This Executive Compensation Plan Agreement involves
Title: NONEMPLOYEE DIRECTOR DEFERRED COMPENSATION PLAN
Governing Law: Illinois Date: 12/17/2009
Industry: Constr. and Agric. Machinery Sector: Capital Goods
DEERE & COMPANY
NONEMPLOYEE DIRECTOR DEFERRED COMPENSATION PLAN
EFFECTIVE DATE: 01 JANUARY 1997
REVISED: 26 MAY 1999
AMENDED BY SUPPLEMENT: 30 AUGUST 2006
AMENDED: 29 NOVEMBER 2006
AMENDED AND RESTATED 13 DECEMBER 2007: EFFECTIVE 1 JANUARY 2008
AMENDED: 25 FEBRUARY 2009 EFFECTIVE: 25 FEBRUARY 2009
(For special rules applicable to deferrals after 2004
see the supplement beginning on page 12)
DEERE & COMPANY
NONEMPLOYEE DIRECTOR DEFERRED COMPENSATION PLAN
The purposes of the Deere & Company Nonemployee Director Deferred Compensation Plan (“Plan”) are to attract and retain highly qualified individuals to serve as Directors of Deere & Company (“Company”) and to relate Nonemployee Directors’ interests more closely to the Company’s performance and its shareholders’ interests.
Each member of the Board of Directors (“Board”) of the Company who is not an employee of the Company or any of its subsidiaries (“Nonemployee Director”) is eligible to participate in the Plan.
(a) Committee . The Nominating Committee of the Board or any successor committee of the Board.
(b) Common Stock . The publicly traded $1 par value common stock of the Company or any successor.
(c) Compensation . Amounts payable for services as a Nonemployee Director, excluding reimbursed expenses.
(d) Deferred Account . The bookkeeping account maintained for each participating Nonemployee Director which will be credited with Deferred Amounts pursuant to the terms hereof.
(e) Deferred Amounts . All amounts credited to a Nonemployee Director’s Deferred Account pursuant to the Plan.
(f) Elective Deferrals . Compensation voluntarily deferred by a Nonemployee Director under the Plan after 31 December 1996 (other than Lump-Sum Deferral defined below).
(g) Lump-Sum Deferral . A one-time lump-sum amount for each Nonemployee Director serving on 31 December 1996, which amount is deferred under the Plan as described in Section V, below, as a result of the termination of the John Deere Pension Benefit Plan for Directors (“Retirement Plan”).
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(h) Participant . A Nonemployee Director for whom a Lump-Sum Deferral occurs on the Effective Date, or who elects to participate in the Plan.
(i) Pre-1997 Elective Deferrals . Compensation deferred by a Nonemployee Director prior to 1 January 1997 under the predecessor Directors’ Deferred Compensation Plan approved 30 January 1973, as amended from time to time.
(j) Secretary . The Secretary of the Company.
IV. Effective Date
The effective date of the Plan is 1 January 1997 (“Effective Date”).
V. Lump-Sum Deferral
As of the Effective Date, the Retirement Plan will be eliminated and the present value of the life annuity offered under the Retirement Plan for each Nonemployee Director who is both a participant in the Retirement Plan and a member of the Board on the Effective Date will be deposited into the Deferred Account of such Nonemployee Director. The present value will be determined by using a discount factor which shall be the rate for 10-year treasury stripped bonds in effect as of 31 December 1996 and by using the 1984 Unisex Pension Mortality tables published in the Pension Benefit Guaranty Corporation Regulation 2619, Appendix A.
VI. Elective Deferral
(a) Participants may elect to defer a part or all of their annual Compensation by making an irrevocable deferral election in writing on a form provided by the Company and delivered to the Company not later than the Company may direct. Elective Deferrals will become effective on the first day of the following calendar quarter, at which time they become irrevocable. Notwithstanding the preceding sentence, any person who first becomes a Nonemployee Director during a calendar quarter, may elect, before his or her term begins, to defer a part or all of his or her compensation that would otherwise be payable to him or her during the remainder of such calendar quarter and each succeeding calendar quarter until such election is modified or terminated as provided herein. A Participant may discontinue deferrals, or may change his or her investment choices, for future quarters by providing a written election delivered to the Company not later than the Company may direct. These changes will become effective on the first day of the following calendar quarter.
