Edgar Filing: DEERE & CO

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Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

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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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DEERE & COMPANY

One John Deere Place
Moline, Illinois 61265

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
February 22, 2006

Deere’s annual stockholders’ meeting will be held on Wednesday, February 22, 2006, at 10:00 a.m. central standard time at Deere’s headquarters at One John Deere Place, Moline in Rock Island County, Illinois. You can find directions to our headquarters on the back cover of the proxy statement. At the annual meeting, stockholders will be asked to:

Elect directors (see page 5);

Consider and vote on amendments to the John Deere Omnibus Equity and Incentive Plan (see page 6);

Ratify the appointment of Deloitte & Touche LLP as Deere’s independent registered public accounting firm for fiscal 2006 (see page 14); and

Consider any other business properly brought before the meeting.

You may vote at the meeting if you were a Deere stockholder at the close of business on December 31, 2005.

To be sure that your shares are properly represented at the meeting, whether you attend or not, please sign, date and promptly mail the enclosed proxy card or voter instruction form in the enclosed envelope, or vote through the telephone or Internet voting procedures described on the proxy card or voter instruction form. If your shares are held in the name of a bank, broker or other holder of record, telephone or Internet voting will be available to you only if offered by them. Their procedures should be described on the voting form they send to you.

Along with the attached proxy statement, we are also sending you our 2005 annual report, which includes our financial statements. Most of you can elect to view future proxy statements and annual reports over the Internet instead of receiving paper copies in the mail. Please refer to page 3 of the proxy statement and your proxy card for further information.

For the Board of Directors,

JAMES H. BECHT
Secretary

Moline, Illinois
January 12, 2006

YOUR VOTE IS IMPORTANT
WE URGE YOU TO VOTE USING TELEPHONE OR INTERNET VOTING, IF AVAILABLE TO YOU, OR BY SIGNING, DATING AND RETURNING THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS NECESSARY IF IT IS MAILED IN THE UNITED STATES.

TABLE OF CONTENTS

				PAGE
Proxy Statement				1
Annual Report				3
Electronic Delivery of Proxy Statement and Annual Report				3
Householding Information				4
Election of Directors				5
Approval of Amendments to the John Deere Omnibus Equity and Incentive Plan				6
Ratification of Independent Registered Public Accounting Firm				14
Fees Paid to the Independent Registered Public Accounting Firm				14
Other Matters				15
Directors Continuing in Office				15
Security Ownership of Certain Beneficial Owners and Management				18
Committees				21
Compensation of Directors				24
Audit Review Committee Report				25
Compensation Committee Report on Executive Compensation				27
Comparison of Five-Year Cumulative Total Return				31
Compensation of Executive Officers				32
Equity Compensation Plan Information				40
Stockholder Proposals and Nominations				41
Cost of Solicitation				42
Appendix A—Director Independence Categorical Standards				A-1

PROXY STATEMENT

Why am I receiving this proxy statement?

Deere’s Board of Directors is soliciting proxies for the 2006 annual meeting of stockholders. You are receiving a proxy statement because you owned shares of Deere common stock on December 31, 2005, and that entitles you to vote at the meeting. By use of a proxy, you can vote whether or not you attend the meeting. This proxy statement describes the matters on which we would like you to vote and provides information on those matters so that you can make an informed decision.

The notice of annual meeting, proxy statement and proxy are being mailed to stockholders on or about January 12, 2006.

What will I be voting on?

•

Election of directors (see page 5).

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Approval of amendments to the John Deere Omnibus Equity and Incentive Plan (see page 6).

•

Ratification of the independent registered public accounting firm (see page 14).

How do I vote?

You can vote either in person at the annual meeting or by proxy without attending the annual meeting. We urge you to vote by proxy even if you plan to attend the annual meeting so that we will know as soon as possible that enough votes will be present for us to hold the meeting. If you attend the meeting in person, you may vote at the meeting and your proxy will not be counted.

Follow the instructions on your voting instruction form. Telephone and Internet voting is available to all registered and most beneficial holders.

Stockholders voting by proxy may use one of the following three options:

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filling out the enclosed voter instruction form, signing it, and mailing it in the enclosed postage-paid envelope;

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voting by Internet (if available, instructions are on the voter instruction form); or

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voting by telephone (if available, instructions are on the voter instruction form).

If you hold your shares in “street name,” please refer to the information forwarded by your bank, broker or other holder of record to see which options are available to you.

The telephone and Internet voting facilities for stockholders will close at 11:59 p.m. eastern standard time on February 21, 2006. If you vote over the Internet, you may incur costs, such as telephone and Internet access charges, for which you will be responsible. The telephone and Internet voting procedures are designed to authenticate stockholders and to allow you to confirm that your instructions have been properly recorded.

If you hold shares through one of Deere’s employee savings plans, your vote must be received by February 17, 2006 or the shares represented by the card will not be voted.

Can I change my vote?

Yes. At any time before your proxy is voted, you may change your vote by:

•

revoking it by written notice to the Secretary of Deere at the address on the cover of this proxy statement;

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delivering a later-dated proxy (including a telephone or Internet vote); or

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voting in person at the meeting.

If you hold your shares in “street name,” please refer to the information forwarded by your bank, broker or other holder of record for procedures on revoking or changing your proxy.

How many votes do I have?

You will have one vote for every share of Deere common stock that you owned on December 31, 2005.

How many shares are entitled to vote?

There were 235,115,136 shares of Deere common stock outstanding and entitled to vote at the meeting. Each share is entitled to one vote. There is no cumulative voting.

How many votes must be present to hold the meeting?

Under Deere’s By-Laws, a majority of the votes that can be cast must be present, in person or by proxy, to hold the annual meeting.

How many votes are needed for the proposals to pass?

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The four nominees for director who receive the most votes will be elected.

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The affirmative vote of a majority of the shares present in person or by proxy must be cast in favor of the amendments to the John Deere Omnibus Equity and Incentive Plan.

•

The affirmative vote of a majority of the shares present in person or by proxy must be cast in favor of the ratification of the appointment of the independent registered public accounting firm.

What if I vote “withhold” or “abstain”?

A vote to “withhold” on the election of directors will have no effect on the outcome. A vote to “abstain” on the other proposals will have the effect of a vote against.

If you vote “abstain,” your shares will be counted as present for purposes of determining whether enough votes are present to hold the annual meeting.

What if I don’t return my proxy card and don’t attend the annual meeting?

If you are a holder of record (that is, your shares are registered in your own name with our transfer agent) and you don’t vote your shares, your shares will not be voted.

If you hold your shares in “street name,” and you don’t give your bank, broker or other holder of record specific voting instructions for your shares, under rules of the New York Stock Exchange your record holder can vote your shares on the election of directors and the ratification of the independent registered public accounting firm but not on the compensation plan proposal.

If you don’t give your record holder specific voting instructions and your record holder does not vote, the votes will be “broker non-votes.” “Broker non-votes” will have no effect on the vote for the election of directors and the other two proposals. “Broker non-votes” will be counted as present for purposes of determining whether enough votes are present to hold the annual meeting.

What happens if a nominee for director declines or is unable to accept election?

If you vote by proxy, and if unforeseen circumstances make it necessary for the Board to substitute another person for a nominee, we will vote your shares for that other person.

Is my vote confidential?

Yes. Your voting records will not be disclosed to us except:

•

as required by law;

•

to the inspectors of voting; or

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if the election is contested.

The tabulator, the proxy solicitation agent and the inspectors of voting must comply with confidentiality guidelines that prohibit disclosure of votes to Deere. The tabulator of the votes and at least one of the inspectors of voting will be independent of Deere and its officers and directors.

If you are a holder of record or an employee savings plan participant, and you write comments on your proxy card, your comments will be provided to us, but your vote will remain confidential.

ANNUAL REPORT

Will I receive a copy of Deere’s annual report?

Unless you have previously elected to view our annual reports over the Internet, we have mailed you our annual report for the year ended October 31, 2005 with this proxy statement. The annual report includes Deere’s audited financial statements, along with other financial information, and we urge you to read it carefully.

How can I receive a copy of Deere’s 10-K?

You can obtain, free of charge, a copy of our Annual Report on Form 10-K for the year ended October 31, 2005, by:

•

accessing Deere’s Internet site at www.deere.com/stock; or

•

writing to:
    Deere & Company Stockholder Relations
    One John Deere Place
    Moline, Illinois 61265-8098.

You can also obtain a copy of Deere’s Form 10-K and other periodic filings with the Securities and Exchange Commission from the SEC’s EDGAR database at www.sec.gov.

ELECTRONIC DELIVERY OF PROXY STATEMENT AND ANNUAL REPORT

Can I access Deere’s proxy materials and annual report electronically?

This proxy statement and the 2005 annual report are available on Deere’s Internet site at www.deere.com/stock. Most stockholders can elect to view future proxy statements and annual reports over the Internet instead of receiving paper copies in the mail.

