48   2016                  
Charles O. Holliday, Jr.
Retired Chairman and CEO, DuPont
  73   2007-2016;
since 2018
                 
Michael O. Johanns
Retired United States Senator from Nebraska and former U.S. Secretary of Agriculture
  71   2015                  
Clayton M. Jones
Retired Chairman and Chief Executive Officer, Rockwell Collins, Inc.
  72   2007             CHAIR    
John C. May
Chairman, CEO, and President, Deere & Company
  52   2019     CHAIR                
Gregory R. Page
Chairman, Corteva, Inc.
  70   2013                 CHAIR
Sherry M. Smith
Former EVP and CFO, SuperValu Inc.
  60   2011       CHAIR          
Dmitri L. Stockton
Retired Special Advisor to Chairman and Senior VP, GE and Former Chairman, President, and CEO, GE Asset Management
  57   2015           CHAIR      
Sheila G. Talton
President and CEO, Gray Matter Analytics
  69   2015                  

2    DEERE & COMPANY               2022 PROXY STATEMENT


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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   EXECUTIVE AND
CORPORATE GOVERNANCE
EXPERIENCE
    

4  female directors

2  ethnically diverse directors

2  Board committees led by diverse directors

    

8 of 11
director nominees with executive
and corporate governance

         
RANGE OF TENURES*     BALANCED MIX OF AGES*     INDEPENDENT OVERSIGHT

Average Tenure: 6 years
8 joined in the last 7 years.

 

Average Age: 62

 

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

         
Tenure and age as of January 7, 2022.
   
DIVERSE AND BALANCED MIX OF ATTRIBUTES AND EXPERIENCE

3    DEERE & COMPANY               2022 PROXY STATEMENT


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Proxy Summary
Annual Meeting of Shareholders

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, 2021, the record date. 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:

CORPORATE GOVERNANCE
We adopted a bylaw, commonly referred to as “proxy access,” allowing shareholders meeting certain requirements to nominate directors and include such nominees in the proxy statement.
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.
In 2020, we adopted a bylaw amendment allowing eligible shareholders to call special shareholder meetings.
In 2020, due to COVID-19, we adapted and responded by adopting a bylaw amendment allowing meetings of shareholders to be held on such business day and at such time and place as may be designated by the Chair or Board, therefore allowing a virtual annual meeting.
   
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 Total Shareholder Return (TSR) Modifier for Long-Term Incentive Cash (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 is multiplicative and could adjust upward or downward based upon TSR performance as compared to the performance peer group.
Effective with the three-year performance period ending in fiscal 2020, Performance Stock Units (PSUs) are based solely on a revenue growth metric. TSR as a standalone metric applies only to the cash portion of the long-term award.
Effective with fiscal 2021, Wirtgen is fully integrated to the Operating Return on Operating Assets (OROA), Shareholder Value Added (SVA), and revenue metrics. For fiscal 2018, 2019, and 2020, the consolidated financials of the Wirtgen acquisition were excluded from the Equipment Operations OROA and SVA for calculating variable compensation to allow for integration and to determine appropriate incentive metrics. For those same years, Wirtgen was 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.


4    DEERE & COMPANY               2022 PROXY STATEMENT


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Proxy Summary
Fiscal 2021 Performance Highlights

Fiscal 2021 Performance Highlights

In a number of ways, 2021 was a year of outstanding achievement for John Deere. It was a year in which we reported our strong financial results while facing the challenges of an ongoing pandemic and work stoppage. Deere & Company (Deere or the Company) achieved a record $44.024 billion net sales and revenues compared with $35.540 billion in fiscal 2020. Common stock closed at $342.31 per share at the end of fiscal 2021, an increase of 52 percent compared to $225.91 at the end of fiscal 2020.

Deere’s results reflected strong end-market demand and our ability to continue serving customers while managing supply-chain issues and conducting successful contract negotiations with our largest union. The business model we launched in 2020 continued to yield impressive results. Not least, Deere delivered strong financial performance and solid returns for investors.

In addition, customers responded positively to our new products and adopted precision technologies at a high rate.

Other financial highlights for the year include:

Deere generated $5.13 billion in economic profit, or Shareholder Value Added.
   
Robust market conditions and healthy demand for our products resulted in a 27 percent increase in sales for the year across our equipment divisions. This strong performance was reflected in a 17 percent combined operating margin (OROS).
   
Deere returned $3.58 billion to investors in the form of dividends and share repurchases.

For more information regarding our fiscal 2021 financial performance, please see our Annual Report, which is available at www.JohnDeere.com/stock.

5    DEERE & COMPANY               2022 PROXY STATEMENT


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Proxy Summary
Fiscal 2021 Performance Highlights

NET SALES AND REVENUES   NET INCOME (1)   SHAREHOLDER VALUE ADDED (2)
(Millions)   (Millions)   (Millions)
               
   
         
Net sales and revenues increased 24% over fiscal 2020. The increase reflects the strong demand for John Deere products from all three of our equipment divisions.   Net income more than doubled to $5.96 billion, up 117% from $2.75 billion in 2020. Profitability in relation to sales was the best in modern times. Earnings per share increased to $18.99 per share versus $8.69 in 2020.   Enterprise Shareholder Value Added (SVA) increased 205% for the year to $5.13 billion, up from $1.68 billion in 2020. Equipment Operations and Financial Services both delivered positive SVA. SVA represents operating profit less an implied charge for capital.
(1)    Net income attributable to Deere & Company.
 
(2)    SVA is a non-GAAP measure. Further details can be reviewed in Appendix B.
         
EQUIPMENT OPERATIONS
OROS
  EQUIPMENT OPERATIONS
OROA(3)
  FINANCIAL SERVICES
RETURN ON EQUITY
         
   
         
(3)   Normal means mid-cycle. OROA is a non-GAAP measure. See Appendix B for details. Prior numbers have been adjusted to exclude goodwill.
         
TOTAL SHAREHOLDER RETURN (TSR)   CASH FLOW FROM OPERATING ACTIVITIES
(Millions)
         
 

6    DEERE & COMPANY               2022 PROXY STATEMENT


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Proxy Summary
Fiscal 2021 Executive Compensation Highlights

Fiscal 2021 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 2021, the variable pay components (described below) are made up of both short-term and long-term metrics, which stimulate complementary behaviors and align with Deere’s pay for performance compensation philosophy.

    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’ goodwill, 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 included for FY2021 for both the Equipment Operations OROA and SVA calculations. Wirtgen was excluded from these calculations in FY2020 for variable pay to allow time for integration and assimilation. For LTIC performance periods already in process (2019-2021 and 2020-2022), Wirtgen will continue to be excluded for fiscal 2021. 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 2021 compensation for the Chairman and CEO and, on average, for all the other named executive officers (NEOs) as disclosed in the Fiscal 2021 Summary Compensation Table. The table also shows the significant amount of at-risk compensation that is performance based and the amount delivered in cash versus equity.

Summary Compensation
Table Elements
Salary STI LTIC Performance
Stock Units
Restricted
Stock Units and
Stock Options
Retirement
and Other
Compensation
Total
Chairman and CEO              
Fixed vs. Performance-Based Fixed 7% Performance-Based 86% Other 7% 100%
Short-Term vs. Long-Term Short-Term 27% Long-Term 73% 100%
Cash vs. Equity Total Cash 47% Total Equity 46% Other 7% 100%
Compensation $1,429,174 $4,005,803 $4,050,000 $3,635,330 $5,654,857 $1,137,662 $19,912,826
% of Total 7% 20% 20% 18% 28% 7% 100%
               
Average Other NEO              
Fixed vs. Performance-Based Fixed 12% Performance-Based 81% Other 7% 100%
Short-Term vs. Long-Term Short-Term 34% Long-Term 66% 100%
Cash vs. Equity Total Cash 60% Total Equity 33% Other 7% 100%
Compensation $815,690 $1,428,925 $1,711,510 $830,199 $1,291,396 $494,108 $6,571,828
% of Total 12% 22% 26% 13% 20% 7% 100%

7    DEERE & COMPANY               2022 PROXY STATEMENT


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ELECTION OF DIRECTORS

Item 1 – Election of Directors

How We Identify and Evaluate Director Nominees

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

The Corporate Governance Committee considers candidates recommended by shareholders, directors, officers, and third-party search firms. Third-party search firms may be used to identify and provide information on director candidates. If you wish to nominate a director, please review the procedures described under “Additional Information – 2023 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, race, 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.

