What is the main purpose of this 8-K filing for Deere & Company?

The main purpose of this 8-K filing is to formally announce and detail the performance goals that have been established by the Compensation Committee for Deere & Company's executive and employee bonus plans. These goals will guide compensation for fiscal year 2007 and a four-year performance period beginning in late 2006.

What financial metrics will be used to determine bonuses for Deere & Company employees?

For the annual Performance Bonus Plan in fiscal 2007, bonuses will be tied to Operating Return on Operating Assets (OROA) for the equipment divisions and Return on Equity (ROE) for the financial services divisions. For the longer-term Mid-Term Incentive Bonus Plan, bonuses will be based on Shareholder Value Added (SVA) over a four-year performance period.

How are acquisitions, specifically goodwill, accounted for in these performance calculations?

The company has implemented a policy where goodwill from new acquisitions exceeding 0.5% of total operating assets (for equipment) or 0.5% of total equity (for financial services) will be phased in evenly over a sixty-month period into the asset or equity base used for performance calculations. This aims to encourage strategic acquisitions while ensuring effective management and integration.

What are the key thresholds for the Mid-Term Incentive Bonus Plan?

For the four-year performance period starting November 1, 2006, a minimum of $1,000,000 in Shareholder Value Added (SVA) must be generated for any awards to be paid. Employees will earn target awards if $2,000,000,000 of SVA is achieved, and the maximum award will be earned if SVA reaches $4,000,000,000.

DE 8-K: Leadership Changes

Summary

Deere & Company (DE) filed an 8-K on December 4, 2006, to report the establishment of performance goals for its executive and employee bonus plans for fiscal year 2007 and the four-year performance period beginning November 1, 2006. These new performance metrics are designed to align executive and employee compensation with key financial objectives, encouraging focus on operational efficiency, profitability, and shareholder value creation. The report details the specific financial measures to be used, including Operating Return on Operating Assets (OROA) for equipment divisions and Return on Equity (ROE) for financial services for the annual bonus plan. For the mid-term incentive plan, Shareholder Value Added (SVA) will be the primary performance metric over a four-year horizon. The establishment of these performance goals is a crucial step in setting compensation targets and motivating management and employees to achieve the company's strategic and financial objectives.

Key Highlights

1Deere & Company has established performance goals for its fiscal 2007 cash bonus plans and a four-year incentive plan starting November 1, 2006.
2The John Deere Performance Bonus Plan for fiscal 2007 will measure success using Operating Return on Operating Assets (OROA) for equipment divisions and Return on Equity (ROE) for financial services.
3The John Deere Mid-Term Incentive Bonus Plan will use Shareholder Value Added (SVA) as the performance measure for the four-year period ending October 31, 2010.
4Specific performance targets for OROA and ROE are detailed, including minimum, target, and maximum award levels at normal sales volumes for various divisions, with adjustments for sales volume variations.
5SVA calculations for both equipment and financial services operations are defined, incorporating costs of capital and equity.
6Minimum SVA thresholds of $1,000,000 are set for any payout under the Mid-Term Incentive Bonus Plan, with a maximum award tied to $4,000,000,000 of SVA.
7The percentage of the SVA pool shared with employees for the mid-term plan has been adjusted to 4%, down from 4.7%, in conjunction with an increase in the SVA cap.

DEERE & CO 8-K Report, Executive Changes (Dec 4, 2006)

Summary

Key Highlights

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