You can choose this option and save Deere the cost of producing and mailing these documents by:

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following the instructions provided on your proxy card or voter instruction form;

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following the instructions provided when you vote over the Internet; or

•

going to www.icsdelivery.com/de and following the instructions provided.

If you choose to view future proxy statements and annual reports over the Internet, you will receive an e-mail message next year containing the Internet address to use to access Deere’s proxy statement and annual report. The e-mail also will include instructions for voting over the Internet. You will have the opportunity to opt out at any time by following the instructions on www.icsdelivery.com/de. You do not have to elect Internet access each year.

HOUSEHOLDING INFORMATION

What is “householding”?

We have adopted a procedure called “householding,” which has been approved by the Securities and Exchange Commission. Under this procedure, a single copy of the annual report and proxy statement will be sent to any household at which two or more stockholders reside if they appear to be members of the same family, unless one of the stockholders at that address notifies us that they wish to receive individual copies. This procedure reduces our printing costs and fees.

Stockholders who participate in householding will continue to receive separate proxy cards.

Householding will not affect dividend check mailings in any way.

If a single copy of the annual report and proxy statement was delivered to an address that you share with another stockholder, at your request to Deere & Company Stockholder Relations, One John Deere Place, Moline, Illinois 61265-8098, we will promptly deliver a separate copy.

How do I revoke my consent to the householding program?

If you are a holder of record and share an address and last name with one or more other holders of record, and you wish to continue to receive separate annual reports, proxy statements and other disclosure documents, you must revoke your consent by contacting Automatic Data Processing, Inc. (“ADP”), either by calling toll free at (800) 542-1061 or by writing to ADP, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. You will be removed from the householding program within 30 days of receipt of the revocation of your consent.

A number of brokerage firms have instituted householding. If you hold your shares in “street name,” please contact your bank, broker or other holder of record to request information about householding.

ELECTION OF DIRECTORS

Crandall C. Bowles, Vance D. Coffman, Arthur L. Kelly and Thomas H. Patrick are to be elected for terms expiring at the annual meeting in 2009.

The Corporate Governance Committee of the Board recommended these individuals to the Board and the Board nominated them.

Each nominee’s age, present position, principal occupations during the past five or more years, positions with Deere and directorships in other companies appear below.

The term of Leonard A. Hadley, a director of the Company since 1994, expires at the annual meeting. Pursuant to the Company’s mandatory retirement age for directors, Mr. Hadley and Mr. John R. Block, a director of the Company since 1986, are retiring the Board following the annual meeting. The size of the Board is being reduced accordingly.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR”
ALL FOUR NOMINEES

Name and Age at December 31, 2005		Present Position, Principal Occupations during the Past Five Years, Positions with Deere and Other Directorships
Crandall C. Bowles Age 58 Director from 1990 to 1994 and since 1999	Chairman and Chief Executive Officer of Springs Industries, Inc.
	•	Chairman and Chief Executive Officer of Springs Industries, Inc. (textiles) since April 1998
	•	Director of Deere from 1990 to 1994 and since 1999. Chair of Corporate Governance Committee and member of Executive and Compensation Committees


Vance D. Coffman Age 61 Director since 2004	Retired Chairman of Lockheed Martin Corporation
	•	Retired Chairman of Lockheed Martin Corporation (aerospace, defense and information technology) since April 2005
	•	Chairman of Lockheed Martin Corporation – April 1998 to April 2005
	•	Chief Executive Officer of Lockheed Martin Corporation – August 1997 to August 2004
	•	Director of Deere since 2004. Member of Compensation and Corporate Governance Committees
	•	Other directorships: Bristol-Myers Squibb Company and 3M Company

Name and Age at December 31, 2005		Present Position, Principal Occupations during the Past Five Years, Positions with Deere and Other Directorships
Arthur L. Kelly Age 68 Director since 1993	Managing Partner of KEL Enterprises L.P.
	•	Managing Partner of KEL Enterprises L.P. (holding and investment partnership) since 1983
	•	Director of Deere since 1993. Chair of Compensation Committee and member of Executive and Pension Plan Oversight Committees
	•	Other directorships: BASF Aktiengesellschaft, Bayerische Motoren Werke (BMW) AG, Northern Trust Corporation and Snap-on Incorporated

Thomas H. Patrick Age 62 Director since 2000	Chairman of New Vernon Capital, LLC
	•	Chairman of New Vernon Capital, LLC (private equity fund) since 2003
	•	Executive Vice Chairman of Merrill Lynch & Co., Inc. – November 2002 to July 2003
	•	Executive Vice President and Chief Financial Officer of Merrill Lynch & Co., Inc. – February 2000 to November 2002
	•	Director of Deere since 2000. Chair of Pension Plan Oversight Committee and member of Audit Review and Executive Committees
	•	Other directorships: Baldwin & Lyons, Inc., Computer Sciences Corporation and optionsXpress Holdings, Inc.

APPROVAL OF AMENDMENTS TO THE JOHN DEERE
OMNIBUS EQUITY AND INCENTIVE PLAN

Summary of the Proposal

The Board of Directors has amended the John Deere Omnibus Equity and Incentive Plan (referred to in this section of the proxy statement as the “Plan”). The amendments were recommended to the Board by its Compensation Committee (the “Committee”) and are subject to the approval of our stockholders. The proposed amendments:

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Increase by 8,250,000 the number of shares authorized for making awards under the plan;

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Reduce the total number of shares available for awards under the Plan by approximately 2.5 shares for each share awarded for other than stock options and stock appreciation rights; and

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Extend the period during which we may make grants to eligible employees to December 31, 2011.

Our stockholders originally approved the Plan in 2000 and approved amendments to the Plan in 2003. The Plan allows us to grant our salaried employees a range of compensation awards based on or related to Deere common stock, including stock options, stock appreciation rights, restricted stock or stock units, performance awards and substitute awards. Employees may lose certain of their awards unless they meet performance goals or restrictions are removed. We may use previously unissued common stock or common stock held in treasury for awards under the Plan.

The Plan initially reserved 9,500,000 shares of common stock plus approximately 4,900,000

unused shares authorized for prior plans. Of this total amount, 1,000,000 shares could be used for awards other than options and stock appreciation rights, including performance and restricted awards. The amendments approved in 2003 authorized an additional 9,000,000 shares for grants of options and stock appreciation rights.

As of December 31, 2005, approximately 2,619,889 shares remained available for new awards under the Plan. The closing market price for Deere common stock on December 30, 2005 was $68.11.

The amendments authorize an additional 8,250,000 shares for awards under the Plan. (8,250,000 shares represent approximately 3.5% of all currently outstanding shares of Deere common stock.) The amendments also provide that the number of shares authorized for the Plan will be reduced by approximately 2.5 shares for each share awarded for full value awards, such as restricted stock, restricted stock units and performance awards. Generally, full value awards are any awards other than stock options and stock appreciation rights. The number of authorized shares is reduced by a greater amount in recognition of the greater initial value of these types of awards. This reduction rule will replace the separate limit of 1,000,000 shares for full value awards that previously applied.

The Plan is currently scheduled to expire on December 31, 2008. The amendments extend the term of the Plan by three years, until December 31, 2011.

The amendments will enable us to continue a stock option program that has been in effect since 1960. The Board of Directors believes that the program and the Plan have helped Deere compete for, motivate and retain high caliber executive, administrative and professional employees. The Board believes that it is in the best interests of Deere and its stockholders to amend the Plan as proposed. Consistent with our compensation objectives, rewards under the Plan depend on those factors which directly benefit our stockholders: dividends paid and appreciation in the market value of our common stock.

The affirmative vote of a majority of the shares present in person or by proxy and entitled to vote at the meeting is required to approve the proposed amendments to the Plan.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE
AMENDMENTS TO THE OMNIBUS EQUITY AND INCENTIVE PLAN

Principal Features of the Plan

We describe below the other principal terms of the Plan.

Administration

The Committee (or a subcommittee of the Committee) administers the Plan. The Committee is responsible for interpreting and administering the Plan and for selecting those salaried employees (including executive officers) who will receive awards. The Committee may delegate any of its authority under the Plan to other persons, including officers of Deere, except for its authority to amend, suspend or terminate the Plan and as prohibited by law or regulation.

Eligibility and Participation

Salaried employees, including executive officers, of Deere and its subsidiaries are eligible to receive awards under the Plan. The Committee, in its discretion, selects those eligible employees who will receive awards. Deere is not obligated to make awards under the Plan at any time. During the fiscal year ended October 31, 2005, we granted options under the Plan covering

3,782,186 shares to 1,034 employees and restricted stock units equivalent to approximately 252,499 shares to 25 officers. In December 2005, we granted options under the Plan covering approximately 2,406,711 shares to approximately 1,083 employees and granted restricted stock units equivalent to approximately 188,354 shares to approximately 24 officers.

We cannot at this time identify the persons to whom we will grant awards in the future, nor can we state the form or value of any future awards.

