DEERE & COMPANY CORPORATE GOVERNANCE POLICIES

Transcription

1 DEERE & COMPANY CORPORATE GOVERNANCE POLICIES Adpted: December 3, 2003 Amended: August 25, 2004; May 27, 2009; December 2, 2009; August 25, 2010; December 7, 2011; December 4, 2013, December 3, 2014 and December 2, 2015 and December 7, 2016 Deere & Cmpany ( Deere r the Cmpany ) recgnizes the imprtance f crprate gvernance as a cmpnent f prviding lng-term sharehlder value. The plicies set frth belw have been guiding principles in Deere s apprach t crprate gvernance, and will cntinue t be reviewed peridically and revised as apprpriate by the Bard f Directrs (the Bard ) t ensure they cnsistently reflect the Bard s gvernance bjectives. BOARD COMPOSITION AND FUNCTIONS 1. Separatin f Chairman and CEO While sme f the cnventinal functins f the Chairman (e.g., the setting f agendas fr Bard and cmmittee meetings) have been and are shared by all directrs, the psitin f Chairman has traditinally been held by Deere's Chief Executive Officer. The Bard believes that the decisin as t wh shuld serve as Chairman and Chief Executive Officer and whether the ffices shuld be cmbined r separated is the prper respnsibility f the Bard. The Bard generally believes that having an independent Chairman is unnecessary in nrmal circumstances. Currently, the Bard has selected an independent directr t serve as a Presiding Directr. If the Chairman s psitin is held by an independent utside directr, then the duties f the Presiding Directr will be assumed by the Chairman. 2. Presiding Directr The Presiding Directr is elected by a majrity f the independent directrs upn a recmmendatin frm the Crprate Gvernance Cmmittee. The Presiding Directr is appinted fr a ne year term beginning upn electin and expiring upn the selectin f a successr Presiding Directr. The Cmpany will publish the name f and methd fr cntacting the Presiding Directr. The Bard has determined that the Presiding Directr shuld have the fllwing duties and respnsibilities: presides at all meetings f the Bard at which the Chairman is nt present, including executive sessins f the independent directrs; serves as liaisn between the Chairman and the independent directrs; the Presiding Directr, in cnsultatin with the Chairman, shall review and apprve the schedule f meetings f the Bard, the prpsed agendas and the materials t be sent t the Bard. Directrs shall have the pprtunity t prvide suggestins fr the meeting schedule, agenda items and materials t the Chairman r the Presiding Directr; calls meetings f the independent directrs when necessary and apprpriate; and is available fr cnsultatin and direct cmmunicatin with the Cmpany s sharehlders.

2 The designatin f an independent Presiding Directr is nt intended t inhibit cmmunicatin amng the directrs r between any f them and the Chairman. Accrdingly, ther directrs are encuraged t cntinue t cmmunicate freely with each ther and directly with the Chairman. Any directr can ask fr an item t be added t the agenda fr any Bard r cmmittee meeting. In additin, cmmittee chairs act as "presiding directrs" n specific subjects fr Bard discussin. Fr example, the Chair f the Cmpensatin Cmmittee leads Bard discussins f CEO cmpensatin in relatinship t perfrmance, while the Chair f the Crprate Gvernance Cmmittee is respnsible fr ensuring that management presents t the Bard an annual review f successin plans. 3. Bard Access t Senir Management and Independent Advisrs Any Bard member has access t any emplyee f the Cmpany. The Crprate Secretary's ffice is available t assist directrs in making cntact with Cmpany emplyees, and will participate in discussins between the directr and emplyee nly where the directr s requests. Cmmittees f the Bard shall, in their discretin, have access t, and may cnsult with and may retain such independent advisrs as each cmmittee deems apprpriate. The Cmpany shall prvide apprpriate funding fr advisrs as determined by such cmmittee. 4. Size f the Bard The size f the Bard is determined by the Bard. Thrugh its nminating functin, the Crprate Gvernance Cmmittee makes recmmendatins regarding the size f the Bard as well as its cmpsitin. 5. Mix f Inside and Outside Directrs The CEO is the nly active r frmer Deere emplyee currently n the Bard. At all times, a majrity f the members f the Bard shall meet the criteria fr independence established by applicable laws and regulatins and the New Yrk Stck Exchange ( NYSE ). 6. Bard Definitin f What Cnstitutes Directr Independence NYSE Standards f Independence A directr may nt be cnsidered independent if the directr des nt meet the criteria fr independence established by the NYSE and applicable law. A directr is cnsidered independent under the NYSE criteria if the Bard finds that the directr has n material relatinship with the Cmpany. Under the NYSE rules, a directr will nt be cnsidered independent if, within the past three years: the directr has been emplyed by Deere, either directly r thrugh a persnal r prfessinal services agreement; an immediate family member f the directr was emplyed by Deere as an executive fficer; the directr receives mre than $120,000 during any twelve-mnth perid in direct cmpensatin frm Deere, ther than fr service as an interim chairman r CEO and ther than directr and cmmittee fees and pensin r ther frms f deferred cmpensatin fr prir service (prvided such cmpensatin is nt cntingent in any way n cntinued service); 2