8    DEERE & COMPANY               2022 PROXY STATEMENT


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Election of Directors
Item 1 – Election of Directors

Director Nominees

The Corporate Governance Committee has recommended, and the Board has nominated, each of Leanne G. Caret, Tamra A. Erwin, Alan C. Heuberger, Charles O. Holliday, Jr., 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 2023.

There are currently twelve members of the Board. Mr. Jain is not standing for re-election at the 2022 Annual Shareholder Meeting. On the date of the Annual Meeting, the size of the Board will be reduced to eleven members.

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 brief 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 Board nominees have a range of viewpoints, backgrounds, expertise, and attributes.

DIVERSE BOARD REPRESENTATION
    

4  female directors

2  ethnically diverse directors

2  Board committees led by diverse directors

RANGE OF TENURES*

Average Tenure: 6 years
8 joined in the last 7 years.

 
BALANCED MIX OF AGES*

Average Age: 62

* Tenure and age as of January 7, 2022.


BOARD MEMBER SKILLS

        Executive      Manufacturing      International      Government /
Academic
     Agriculture      Technology/Data
Analytics
     Finance      Risk
Management
     Corporate
Governance
Leanne G. Caret                        
Tamra A. Erwin                        
Alan C. Heuberger                          
Charles O. Holliday, Jr.                          
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

9    DEERE & COMPANY               2022 PROXY STATEMENT


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Election of Directors
Item 1 – Election of Directors

       

 

Age: 55

Director since: 2021

Committees:

Compensation, Finance

 

      LEANNE G. CARET
  Executive Vice President of The Boeing Company and President and Chief Executive Officer of Boeing Defense, Space & Security (since 2016)
 

Past Positions at The Boeing Company

(aircraft, defense, intelligence and satellite systems and services, and related financing)

 
 

  President, Global Services & Support – 2015 to 2016

  Chief Financial Officer and Vice President, Finance, Defense, Space & Security – 2014 to 2015

  Vice President and General Manager, Vertical Lift – 2013 to 2014

  Vice President, H-47 Programs, Vertical Lift – 2009 to 2013

  General Manager, Global Transport & Executive Systems – 1998 to 2009

 










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. Caret should serve on Deere’s Board of Directors: her leadership qualities developed from her experience while serving as Executive Vice President of The Boeing Company, President and Chief Executive Officer of Boeing Defense, Space & Security and as an officer of other global operations; the breadth of her experiences in global operations in manufacturing and high-technology industries, global supply chain operations, financial management, business acquisitions and integrations, government contracting, diversity and inclusion strategies, and other areas of oversight while serving as an executive officer of The Boeing Company; and her subject matter knowledge in the areas of digital engineering and advanced manufacturing solutions, development of advanced and new technologies, automation and investor relations.

 

       

 

Age: 57

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.

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Age: 48

Director since: 2016

Committees:

Audit Review, Finance

 

      ALAN C. HEUBERGER
  Senior Investment Manager, Cascade Asset Management Company (formerly BMGI) (since 2021)
 

Past Positions at BMGI (private investment management)

 

  Senior Manager — 2004 to 2021

  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 a senior manager of Cascade Asset Management Company; 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.

 

       

 

Age: 73

Director since: 2007 to 2016; 2018

Committees:

Compensation, Corporate Governance

 

      CHARLES O. HOLLIDAY, JR.
  Retired Chairman and Chief Executive Officer of DuPont and Former Chairman of Royal Dutch Shell plc
 

Past Positions

Other Current Directorships

 

  Chairman of Royal Dutch Shell plc (oil and natural gas exploration, refining and product sales) — 2015 to 2021

  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)

  HCA Healthcare, Inc.

Previous Directorships

  Royal Dutch Shell plc

  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.

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Age: 71

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

Other Current Directorships

 

  United States Senator from Nebraska — 2009 to 2015

  United States Secretary of Agriculture — 2005 to 2007

  Governor of Nebraska — 1999 to 2005

  Corteva, 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. 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: 72

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)

Other Current Directorships

  Motorola Solutions, Inc.

 

  Chairman — 2013 to 2014

  Chairman and Chief Executive Officer — 2012 to 2013

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

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: 52

Director since: 2019

 

 

 

      JOHN C. MAY
  Chairman, Chief Executive Officer and President of Deere & Company (since 2020)
 

Past Positions at Deere & Company

Other Current Directorships

 

  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

  Ford Motor Company

 







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: 70

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)

Other Current Directorships

  Eaton Corporation plc

 

  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

  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: 60

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)

Other Current Directorships

  Piper Sandler Companies

  Realogy Holdings Corp.

  Tuesday Morning Corp.

 

  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

 










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: 57

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

Other Current Directorships

 

  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 — 2008 to 2011

  Ryder System, Inc.

  Stanley Black & Decker, Inc.

  Target Corp.

 








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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Age: 69

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

Other Current Directorships
 

  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

  OGE Energy Corp.

  Sysco Corporation

Previous Directorships

  Wintrust Financial Corporation

 










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

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Corporate Governance

Corporate Governance

Corporate Governance Highlights

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

INDEPENDENCE   BEST PRACTICES

—   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

     

—   Directors may not stand for re-election after their 75th birthdays, 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   RISK OVERSIGHT

—   All directors are elected annually

—   In uncontested elections, directors are elected by majority vote

—   The Board and each active Board committee conducts an annual performance self-evaluation

—   Shareholders have the ability to include nominees in our proxy statement (so-called proxy access rights)

 

—   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 2021, we reviewed the independence of each then-sitting director (including all our nominees), 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 2021 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. Additionally, the enhanced role of the independent Presiding Director provides a strong counterbalance to the non-independent Chairman and Chief Executive Officer roles. 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.

Presiding Director

Charles O. Holliday, Jr. has served as our independent Presiding Director since February 2020.

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 pre-pandemic practice was to schedule at least one Board meeting per year at a company location other than our World Headquarters so directors had an opportunity to observe different aspects of our business first-hand. The Board met six times during fiscal 2021.

Directors are expected to attend Board meetings, meetings of committees on which they serve, and annual 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 2021, 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 2021.

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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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.

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 2021 and of which Mr. May serves as chair) is composed solely of independent directors.

The committee structure and memberships are described below and reflect the changes that became effective in December 2021. Every committee other than the Executive Committee regularly reports on its activities to the full Board.

EXECUTIVE COMMITTEE

Fiscal 2021 meetings: 0

Members:

John C. May (Chair)

Clayton M. Jones

Gregory R. Page

Sherry M. Smith

Dmitri 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

Fiscal 2021 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 Securities and Exchange Commission (SEC) and that each has accounting or related financial management expertise as required by NYSE listing standards

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COMPENSATION COMMITTEE

Fiscal 2021 meetings: 5

Members:

Dmitri L. Stockton (Chair)

Leanne G. Caret

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

Fiscal 2021 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 (ESG) matters

—  All members have been determined to be independent under current NYSE listing standards

     

FINANCE COMMITTEE

Fiscal 2021 meetings: 5

Members:

Gregory R. Page (Chair)

Leanne G. Caret

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

* Mr. Jain is not standing for re-election at the 2022 Annual Shareholder Meeting.

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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 high-priority areas of enterprise risk with the Board.

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 areas 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, General Counsel, and Worldwide Public Affairs, 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, overseeing the aspirations and activities related to ESG matters, 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 proactive shareholder outreach three times per year, in addition to our regular ongoing dialogue with shareholders and potential investors throughout the year. These proactive outreach efforts focus on governance, executive compensation, sustainability, and other related topics. During 2021, as part of our shareholder outreach, we invited shareholders representing more than 45% of outstanding share ownership to engage in conversations with us on these topics. Of those we contacted, shareholders representing over 40% of outstanding share ownership participated in meetings and offered valuable insights.