Individual Limits

During any fiscal year, no executive officer may receive awards of stock options and stock appreciation rights covering more than 0.5% of the total number of Deere shares outstanding at the beginning of the fiscal year in which the amendments to the Plan are approved by the Company’s stockholders (or 1,184,358 shares if the amendments are approved by stockholders at the February 2006 meeting). In addition, no executive officer may receive more than 300,000 shares of our common stock in any fiscal year pursuant to performance awards, restricted stock awards and restricted stock equivalent awards.

Options and Stock
Appreciation Rights

The per share exercise price of options granted under the Plan may not be less than the fair market value of a share of Deere common stock on the date of grant. The exercise price may not be modified once it is established. For purposes of the Plan, the fair market value of a share on any date is the average of the highest and lowest sale prices on the New York Stock Exchange during regular trading hours on that date (or the last date on which this information was reported). With certain exceptions, optionees may pay the exercise price of options in cash, in Deere common stock or in a combination of cash and stock.

The Committee may designate options awarded under the Plan as incentive stock options (“ISOs”), a type of option authorized under the Internal Revenue Code. Options not designated as ISOs are referred to as “nonqualified” options. In recent years, Deere has issued only nonqualified options.

The Plan also authorizes the Committee to grant stock appreciation rights. A stock appreciation right entitles the grantee to receive, upon exercise of the right, an amount equal to the excess of (a) the fair market value of a specified number of shares of Deere common stock, minus (b) the exercise price of the right. The exercise price may not be less than the fair market value of Deere common stock on the date the right is granted. We may pay the amount due to the holder of a stock appreciation right in Deere common stock, in cash or in a combination of cash and stock. Stock appreciation rights may be either unrelated to a stock option or may be alternative to (“in tandem with”) an option.

The date when stock options and stock appreciation rights first become exercisable must be at least six months after the date of grant. Options and stock appreciation rights may have a term of up to ten years.

Options and stock appreciation rights generally remain exercisable for a limited time following termination of employment due to death, disability,

retirement or with the consent of the Committee. Upon any other kind of termination, options and stock appreciation rights immediately expire.

Performance Awards

The Committee may grant performance awards either as performance shares (with each performance share representing one share of Deere common stock) or performance units (representing a dollar amount established by the Committee at the time of the award). Performance awards are earned over a performance period of at least one year. There may be more than one performance award in existence at any one time, and the performance periods may differ or overlap.

The Committee establishes minimum, target, and maximum performance goals when it makes performance awards. The Committee determines the portion of the performance award earned by the participant based on the degree to which the performance goals are achieved over the relevant performance period. A participant will not earn any portion of a performance award unless the minimum performance goals are met. When earned, we may pay performance awards in cash, in Deere common stock or in a combination of cash and stock, and in a lump sum or in installments. The Committee determines the form and manner of payment.

The Committee, as it deems appropriate, may establish performance goals for each performance period from among any of the following factors, or any combination of the following:

• total stockholder return;

•

growth in revenues, sales, settlements, market share, customer conversion, net income, stock price, and/or earnings per share of common stock;

• return on assets, net assets, and/or capital;

• return on stockholders’ equity;

• economic value added;

• improvements in costs and/or expenses; or

• any similar performance measure established by the Committee.

The Plan also authorizes the Committee, subject to the restrictions of Section 162(m) of the Internal Revenue Code, to reduce grants or adjust performance goals if we acquire or dispose of certain assets or securities.

Restricted Stock or
Restricted Stock Equivalents

Restricted stock or restricted stock equivalents have restriction periods and price goals that the Committee designates at the time of the award. Restriction periods must be at least three years for time-based restrictions and at least one year for performance-based restrictions. A maximum of 5% of the aggregate shares authorized for the Plan may be restricted stock or stock equivalents with no minimum vesting periods.

Each restricted stock equivalent represents the right to receive an amount determined by the Committee at the time of the award. The value of a restricted stock equivalent may be equal to the full monetary value of one share of our common stock. Any award of restricted stock or stock equivalents to an executive officer intended to qualify as performance-based compensation must include a stock price goal during the restriction period.

Other Awards

The Committee may grant other forms of equity-based awards consistent with the purposes of the Plan. The Committee may base other awards on the value of Deere common stock or other criteria. Other awards with a performance goal may not vest in less than one year. Other awards without a performance goal may not vest in less than three years. Other awards include the restricted stock units which we awarded to certain officers in December 2005 (as described below under the heading “Plan Benefits”.)

The Plan also authorizes the Committee to grant awards in substitution for awards granted by an entity that Deere acquires or that combines with Deere. Substitute awards count against the Plan’s authorized share limits. Substitute awards are not subject to the minimum holding period and minimum exercise price provisions of the Plan.

Stockholder Rights

During the performance or restriction period, participants have the right to receive dividends and to vote the shares of common stock that they have been awarded. Holders of stock options, however, do not have rights as a stockholder prior to exercise. Holders of restricted stock units also do not have rights as a stockholder prior to vesting and payment in shares. With limited exceptions, participants may not transfer, assign, pledge, or encumber awards under the Plan.

Cash Equivalents
and Deferral

The Committee may permit participants to elect to receive performance awards and restricted stock in cash instead of shares. The Committee may also award cash equivalent awards or other alternative forms of awards to employees of foreign subsidiaries or branches. Payments of cash equivalent awards are applied against the Plan’s authorized share limits based on the fair market value of the common stock covered by the awards. The Committee may also permit participants eligible for our voluntary deferred compensation plan to elect within certain time limits to defer cash payments of performance and restricted awards.

Obligations to Deere

Participants who leave Deere may lose their unexercised stock options and stock appreciation rights, their unearned performance awards and their restricted stock and stock equivalent awards, if they fail to honor consulting or noncompetition obligations to Deere or fail to satisfy other terms specified in the award.

Change in Control

If there is a change in control or potential change in control of Deere, the restrictions and vesting requirements of awards may, subject to certain regulatory restrictions, lapse and the value of other awards may be paid to the participants in cash (at the “change in control price” defined in the Plan).

For purposes of the Plan, a change of control is generally considered to have occurred if any of the following occur: (i) a third party or persons acting as a group acquire 50% or more of the combined voting power or total fair market value of the Company’s outstanding stock; (ii) there is a change in majority of the incumbent Board of Directors of the Company (other than through election of nominees who are approved by a vote of at least a majority of the directors then in office); (iii) any merger or consolidation of the Company (other than certain transactions that do not result in a substantial change in proportional ownership of the Company);

or (iv) the complete liquidation or a sale of all or substantially all of the Company’s assets in which one or more persons acting as a group acquires 40% or more of the total fair market value of all company assets. A potential change of control is defined generally to include the entering into of an agreement the consummation of which would result in a change of control, or the acquisition by a third party of securities representing 5% or more of the combined voting power of the company accompanied by a determination by the Board of Directors of the Company that a potential change of control has occurred for purposes of the Plan.

The lapse of limitations and payment of the value of incentive shares in the event of a change in control or potential change in control may increase the net cost of the change in control and, thus, theoretically could render more difficult or discourage a change in control, even if the change in control would benefit Deere stockholders generally.

Amendment and
Adjustment

The Committee may suspend or terminate the Plan at any time, but stockholder approval is required for the following amendments (to the extent stockholder approval is required by law, agreement or the rules of any exchange upon which Deere common stock is listed):

•

increasing the amount of common stock authorized for awards (other than as a result of a stock dividend, stock split or similar transaction);

• modifying the eligibility requirements;

• materially increasing participants’ benefits; or

• extending the term of the Plan.

No amendment, suspension or termination of the Plan may materially and adversely affect any outstanding awards without the consent of the participant.

If there is a stock dividend or stock split, a combination or another kind of increase or reduction in the number of issued shares of Deere common stock, the Board of Directors or the Committee may adjust the number and type of shares authorized under the Plan and covered by outstanding awards.

Federal Income Tax Consequences of Stock Options and Stock Appreciation Rights

The following summarizes the consequences under existing U.S. federal income tax rules of the award and exercise of stock options and stock appreciation rights under the Plan.

ISOs

ISOs are intended to qualify as “incentive stock options” under Section 422 of the Internal Revenue Code. We understand that under current federal income tax law:

•

Our employees do not recognize income when we grant them incentive stock options.

•

An optionee does not recognize income when an ISO is exercised, although the difference between the option price and the fair market value of the shares acquired upon exercise is a “tax preference item” which, under certain circumstances, may give rise to alternative minimum tax liability on the part of the optionee.

•

If the optionee holds shares purchased pursuant to the exercise of an ISO for cash for at least two years from the option grant date and at least one year after the transfer of the shares to the optionee, then:

•

The optionee will recognize gain or loss only upon ultimate disposition of the shares. Any gain or loss generally will be treated as long-term capital gain or loss.

•

Deere will not be entitled to a federal income tax deduction in connection with the grant or the exercise of the option.

