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JOHN DEERE SUPPLEMENTAL PENSION BENEFIT PLAN

Employee Benefits Plan Agreement

JOHN DEERE SUPPLEMENTAL PENSION BENEFIT PLAN

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JOHN DEERE | Deere Company

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Title: JOHN DEERE SUPPLEMENTAL PENSION BENEFIT PLAN
Date: 12/20/2005
Industry: Constr. and Agric. Machinery     Sector: Capital Goods

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Exhibit 10.15

 

  JOHN DEERE SUPPLEMENTAL PENSION BENEFIT PLAN

 

AMENDED: 1 November 198

 

AMENDED: 24 February 1988

 

AMENDED: 28 February 1990

 

AMENDED: 27 February 1991

 

AMENDED: 29 May 1991

 

AMENDED: 26 August 1992

 

AMENDED: 09 December 1992

 

AMENDED: May 1993 – Effective: 01 July 1993

 

AMENDED: 08 December 1993 – Effective: 01 July 1993

 

AMENDED: 07 December 1994

 

AMENDED: May 1995 – Effective: 01 January 1995

 

AMENDED: 13 December 1995 – Effective: 01 January 1995

 

AMENDED: 04 December 1996 – Effective: 01 January 1997

 

AMENDED: 07 January 1998 – Effective: 01 January 1998

 

AMENDED: 26 May 1999  - Effective: 26 May 1999

 

AMENDED: 19 July 1999  - Effective: 01 July 1999

 

AMENDED: 06 August 1999 – Effective: 01 AugusT 1999

 

AMENDED: 02 November 1999 – Effective: 01 November 1999

 

AMENDED:  31 July 2000 –Effective: 01Jan 2000 (Item (1&2) 01 Apr 2000 (Item (3)

(See Resolution for Item explanation)

 

AMENDED: 29 January 2002 - Effective: 01 January 2002

 

 

 

80



 

JOHN DEERE SUPPLEMENTAL PENSION BENEFIT PLAN

 

TABLE OF CONTENTS

 

Section

 

Page

 

 

 

I.

PURPOSE AND ESTABLISHMENT

 

 

 

 

 

1.1

Establishment and Amendment of the Plan

83

 

1.2

Purpose

83

 

1.3

Cost of Benefits

83

 

1.4

Application of Plan

83

 

1.5

Administration and Termination

83

 

1.6

Nonencumbrance of Benefits

84

 

1.7

Employment Rights

84

 

1.8

Severability

84

 

1.9

Applicable Law

84

 

 

 

II.

DEFINITIONS

 

 

 

 

 

2.1

Definitions

85

 

2.2

Gender and Number

88

 

 

 

III.

SUPPLEMENTAL PENSION BENEFIT

 

 

 

 

 

3.1

Eligibility

89

 

3.2

Amount

89

 

3.3

Limitations

90

 

3.4

Reduction for Early Retirement under Contemporary Option

90

 

3.5

Commencement and Duration

90

 

3.6

Death Prior to Receipt of Lump Sum

91

 

3.7

Qualified Domestic Relations Order

92

 

 

 

IV.

DISABILITY BENEFIT

 

 

 

 

 

4.1

Eligibility

93

 

4.2

Amount

93

 

4.3

Commencement and Duration

93

 

 

 

V.

CHANGE IN CONTROL OF COMPANY

 

 

 

 

 

5.1

Eligibility

94

 

5.2

Change in Control of the Company

94

 

5.3

Cause

95

 

5.4

Good Reason

95

 

5.5

Amount

96

 

5.6

Commencement and Duration

96

 

5.7

Deere & Company Severance Protection

96

 

 

81



 

Section

 

Page

 

 

 

VI.

SURVIVOR BENEFITS

 

 

 

 

 

6.1

Death of an active Participant or a Participant on Permanent & Total Disability

97

 

6.2

Death of a Retired Participant

97

 

6.3

Commencement and Duration

98

 

6.4

Survivor Benefit Election After Retirement

98

 

 

 

VII.