(b) If the amount of a Participant’s Compensation is changed, the deferral percentage and investment alternative elections shall continue to be
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applied to the new Compensation amount after the change.
VII. Deferred Account
(a) The Company shall establish a separate Deferred Account for each Participant.
(b) Pre-1997 Elective Deferrals and the interest earned thereon shall be credited to the Deferred Account and will continue to be invested in the interest-bearing investment alternative described below.
(c) Two investment alternatives will be available, as of the Effective Date: an interest-bearing alternative and an equity alternative denominated in units of Deere Common Stock. Additional investment alternatives may be added by subsequent amendment of the Plan.
(d) At the time of Elective Deferral, Participants may direct their deferrals into either investment alternative, or a combination of the two, in increments of 5%.
(e) Deferred amounts credited into the interest-bearing investment alternative will be credited with interest at the end of each calendar quarter at the interest rate identified in the U.S. Federal Reserve Statistical Release, “bank prime loan” rate for the second month of each calendar quarter, plus 2%. Deferred amounts credited into the interest-bearing alternative after December 31, 2009, will be credited with interest at the end of each calendar quarter at an at-market rate equal to the at-market rate used for the employee Deere & Company Voluntary Deferred Compensation Plan.
(f) Deferred Amounts credited into the equity alternative shall be expressed and credited to each Participant’s Deferred Account in units (“Units”) determined as hereinafter provided. As of each date on which Deferred Amounts are credited into the equity investment alternative, the Company shall credit to such Deferred Account a number of Units and fractional Units, rounded to three decimal places, determined by dividing such Deferred Amounts by the Unit Value (as defined below) of one share of Common Stock. The “Unit Value” of one share of Common Stock shall be the closing price of the Common Stock on the New York Stock Exchange on the date on which Deferred Amounts are credited to the Deferred Account or a payment is to be valued under Section VIII (b) below, as the case may be; or if there were no sales on that day, then Unit Value shall be the closing price on the New York Stock Exchange Composite Tape on the most recent preceding day on which there were sales. The Lump-Sum Deferral shall be credited as of the Effective Date.
(g) When dividends are paid with respect to the Company’s Common Stock,
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the Company shall calculate the amount which would have been payable on the Units in each Participant’s Deferred Account on each dividend record date as if each Unit represented one issued and outstanding share of the Company’s Common Stock. The applicable number of Units and fractional Units equal to the amount of such dividends (based on the Unit Value of one share of the Company’s Common Stock on the dividend payment date) shall be credited to each Participant’s Deferred Account. In the event of any capital stock adjustment to the Company’s Common Stock or other similar event, the number of Units or fractional Units credited to Deferred Accounts shall be adjusted to appropriately reflect such event.
(h) Participants credited with Units hereunder shall not have any voting rights in respect thereof.
VIII. Payment of Benefits
(a) The value of a Participant’s Deferred Account shall be payable solely in cash, either in (i) a lump sum, or (ii) in up to ten equal annual installments, in accordance with an election made by the Participant by written notice delivered to the Company prior to the calendar year in which payments are to be made or commence. Such payment or payments shall be made or commence, as the case may be, on the first business day of the calendar year following the year of the termination of service as Director.
(b) Any lump sum payment shall be valued as of the end of the most recent calendar month prior to the payment date. The amount of each installment payment shall be determined by dividing the aggregate value credited to the Participant’s Deferred Account (as of the end of the most recent calendar month prior to the payment date) by the remaining number of unpaid installments; provided, however, that the Committee may, in its absolute discretion, approve any other method of determining the amount of each installment payment in order to achieve approximately equal installment payments over the installment period.
(c) The Company shall have the right to deduct from all payments under this Plan the amount necessary to satisfy any Federal, state, or local withholding tax requirements.
(d) The Committee, at its sole discretion, may alter the timing or manner of payment of Deferred Amounts in the event that the Participant establishes, to the satisfaction of the Board, severe financial hardship. In such event, the Committee may:
(1) provide that all or a portion of the amount previously deferred by the Participant shall be paid immediately in a lump-sum cash
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(2) provide that all or a portion of the installments payable over a period of time shall be paid immediately in a lump sum; or
(3) provide for such other installment payment schedules as it deems appropriate under the circumstances.