•

If the optionee disposes of the shares purchased pursuant to the exercise of an ISO before the expiration of the required holding period, then:

•

The optionee will recognize ordinary income in the year of the disposition in an amount equal to the difference between the option price and the lesser of the fair market value of the shares on the exercise date or the selling price. The balance of any gain the optionee realizes on the disposition will be taxed as capital gain.

•

Deere will be entitled to a deduction in the year of the disposition equal to the amount of ordinary income recognized by the optionee.

Nonqualified Options

“Nonqualified” stock options are stock options that do not qualify as ISOs. We understand that under existing U.S. federal income tax law:

•

Our employees do not recognize income when we grant them nonqualified stock options.

•

Upon exercise of a nonqualified option, the optionee recognizes ordinary income in the amount by which the fair market value of the shares purchased exceeds the exercise price of the option. Deere generally is entitled to a deduction in an equal amount.

•

The optionee’s tax basis in shares purchased upon exercise of a nonqualified option is the value of the shares on the exercise date. Any gain or loss that the optionee realizes upon disposition of the shares will generally be treated as capital gain or loss. The gain or loss will be long-term if the shares have been held longer than one year.

Stock Appreciation Rights

We understand that under existing U.S. federal income tax law:

•

Our employees do not recognize income when we grant them stock appreciation rights.

•

When a stock appreciation right is exercised, the grantee must treat the cash and the fair market value of any stock received upon exercise as ordinary income. Deere generally is entitled to a deduction in an equal amount.

Other Tax Matters

Certain additional rules apply if an optionee pays the exercise price of an option in shares he or she already owns.

We may permit an optionee to have us withhold all or a portion of the shares that the optionee acquires upon the exercise of an option to satisfy estimated or actual federal, state or local income taxes. We may also permit the optionee to deliver other previously acquired shares (other than restricted stock) for the purpose of tax withholding.

Plan Benefits

Because awards under the Plan are determined by the Committee in its sole discretion, we cannot determine the benefits or amounts that will be received or allocated in the future under the Plan. The table below shows stock options and restricted stock units granted in December 2005 to the individuals and groups indicated. These awards are not necessarily indicative of awards that we may make in the future.

	December 2005
			Restricted Stock Units (3)
Name and Position	Stock Options (1)			Dollar Value $ (2)	Number of Restricted Stock Units
Robert W. Lane Chairman, President and Chief Executive Officer		150,050	$	3,448,603	50,016
Pierre E. Leroy Retired President, Worldwide Construction & Forestry Division		30,524	$	701,497	10,174
H.J. Markley President, Agricultural Division-North America, Australia, Asia and Global Tractor and Implement Sourcing		31,097	$	714,667	10,365
Nathan J. Jones Senior Vice President and Chief Financial Officer		31,230	$	717,770	10,410
John J. Jenkins President, Worldwide Commercial & Consumer Equipment Division		30,060	$	690,879	10,020
David C. Everitt President, Agricultural Division-Europe, Africa, Middle East, South America And Global Harvesting Equipment Sourcing		30,770	$	707,151	10,256
Executive Group		363,958	$	8,364,738	121,316
Non-Executive Director Group (3)		None		None	None
Non-Executive Officer Employee Group		2,042,753	$	4,622,270	67,038

(1)

Market-priced options that vest over three years (or upon retirement, if earlier) and have a ten-year term.

(2)

Represents the closing market value of Deere common stock on the grant date, without giving effect to the diminution in value attributable to the restriction on the units. The units vest after three years and must be held for five years.

(3)

Non-employee directors are not eligible to participate in the Plan.

RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Review Committee has approved the selection of Deloitte & Touche LLP to serve as the independent registered public accounting firm to examine Deere’s financial statements for the 2006 fiscal year. The Audit Review Committee and the Board are requesting that stockholders ratify this appointment as a means of soliciting stockholders’ opinions and as a matter of good corporate practice.

The affirmative vote of a majority of the shares present in person or by proxy and entitled to vote at the meeting is required to ratify the selection of Deloitte & Touche LLP. If the stockholders do not ratify the selection, the Audit Review Committee will consider any information submitted by the stockholders in connection with the selection of the independent registered public accounting firm for the next fiscal year. Even if the selection is ratified, the Audit Review Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Review Committee believes such a change would be in the best interest of the Company and its stockholders.

We expect that a representative of Deloitte & Touche LLP will be at the annual meeting. This representative will have an opportunity to make a statement and will be available to respond to appropriate questions.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE
RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

FEES PAID TO THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

For the years ended October 31, 2005 and 2004, professional services were performed by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, “Deloitte & Touche”).

Audit Fees

The aggregate fees billed include amounts for the audit of Deere’s annual financial statements, the reviews of the financial statements included in Deere’s Quarterly Reports on Form 10-Q, including services related thereto such as comfort letters, statutory audits, attest services, consents, and assistance with and review of documents filed with the U.S. Securities Exchange Commission (“SEC”) and other regulatory bodies. Audit Fees for the fiscal years ended October 31, 2005 and 2004, were $10.4 million and $7.2 million, respectively.

Audit-Related Fees

During the last two fiscal years, Deloitte & Touche has provided Deere with assurance and related services that are reasonably related to the performance of the audit of our financial statements. The aggregate fees billed for such audit-related services for the fiscal years ended October 31, 2005 and 2004, were $0.4 million and $1.0 million, respectively. These services included audits of financial statements of employee benefit plans and various attest services. The 2004 amount included general assistance with the implementation of the SEC rules adopted pursuant to the Sarbanes-Oxley Act of 2002.

Tax Fees

The aggregate fees billed for professional services provided by Deloitte & Touche in connection with tax compliance, tax advice and tax planning services for the fiscal years ended October 31, 2005 and 2004 were $0.2 million and $0.6 million, respectively.

All Other Fees

There were no fees billed for services not included above for the fiscal years ended October 31, 2005 and October 31, 2004.

Pre-approval of Services by the Independent Registered Public Accounting Firm

The Audit Review Committee has adopted a policy for pre-approval of audit and permitted non-audit services by Deere’s independent registered public accounting firm. The Audit Review Committee will consider annually and, if appropriate, approve the provision of audit services by its independent registered public accounting firm and consider and, if appropriate, pre-approve the provision of certain defined audit and non-audit services. The Audit Review Committee will also consider on a case-by-case basis and, if appropriate, approve specific services that are not otherwise pre-approved.

Any proposed engagement that does not fit within the definition of a pre-approved service may be presented to the Audit Review Committee for consideration at its next regular meeting or, if earlier consideration is required, to the Audit Review Committee or one or more of its members between regular meetings. The member or members to whom such authority is delegated shall report any specific approval of services at its next regular meeting. The Audit Review Committee will regularly review summary reports detailing all services being provided to Deere by its independent registered public accounting firm.

During fiscal 2005, all services by Deere’s independent registered public accounting firm were pre-approved by the Audit Review Committee in accordance with this policy.

OTHER MATTERS

We do not know of any other matters that will be considered at the annual meeting. However, if any other proper business should come before the meeting, we will have discretionary authority to vote according to our best judgment.

DIRECTORS CONTINUING IN OFFICE

The seven persons named below are now serving as directors of Deere. Their terms will expire at the annual meetings in 2007 and 2008, as indicated. Their ages, present positions, principal occupations during the past five or more years, positions with Deere and directorships in other companies appear below.

TERMS EXPIRING AT ANNUAL MEETING IN 2007

Name and Age at December 31, 2005		Present Position, Principal Occupations during the Past Five Years, Positions with Deere and Other Directorships
Robert W. Lane Age 56 Director since 2000	Chairman, President and Chief Executive Officer of Deere
	•	Chairman, President and Chief Executive Officer of Deere since August 2000
	•	Director of Deere since 2000. Chair of the Executive Committee
	•	Other directorships: General Electric Company and Verizon Communications, Inc.

Antonio Madero B. Age 68 Director since 1997	Chairman and Chief Executive Officer of SANLUIS Corporacion, S.A. de C.V.
	•	Chairman and Chief Executive Officer of SANLUIS Corporacion, S.A. de C.V. (automotive components manufacturing) since 1979
	•	Director of Deere since 1997. Member of Compensation and Pension Plan Oversight Committees
	•	Other directorships: Goldcorp Inc. and a variety of corporations in Mexico

Aulana L. Peters Age 64 Director since 2002	Retired Partner of Gibson, Dunn & Crutcher LLP
	•	Retired Partner of Gibson, Dunn & Crutcher LLP (law firm) since 2000
	•	Member of the Public Oversight Board of the American Institute of Certified Public Accountants – January 2001 to March 2002
	•	Commissioner of the Securities and Exchange Commission – 1984 to 1988
	•	Director of Deere since 2002. Member of Audit Review and Pension Plan Oversight Committees
	•	Other directorships: Merrill Lynch & Co., Inc., 3M Company and Northrop Grumman Corporation

John R. Walter Age 58 Director since 1991	Chairman of Ashlin Management Company
	•	Chairman of Ashlin Management Company (private investments) since December 1997
	•	Chairman of Manpower Inc. (temporary-staffing) – April 1999 to March 2001
	•	Director of Deere since 1991. Member of Compensation and Corporate Governance Committees
	•	Other directorships: Abbott Laboratories, Manpower Inc., SNP Corporation of Singapore and Vasco Data Security International, Inc.