FINANCING OF BENEFITS

 

 

 

 

 

7.1

Contractual Obligation

100

 

7.2

Unsecured General Creditor

100

 

7.3

Funding

100

 

7.4

Vesting

100

 

7.5

Administration

100

 

7.6

Expenses

100

 

7.7

Indemnification and Exculpation

101

 

7.8

Effect on Other Benefit Plans

101

 

7.9

Tax Liability

101

 

 

 

EXHIBIT I

105

 

 

82



 

JOHN DEERE SUPPLEMENTAL PENSION BENEFIT PLAN

 

Section 1.  Purpose and Establishment

 

1.1            Establishment and Amendment of the Plan .  Deere & Company (the “Company”) established and presently maintains the John Deere Supplemental Pension Benefit Plan (the “Plan”), an unfunded supplemental retirement plan for the benefit of its eligible employees, on 1 November 1978.  Said plan is hereby further amended and restated as set forth herein effective as of 1 January 1997.

 

1.2            Purpose .  The purpose of this Plan is to promote the mutual interests of Deere & Company and its Officers and Executives.

 

1.3            Cost of Benefits .  Cost of providing benefits under the Plan will be borne by the Company.

 

1.4            Application of Plan .  The provisions of this Plan as set forth herein are applicable only to the employees of the Company in current employment on or after 1 November 1987, except as specifically provided herein.  Except as so provided, any person who was covered under the Plan as in effect on 31 October 1987 and who was entitled to benefits under the provisions of the Plan shall continue to be entitled to the same amount of benefits without change under this Plan.  Any person covered under the Plan as in effect 1 November 1987 who is age 55 or above on 1 November 1987 shall be entitled to the larger of the benefit amount in Section 3.2 below or the benefit provided under the John Deere Supplemental Pension Benefit Plan effective prior to 1 November 1987.

 

1.5            Administration and Termination .  The Plan is administered by and shall be interpreted by the Company.  The Board of Directors of the Company or the Pension Plan Oversight Committee of the Board may at any time amend or modify this Plan in their sole discretion.  In addition, the Deere & Company Compensation Committee shall have the authority to approve all amendments or modifications that:

 

a.      in the Compensation Committee’s judgment are procedural, technical or administrative, but do not result in changes in the control and management of the Plan assets; or

 

b.      in the Compensation Committee’s judgment are necessary or advisable to comply with any changes in the laws or regulations applicable to the Plan; or

 

 

83



 

c.      in the Compensation Committee’s judgment are necessary or advisable to implement provisions conforming to a collective bargaining agreement which has been approved by the Board of Directors; or

 

d.      in the Compensation Committee’s judgment will not result in changes to benefit levels exceeding $5 million dollars per amendment or modification during the first full fiscal year that such changes are effective for the Plan; or

 

e.      are the subject of a specific delegation of authority from the Board of Directors.

 

Provided, however, that this Plan shall not be amended or modified so as to reduce or diminish the benefit then currently being paid to any employee or surviving spouse of any former employee without such person’s consent.  The power to terminate this Plan shall be reserved to the Board of Directors of Deere & Company.  The procedure for amendment or modification of the Plan by either the Board of Directors, or, to the extent so authorized, the Pension Plan Oversight Committee, as the case may be, shall consist of:  the lawful adoption of a written amendment or modification to the Plan by majority vote at a validly held meeting or by unanimous written consent, followed by the filing of such duly adopted amendment or modification by the Secretary with the official records of the Company.

 

1.6            Nonencumbrance of Benefits .  Except as provided in Article VIII, Section 8 of the John Deere Pension Plan for Salaried Employees, no employee, retired employee, or other beneficiary hereunder shall have any right to assign, alienate, pledge, hypothecate, anticipate, or in any way create a lien upon any part of this Plan, nor shall the interest of any beneficiary or any distributions due or accruing to such beneficiary be liable in any way for the debts, defaults, or obligations of such beneficiary, whether such obligations arise out of contract or tort, or out of duty to pay alimony or to support dependents, or otherwise.