It is expressly provided that the amount distributed shall not be in excess of that amount which is necessary for the Participant to meet the financial hardship. Severe financial hardship will be deemed to have occurred in the event of the Participant’s impending bankruptcy, the long and serious illness of Participant or a dependent, other events of similar magnitude, or the invalidation of a deferral election by the Internal Revenue Service. The Committee’s decision in passing on the severe financial hardship of the Participant and the manner in which, if at all, the payment of Deferred Amounts shall be altered or modified shall be final, conclusive and not subject to appeal.
IX. Death of Participant
(a) In the event of the death of a Participant, any amounts remaining in the Deferred Account will be paid to the Participant’s designated beneficiary in accordance with the distribution choices (e.g., lump sum or installments) elected by the Participant. These payments will commence on the first business day of the calendar year following the Participant’s death. Amounts unpaid after the death of both the Participant and the designated beneficiary will be paid in a lump sum to the executor or administrator of the estate of the last of them to die. In the event that a Participant had not properly filed a beneficiary designation with the Company prior to his or her death or, in the event a beneficiary predeceases the Participant, any unpaid deferrals will be paid in a lump sum to the Participant’s estate.
(b) No 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.
X. Change of Control
The following acceleration and valuation provisions shall apply in the event of a “Change of Control” or “Potential Change of Control,” as defined in this Section X.
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(a) In the event that:
(i) a “Change of Control” as defined in paragraph (b) of this Section X occurs; or
(ii) a “Potential Change of Control” as defined in paragraph (c) of this Section X occurs and the Committee or the Board determines that the provisions of this paragraph (a) should be invoked;
then, unless otherwise determined by the Committee or the Board in writing prior to the occurrence of such Change of Control, the value of all Units credited to a Participant’s Deferred Account shall be converted to cash based on the “Change of Control Price” (as defined in paragraph X(d)) and the aggregate amount credited to the Participant’s Deferred Account under the Plan shall be paid in one lump-sum payment as soon as practicable following the date the Change of Control or Potential Change of Control occurs, but in no event more than 90 days after such date.
(b) For purposes of paragraph (a) of this Section X, a “Change of Control” means a change in control of a nature that would be required to be reported in response to Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 (“Exchange Act”) whether or not the Company is then subject to such reporting requirement, provided that, without limitation, such a Change of Control shall be deemed to have occurred if:
(i) any “person” (as defined in Sections 13(d) and 14(d) of the Exchange Act), other than a Participant in the Plan or group of Participants in the Plan, is or becomes the “beneficial owner” (as defined in Rule 13(d)(3) under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding securities;
(ii) during any period of two consecutive years, there shall cease to be a majority of the Board comprised as follows: individuals who at the beginning of such period constitute the Board and any new director(s) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved;
(iii) the shareholders of the Company approve a merger or
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consolidation of the Company with any other company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 80% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger of consolidation; or
(iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.
(c) For purposes of paragraph (a) of this Section X, a “Potential Change of Control” means the happening of any of the following:
(i) the entering into an agreement by the Company (other than with a Participant in the Plan or group of Participants in the Plan), the consummation of which would result in a Change of Control of the Company as defined in paragraph (b) of this Section X; or
(ii) the acquisition of beneficial ownership, directly or indirectly, by any entity, person or group (other than a Participant or group of Participants, the Company or a majority owned subsidiary of the Company, or any of the Company’s employee benefit plans including its trustee) of securities of the Company representing 5% or more of the combined voting power of the Company’s outstanding securities and the adoption by the Board of a resolution to the effect that a Potential Change of Control of the Company has occurred for purposes of the Plan.
(d) For purposes of this Section X, “Change of Control Price” means the highest price per share of the Common Stock paid in any transaction reported on the New York Stock Exchange Composite Tape, or offered in any transaction related to a Potential or actual Change of Control of the Company at:
(i) the date the Change of Control occurs;
(ii) the date the Potential Change of Control is determined to have occurred; or
(iii) such other date as the Committee may determine before the Change of Control occurs,