TERMS EXPIRING AT ANNUAL MEETING IN 2008

Name and Age at December 31, 2005		Present Position, Principal Occupations during the Past Five Years, Positions with Deere and Other Directorships
T. Kevin Dunnigan Age 67 Director since 2000	Retired Chairman of Thomas & Betts Corporation
	•	Retired Chairman of Thomas & Betts Corporation (electrical components) since December 2005
	•	Chairman of Thomas & Betts Corporation – January 2004 to December 2005
	•	Chairman, President and Chief Executive Officer of Thomas & Betts Corporation – August 2000 to January 2004
	•	Director of Deere since 2000. Chair of Audit Review Committee and member of Corporate Governance and Executive Committees
	•	Other directorships: C. R. Bard, Inc.

Dipak C. Jain Age 48 Director since 2002	Dean, Kellogg School of Management, Northwestern University
	•	Dean, Kellogg School of Management, Northwestern University, Evanston, Illinois since July 2001
	•	Associate Dean for Academic Affairs, Kellogg School of Management, Northwestern University – 1996 to 2001
	•	Sandy and Morton Goldman Professor of Entrepreneurial Studies and Professor of Marketing, Kellogg School of Management – 1994 to July 2001
	•	Visiting professor of marketing at Sasin Graduate Institute of Business Administration at Chulalongkorn University, Bangkok, Thailand; Nijenrode University, The Netherlands; Otto Bescheim Graduate School of Management, Koblenz, Germany; IIT, Delhi, India; Hong Kong University of Science and Technology, China; Recanati Graduate School of Business Administration at Tel Aviv University, Israel
	•	Director of Deere since 2002. Member of Audit Review and Pension Plan Oversight Committees
	•	Other directorships: Hartmarx Corporation, Northern Trust Corporation, Peoples Energy Corporation, Reliance Industries Limited and UAL Corporation

Joachim Milberg Age 62 Director since 2003	Chairman of the Supervisory Board of Bayerische Motoren Werke (BMW) AG
	•	Chairman of the Supervisory Board of Bayerische Motoren Werke (BMW) AG (motor vehicles) since May 2004.
	•	Retired Chief Executive Officer of BMW AG since May 2002
	•	Chairman of the Board of Management and Chief Executive Officer of BMW AG – February 1999 to May 2002
	•	Director of Deere since 2003. Member of Audit Review and Corporate Governance Committees
	•	Other directorships: Alliant Versicherungs AG, Bertelsmann AG, BMW AG, Festo AG and MAN AG

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table shows the number of shares of our common stock beneficially owned as of December 31, 2005 (unless otherwise indicated) by:

•

each person, who, to our knowledge, beneficially owns more than 5% of our common stock;

•

each of our directors;

•

our Chief Executive Officer and the other five executive officers named in the Summary Compensation Table; and

•

all individuals who served as directors or executive officers at December 31, 2005, as a group.

A beneficial owner of stock 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 of the stock.

All individuals listed in the table have sole voting and investment power over the shares unless otherwise noted. As of December 31, 2005, Deere had no preferred stock issued or outstanding.

The table also includes information about exercisable stock options credited to executive officers under compensation plans.

In addition to the number of shares shown in the table, directors own the deferred stock units listed in footnote four following the table. The deferred stock units are credited to directors under the Nonemployee Director Deferred Compensation Plan. The value of the units are subject to the same market risks as Deere common stock. The units are payable only in cash and, with limited exceptions, must be held until the director’s retirement from the Board.

In addition to the number of shares shown in the table, executive officers own the restricted stock units listed in footnote six following the table. The restricted stock units represent stock equivalent units awarded under the Omnibus Equity and Incentive Plan as part of long-term compensation. The units vest after three years and are payable only in stock after five years or following retirement.

		Options Exercisable Within 60 Days	Percent of Shares Outstanding
Greater Than 5% Owners
Capital Research and Management Company 333 South Hope Street Los Angeles, California 90071 (2)	22,100,600		9.3 %

Lord Abbett & Co. 90 Hudson Street Jersey City, New Jersey 07302 (3)	13,975,597		5.9 %

Directors (4)
John R. Block	12,898		*
Crandall C. Bowles	9,636		*
Vance D. Coffman	1,544		*
T. Kevin Dunnigan	9,464		*
Leonard A. Hadley	11,398		*
Dipak C. Jain	4,895		*
Arthur L. Kelly	16,297		*
Robert W. Lane	93,773	1,126,627	*
Antonio Madero B.	9,597		*
Joachim Milberg	3,632		*
Thomas H. Patrick	17,904		*
Aulana L. Peters	4,482		*
John R. Walter (5)	13,198		*

Named Executive Officers (6)
Pierre E. Leroy	43,107	349,356	*
H. J. Markley (7)	23,088	253,976	*
Nathan J. Jones	2,111	281,623	*
John J. Jenkins	17,565	186,074	*
David C. Everitt	1,312	136,151	*

All directors and executive officers as a group (20 persons) (8)	320,177	2,512,615	*

Less than 1% of the outstanding shares of Deere common stock.

(1)

The table includes the following number of restricted shares awarded to directors under Deere’s Nonemployee Director Stock Ownership Plan. These shares may not be transferred prior to retirement as a director.

Director				Restricted Shares
Mr. Block					12,298
Mrs. Bowles					8,236
Mr. Coffman					1,544
Mr. Dunnigan					7,464
Mr. Hadley					11,398
Mr. Jain					4,895
Mr. Kelly					12,097
Mr. Madero					9,597
Mr. Milberg					3,632
Mr. Patrick					7,904
Mrs. Peters					4,282
Mr. Walter					12,298

(2)

The ownership information in the table for Capital Research and Management Company is based on information supplied by Capital Research and Management Company and contained in reports of institutional investment managers filed with the Securities and Exchange Commission for the period ended September 30, 2005. Capital Research and Management Company holds these shares on behalf of institutional and individual investors. Capital Research and Management Company disclaims investment discretion over the shares and has no voting power with respect to the shares.

(3)

The ownership information in the table for Lord Abbett & Co. is based on information supplied by Lord Abbett & Co. and contained in reports of institutional investment managers filed with the Securities and Exchange Commission for the period ended September 30, 2005. Lord Abbett & Co. has voting power with respect to 8,510,159 shares and investment discretion over all of the shares.

(4)

In addition to the shares listed in the table, directors own the following number of deferred stock units credited under the Nonemployee Director Deferred Compensation Plan.

Director				Deferred Units
Mr. Block				14,695
Mrs. Bowles				7,753
Mr. Coffman				1,527
Mr. Hadley				19,298
Mr. Kelly				3,585
Mr. Madero				3,235
Mr. Patrick				5,784

(5)

The number of shares shown for Mr. Walter includes 900 shares owned by family members. Mr. Walter disclaims beneficial ownership of those shares.

(6)

In addition to the shares listed in the table, executive officers own the following number of restricted stock units awarded to executive officers under Deere’s Omnibus Equity and Incentive Plan.

Executive				Restricted Units
Mr. Lane					245,621
Mr. Leroy					50,830
Mr. Markley					49,311
Mr. Jones					51,275
Mr. Jenkins					48,831
Mr. Everitt					46,166
All executive officers					581,671

(7)

The number of shares shown for Mr. Markley includes 5,130 shares owned by family members. Mr. Markley disclaims beneficial ownership of those shares.

(8)

The number of shares shown for all directors and executive officers as a group includes 33,139 shares owned jointly with family members over which the directors and executive officers share voting and investment power.

COMMITTEES

The Board of Directors of Deere met eight times during the 2005 fiscal year. Directors are expected to attend Board meetings, meetings of committees on which they serve, and stockholder meetings, and to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities. During the 2005 fiscal year, all of the directors attended 75% or more of the meetings of the Board of Directors and committees on which they served. All the directors attended the annual stockholder meeting in February 2005.

Non-management directors may meet in executive session, without the Chief Executive Officer, at any time, and are regularly scheduled for non-management executive sessions twice each year. The committee chairpersons preside over the meetings of the non-management directors on a rotating basis as established by the Corporate Governance Committee.

If you wish to communicate with the Board of Directors you may send correspondence to the Corporate Secretary, Deere & Company, One John Deere Place, Moline, Illinois 61265-8098. The Secretary will submit your correspondence to the Board or the appropriate committee, as applicable. You may communicate directly with the presiding non-management director of the Board by sending correspondence to Presiding Director, Board of Directors, Deere & Company, Department A, One John Deere Place, Moline, Illinois 61265-8098.

The Board has delegated some of its authority to five committees of the Board. These are the Executive Committee, the Compensation Committee, the Corporate Governance Committee, the Pension Plan Oversight Committee, and the Audit Review Committee.