 

1.7            Employment Rights .  Establishment of this Plan shall not be construed to give any Participant the right to be retained by the Company or to any benefits not specifically provided by the Plan.

 

1.8            Severability .  In the event any provision of the Plan shall be held invalid or illegal for any reason, any invalidity or illegality shall not affect the remaining parts of the Plan, but the Plan shall be construed and enforced as if the invalid or illegal provision had never been inserted, and the Company shall have the privilege and opportunity to correct and remedy such questions of invalidity or illegality by amendment as provided in the Plan.

 

1.9            Applicable Law .  This Plan is fully exempt from Titles II, III, and IV of ERISA.  The Plan shall be governed and construed in accordance with Title I of ERISA and the laws of the State of Illinois.

 

84



 

Section 2.  Definitions

 

2.1            Definitions .  Whenever used in this Plan, it is intended that the following terms have the meanings set forth below:

 

(a)            “Average Pensionable Pay ” of the Traditional Pension Option means the average for each year of the following:

 

(1)            all straight-time salary payments, plus the larger of (i) or (ii) through 31 December 2000 and as of 1 January 2001 plus the larger of (i) or (iii) below:

 

(i)             the amounts paid under the John Deere Profit Sharing Plan and the John Deere Short-Term Incentive Plan prior to 1991 plus the sum of the bonuses paid under the John Deere Performance Bonus Plan for Salaried Employees, the John Deere Health Care,Inc. Annual Performance Award Plan or the John Deere Credit Company Profit Sharing Plan.

 

(ii)            the amount paid prior to 1989 under the John Deere Long-Term Incentive Plan, the John Deere Restricted Stock Plan through 1998, or after 1998 the Pro-rated Yearly Vesting Amount under the John Deere Equity Incentive Plan.

 

(iii)           the target amount under the John Deere Performance Bonus Plan for Salaried Employees, the John Deere Health, Inc. Annual Performance Award Plan or the John Deere Credit Company Profit Sharing Plan.

 

(2)            The annual average of such amounts shall be based on the five (5) highest years, not necessarily consecutive, during the ten (10) years immediately preceding the earliest of the Participant’s retirement, total and permanent disability, or death.  The greater of any such short or long-term awards as defined in 2.1(a)(1)(i) or (ii) above paid or vested during the twelve months immediately following the Participant’s retirement, shall be substituted for the lowest such annual short or long-term bonus award used to calculate Average Pensionable Pay, if the result would be a higher pension benefit.  All amounts used in calculating the Average Pensionable Pay will be determined before the effect of any salary or bonus deferral or reduction resulting from an election by the Employee under any Company sponsored plan or program, but excluding any matching and/or growth factor, Company contribution, and/or flexible credits provided by the Company under any such plan or program.

 

(b)            “Average Monthly Pensionable Pay” means the Average Pensionable Pay divided by twelve (12).

 

(c)            “Board” means the Board of Directors of the Company.

 

85



 

(d.1)         Career Average Pay of the Contemporary Pension Option means the        following for those Officers listed in Exhibit 1:

 

(1)            The highest five calendar years of the last ten not necessarily consecutive as of 31 December 1996 plus the greater of short-term bonus or long-term incentive pay received in each of those years as defined in section 2.1(a)(1)(i) or (ii) above.

 

plus

 

(2)            Base pay and short-term bonuses as defined in Section 2.1(a)(1)(i) above paid beginning 1 January 1997 and thereafter (excluding any long-term incentives as defined in section 2.1(a)(1)(ii) above).

 

The amounts of all salary, short-term bonus, or other pay received as described in (1) and (2) above will be divided by the number of pay periods in which base pay was received to determine the Career Average Pay.

 

(d.2)         “Career Average Pay” of the Contemporary Pension Option means the following for newly eligible Participants effective the latter of 1 January 1997 or entering Base Salary Grade 13 or above:

 

(1)            The highest five consecutive of the last ten anniversary years or the last 60 months of straight time pay if higher as of 31 December 1996 for Participants with five or more years of continuous employment.