–  Focused on governance, board composition, board expertise, and executive compensation

–  Discussions related to overall program structure and key metrics in executive compensation

–  Questions on priorities and plans related to ESG, particularly climate

PROXY SEASON ENGAGEMENT

     

SUSTAINABILITY REPORT
ENGAGEMENT

–  Focused on feedback related to our annual sustainability report

–  Shareholders view Deere positively for direct link between strategy and sustainable outcomes

–  Feedback received: Shareholders viewed climate change a key priority going forward – including Scope 3, Task Force on Climate-related Financial Disclosures (TCFD), alternative propulsion strategy

–  Open questions related to our diversity, equity, and inclusion (DEI) priorities

     

 

–  Focused on updating shareholders on potential executive compensation changes and progress on ESG priorities

–  Climate remains a key focus area for investors

–  Board composition, including tenure, expertise and overboarding, is an area of interest

–  ESG integration into executive compensation is a key topic of inquiry

MID-YEAR ENGAGEMENT

In response to the feedback received from shareholders during 2021, we have taken the following actions:

Quantified our Scope 3 greenhouse gas emissions and intend to include this metric in our 2021 Sustainability Report
Engaged in analysis of our risks and opportunities related to climate change to enable us to include a TCFD Report with our 2021 Sustainability Report
Evaluated the characteristics of a Science Based Target for our business and engaged in scenario analysis to determine the best path forward for our business and customers
Expanded customer outcome focused disclosures planned for 2021 Sustainability Report to further demonstrate alignment of strategy and sustainable outcomes
Included a key topic summary in the 2021 Sustainability Report to serve as a guide for sustainability priorities and strategy
Simplified the metric weighting in the STI calculation to reduce complexity in variable pay
Continued to align with shareholders by utilizing a relative TSR modifier and also a relative revenue growth metric
Plan to disclose EEO-1 data (with respect to our U.S. employees) in fiscal 2022

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Communication with the Board

Shareholders and other interested parties wishing to communicate with the Board may send correspondence to: Corporate Secretary, Deere & Company, One John Deere Place, Moline, Illinois 61265-8098. The Corporate Secretary will submit all correspondence about bona fide issues or questions concerning the Company 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 disclosures relating to the political contributions of Deere and its political action committee. This information is publicly available at www.JohnDeere.com/politicalcontributions.

Sustainability

In 2020, we launched the Smart Industrial Operating Model with the aim of making our company more efficient, nimble, and competitive. Through this model, we expect to help our customers become more profitable and sustainable. We expect to continue to revolutionize agriculture and construction through rapid introduction of new technologies and services that we expect will result in more sustainable outcomes for our customers, employees, dealers, suppliers, shareholders, and the communities we serve. Our Sustainability Report discusses our environmental, social, and governance (ESG) strategies, programs, and progress toward our goals and is publicly available on the Sustainability page of our website.

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Compensation of Directors

Compensation of Directors

We have structured the compensation of our nonemployee 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 nonemployee directors an annual retainer. In addition, committee chairs 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, nonemployee directors are awarded restricted stock units (RSUs) after each Annual Meeting. A person who serves a partial term as a nonemployee director will receive a prorated retainer and a prorated RSU award.

Compensation for nonemployee directors is reviewed every other year by the Corporate Governance Committee. At its February 2021 meeting, the Board approved compensation as noted below for nonemployee directors as recommended by the Corporate Governance Committee. The cash components and the equity component both became effective in June 2021.

The following chart describes amounts we pay and the value of awards we grant to nonemployee directors effective June 2021:

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*  $20,000 
Finance Committee Chair Fee  $15,000 
   
* The Corporate Governance Committee Chair fee increased from $15,000 to $20,000 on June 1, 2021

Under our Nonemployee 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 nonemployee director to own Deere common stock equivalent in value to at least five times the director’s annual cash retainer, which is an increase from the requirement in 2020 of 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 nonemployee directors prior to 2008), RSUs, and any common stock held personally by the nonemployee director are included in determining whether the applicable ownership threshold has been reached. Each nonemployee director, except Ms. Erwin, who was appointed on May 1, 2020, and Ms. Caret, who was appointed on November 1, 2021, has achieved stockholdings in excess of the applicable multiple as of the date of this Proxy Statement.      

5x
DIRECTOR’S ANNUAL
CASH RETAINER

(an increase from previous
requirement of 3x)

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Election of Directors

Compensation of Directors

We require nonemployee 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, nonemployee directors may vote their restricted shares (but not shares underlying RSUs) and receive dividends on the restricted shares and dividend equivalents on the RSUs.

In fiscal 2021, we provided the following compensation to our nonemployee directors:

DIRECTOR COMPENSATION

Name     Fees Earned
or Paid in Cash(1)
      Stock Awards(2)      Nonqualified Deferred
Compensation Earnings(3)
      Change in
pension value and
nonqualified deferred
compensation earnings
      Total 
Tamra A. Erwin              $135,000            $159,684    $0       $294,684 
Alan C. Heuberger    $135,000     $159,684    $0       $294,684 
Charles O. Holliday, Jr.    $165,000     $159,684    $0       $324,684 
Dipak C. Jain    $135,000     $159,684    $42,382       $337,067 
Michael O. Johanns    $135,000     $159,684    $0       $294,684 
Clayton M. Jones    $152,084     $159,684    $0       $311,768 
Gregory R. Page    $150,000     $159,684    $777       $310,461 
Sherry M. Smith    $160,000     $159,684    $2,160       $321,844 
Dmitri L. Stockton    $155,000     $159,684    $0       $314,684 
Sheila G. Talton    $135,000     $159,684    $0       $294,684 
   
(1) All fees earned in fiscal 2021 for services as a director, including committee chairperson and Presiding Director fees, whether paid in cash or deferred under the Nonemployee 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 nonemployee 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 2021, the grant date was March 3, 2021, and the grant price was $347.14.
   
  The nonemployee director grant date is seven calendar days after the Annual Meeting. These awards vest one year after grant date, but are required to be held until retirement. 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 2021. The following table lists the cumulative restricted shares and RSUs held by the nonemployee directors as of October 31, 2021:
   
Director Name      Restricted Stock      RSUs       Director Name      Restricted Stock      RSUs
Tamra A. Erwin  -  1,271  Clayton M. Jones  824  19,401
Alan C. Heuberger  -  4,936  Gregory R. Page  -  9,853
Charles O. Holliday, Jr.  -  3,581  Sherry M. Smith  -  12,003
Dipak C. Jain  13,234  19,401  Dmitri L. Stockton  -  7,147
Michael O. Johanns  -  7,663  Sheila G. Talton  -  7,147
   
(3) Directors are eligible to participate in the Nonemployee 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 Nonemployee 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.

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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, 2021, (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 nonemployee director as of December 31, 2021
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, 2021, as a group

A beneficial owner of stock (represented in column (a) below) 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) below), restricted shares, and RSUs that could become exercisable or be settled within 60 days of December 31, 2021, at the discretion of an individual identified in the table (represented in column (c) below).

All individuals listed in the table have sole voting and investment power over the shares unless otherwise noted.

As of December 31, 2021, Deere had no preferred stock issued or outstanding.

       Shares Beneficially
Owned and Held
(a)
      Exercisable Options
(b)
      Options,
Restricted Shares,
and RSUs Vesting
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
  26,446,073      26,446,073  8.5%
                
The Vanguard Group, Inc.(2)
100 Vanguard Blvd.
Malvern, PA 19355
  21,972,786      21,972,786  7.0%
                
BlackRock, Inc.(3)
55 East 52nd Street
New York, NY 10055
  20,066,592      20,066,592  6.4%
                
   
(1) The ownership information for Cascade Investment, L.L.C. (“Cascade”) is based on information supplied by Cascade in a statement on Amendment No. 5 to Schedule 13D filed with the SEC on August 6, 2021. 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 and sole dispositive power over 26,446,073 shares owned.
   
(2) The ownership information for The Vanguard Group, Inc. (“Vanguard”) is based on information supplied by Vanguard in a statement on Amendment No. 6 to Schedule 13G filed with the SEC on February 10, 2021. 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 shared voting power over 490,324 shares, sole dispositive power over 20,631,665 shares owned, and shared dispositive power over 1,341,121 shares owned.
   
(3) The ownership information for BlackRock, Inc. (“BlackRock”) is based on information supplied by BlackRock in a statement on Amendment 4 to Schedule 13G filed with the SEC on January 29, 2021. 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 17,379,623 shares and sole dispositive power over 20,066,592 shares owned.