The Compensation Committee, the Corporate Governance Committee, the Pension Plan Oversight Committee, and the Audit Review Committee have written charters that comply with current New York Stock Exchange rules relating to corporate governance matters. Copies of the committee charters as well as the Company’s Code of Ethics and Business Conduct Guidelines are available at www.deere.com/corpgov. A copy of these charters and policies also may be obtained upon request to the Deere & Company Stockholder Relations department.

Pursuant to the requirements of the New York Stock Exchange, the Board has adopted Corporate Governance Policies that meet or exceed the independence standards of the New York Stock Exchange. Also, as part of our Corporate Governance Policies, the Board has adopted categorical standards to assist it in evaluating the independence of each of its directors. The categorical standards are intended to assist the Board in determining whether or not certain relationships between its directors and the Company or its subsidiaries (either directly or indirectly as a partner, shareholder, officer, director, trustee or employee of an organization that has a relationship with the Company) are “material relationships” for purposes of the New York Stock Exchange independence standards. The categorical standards establish thresholds at which such relationships are deemed to be not material. Deere’s Corporate Governance Policies are available on its website at www.deere.com/corpgov. A copy also may be obtained upon request to the Deere & Company Stockholder Relations department. In addition, the categorical standards adopted to evaluate the independence of Deere’s directors are attached as Appendix A to this Proxy Statement.

In December 2005, the independence of each director was reviewed, applying the independence standards set forth in Deere’s Corporate Governance Policies. The review considered relationships and transactions between each director (and his or her immediate family and affiliates) and each of the Company and its management and the Company’s independent registered public accounting firm.

Based on this review, the Board affirmatively determined that the following directors have no material relationships with the Company and its subsidiaries and are independent as defined in Deere’s Corporate Governance Policies and the listing standards of the New York Stock Exchange: Mr. Block, Mrs. Bowles, Mr. Coffman, Mr. Dunnigan, Mr. Hadley, Mr. Jain, Mr. Kelly, Mr. Madero, Mr. Milberg, Mr. Patrick, Mrs. Peters and Mr. Walter. Mr. Lane is considered an inside director because of his employment as Chief Executive Officer and President of the Company.

The Executive Committee

The Executive Committee may act on behalf of the Board if a matter requires Board action between meetings of the full Board. The Executive Committee’s authority concerning certain significant matters is limited by law and Deere’s By-Laws.

The Compensation
Committee

The Compensation Committee approves compensation for senior officers of Deere and makes recommendations to the Board regarding incentive and equity-based compensation plans.

The annual report of the Compensation Committee follows.

The Corporate Governance

The Corporate Governance Committee monitors corporate governance policies and procedures and serves as the nominating committee for Board directors. The primary functions performed by the Committee include:

•

developing, recommending and monitoring corporate governance policies and procedures for Deere and the Board;

•

identifying and recommending to the Board individuals to be nominated as a director;

•

ensuring that the Chairman periodically reviews Deere’s plans regarding succession of senior management with the Committee and with all other independent directors;

•

making recommendations concerning the size, composition, committee structure, and fees for the Board and criteria for tenure and retention of directors;

•

overseeing the Company’s Office of Corporate Compliance;

•

overseeing the evaluation of Deere’s management; and

•

reviewing and reporting to the Board on the performance and effectiveness of the Board and the Corporate Governance Committee.

The Committee will consider candidates for nomination as a director recommended by stockholders, directors, officers, third party search firms and other sources. In evaluating candidates, the Committee considers the attributes of the candidate (including skills, experience, international versus domestic background, diversity, age, and legal and regulatory requirements) and the needs of the Board, and will review all candidates in the same manner, regardless of the source of the recommendation. The Committee will consider individuals recommended by stockholders for nomination as a director in accordance with the procedures described under “Stockholder Proposals and Nominations.”

The Pension Plan Oversight

The Pension Plan Oversight Committee oversees Deere’s pension plans. The Committee establishes corporate policy with respect to the pension plans, and reviews asset allocation, actuarial assumptions and funding policies. The Committee also has authority to make substantive amendments and modifications to the pension plans. The Committee reports to the Board on its activities.

The Audit Review
Committee

The Audit Review Committee’s duties and responsibilities include, among other things:

•

retaining, overseeing and evaluating an independent registered public accounting firm to audit the annual financial statements;

•

assisting the Board in overseeing the integrity of Deere’s financial statements, compliance with legal requirements, the independent registered public accounting firm’s qualifications, independence and performance, and the performance of Deere’s internal auditors;

•

determining whether to recommend that the financial statements and related disclosures be included in Deere’s annual report filed with the Securities and Exchange Commission;

•

considering whether the provision by the independent registered public accounting firm of services not related to the annual audit and quarterly reviews is consistent with maintaining the auditors’ independence;

•

approving the scope of the audit in advance;

•

reviewing the financial statements and the audit report with management and the independent registered public accounting firm;

•

reviewing earnings and financial releases with management;

•

reviewing Deere’s procedures relating to business ethics;

•

consulting with the internal audit staff and reviewing management’s administration of the system of internal accounting controls;

•

reviewing the adequacy of the Audit Review Committee charter;

•

reviewing policies relating to risk assessment and management;

•

setting hiring policies for employees of the independent registered public accounting firm; and

•

approving all engagements for audit and non-audit services by the independent registered public accounting firm.

The Audit Review Committee reports to the Board on its activities and findings.

The Board of Directors has determined that under current New York Stock Exchange listing standards all members of the Audit Review Committee are independent and financially literate. The Board also determined that Mr. Dunnigan, Mr. Hadley, Mr. Patrick and Mrs. Peters are “audit committee financial experts” as defined by the Securities and Exchange Commission and that each has accounting or related financial management expertise as required by New York Stock Exchange listing standards.

The report of the Audit Review Committee follows.

The following table shows the current membership of each committee and the number of meetings held by each committee during fiscal 2005:

Director	Executive Committee	Compensation Committee	Corporate Governance Committee	Pension Plan Oversight Committee	Audit Review Committee
John R. Block		X	X
Crandall C. Bowles	X	X	Chair
Vance D. Coffman		X	X
T. Kevin Dunnigan	X		X		Chair
Leonard A. Hadley			X		X
Dipak C. Jain				X	X
Arthur L. Kelly	X	Chair		X
Robert W. Lane	Chair
Antonio Madero B.		X		X
Joachim Milberg			X		X
Thomas H. Patrick	X			Chair	X
Aulana L. Peters				X	X
John R. Walter		X	X
Fiscal 2005 meetings	1	4	4	3	4

COMPENSATION OF DIRECTORS

We pay our directors who are not Deere employees a single annual retainer of $80,000. We also pay an additional fee of $10,000 per year to the non-employee chairperson of the Audit Review Committee and an additional fee of $5,000 per year to the non-employee chairperson of each other Board Committee. We do not pay any other committee retainers or meeting fees. Under our Nonemployee Director Deferred Compensation Plan, directors may choose to defer some or all of their annual retainers and receive the amounts due to them following retirement as a director. A director may elect to have these deferrals invested in either an interest-bearing account or in an account with an equivalent return to an investment in Deere stock.

We also award our non-employee directors $75,000 of restricted Deere stock upon their election to the Board, and each year during their service as directors. A person who becomes a non-employee director between annual meetings, or who serves a partial term, receives a prorated grant.

While a person is a director, he or she may not sell, gift or otherwise dispose of these restricted shares. Directors may lose their restricted shares if their service is terminated for any reason other than retirement, disability or death. The restricted period ends when the director retires from the Board, becomes permanently and totally disabled, dies, or if there is a change in control of Deere. While the restrictions are in effect, the non-employee directors may vote the shares and receive dividends.

The reports of the Audit Review Committee and Compensation Committee and the performance graph that follow will not be deemed 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 Acts.

AUDIT REVIEW COMMITTEE REPORT

To the Board of Directors:

The Audit Review Committee consists of the following members of the Board of Directors: T. Kevin Dunnigan (Chair), Leonard A. Hadley, Dipak C. Jain, Joachim Milberg, Thomas H. Patrick and Aulana L. Peters. Each of the members is independent as defined under the rules of the New York Stock Exchange (NYSE). The Audit Review Committee is responsible for assisting the Board of Directors in fulfilling its oversight responsibilities pertaining to the accounting, auditing and financial reporting processes of the Company. Management is responsible for establishing and maintaining the Company’s internal control over financial reporting and for preparing financial statements in accordance with accounting principles generally accepted in the United States of America. The Audit Review Committee is directly responsible for the appointment, oversight, compensation and retention of Deloitte & Touche LLP, the independent registered public accounting firm for the Company. Deloitte & Touche LLP is responsible for performing an independent audit of the Company’s annual financial statements and expressing an opinion on (i) the conformity of the Company’s financial statements with accounting principles generally accepted in the United States of America, (ii) management’s assessment of the effectiveness of internal control over financial reporting, and (iii) the effectiveness of internal control over financial reporting.