 

plus

 

(2)            Restorable short-term performance bonuses earned and paid during the years 1992-1996 credited at the rate of 1/120th for each pay period of continuous employment beginning 1 January 1997.  Short-term performance bonuses are defined in 2.1(a)(1)(i) of this Plan.

 

plus

 

(3)            All straight time pay plus short-term performance bonuses paid on or after 1 January 1997 (excluding any long-term incentives such as stock options).

 

The amounts of salary and bonus derived from (d.2)(1) plus (2) plus (3) above are divided by the number of pay periods in which base pay was received to determine the career average pay.  This amount multiplied times 2 transforms career average pay to a monthly equivalent.

 

86



 

(e)            “Company” means Deere & Company, a Delaware corporation.

 

(f)             “Contemporary Pension Option” means the benefit provided to Officers Listed in Exhibit 1 who elect the Contemporary Pension Option on or before 15 November 1996, and all other Executives who become Participants on or after 1 January 1997.

 

(g)            “Disability” shall have the same meaning as under the Qualified Retirement Plan or John Deere Long Term Disability Plan for Salaried Employees

 

(h)            “Executive” means an employee base salary grade 13 or above who on 1 January 1997 is a non-officer, or an employee who attains base salary grade 13 or above after 1 January 1997.

 

(i)             “Officer” means employees listed in Exhibit I and by way of their election under the John Deere Pension Plan for Salaried Employees may choose between this Traditional or Contemporary Supplemental Plan option.

 

(j)             “Non-officer” means any employee of the Company who is not an elected officer and does not hold one of the elected positions listed in (i) above.

 

(k)            “Participant”   means an Officer as defined in (i) above who has served in such capacity for 36 months or Salary Grade 13 and above Executives who are eligible for participation under the Contemporary Supplemental Plan option on the latter of 1 January 1997 or attainment of base Salary Grade 13.

 

(l)             “Plan Year” means the 12-month period beginning each November 1.

 

(m)           “Pro-rated Yearly Vesting Amount under the John Deere Equity Incentive Plan” means for the purposes of calculating a long term incentive amount under Section 2.1 (a) (1) (ii) of this Plan is one-quarter of each bi-annual EIP Grant allocated to each year following the Grant date multiplied times the Grant Price.  In the event an EIP Grant vests and bonus shares are payable during the 12 months immediately following a Participant’s retirement, the actual value of the Grant will be redetermined and allocated equally in one-quarter increments to each of the years following the Grant date which were used to calculate Average Pensionable Pay, if the result would be a higher pension benefit.

 

(n)            “Qualified Retirement Plan” means the John Deere Pension Plan for Salaried Employees which is a qualified plan under Section 401(a) of the Internal Revenue Code.  Provisions under this Plan shall in no way alter provisions under the Qualified Retirement Plan.

 

87



 

o)             “Retirement Benefit” shall be a single-life annuity or lump sum amount as provided under Section 3 subject to provisions of Section 5.

 

(p)            “Section 162(m) Participant” means a participant who is the CEO or the four highest paid Executives, as reported in the proxy, who is employed on the last day of the fiscal year.

 

q)             “Service” shall have the same meaning in this Plan as “service credit” in the           Qualified Retirement Plan.  Service credit for benefit purposes in this plan               for those Executives not listed in Exhibit I will begin on the latter of 1                January 1997 or attainment of base salary grade 13 or above whichever is                later.

 

(r)             “Surviving Spouse” shall mean the legally married spouse of a deceased participant.

 

(s)            Traditional Pension Option” means the benefit under this Plan for Officers who (1) are listed in Exhibit 1, and (2) are or become Participants, and (3) who elect the Traditional Pension Option on or before 15 November 1996.

 

2.2            Gender and Number .  Except when otherwise indicated by the context, any masculine term used herein shall also include the feminine, and the singular shall also include the plural.