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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
Nonemployee Directors (4) (5)            
Leanne G. Caret       144   144   *
Tamra A. Erwin   275     1,271   1,546   *
Alan C. Heuberger   100     4,936   5,036   *
Charles O. Holliday, Jr.   11,905     3,581   15,486   *
Dipak C. Jain       32,635   32,635   *
Michael O. Johanns       7,663   7,663   *
Clayton M. Jones       20,225   20,225   *
Gregory R. Page       9,853   9,853   *
Sherry M. Smith       12,003   12,003   *
Dmitri L. Stockton       7,147   7,147   *
Sheila G. Talton       7,147   7,147   *
Named Executive Officers (6)            
Ryan D. Campbell   5,824   11,429     17,253   *
Marc A. Howze   10,672   24,551   20,353   55,576   *
Rajesh Kalathur   55,909   102,727     158,636   *
John C. May II   56,409   46,312     102,721   *
Cory J. Reed   24,452   44,804     69,256   *
All directors and executive officers as a group            
(19 persons) (7)   297,569   319,825   126,958   744,352   *
   
* Less than 1% of the outstanding shares of Deere common stock.
   
(4) The table includes restricted shares and RSUs awarded to directors under the Deere & Company Nonemployee Director Stock Ownership Plan (see footnote (2) to the Fiscal 2021 Director Compensation Table). Restricted shares may not be transferred until the sooner to occur of the director’s termination of service, death or a change in control of Deere. RSUs are payable only in Deere common stock and are settled upon the first to occur if the director’s termination of service, death or a change in control of Deere, 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 Nonemployee Director Deferred Compensation Plan:
   
Director      Deferred Units
Dipak C. Jain  9,225
Michael O. Johanns  3,180
Gregory R. Page  4,149
Dmitri L. Stockton  2,556
   
(5) The following table outlines the nonemployee director awards that are fully vested. The nonemployee director grants vest one year after grant date, but are required to be held until retirement.
   
Director       Vested Restricted
Shares and RSUs
      Unvested Restricted
Shares and RSUs
        Director       Vested Restricted
Shares and RSUs
      Unvested Restricted
Shares and RSUs
Leanne G. Caret   0   144   Clayton M. Jones   18,941   1,284
Tami A. Erwin   811   460   Gregory R. Page   9,393   460
Alan C. Heuberger   4,476   460   Sherry M. Smith   11,543   460
Charles O. Holliday, Jr.   3,121   460   Dmitri L. Stockton   6,687   460
Dipak C. Jain   18,941   13,694   Sheila G. Talton   6,687   460
Michael O. Johanns   7,203   460            
   
(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 96,404 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 pre-approval at its next meeting, unless action is required sooner. In such a case, the transaction would be submitted to the Chair 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 Chair, 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 2021, the employee earned approximately $161,443 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.

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ADVISORY VOTE ON
EXECUTIVE COMPENSATION

Item 2 – Advisory Vote on Executive Compensation

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

Supporting Statement

PAY FOR PERFORMANCE

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

COMPENSATION PHILOSOPHY

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 structure our compensation program to be regarded positively by our shareholders and employees
We recognize the need to manage value throughout the business cycle

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Advisory Vote on Executive Compensation

Compensation Discussion and Analysis

At our 2021 Annual Meeting, we held a shareholder advisory vote on executive compensation in which shareholders approved the advisory vote on the compensation of our NEOs with a 93.7 percent favorable result.

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 (“Committee”) will carefully consider the outcome of the advisory vote and those opinions when making future compensation decisions. However, the Board believes that the 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 Committee.

FAVORABLE SAY-ON-PAY RESULTS
93.7% 94.9% 94.7%
2021 2020 2019

Compensation Discussion and Analysis

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

Unlocks new value for customers and helps them become more profitable and sustainable
Revolutionizes agriculture and construction industries through the rapid introduction of new technologies
Responds more quickly to changing market conditions and customer needs
Allocates capital in a disciplined approach by devoting research and investment dollars to the most promising and profitable opportunities

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 through the delivery of innovations that address customer needs, unlock customer value, and support sustainability. This includes maintaining aggressive goals for operating margin and asset turns, while achieving sustained Shareholder Value Added (SVA) growth through disciplined capital allocation. Our at-risk pay is designed to motivate NEOs to execute this strategy.

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Advisory Vote on Executive Compensation

Compensation Discussion and Analysis

The following section provides a detailed description of our compensation programs, including the underlying philosophy and strategy, the individual elements, the relationship between our performance and compensation delivered in fiscal 2021, and the Board’s and the Committee’s methodology and processes used to make compensation decisions.

Name      Title at the Close of Fiscal 2021
John C. May   Chairman and Chief Executive Officer
Ryan D. Campbell   Senior Vice President and Chief Financial Officer
Marc A. Howze   Group President, Lifecycle Solutions and Chief Administrative Officer
Rajesh Kalathur   President, John Deere Financial and Chief Information Officer
Cory J. Reed   President, Worldwide Agriculture & Turf Division, Production & Precision Agriculture, Americas and Australia

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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 through the delivery of innovations that address customer needs, unlock customer value, and drive sustainable outcomes. This includes maintaining aggressive goals for operating margin and asset turns while realizing sustainable Shareholder Value Added growth through disciplined capital allocation. 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
$44.02 $5.96 $5.13
BILLION BILLION BILLION
UP 24% UP 117% UP 205%

 

In fiscal 2021, net sales and revenues reached $44.02 billion driven by strong demand for Deere products and services. Net income attributed to Deere & Company more than doubled, reaching an all-time high of $5.96 billion. Shareholder Value Added, our measure of economic profit, increased to $5.13 billion, up 205%.

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 execution of 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. In 2021, Deere reported our highest-ever financial results while facing the continued challenges of the pandemic and a labor strike. Demand for products of all sizes and types, across all businesses and regions, was extremely strong.

DRIVERS OF ONE-YEAR OROA, ROE, AND REVENUE GROWTH (STI)       DRIVERS OF THREE-YEAR SVA (LTIC)       DRIVERS OF TSR (LTIC) AND REVENUE GROWTH (LTI)

—  Operating margin focus

—  Disciplined asset management

—  Efficient use of equity

—  Near-term business execution

 

—  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

 

—  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

            2021   Fiscal 2021 Actions and Results    
  Short-Term Incentive (STI)   OROA   38.06%   The STI payout was 175% of target, resulting in an award of $4.0 million for the CEO and awards of approximately $1.4 million for the other NEOs.   Page
37
    ROE   16.03%    
    Net Sales and Revenues   $44.02B    
    Payout as a % of Target   175%    
  Cash (LTIC)   3-Year Accumulated SVA   $7.96B   The payout for the 2019-2021 performance period due to accumulated SVA was 200%. Although the relative TSR was at the 95th percentile, no additional adjustment was made to the LTIC payout due to the 200% payout cap being reached based on SVA performance. This resulted in an award of $4.0 million for the CEO and awards of approximately $1.7 million for each of the other NEOs   Page
42
    Accumulated SVA % of Target   200%    
    3-Year TSR as of 31 Oct.   165.19%    
    TSR Performance Results as Compared to the Performance Peer Group (1)   95th
percentile
   
    TSR Modifier (2)   N/A    
    Payout as a % of Target   200%    
  Equity (LTI)   Deere Annualized Revenue Growth Rate   5.63%   For the PSUs ending in fiscal 2021 based upon Deere’s relative revenue growth, Deere performed at the 84th percentile, which equates to a 200% payout. The LTI grant for the 2021-2023 performance period was received in December 2020 and is based solely on relevant revenue growth. The CEO received an LTI award valued at $9.4 million, a 30% increase over the base-level award; LTI awards for the other NEOs were increased an average of 20%, valued at $2.2 million; adjustments reflect strong operating performance, execution of the Smart Industrial strategy, and responsiveness to the dynamic business conditions.   Page
46
    Revenue Growth Performance Results as Compared to Performance Peer Group (1)   84th
percentile
   
    PSU Payout as a % of Target   200%    
   
(1) See the Performance Peer Group section for additional details.
   
(2) Due to the payout being at the 200% cap based upon accumulated SVA, there is no additional adjustment for the TSR Modifier.
   

Shareholder Outreach

At the February 2021 Annual Meeting, Deere received a 93.7% favorable vote for Say-on-Pay. As part of our ongoing annual review in 2021, 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 45% 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:

  93.7%  
  FAVORABLE SAY-ON-PAY  
     
     
  >45%  
  OUTSTANDING
SHARES ENGAGED
 


Deere has strong alignment between business strategy and compensation design.
Our shareholders understand how OROA, ROE, and SVA are linked to successful operating performance.
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 a view that Deere’s variable pay programs are complex.
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.

