DeDeere & Co. Chief Executive Sam Allen asked the company's board to cut his cash bonus for 2014 by 25% in the wake of tough conditions in the farm equipment market and the company's flagging stock price, Deere said in regulatory filing Friday.
The Moline, Ill., company said the board honored Mr. Allen's request, "resulting in total payments .... of $1.8 million less than the amounts he would have otherwise earned" for meeting the company's performance goals.
Mr. Allen's total compensation for the company's fiscal year ended Oct. 31 rose 5.9% from last year to $20.3 million. Much of the increase stemmed from a change in the value of his pension and deferred compensation, which rose to $3.14 million from $1.19 million in 2013. Excluding the pension, Mr. Allen's compensation, which also includes awards of stock and options, fell 4.6% to $17.1 million.
His base salary rose 4.1% to $1.49 million, but his incentive-based bonus slipped 19.5% from 2013 to $5.39 million. Without the voluntary reduction, Mr. Allen's bonus would have climbed 7.3% to $7.19 million.
Falling crop prices and the curtailment of generous U.S. tax deductions for farmers investing in new machinery have damped demand for farm machinery, particularly for large, high-horsepower models in the U.S. and Canada where Deere dominates the market.
Deere, the world's sales leader in farm tractors and harvesting combines, reported a 9% decrease in farm machinery sales in fiscal 2014 to $26.4 billion, while operating profit from farm equipment dropped 22% to $3.65 million. Overall net income for the year slipped 10.6% to $3.16 billion, or $8.63 a share, from $3.54 billion, or $9.09 a share in 2013.
For fiscal 2015, Deere forecast profit at $1.9 billion, implying earnings per share of $5.35 to $5.50.
Since the start of the year, Deere stock has slipped 1.1%, while the broader market S&P 500 index is up 11.5%. Deere shares Friday closed 0.58% higher at $90.06.
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