3 an immediate family member f the directr receives mre than $120,000 during any twelve-mnth perid in direct cmpensatin frm Deere, ther than fr service as a nn-executive emplyee and ther than directr and cmmittee fees and pensin r ther frms f deferred cmpensatin fr prir service (prvided such cmpensatin is nt cntingent in any way n cntinued service); the directr was affiliated with r emplyed by Deere s independent auditr; an immediate family member f the directr was a partner f Deere s independent auditr, r was affiliated with r emplyed in a prfessinal capacity by Deere s independent auditr and persnally wrked n Deere s audit; a Deere executive fficer has served n the cmpensatin cmmittee f a cmpany that, at the same time, emplyed the directr r an immediate family member f the directr as an executive fficer; r the directr is emplyed, r an immediate family member f a directr is emplyed, as an executive fficer f anther cmpany and the annual payments t r received frm Deere exceed in any single fiscal year the greater f $1 millin r 2% f such ther cmpany s cnslidated grss annual revenues. In additin, in determining the independence f any directr wh will serve n the Cmpensatin Cmmittee, the Bard must cnsider all factrs specifically relevant t determining whether the directr has a relatinship t Deere which is material t that directr's ability t be independent frm management in cnnectin with the duties f a Cmpensatin Cmmittee member, including but nt limited t: the surce f cmpensatin f such directr, including any cnsulting, advisry r ther cmpensatry fee paid by Deere t such directr; and whether such directr is affiliated with Deere r an affiliate f Deere. Categrical Standards f Independence The Bard has established the fllwing additinal categrical standards f independence t assist it in making independence determinatins: Business Relatinships. Any payments by Deere t a business emplying, r 10% r mre wned by, a directr r an immediate family member f a directr fr gds r services, r ther cntractual arrangements, must be made in the rdinary curse f business and n substantially the same terms as thse prevailing at the time fr cmparable transactins with nn-affiliated persns. The fllwing relatinships are nt cnsidered material relatinships that wuld impair a directr's independence: if a directr (r an immediate family member f the directr) is an fficer f anther cmpany that des business with Deere and the annual sales t, r purchases frm, Deere during such cmpany's preceding fiscal year are less than ne percent f the grss annual revenues f such cmpany; if a directr is a partner f r f cunsel t a law firm, the directr (r an immediate family member f the directr) des nt persnally perfrm any legal services fr 3

4 Deere, and the annual fees paid t the firm by Deere during such firm's preceding fiscal year des nt exceed $100,000; and if a directr is a partner, fficer r emplyee f an investment bank r cnsulting firm, the directr (r an immediate family member f the directr) des nt persnally perfrm any investment banking r cnsulting services fr Deere, and the annual fees paid t the firm by Deere during such firm s preceding fiscal year des nt exceed $100,000. Relatinships with Nt-fr-Prfit Entities. A directr s independence will nt be cnsidered impaired slely fr the reasn that the directr r an immediate family member is an fficer, directr, r trustee f a fundatin, university, r ther nt-fr-prfit rganizatin that receives frm Deere r its fundatin during any f the prir three fiscal years cntributins in an amunt nt exceeding the greater f $1 millin r tw percent f the nt-fr prfit rganizatin s aggregate annual charitable receipts during the entity s fiscal year. (Any autmatic matching f emplyee charitable cntributins by Deere r its fundatin is nt included in Deere s cntributins fr this purpse.) All cntributins by Deere in excess f $100,000 t nt-fr-prfit entities with which the directr is affiliated shall be reprted t the Crprate Gvernance Cmmittee and may be cnsidered in making independence determinatins. Fr purpses f these standards, Deere shall mean Deere & Cmpany and its direct and indirect subsidiaries, and immediate family member shall have the meaning set frth in the NYSE independence rules, as may be amended frm time t time. 7. Bard Membership Criteria As a part f its screening f candidates fr nminatin t the full Bard, the Crprate Gvernance Cmmittee cnsiders issues f skills, experience, internatinal versus dmestic backgrund, diversity, age, and legal and regulatry requirements in the cntext f an assessment f the perceived needs f the Bard. 8. Selectin, Orientatin and Cntinuing Educatin f Directrs Suggestins fr directr-candidates are received frm sharehlders and frm directrs. The Crprate Gvernance Cmmittee can als elect t retain a directr placement cnsultant. The Crprate Gvernance Cmmittee is respnsible fr screening candidates and making recmmendatins t the full Bard, which nminates a slate f directrs fr electin at the annual meeting f sharehlders, and als elects directrs t fill vacancies r newly-created seats n the Bard. The Bard and the Cmpany have an rientatin prcess fr new directrs, and bth new and cntinuing directrs receive nging educatin and backgrund materials, meet with Cmpany management and visit Cmpany facilities. The Cmpany annually will pay fr a directr t attend ne seminar, sympsium r similar educatinal pprtunity related t that directr s service n the Bard. 9. Extending the Invitatin t a New Ptential Directr t Jin the Bard The prcess f interviewing directr candidates prvides the pprtunity fr direct cntact between directr candidates and members f the Crprate Gvernance Cmmittee as well as ther Bard members. Traditinally, the actual invitatin t jin the Bard has been extended n behalf f the Bard by Deere's CEO. 10. Assessing the Bard's Perfrmance 4