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Advisory Vote on Executive Compensation

Compensation Discussion and Analysis

2021 Compensation Overview

We regularly analyze our practices to ensure we remain a leader in executive compensation best practices and remain aware of shareholder concerns. In the next fiscal year, we will be conducting a study to further evaluate the potential integration of ESG to compensation. We recognize the value of the ongoing feedback and will continue regular shareholder engagement activities to gain their perspective firsthand.

2021 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.

REVIEW OF PAY FOR PERFORMANCE RELATIVE TO COMPENSATION 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 compensation peer group. As part of this comparison, we evaluated 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 2020 — 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 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.

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.

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: actual base salaries, STI awards, and LTIC awards paid over the three-year period from 2018-2020; the Black-Scholes value as of November 1, 2020, of any stock options granted over the three-year period; and the value as of November 1, 2020, of RSUs granted over the three-year period and of PSUs (reflecting actual performance for the 2018-2020 performance cycle and the in-process 2019-2021 and 2020-2022 performance cycles).

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Table of Contents

Advisory Vote on Executive Compensation

Compensation Discussion and Analysis

2021 Compensation Overview

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 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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Table of Contents

Advisory Vote on Executive Compensation

Compensation Discussion and Analysis

2021 Compensation Overview

Snapshot of Compensation Elements

The components of our 2021 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 and disciplined investment during a three-year period Equity award for creating shareholder value as reflected by stock price and revenue growth  
           
Characteristics Base salaries are intended to provide stable compensation to executive officers as a fixed cash component generally targeted at the compensation peer group median. Variable cash compensation based on the achievement of performance objectives designed to align our executive officers in pursuing short-term goals. Payout levels are based on actual results and performance must meet a threshold level of performance to achieve a payout with a payout cap of 200% of target. A target STI award is designed to contribute to annual cash compensation and overall compensation at the compensation peer group median. Long-term performance based cash compensation designed to align our executive officers in delivering long-term strategic objectives. Payout levels are based on actual results as compared to a three year performance goal with a payout cap of 200% of target. Additionally, a relative TSR modifier enables alignment with shareholders. A target LTIC award is designed to contribute to compensation at the compensation peer group median. Awarded in a combination of both performance and time-based equity including RSUs, PSUs, and stock options and designed to reward the delivery of long-term strategic objectives and value creation. A base-level LTI award is designed to contribute to overall compensation at the compensation peer group median. Perquisites, retirement benefits, deferred compensation benefits, additional benefits payable upon a change in control
           
Metrics

-  CEO: Increase to $1.45M for 2021

- 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 -  Shareholder Value Added (SVA) and Total Shareholder Return (TSR) modifier to the payout

- Revenue growth

- LTI awards can be increased by up to 30% to recognize individual performance

 
           

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 aligned to the median levels for comparable executives.

 

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Table of Contents

Advisory Vote on Executive Compensation

Compensation Discussion and Analysis

2021 Compensation Overview

2021 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 short-term and long-term components (STI, LTIC, and LTI), all driven by metrics that align with Deere’s business strategy.

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 2021 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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Table of Contents

Advisory Vote on Executive Compensation

Compensation Discussion and Analysis

Direct Compensation Elements

 

Direct Compensation Elements

As shown in the Target Direct Compensation Mix charts under 2021 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:

Level of responsibility and time in position
Individual performance and potential
Internal equity
Base salaries for executives with similar roles and responsibilities at our peer companies

The magnitude of the base salary increases for John May and Ryan Campbell reflect strong individual performance as well as below median base salary position relative to their counterparts at our peer companies.

Deere has been implementing a multi-year strategy to ultimately bring the base salaries of Mr. May and Mr. Campbell into more alignment with the market median.

Officer       Base Salary as of Dec. 1, 2019       Fiscal 2021 Salary Increase %       Base Salary as of Dec. 1, 2020
John C. May   $1,200,000   21%   $1,450,008
Ryan D. Campbell   $681,322   25%   $851,664
Marc A. Howze   $764,484   5%   $802,716
Rajesh Kalathur   $796,932   3%   $820,848
Cory J. Reed   $771,540   5%   $810,120

Short-Term Incentive (STI)

PERFORMANCE METRICS FOR STI

The Committee believes that operating margins and the allocation of capital for research and investment in a disciplined approach are key drivers to creating long-term shareholder value. For this reason, the Committee has designed the STI program to support our Smart Industrial strategy and to motivate our executives and most other salaried employees to focus on profitability, asset optimization, and capital efficiency.

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 2021, the performance results for these metrics are combined to determine STI awards as follows:

Company Performance Factor Weighting:         Enterprise OROA/ROE Metric Weighting:  
Enterprise OROA/ROE Metric(a) 67%   Equipment Operations OROA(b) 90%
Net Sales and Revenues Metric 33%   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 Precision & Production Agriculture (PPA) operations, Small Ag & Turf (SAT) operations, and Construction and Forestry (C&F) 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 90% of our net sales and revenues in fiscal 2021.

OROA – Equipment Operations Metric

OROA goals are developed formulaically to reflect the nature of our end markets. As a smart industrial company, our business requires 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. Deere desires to dampen the amplitude of the cycle as part of our strategy.

 

To maintain the rigor of the program, the specific goals for any year are formulaically 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 sales at the end of the year to the mid-cycle sales approved at the start of the fiscal year. Performance targets are formulaically determined according to the position to the mid-cycle and the goals at trough, mid-cycle and peak levels approved by the Committee at the beginning of the year. Points in between those levels are interpolated. There is not discretion in the determination of the percent of mid-cycle or in the goals associated with a specific volume level.

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Advisory Vote on Executive Compensation

Compensation Discussion and Analysis

Direct Compensation Elements

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, which is also exhibited by the payout levels since the increase in goals of 98.4% (2018), 68.7% (2019), and 121.2% (2020).

OROA GOAL

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Direct Compensation Elements

    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.

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.

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 2021:

Fiscal 2021 ROE Goals       Subsidized business       Non-subsidized business       Weighted Goals
% of Business   74%   26%    
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 2021, our net sales and revenues target goal is $38,111M, which is an increase from the 2020 target goal of $36,388M. 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 exceed target by at least 15% will result in a maximum (200%) payout on that metric. Points in between those levels are interpolated.

             
        Threshold       Target       Max
Fiscal 2021 Net Sales & Revenue Goals   $32,394M   $38,111M   $43,828M

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Advisory Vote on Executive Compensation

Compensation Discussion and Analysis

Direct Compensation Elements

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 the NEO’s base salary. For 2021, John May’s target STI rate was increased to 160% to improve his positioning versus peer group median. 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.

        2020
Target Rate
      2021
Target Rate
CEO   150%   160%
Other NEOs   100%   100%

FISCAL 2021 PERFORMANCE RESULTS AND PAYOUT AMOUNTS

The chart below shows the STI performance targets and actual results for fiscal 2021. OROA performance targets are based on Equipment Operations being at 109% of Mid-Cycle.

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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Table of Contents

Advisory Vote on Executive Compensation

Compensation Discussion and Analysis

Direct Compensation Elements

Based on the 175.2% STI payout, actual STI awards paid to the NEOs are shown in the table to the right and detailed in the Fiscal 2021 Summary Compensation Table under footnote (5).

For fiscal 2021, STI awards paid to the NEOs consisted of approximately 2% of the total amount of STI awards paid to all eligible employees.

Officer       Fiscal 2021 STI Award Payout
John C. May   $4,005,803
Ryan D. Campbell   $1,467,078
Marc A. Howze   $1,400,617
Rajesh Kalathur   $1,434,470
Cory J. Reed   $1,413,536


STI CHANGES FOR FY2022

With the emphasis in our Smart Industrial strategy to deliver strong margins, the Net Sales & Revenues metric in STI will be replaced with an Operating Return on Sales (OROS) metric for 2022. Similar to the current OROA metric, the OROS goals will be volume adjusted. In 2022, the performance results for STI will be based upon the following metrics and weightings.

Company Performance Factor Weighting:     Enterprise OROA/ROE Metric Weighting:  
Enterprise OROA/ROE Metric(a) 67%       Equipment Operations OROA(b) 90%
Operating Return on Sales 33%   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 Precision & Production Agriculture (PPA) operations, Small Ag & Turf (SAT) operations, and Construction and Forestry (C&F) operations.