All members of the Audit Review Committee are financially literate under the applicable NYSE rules, and the following members of the Committee—Mr. Dunnigan, Mr. Hadley, Mr. Patrick and Mrs. Peters—are “audit committee financial experts” within the meaning of that term as defined by the Securities and Exchange Commission (SEC) in Regulation S-K under the Securities Exchange Act of 1934, as amended. The Audit Review Committee has a written charter describing its responsibilities, which has been approved by the Board of Directors and is available on the Company’s website at www.deere.com/corpgov. The Audit Review Committee’s responsibility is one of oversight. Members of the Audit Review Committee rely on the information provided and the representations made to them by: management, which has primary responsibility for establishing and maintaining appropriate internal control over financial reporting, and for Deere & Company’s financial statements and reports; and by the independent registered public accounting firm, which is responsible for performing an audit in accordance with Standards of the Public Company Accounting Oversight Board—United States (PCAOB) and expressing an opinion on (i) the conformity of the Company’s financial statements with accounting principles generally accepted in the United States, (ii) management’s assessment of the effectiveness of internal control over financial reporting, and (iii) the effectiveness of internal control over financial reporting.

In this context, we have reviewed and discussed with management the Company’s audited financial statements as of and for the year ended October 31, 2005.

We have discussed with Deloitte & Touche LLP, the independent registered public accounting firm for Deere, the matters required to be discussed by PCAOB Interim Auditing Standard AU Section 380, Communication with Audit Committees.

We have received and reviewed the written disclosures and the letter from Deloitte & Touche LLP required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, as amended, and have discussed with them their independence. We have concluded that Deloitte & Touche LLP’s provision of audit and non-audit services to Deere is compatible with their independence.

Based on the reviews and discussions referred to above, and exercising our business judgment, we recommend to the Board of Directors that the financial statements referred to above be included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2005 for filing with the SEC. We have selected Deloitte & Touche LLP as Deere & Company’s independent registered public accounting firm for fiscal 2006, and have approved submitting the selection of the independent registered public accounting firm for ratification by the shareholders.

Audit Review Committee
    T. Kevin Dunnigan, Chair
    Leonard A. Hadley
    Dipak C. Jain
    Joachim Milberg
    Thomas H. Patrick
    Aulana L. Peters

COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION

Compensation Philosophy

The Compensation Committee of the Board (the “Committee”) is committed to providing a total compensation program that supports Deere’s long-term business strategy and performance culture and creates a commonality of interest with Deere’s stockholders. The Committee is responsible for the oversight of executive compensation and reviews Deere’s compensation program on an ongoing basis. No member of the Committee is a former or current officer of Deere or any of its subsidiaries.

The overall philosophy of the Committee regarding executive compensation can be summarized as follows:

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Provide a target total reward opportunity sufficient to attract and retain high-caliber executives. In general, this involves a target total pay structure that provides median total compensation at planned levels of performance and top-quartile total compensation when Deere achieves upper-quartile performance on a sustained basis. Market comparisons are made to a comparable group of large, diversified companies;

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Link the majority of the total compensation opportunity to performance-based incentives, annual financial and strategic goals, as well as the creation of sustainable stockholder value within Deere’s long-term strategic goals;

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Provide significant reward for achievement of superior performance, as well as significant risk to penalize substandard performance;

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Recognize the cyclical nature of Deere’s equipment businesses and the need to manage for value throughout the business cycle;

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Provide flexibility to recognize, differentiate, and reward individual performance;

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Create significant opportunity and incentive for executives to be long-term stockholders in Deere; and

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Structure the program to be regarded positively by Deere’s stockholders, employees, the financial community, and the public in general, as well as the eligible executive management.

The Revenue Reconciliation Act of 1993 placed certain limits on the tax deductibility of nonperformance-based executive compensation. The Committee intends that, to the extent practicable, executive compensation be deductible for federal income tax purposes provided doing so would be consistent with the other compensation objectives. The Committee may authorize modest amounts of non-deductible compensation when the Committee determines doing so is justified to achieve the other compensation objectives.

The specific practices concerning each component of Deere’s executive compensation program are described in the following paragraphs:

Base Salary

It is the Committee’s policy to position the base salaries of Deere’s executives at approximately the median level of base salaries provided to comparable positions within a peer group of companies that are

similar to Deere in sales volume, products and services, and a global presence. For fiscal 2005, this peer group consisted of 25 companies—three of which are also included among the four companies, other than Deere, that comprise the S&P 500 Construction & Farm Machinery index used in the performance graph following this report. The Committee believes that this larger peer group of companies provides a more appropriate and reliable benchmark for assessing competitive levels of compensation than the limited number of companies within the S&P 500 Construction & Farm Machinery index.

The Committee annually reviews the base salary of each executive officer of Deere, including Mr. Lane, the Chief Executive Officer (CEO). In determining salary adjustments for Deere’s executives (including Mr. Lane and the other executive officers named in the Summary Compensation Table), the Committee takes into consideration various factors, including individual performance, the financial and operational performance of the activities directed by the executive, the financial performance of Deere relative to peer group companies, experience, time in position and potential. The executive’s current salary in relation to the executive’s salary range and the median salary practices of the peer group are also considered.

These factors are considered subjectively in the aggregate, and none of the factors is accorded a specific weight. In selected cases, other factors may also be considered. Peer group salary data for comparable-level positions are provided annually to Deere by an outside compensation consultant.

Mr. Lane’s base salary for fiscal 2005 was below the peer group median. Mr. Lane received a base salary of $1,079,570 for fiscal 2004 and $1,124,960 for fiscal 2005. The primary factors used to determine Mr. Lane’s salary increase for fiscal 2005 were company and individual performance and median salary practices of the peer group. For fiscal 2005, the base salaries of the other executive officers named in the Summary Compensation Table were slightly below the peer group median and generally consistent with the base salary philosophy established by the Committee.

Short-Term Incentives

A substantial portion of Deere’s executive compensation package is contingent upon Deere’s attaining preestablished financial goals under the John Deere Performance Bonus Plan (the “Bonus Plan”). The Bonus Plan was reapproved by the stockholders at the February, 2004 annual meeting. Each year, in which the preestablished goals are achieved, the compensation of all salaried employees (including Mr. Lane and the other executive officers named in the Summary Compensation Table) is supplemented by fiscal year-end payments under the Bonus Plan. Beginning in fiscal 2004, the amount of these payments (if any) generally depend upon Deere’s operating return on operating assets as adjusted for actual sales volumes in the equipment divisions and the return on equity in the financial services businesses. The operating return goals are derived by improving on historical Deere performance over the business cycle with the objective of sustaining 20% operating return on operating assets at normal volumes and comparable levels of performance for the financial services businesses. Compared to years prior to fiscal 2004, higher levels of performance are required to generate target awards at normal volumes. The amount of the payments also depends upon the position and salary of the employee and any other performance goals established by the employee’s division. In addition, the Committee can decrease or eliminate awards to designated senior officers of Deere and can increase, decrease or eliminate awards to other salaried employees.

When added to base salary, target awards under the Bonus Plan for Deere’s executives are structured to provide median annual cash compensation relative to the peer group companies. The target award is 110 percent of base salary for the CEO and 70 to 75 percent of base salary for other senior officers. The target percentages are reviewed and set by the Committee annually. No bonus payment is available if minimum performance thresholds are not achieved.

For fiscal 2005, Deere’s operating return on average consolidated operating assets as adjusted for actual sales volumes in the equipment divisions and return on equity in the financial services businesses, calculated in accordance with the Bonus Plan were at maximum performance. Based on these results, the preestablished Bonus Plan formula resulted in an annual performance bonus payment for Mr. Lane of $2,411,695. The Committee and Subcommittee determined to pay Mr. Lane the amount calculated under the Bonus Plan. This amount represents approximately 214 percent of base salary. The other senior officers also received annual performance bonus payments calculated under the preestablished Bonus Plan formula of approximately 136 percent of base salaries.

In addition to the above performance Bonus Plan payments, the Committee and the CEO are authorized to grant discretionary bonuses to selected employees in recognition of outstanding achievement. Such bonuses may not exceed 20 percent of annual base salary, except in unusual circumstances. In December 2005, the Committee awarded Mr. Pierre E. Leroy a discretionary bonus of $509,700, equal to approximately one year of base salary.

Deere also provides senior officers with selected personal benefits that in aggregate are below market, but where provided are commensurate with those of executives at peer group companies. Such personal benefits consist primarily of health and life insurance, limited personal use of corporate aircraft, and financial planning assistance. The Committee does not consider personal benefits to be a material component of executive compensation.

Long-Term Incentives

Equity Incentives. Deere’s long-term incentives for executive officers have been comprised of annual grants of market-priced and premium-priced stock options under the John Deere Stock Option Plan and the John Deere Omnibus Equity and Incentive Plan (the “Omnibus Plan”) and grants of restricted stock units under the Omnibus Plan. Grants under these plans are intended to promote the creation of sustained stockholder value, encourage ownership of Deere stock, foster teamwork and retain high-caliber executives.