5 The Crprate Gvernance Cmmittee is respnsible fr advising the Bard n criteria fr retentin f directrs unrelated t age r tenure (such as attendance, health, r respnsibilities that are incmpatible with effective service as a directr), and may advise the Bard upn remval f a directr in unusual circumstances. In general, directrs are expected t attend Bard meetings and meetings f cmmittees n which they serve, and t spend the time needed and meet as frequently as necessary t prperly discharge their respnsibilities. Infrmatin and data that are imprtant t the Bard s understanding f the business t be cnducted at a Bard r cmmittee meeting shuld generally be distributed in writing t the directrs befre the meeting, and directrs shuld review these materials in advance f the meeting. The Crprate Gvernance Cmmittee cnducts an annual review f the perfrmance and effectiveness f the Bard, and reprts t the full Bard, which determines whether it and its cmmittees are functining effectively. 11. Directrs Wh Change Present Jb Respnsibilities A directr wh retires r wh has a material change in her r his ccupatin, career r principal activity shall tender a resignatin frm the Bard t the Chair f the Crprate Gvernance Cmmittee. The Bard, upn the recmmendatin f the Crprate Gvernance Cmmittee, shall determine whether t accept the resignatin. 12. Retirement Age A directr shall retire frm the Bard effective with the first annual meeting f stckhlders fllwing such directr s 75th birthday, except in rare circumstances apprved by the Bard. 13. Bard Interactin with Institutinal Investrs, the Press, Custmers, etc. Under nrmal circumstances, the Bard believes management shuld be the primary cntact with these cnstituencies. Hwever, there are n cnstraints upn the directrs' ability t cmmunicate with utsiders (ther than such legal cnstraints as may be required by the securities laws, in acquisitin r divestiture situatins, r therwise). 14. Number f Bards n Which a Directr May Serve The Bard sets n specific limitatin n the number f publicly-held cmpanies bards n which a Deere directr may sit. Hwever, directrs may nt exceed any limitatins n bard r cmmittee memberships as established by law, regulatin r the NYSE. The Crprate Secretary is available t assist directrs in assessing the implicatins f additinal bard affiliatins, and the Crprate Secretary shuld be ntified n behalf f the Crprate Gvernance Cmmittee when a directr is cnsidering an invitatin t sit n anther cmpany s bard. In the event that a directr s effectiveness was materially cmprmised by ther affiliatins, the Crprate Gvernance Cmmittee wuld address the situatin n an ad hc basis. The Bard has determined that n directr shuld serve n the audit cmmittee f mre than fur public cmpanies. BOARD MEETINGS 15. Frequency and Length f Meetings The full Bard nrmally has fur regular meetings per year and meets therwise as needed. These meetings prvide an adequate pprtunity fr the directrs t discharge their duties. The Bard reslutins establishing the cmmittees typically require a minimum f tw meetings per year, with the exceptin f the Executive Cmmittee, which meets as required. Hwever, meetings are held whenever there is a need, with the result that mst cmmittees meet mre frequently. The Audit Review Cmmittee and the Cmpensatin Cmmittee meet quarterly. 5