Long-Term Incentive (LTI)

LTI is designed to reward the NEOs for creating sustained shareholder value, encourage the ownership of Deere stock, foster teamwork, and retain and motivate high-caliber executives while aligning their interests with those of our shareholders. The LTI awards tie a significant portion of compensation to the Company’s performance over time. LTI awards consist of a cash plan and an equity program under the John Deere 2020 Equity and Incentive Plan, which was approved at the Annual Meeting in February 2020. Over 50% of Deere’s long-term incentive is performance-based.

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 with a modifier based on three-year relative TSR performance.

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 strong margins delivered with the revolution of the agriculture and construction industries through the rapid introduction of new technologies and a disciplined approach to the allocation of capital for research and investment dollars to the most promising and profitable opportunities.

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

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Advisory Vote on Executive Compensation

Compensation Discussion and Analysis

Direct Compensation Elements

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 2021. 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 12% since the LTIC plan was introduced in 2004. The SVA goals for the performance period ending in 2021 were lower than the prior year primarily due to commodity pressures at the start of the performance period. As displayed below, the subsequent years have increased SVA performance expectations as compared to the period ending in 2021.

SVA Goals for LTIC       Fiscal 2019
through Fiscal 2021
      Fiscal 2020
through Fiscal 2022
      Fiscal 2021
through Fiscal 2023
Threshold SVA Required for Payout   $5 million   $5 million   $5 million
SVA Goal for Target Payout   $3,335 million   $3,955 million   $5,250 million
SVA Goal for Maximum Payout   $6,670 million   $7,910 million   $10,500 million

MODIFICATION OF AWARDS BASED ON RELATIVE TSR (rTSR)

LTIC payouts may be modified based on relative TSR performance as compared to the Performance Peer Group. The same peer group is used as the comparator group for PSU metrics. Performance at the 50th percentile will have no adjustment to the payout as the modifier will be 100%. Payout percentages are linearly interpolated for rTSR performance between the points as illustrated below.

Performance Bend Points       Percent of Award Earned
At or above 75th percentile   125%
50th percentile   100%
At or below 25th percentile   75%

RELATIVE TSR PERFORMANCE FOR LTIC PERFORMANCE PERIOD ENDING FISCAL 2021

        Threshold
75%
  Target
100%
  Maximum
125%
      Performance
Results
      LTIC rTSR
Modifier
                     
Relative TSR       95th percentile   200%

Deere’s TSR during the performance period ending fiscal 2021 was 165.2%, which ranked at the 95th percentile as compared to the performance peer group. For the performance period ending fiscal 2021, the rTSR modifier will increase the LTIC payout by 125% up to the maximum LTIC payout of 200%.

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Advisory Vote on Executive Compensation

Compensation Discussion and Analysis

Direct Compensation Elements

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. 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.

         Effective with Performance
Period Ending in 2021
CEO   135%
Other NEOs   105%

FISCAL 2021 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 2021, which resulted in a payout of 200%.

The payout percentage for fiscal 2021 was calculated as follows:

Fiscal Year       SVA (in millions)
2019   $1,535
2020   $1,556
2021   $4,866
Accumulated SVA for 2019-2021 performance period   $7,957
SVA Goal for Target Payout   $3,335
Accum SVA % of Target for Current Year   200%
rTSR Modifier (1)   N/A
Actual Performance as % of Target (See table on next page)   200%
   
(1) Due to payout being at 200% based upon accumulated SVA, there is no adjustment for rTSR even though it would have adjusted at 125%.
   

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Compensation Discussion and Analysis

Direct Compensation Elements

HISTORICAL ACCUMULATED SVA, LTIC GOALS, RELATIVE TSR PERFORMANCE AND LTIC PAYOUTS

The following table shows historical LTIC information and how SVA for fiscal 2021 will affect LTIC awards for the performance periods ending in 2021, 2022, and 2023. Maximum payout is based upon 200% of SVA goal at target.

Year        2017-2019        2018-2020        2019-2021        2020-2022        2021-2023
Accumulated SVA (Millions)   $4,684   $4,975   $7,957   $6,422   $5,128
SVA as a % of Target   116.8%   127.6%   200.0%   In Process
Performance
Periods
rTSR Percentile   88th   95th   95th  
LTIC Modifier (2)(3)   100.0%   125.0%   N/A  
LTIC Payout   116.8%   159.5%   200.0%  
   
(1) The fiscal 2021 SVA for the 2021-2023 performance period is different than the prior performance periods that include fiscal 2021 due to the change in the definition of SVA effective with this performance period to include Wirtgen financials and exclude enterprise goodwill.
   
(2) The rTSR modifier for the period ending 2019 only allowed for downward adjustment.
   
(3) For the performance period ending 2021, no upward adjustment from the rTSR modifier was applied due to the LTIC payout being at the 200% cap based upon the accumulated SVA. Had the cap not been hit, the payout would have been increased by 125% based upon rTSR performance.

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.

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Direct Compensation Elements

Based on the 200% payout, actual LTIC awards paid to the NEOs are shown in the table to the right and detailed in the Fiscal 2021 Summary Compensation Table under footnote (5).

The results for the performance period ended in 2021 are also used to determine the LTIC awards for other eligible employees worldwide. LTIC awards paid to the NEOs for fiscal 2021 consisted of approximately 6% of the total amount of LTIC awards paid to all eligible employees.

Officer       Fiscal 2021 LTIC Award Payout
John C. May                                      $ 4,050,000
Ryan D. Campbell   $ 1,711,510
Marc A. Howze   $ 1,711,510
Rajesh Kalathur   $ 1,711,510
Cory J. Reed   $ 1,711,510


 

Mr. May’s 2021 LTIC award has increased from the prior year due to the 2021 payout being based upon the median for the CEO position. Due to eligibility rules, the 2020 LTIC award of $1,560,484, was based upon the median for his role as Chief Operating Officer. Mr. May was named CEO on November 4, 2019.

LONG-TERM INCENTIVE EQUITY (LTI)

LTI awards consist of the following three equity components awarded annually under the John Deere 2020 Equity and Incentive Plan:

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

FISCAL 2021 LTI EQUITY AWARD OVERVIEW FOR NEOs

    PSUs   RSUs   Stock Options
LTI Equity Mix         40%         25%         35%
Performance
measurements
  Revenue growth(1)   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   Aligns the interest with shareholders, rewarding for stock price appreciation
(1) Based on Deere’s compounded annual growth rate as compared to the Performance Peer Group

APPROVAL OF LTI EQUITY 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 John Deere 2020 Equity and Incentive Plan

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

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Direct Compensation Elements

At the first Committee meeting of each fiscal year, after consideration of compensation peer group data on median values for long-term incentives, the Committee approves a dollar value for a base-level LTI equity 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 30%) or decrease (down to $0) an individual NEO’s base-level award to distinguish that executive’s performance, deliver a particular LTI equity value, or reflect other adjustments as the Committee deems appropriate. The potential adjustment of up to 30% for fiscal 2021 was increased from a potential of up to 20% in fiscal 2020 as the Committee wants greater flexibility to take individual performance into account given the plan design is geared towards company performance. For fiscal 2021, the Committee approved adjustments to base-level award values ranging up to 30% to recognize the accomplishments of the individual NEOs. LTI equity awards were approved for the NEOs as follows:

  Adjusted Award Values(a)
John C. May $9,425,000
Ryan D. Campbell $2,332,200
Marc A. Howze $2,332,200
  Adjusted Award Values(a)
Rajesh Kalathur $1,883,700
Cory J. Reed $2,063,100


   
(a) The amounts shown include PSUs valued at the grant price on the date of grant assuming a 100% payout.

See the Fiscal 2021 Grants of Plan-Based Awards table and footnotes for more information on LTI equity awards delivered, as well as the terms of the awards.

For fiscal 2021, the number of RSUs and PSUs granted to the NEOs represented 11% and 60%, respectively, of the total RSUs and PSUs granted to all eligible salaried employees; stock options granted to the NEOs represented 37% of the total stock options granted to eligible salaried employees.

SETTLEMENT OF PSUs INTO DEERE STOCK

For PSUs granted in fiscal 2021 (December 2020), 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 2023 and measured relative to the Performance Peer Group as of the end of the performance period.

PERFORMANCE TARGETS FOR PERFORMANCE PERIOD ENDING IN 2021

Revenue Growth Payout % 100% of PSUs Awarded Final Award

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
the Performance Peer Group
      % 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.