 

88



 

Section 3.  Supplemental Pension Benefit

 

3.1            Eligibility .  A Participant shall be eligible for benefits under the provisions of this Plan who has attained age 60 under the Traditional Pension Option or age 55 under the Contemporary Pension Option or at any age if eligible to retire on 1 January 1997 and retires under the provisions of the Qualified Retirement Plan.

 

3.2            Amount .  Upon termination and election to retire pursuant to 3.1 above, the Participant shall be entitled to a monthly Retirement Benefit as follows:

 

(1)            Traditional Pension Option equals (a) plus (b) below:

 

(a)            2% of average monthly pensionable pay for each year of service as an Officer.

 

(b)            1 1/2% of average monthly pensionable pay for each year of service as a non-Officer.

 

or

 

(2)            Contemporary Pension Option equals (a) plus (b) below:

 

(a)            2% of career average pay for each year of service as an Officer or Participant.

 

(b)            1 1/2% of career average pay for each year of service as a non-Officer prior to the latter of 1 January 1997 or attainment of base salary grade 13 or above, whichever is later.

 

This amount shall be subject to any reductions for

 

(1)            Early retirement under the Contemporary Pension Option as provided in Section 3.4 of this plan.

 

(2)            Any formula used to calculate the reduction in the retiree’s monthly benefit under the Qualified Retirement Plan.

 

(3)            Survivor benefits described in Section 6.

 

89



 

(4)            Provisions shown in Section 3.3 which follows and shall be further reduced by the sum of

 

(i)             the benefit earned under the Qualified Retirement Plan and

 

(ii)            the benefit provided under the John Deere Supplementary Pension Plan.

 

3.3            Limitations .

 

(a)            The total monthly Retirement Benefit paid under the Traditional Pension Option of this Plan, the Qualified Retirement Plan and the John Deere Supplementary Pension Plan may not exceed 66-2/3% of the Average Monthly Pensionable Pay.  If such number is exceeded the amount payable under this Plan shall be reduced.

 

(b)            That part of the retired employee’s monthly benefit which is based on service credit prior to 1 July 1993 (1 January 1994 for employees of John Deere Credit Company, John Deere Health Care, Inc. and John Deere Insurance Group) shall be reduced by 1/2% for each full year in excess of 10 years that the spouse is younger than the employee.

 

3.4            Reduction for Early Retirement under Contemporary Pension Option .  The amount determined in 3.2 above shall be reduced 1/3% per month from the unreduced full benefit age provided in the Contemporary Pension Option of the Qualified Retirement Plan as of the date benefits commence.

 

3.5            Commencement and Duration .  Payment of monthly retirement benefits provided under this Plan shall commence on the first day of any calendar month following the date of retirement as elected under the Qualified Retirement Plan.  Benefit payments will be made on the first day of each calendar month thereafter.  The last payment will be made the first day of the calendar month in which the Participant dies, subject to the provisions of Section 5.

 

Alternatively, the Participant may elect to receive a lump sum payment for all or a portion (in 10% increments from 10% to 90%) of the Retirement Benefits payable under this Plan including the 55% joint and survivor annuity equal to 11% of the supplemental benefit payable, adjusted for service accrued through 30 June 1993, or 31 December 1993 in the case of employees of John Deere Credit Company, John Deere Health Care, Inc., or John Deere Insurance Group.  Written notice of the Participant’s election to receive a lump sum payment shall be irrevocable, and must be received by the Company within the twelve (12) months prior to payment, but in no event subsequent to the Participant’s date of retirement.  The lump sum payment shall be made to Participant twelve (12) months after receipt of notice by the Company but in no event prior to the Participant’s retirement.

 

90



 

Notwithstanding the above, a Section 162(m) Participant whose retirement date coincides with the Company’s fiscal year-end date will not be paid the previously elected lump-sum payment until he is no longer a Section 162(m) Participant.

 

Effective beginning 1  January 2002 and thereafter, the lump sum will be calculated using an interest rate assumption equal to the average yield in September&nb


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