Under each plan, grants to executives are based on criteria established by the Committee and Subcommittee, including responsibility level, base salary, current market practice, the market price of Deere’s stock and the number of shares available under each plan. Grant guidelines for market-priced options and restricted stock units are established for all executive participants (including Mr. Lane) with the objective of providing a target total compensation opportunity, including base salary, the target annual profit sharing bonus, stock options, and restricted stock units, equal to the 50th percentile of the peer group. Depending on stock price performance, Deere’s performance and the number of available shares, actual total compensation for any given year could be at, above, or below the target of the peer group. The number of options or restricted shares previously granted to, or held by, an executive is not a factor in determining individual grants.

In fiscal 2005, the long-term incentive award to senior executives included market-priced options and restricted stock units that vest over three years and are subject to the other terms and conditions of the Omnibus Plan. The options have a maximum term of ten years and the restricted stock units are not transferable for five years. This combination of options and restricted stock units is intended to reinforce the focus on long-term sustained higher levels of Deere performance, support the stock ownership guidelines for senior management and allocate available shares over the expected life of the Omnibus Plan. Consistent with the Committee’s compensation philosophy and the comparator group marketplace, for fiscal 2005 the Committee approved a target grant of market-priced options and restricted stock units. During fiscal 2005, Mr. Lane was awarded 160,000 market-priced options that become exercisable in three annual installments beginning in December 2005 and 65,000 restricted stock units that vest after three years, must be held for five years and are payable exclusively in stock.

The Mid-Term Plan. In fiscal 2003, Deere introduced a new, multiyear incentive plan, the John Deere Mid-Term Incentive Bonus Plan (the “Mid-Term Plan”) to create additional rewards when excellent

			Annual Compensation				Long-Term Compensation Awards
							Awards				Payouts
Name and Principal Position	Fiscal Year		Salary ($)		Bonus(1) ($)		Restricted Stock Awards(2) ($)		Securities Underlying Options/ SAR(3) (#)		LTIP Payouts(4) $		All Other Compensation(5) ($)
Robert Lane, Chairman, President & Chief Executive Officer		2005 2004 2003	$ $ $	1,124,960 1,079,570 1,022,751	$ $ $	2,411,695 2,000,000 1,346,112	$ $ $	4,493,450 4,550,260 2,620,245		160,000 185,000 212,269	$ $ $	2,824,309 1,555,872 0	$ $ $	67,841 12,552 7,272

Pierre E. Leroy, Retired President, Worldwide Construction & Forestry(6)		2005 2004 2003	$ $ $	520,737 504,057 481,720	$ $ $	713,580 651,617 405,883	$ $ $	1,252,774 934,648 339,491		45,306 37,800 27,505	$ $ $	943,857 491,626 0	$ $ $	588,368 10,219 13,324

H. J. Markley, President, Agricultural Division		2005 2004 2003	$ $ $	508,940 472,908 451,098	$ $ $	698,508 621,341 380,911	$ $ $	1,091,286 811,668 451,883		39,467 33,000 36,609	$ $ $	943,857 491,626 0	$ $ $	26,226 9,290 5,724

Nathan J. Jones, Senior Vice President and Chief Financial Officer		2005 2004 2003	$ $ $	502,845 469,885 454,700	$ $ $	691,810 620,918 384,894	$ $ $	1,151,015 836,264 491,368		41,626 34,000 39,807	$ $ $	943,857 491,626 0	$ $ $	22,172 6,272 4,870

John J. Jenkins, President, Worldwide Commercial & Consumer Equipment		2005 2004 2003	$ $ $	500,459 471,319 442,973	$ $ $	678,720 615,141 372,985	$ $ $	934,638 971,542 439,338		33,800 39,300 35,593	$ $ $	943,857 491,626 0	$ $ $	23,744 9,173 5,028

David C. Everitt, President, Agricultural Division		2005 2004 2003	$ $ $	479,576 408,803 380,164	$ $ $	645,050 535,620 321,025	$ $ $	1,006,533 793,221 391,150		36,400 32,200 31,685	$ $ $	943,857 491,626 0	$ $ $	30,029 7,444 5,258

	Individual Grants									Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term(3)
Name	Number of Securities Underlying Options/SARs Granted(1)(#)		% of Total Options/SARs Granted to Employees in Fiscal Year			Exercise or Base Price ($/Sh)		Expiration Date(2)		5% ($)		10% ($)
Robert W. Lane		160,000		4.23	%	$	69.37		12/8/14	$	6,980,227	$	17,689,266
Pierre E. Leroy		45,306		1.20	%	$	69.37		12/8/14	$	1,976,539	$	5,008,937
H. J. Markley		39,467		1.04	%	$	69.37		12/8/14	$	1,721,804	$	4,363,389
Nathan J. Jones		41,626		1.10	%	$	69.37		12/8/14	$	1,815,993	$	4,602,084
John J. Jenkins		33,800		0.89	%	$	69.37		12/8/14	$	1,474,573	$	3,736,858
David C. Everitt		36,400		0.96	%	$	69.37		12/8/14	$	1,588,002	$	4,024,308

					Number of Securities Underlying Unexercised Options/SARs at Fiscal Year-End (2)(#)				Value of Unexercised In-the- Money Options/SARs at Fiscal Year End (3)($)
Name	Number of Securities Underlying Options/SARs Exercised (1)(#)		Value Realized ($)		Exercisable		Unexercisable		Exercisable		Unexercisable
Robert W. Lane		200,205	$	4,680,646		941,128		352,149	$	15,489,312	$	1,042,329
Pierre E. Leroy		39,100	$	1,302,103		312,401		79,331	$	5,382,135	$	135,066
H. J. Markley		0	$	0		217,587		73,328	$	3,778,389	$	179,765
Nathan J. Jones		0	$	0		243,114		77,203	$	4,011,465	$	195,479
John J. Jenkins		12,788	$	370,064		160,844		71,484	$	2,539,781	$	174,780
David C. Everitt		0	$	0		102,692		68,109	$	1,618,900	$	155,600

		Estimated Future Payouts Under Non-Stock-Price-Based Plans (2)
Name	Performance or Other Period Until Maturation or Payout (1)	Threshold ($)	Target ($)	Maximum ($)
Robert W. Lane	4 years	$1,120	$1,680,480	$3,360,960
Pierre E. Leroy	—	$ 0	$ 0	$ 0
H. J. Markley	4 years	$ 380	$ 575,640	$1,151,280
Nathan J. Jones	4 years	$ 380	$ 575,640	$1,151,280
John J. Jenkins	4 years	$ 380	$ 575,640	$1,151,280
David C. Everitt	4 years	$ 380	$ 575,640	$1,151,280

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (#)			Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights ($)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) (#)
	(a)			(b)		(c)
Equity Compensation Plans Approved by Security Holders		18,205,261	(1)		$51.81		5,409,991	(2)

Equity Compensation Plans Not Approved by Security Holders		-0-			—		-0-	(3)

Total		18,205,261			$51.81		5,409,991

DEERE & COMPANY STOCKHOLDER RELATIONS ONE JOHN DEERE PLACE MOLINE, IL 61265-8098	VOTE BY TELEPHONE AND INTERNET 24 HOURS A DAY, 7 DAYS A WEEK VOTE BY TELEPHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Deere & Company, c/o ADP, 51 Mercedes Way, Edgewood, NY 11717. Your telephone or Internet vote authorizes the named proxies to vote in the same manner as if you marked, signed and returned the proxy card.
	If you have submitted your proxy by telephone or the Internet there is no need for you to mail back your proxy.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING!

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:	DEEREA	KEEP THIS PORTION FOR YOUR RECORDS
		DETACH AND RETURN THIS PORTION ONLY
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DEERE & COMPANY

	The Directors recommend a vote FOR all Nominees and FOR Items 2 and 3.
	1. Election of Directors		For All	Withhold All	For All Except	To withhold authority to vote, mark "For All Except" and write the nominee's number on the line below.
	Nominees:	01 - Crandall C. Bowles, 02 - Vance D. Coffman, 03 - Arthur L. Kelly and 04 - Thomas H. Patrick.	o	o	o

		For	Against	Abstain

2.	Approval of the amendment of the John Deere Omnibus Equity and Incentive Plan.	o	o	o

3.	Ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for fiscal 2006.	o	o	o

(Please sign, date and return this proxy in the enclosed postage prepaid envelope.)

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Please indicate if you wish to discontinue receipt of the Annual Report by mail.	o	o

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	Signature [PLEASE SIGN WITHIN BOX]	Date		Signature (Joint Owner)	Date

1.		No cameras, sound equipment or recording devices may be brought into the auditorium.

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4.		Voting results announced at the meeting by the Inspectors of Voting are preliminary. Final results will be included in the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission for the second quarter of fiscal 2006.

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