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PSUs FOR PERFORMANCE PERIOD ENDED 2021

The performance period for PSUs granted in fiscal 2019 ended on October 31, 2021. The final number of shares earned was based on Deere’s annualized revenue growth relative to the Performance Peer Group over the three-year performance period. The Committee made its final payout determination in December 2021 following a review of the relative performances of Deere and the Performance Peer Group. Deere’s annualized 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 2016 through fiscal 2020 of 33.5%, 100%, 200%, 200%, and 200%, respectively.

        Threshold
0%
Target
100%
Maximum
200%
      Performance
Results
      % of Target Shares
Earned
                     
Annualized Revenue Growth       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 equity awards granted in fiscal 2019, 2020, and 2021 are valued using the fiscal year-end stock price of $342.31. The value of PSUs also takes into consideration the current year payout and the current performance for the performance cycles in-process (2020-2022 and 2021-2023). The value of options is calculated using the Black-Scholes value as of fiscal year end. The following chart compares the LTI equity values reported on the Summary Compensation Table to Mr. May’s realizable LTI equity value for each of the grants in fiscal 2019, 2020, and 2021.

REPORTED VS. REALIZABLE LTI EQUITY VALUE

(Thousands)

     
     
     
     
     
     
     
     
     
     
(a)   See footnotes (3) and (4) to the Summary Compensation Table for an explanation of these valuations.
(b)   Realizable LTI Equity is calculated as:
  –  The value of stock options that were granted in fiscal 2019, 2020, and 2021 using the Black-Scholes value as of October 31, 2021.
  The value of RSUs that were granted in fiscal 2019, 2020, and 2021 using the stock price as of October 31, 2021 of $342.31.
  The value of PSUs granted in fiscal 2019, 2020, and 2021 using the stock price as of October 31, 2021, of $342.31 and reflecting actual payout for the 2019-2021 performance and projected payouts for the in-process performance cycles of 200% for 2020-2022 and of 200% for 2021-2023.
(c)   Values reported based upon former CEO, Samuel R. Allen.


The Committee believes each pay element included in Direct Compensation is consistent with our pay for performance compensation philosophy. The Committee reviews Direct Compensation for the NEOs in the aggregate (excluding the CEO)

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as well as for each NEO individually and compares this compensation to the market position data of our compensation 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 the equity component of 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 compensation peer group.

Other Compensation Matters

RULES RELATED TO STOCK OWNERSHIP, HOLDING REQUIREMENTS, AND
ANTI-HEDGING AND ANTI-PLEDGING POLICIES

NEOs are expected to attain the applicable target ownership 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. Each NEO, except Mr. Campbell, who was promoted to CFO on April 1, 2019, has achieved stockholdings in excess of the applicable multiple as of the date of this Proxy Statement.

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.

STOCK OWNERSHIP REQUIREMENTS
6x
BASE SALARY FOR THE
CHAIRMAN & CEO
 
3.5x
ANNUAL BASE SALARY
FOR NEOS


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 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) to $1 million. 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,

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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 (7) to the Fiscal 2021 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 (7), NEOs, as well as other selected employees, are provided indoor parking at no incremental cost to Deere. NEOs may also receive security services for specific security-related reasons identified by independent third-party security consultants.

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.

Retirement Benefits

All NEOs are covered by the same defined benefit pension plan, which includes 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

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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 2021 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 the STI results for the most recently completed fiscal year (see the “Fiscal 2021 Performance Results and Payout Amounts” in the STI section). The following table illustrates Deere’s match for calendar 2021, which is reported for our NEOs under the “All Other Compensation” column of the Fiscal 2021 Summary Compensation Table:

Match on first 2% of eligible earnings:       300 %
       
Match on next 4% of eligible earnings:   100 %

Deferred Compensation Benefits

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

The investment options parallel the investment options offered under our 401(k) plan, with certain limited exceptions. Additionally, participants may change investment options at any time.

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

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 2021 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 2021 Potential Payments upon Termination of Employment Other than Following a Change in Control.”

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Compensation Methodology and Process

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.

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 2021, 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

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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.

Market Analysis

COMPENSATION PEER GROUP

Executive compensation is benchmarked against a peer group of leading U.S. based companies (with an emphasis on industrial manufacturing companies), large global operations, a diversified business and/or roughly comparable annual sales and market capitalizations. On at least an annual basis, the Compensation Committee works with its independent consultant, Pearl Meyer, to review the composition of the peer group and determine whether any changes should be made. For fiscal 2021, although the peer group remained at 16 companies, two companies were removed and replaced by two different companies. Howmet Aerospace, a spin-off from the split with Arconic, was removed due to company size. DuPont De Nemours, Inc. was removed due to its primary focus as a chemical company and no longer having an industrial focus. Archer Daniels Midland and Parker-Hannifin were added due to meeting revenue size criteria and having an industrial focus. The table below lists the companies included in the compensation peer group for the fiscal 2021 market analysis process.

Company  Revenue (M)(1)   Market Capitalization (M)(1)   Employees (1)
3M Company              $32,348                                $87,384              96,163
Archer Daniels Midland  $64,322   $20,695    38,100
Boeing Company  $70,550   $79,581    161,100
Caterpillar Inc.  $50,969   $62,989    102,300
Cummins Inc.  $22,578   $24,104    61,615
Eaton Corp. plc  $20,874   $33,400    101,000
Emerson Electric Co.  $17,968   $34,074    88,000
General Dynamics Corporation  $38,838   $37,384    102,900
Honeywell International Inc.  $36,288   $100,364    113,000
Illinois Tool Works Inc.  $13,785   $51,597    45,000
Johnson Controls International plc  $23,745   $22,205    104,000
Lockheed Martin Corporation  $61,127   $109,106    110,000
PACCAR Inc.  $24,274   $23,933    27,000
Parker Hannifin  $14,216   $20,297    55,610
United Technologies Corporation(2)  $76,891   $97,757    243,200
Whirlpool Corporation  $19,984   $7,004    77,000
75th Percentile  $53,509   $81,532    105,500
Median  $28,311   $35,729    98,582
25th Percentile  $20,652   $23,501    60,114
Deere & Company  $38,880   $45,494    73,489
Deere Percentile   67th    57th    32nd
(1) Reflects data based on the last twelve months of data as of April 30, 2020 per S&P Capital IQ.
(2) Financials reflective of United Technologies prior to completion of mergers/spin-offs on 4/3/2020. The company retained Raytheon after the completion of the transaction.

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Compensation paid by our compensation 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 compensation peer group to confirm that it remains an appropriate point of reference for NEO compensation.

PERFORMANCE PEER GROUP

The relative performance metrics of TSR and revenue are measured against a peer group comprised of a subset of the S&P 500 Industrials. The peer group is developed by starting with the S&P 500 Industrials and then removing companies that are not manufacturing and/or related to the agricultural or construction cycles. Industries removed include Air Freight & Logistics, Airlines, Commercial Services & Supplies, Professional Services, Trading Companies & Distributors. Within the relevant industries, qualitative discretion was applied to determine suitability and maintain consistency. Companies with significant U.S. government revenue are excluded since stock price and revenue are significantly driven by government actions. The performance peer group for the performance period ending in fiscal 2021 included the 39 companies listed below.

Diversified Industrials       Electrical & Automation       

 

3M Company   Acuity Brands, Inc.  
General Electric Company   AMETEK, Inc.  
Honeywell International Inc.   Eaton Corporation plc  
Roper Technologies, Inc.   Emerson Electric Co.  
    Rockwell Automation Inc.  
Aerospace & Defense   Machinery  
Howmet Aerospace   Caterpillar Inc.  
(formerly Arconic, Inc.)   Cummins Inc.  
Textron Inc.   Dover Corporation  
The Boeing Company   Flowserve Corporation  
TransDigm Group Incorporated   Fortive Corporation  
Raytheon Technologies Corporation   Illinois Tool Works Inc.  
(formerly United Technologies Corp.)   Ingersoll-Rand Plc  
    PACCAR Inc  
    Parker-Hannifin Corporation  
    Pentair plc  
    Snap-on Incorporated  
    Xylem Inc.  
Road & Rail   Construction & Engineering  
CSX Corporation   Fluor Corporation  
J.B. Hunt Transport Services, Inc.   Jacobs Engineering Group Inc.  
Kansas City Southern   Quanta Services, Inc.  
Norfolk Southern Corporation      
Ryder System, Inc.      
Union Pacific Corporation      
Building Products      
Allegion plc      
Fortune Brands Home & Security, Inc.      
Johnson Controls International plc      
Masco Corporation      

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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 compensation 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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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 recommended to the Board of Directors that the Compensation Discussion and Analysis be included in Deere’s Proxy Statement.