6 16. Bard Meeting Agendas The Bard is respnsible fr its agenda. The CEO prpses agenda items based n input frm directrs and Cmpany management. A draft agenda is sent t Bard members with the backgrund materials fr each meeting. Frward agendas shwing regularly-scheduled business and planned presentatins fr the fllwing year are distributed t each directr prir t each regularly-scheduled meeting. 17. Bard Materials Distributed in Advance Supprting materials are sent t the directrs fr their review befre each Bard and cmmittee meeting. These materials are generally sent ne week befre the meeting. Management attempts t make the infrmatin as infrmative as pssible. 18. Presentatins Where an ral presentatin is the mst efficient and infrmative way t present an item fr discussin, r where sensitive matters are at issue, backgrund infrmatin may r may nt be sent. 19. Attendance f Nn- Directrs at Bard Meetings The business sessins f Bard meetings are attended by the Cmpany's Senir Management, which includes the Presidents f the majr business divisins f the enterprise. Other emplyees are invited t make presentatins n specific subjects, r where their presence might be useful t the deliberatins f the Bard. 20. Executive Sessins Each Bard meeting nrmally begins with a sessin between the CEO and the independent directrs. This prvides a platfrm fr discussins utside the presence f the nn-bard management attendees, as well as an pprtunity fr the independent directrs t g int executive sessin (withut the CEO) if requested by any directr. The utside directrs may meet in executive sessin, withut the CEO, at any time, and are scheduled fr such nnmanagement executive sessins at each regularly scheduled Bard meeting. The Presiding Directr will preside ver these executive sessins. BOARD COMMITTEES 21. Number f Cmmittees There are currently five cmmittees f the Bard: Audit Review, Cmpensatin, Crprate Gvernance, Executive and Finance. The Crprate Gvernance Cmmittee is respnsible fr submitting recmmendatins n cmmittee cmpsitin and structure, upn request f the CEO r the Bard. 22. Assignment and Rtatin f Cmmittee Members The CEO peridically makes recmmendatins t the Crprate Gvernance Cmmittee regarding cmmittee assignments. The cnsensus f the Bard is that cmmittee rtatin is desirable, but that such cnsideratins as changes in Bard membership can necessitate lnger r shrter cmmittee assignments. In additin, rtatin f assignments must be cnsidered in the cntext f legal and regulatry requirements, and must be balanced 6

7 against the need fr increasing levels f expertise in each Bard cmmittee s area. Accrdingly, the Bard has nt set a specific number f years f service as a guideline. 23. Cmmittee Agendas Prpsed agenda items are submitted by cmmittee members r by management t the cmmittee chair. Frward agendas are established fr the Audit Review Cmmittee. Frward agendas are established fr ther cmmittees nly with regard t the requirements f specific prjects. BOARD COMPENSATION 24. Bard Cmpensatin Review The Crprate Gvernance Cmmittee is respnsible fr furnishing recmmendatins t the full Bard n directrs' retainers and meeting fees. Cmpensatin is then frmally apprved by the Bard. The Bard's practice is t reexamine and adjust directrs' cmpensatin apprximately every three t fur years, r mre ften as apprpriate. In determining apprpriate cmpensatin and assessing directr independence, the Bard will evaluate the frms and amunts f directr cmpensatin, including legal and regulatry requirements, custmary and cmparative cmpensatin, and relatinships with affiliated and charitable rganizatins. 25. Stck Ownership Requirements fr Directrs The Bard recgnizes the imprtance f stck wnership in aligning directrs interests with thse f sharehlders. Paying a significant prtin f directrs cmpensatin in restricted stck assures this alignment. In additin, directrs may elect t defer all r part f their cash cmpensatin in a phantm stck accunt. MANAGEMENT EVALUATION AND SUCCESSION PLANNING 26. Frmal Evaluatin f the Chief Executive Officer Deere's utside directrs meet annually in executive sessin t review the perfrmance f the Chief Executive Officer. The evaluatin shuld include bjective criteria such as perfrmance f the business, accmplishment f strategic bjectives, and develpment f management. In additin, the Cmpensatin Cmmittee makes a regular evaluatin f the CEO with regard t perfrmance-related cmpensatin issues. 27. Successin Planning and Management Develpment The Bard has respnsibility fr the plicies regarding the successin plan fr the CEO. This shall include bth lng- and shrt-term successin planning. The lng-term plan shuld include identificatin f senir management candidates and a discussin f the CEO s plan fr their lng-term develpment. The shrt-term plan is t be used in the event f the unexpected disability f the CEO, in which case the Chair f the Crprate Gvernance Cmmittee is respnsible fr cnvening the Executive Cmmittee t execute the plan r therwise address management successin. * * * * * 7