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

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Executive Compensation Tables

In this section, we provide tabular and narrative information regarding the compensation of our NEOs for fiscal 2021. Fiscal 2021 is the first year Marc A. Howze met the criteria for inclusion. Therefore, data for only fiscal year 2021 is included for Mr. Howze. For fiscal 2019, John C. May held the role of Chief Operating Officer. He was promoted to CEO on November 4, 2019 and elected as Chairman of the Board on May 1, 2020.

FISCAL 2021 SUMMARY COMPENSATION TABLE

Name and Position   Fiscal
Year
   Salary(2)   Stock Awards(3)   Option Awards(4)   Non-Equity
Incentive Plan
Compensation(5)
   Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings(6)
   All Other
Compensation(7)
   Total 
John C. May(1)
Chairman and
Chief Executive Officer
   2021    $1,429,174     $5,991,488       $3,298,699       $8,055,803            $741,736           $395,926   $19,912,826 
   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 
Ryan D. Campbell
Senior Vice President and
Chief Financial Officer
   2021   $837,469   $1,482,168   $816,236   $3,178,588   $288,384   $146,883   $6,749,728 
   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 
Marc A. Howze
Group President, Lifecycle Solutions and Chief Administrative Officer
   2021   $799,530   $1,482,168   $816,236   $3,112,127   $420,001   $162,946   $6,793,008 
                                        
Rajesh Kalathur
President, John Deere Financial and Chief Information Officer
   2021   $818,855   $1,197,049   $659,263   $3,145,980   $330,179   $156,649   $6,307,975 
   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 
Cory J. Reed
President, Worldwide Agriculture & Turf
Division, Production & Precision Agriculture, Americas and Australia
   2021   $806,905   $1,311,195   $722,065   $3,125,046   $318,543   $152,846   $6,436,600 
   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 
(1) For fiscal 2019, John C. May held the role of Chief Operating Officer. He was promoted to CEO on November 4, 2019 and elected as Chairman of the Board on May 1, 2020. Compensation reflects the change in responsibilities for the roles listed.
(2) Includes amounts deferred by the NEO under the John Deere Voluntary Deferred Compensation Plan. Salary amounts deferred in fiscal 2021 are included in the first column of the Fiscal 2021 Nonqualified Deferred Compensation Table.
(3) 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 October 31, 2021 (“2020 Form 10-K”). For PSUs, the value at the grant date is based upon a target payout 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: $7,270,659 (May), $1,798,744 (Campbell), $1,798,744 (Howze), $1,452,756 (Kalathur), and $1,591,347 (Reed). RSUs will vest three years after the grant date, at which time they may be settled in Deere common stock. Refer to the Fiscal 2021 Grants of Plan-Based Awards table and footnote (7) thereto for a detailed description of the grant date fair value of stock awards.
(4) 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 2021 Form 10-K. Refer to the Fiscal 2021 Grants of Plan-Based Awards table and footnote (7) for a detailed description of the grant date fair value of option awards.

57    DEERE & COMPANY               2022 PROXY STATEMENT


Table of Contents

Advisory Vote on Executive Compensation
Executive Compensation Tables

(5) 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 2021 were paid to the NEOs on December 15, 2021, unless deferred under the Voluntary Deferred Compensation Plan. Deferred STI and LTIC amounts are included in the first column of the Fiscal 2021 Nonqualified Deferred Compensation Table.

The following table shows the awards earned under the STI and LTIC plans during fiscal 2021:

     STI (a)  LTIC (b)   
  Name  Target Award
as % of Salary
  Actual Performance
as % of Target
  Award Amount   Target Award
as % of
Median Salary
  Actual
Performance
as % of Target
  Award Amount   Total Non-Equity
Incentive Plan
Compensation
  John C. May      160%      175.2%      $4,005,803  135%      200.0%      $4,050,000  $8,055,803
  Ryan D. Campbell  100%  175.2%  $1,467,078  105%  200.0%  $1,711,510  $3,178,588
  Marc A. Howze  100%  175.2%  $1,400,617  105%  200.0%  $1,711,510  $3,112,127
  Rajesh Kalathur  100%  175.2%  $1,434,470  105%  200.0%  $1,711,510  $3,145,980
  Cory J. Reed  100%  175.2%  $1,413,536  105%  200.0%  $1,711,510  $3,125,046
  (a) Based on actual performance, as discussed in the CD&A under “Fiscal 2021 Performance Results and Payout Amounts” in the STI section, the NEOs earned an STI award equal to 175% of the target opportunity.
  (b) Based on actual performance, as discussed in the CD&A under “Fiscal 2021 Performance Results for LTIC,” the NEOs earned an LTIC award equal to 200% of the target opportunity.
(6) The total amount reported 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 2021 Pension Benefits Table. No NEO earned above market interest on deferred compensation during fiscal 2021.
(7) The following table provides details about each component of the “All Other Compensation” column in the Fiscal 2021 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                   $80,707                   $0                   $2,257                              $312,962         $395,926
  Ryan D. Campbell  $0  $0  $531  $146,352  $146,883
  Marc A. Howze  $0  $10,000  $2,268  $150,678  $162,946
  Rajesh Kalathur  $0  $0  $756  $155,893  $156,649
  Cory J. Reed  $0  $0  $531  $152,315  $152,846
  (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 2021 amounted to approximately 36 hours of travel, which represents less than 2.0% 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, excess liability premiums, 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 employees whose earnings exceed relevant IRS limits.

58    DEERE & COMPANY               2022 PROXY STATEMENT


Table of Contents

Advisory Vote on Executive Compensation

Executive Compensation Tables

The following table provides additional information regarding fiscal 2021 grants of RSU, PSU, and stock option awards under the John Deere 2020 Equity & Incentive Plan and the potential range of awards that were approved in fiscal 2021 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 2021 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    12/1/20-STI       $ -     $ 2,286,678    $ 4,573,356    -    -    -    -    -    $ -    $ -   
    12/1/20-LTIC   $ 1,100   $ 1,929,385   $ 3,858,770   -   -   -   -   -   $ -   $ -  
    12/9/20   $ -   $ -   $ -   -   -   -   9,246   -   $ -   $ 2,356,158  
    12/9/20   $ -   $ -   $ -   3,698   14,794   29,588   -   -   $ -   $ 3,635,330  
    12/9/20   $ -   $ -   $ -   -   -   -   -   52,578   $ 254.83   $ 3,298,699  
        $ 1,100   $ 4,216,063   $ 8,432,126   3,698   14,794   29,588   9,246   52,578   $ -   $ 9,290,187  
Ryan D. Campbell   12/1/20-STI   $ -   $ 837,469   $ 1,674,938   -   -   -   -   -   $ -   $ -  
    12/1/20-LTIC   $ 400   $ 879,342   $ 1,758,684   -   -   -   -   -   $ -   $ -  
    12/9/20   $ -   $ -   $ -   -   -   -   2,287   -   $ -   $ 582,796  
    12/9/20   $ -   $ -   $ -   915   3,660   7,320   -   -   $ -   $ 899,372  
    12/9/20   $ -   $ -   $ -   -   -   -   -   13,010   $ 254.83   $ 816,236  
        $ 400   $ 1,716,811   $ 3,433,622   915   3,660   7,320   2,287   13,010   $ -   $ 2,298,404  
Marc A. Howze   12/1/20-STI   $ -   $ 799,530   $ 1,599,060   -   -   -   -   -   $ -   $ -  
    12/1/20-LTIC   $ 400   $ 839,507   $ 1,679,014   -   -   -   -   -   $ -   $ -  
    12/9/20   $ -   $ -   $ -   -   -   -   2,287   -   $ -   $ 582,796  
    12/9/20   $ -   $ -   $ -   915   3,660   7,320   -   -   $ -   $ 899,372  
    12/9/20   $ -   $ -   $ -   -   -   -   -   13,010   $ 254.83   $ 816,236  
        $ 400   $ 1,639,037   $ 3,278,074   915   3,660   7,320   2,287   13,010