<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
HARLEY-DAVIDSON, INC.
---------------------
(Name of Registrant as Specified in its Charter)
HARLEY-DAVIDSON, INC.
---------------------
(Name of person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:/1/
4) Proposed maximum aggregate value of transaction:
_______________
/1/ Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and date of its filing.
<PAGE>
LOGO
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
HARLEY-DAVIDSON, INC.
3700 WEST JUNEAU AVENUE
MILWAUKEE, WISCONSIN 53208
(414) 342-4680
April 4, 1994
Dear Fellow Shareholder:
On behalf of the Board of Directors and management of Harley-Davidson, Inc.,
I cordially invite you to attend the 1994 Annual Meeting of Shareholders of
Harley-Davidson, Inc. to be held at 10:30 a.m., local time, on Saturday, May
14, 1994 at the Hyatt Regency Milwaukee, 333 West Kilbourn Avenue, Milwaukee,
Wisconsin.
The attached Notice of Annual Meeting and Proxy Statement describe the formal
business to be transacted at the Meeting. During the Meeting, there will be
brief reports on the operations of the Company. Once the business of the
Meeting has been concluded, shareholders will be given the opportunity to ask
questions.
We sincerely hope you will be able to attend our 1994 Annual Meeting.
However, whether or not you are personally present, it is important that your
shares be represented. ACCORDINGLY, PLEASE MARK, SIGN, DATE AND MAIL YOUR PROXY
CARD IN THE ENCLOSED ENVELOPE PROVIDED FOR THIS PURPOSE.
Sincerely yours,
LOGO
Vaughn L. Beals, Jr.
Chairman
<PAGE>
LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 14, 1994
The 1994 Annual Meeting of Shareholders (the "Annual Meeting") of Harley-
Davidson, Inc. (the "Company") will be held at the Hyatt Regency Milwaukee, 333
West Kilbourn Avenue, Milwaukee, Wisconsin on May 14, 1994 at 10:30 a.m., local
time, for the following purposes:
1. To elect three directors for a three-year term to expire at the
Company's 1997 Annual Meeting of Shareholders;
2. To approve amendments to the Company's 1990 Stock Option Plan, the
Company's 1988 Stock Option Plan and the Company's 1986 Stock Option Plan
(i) to provide that options for not more than 100,000 shares may be granted
to any one employee under the Option Plans in any fiscal year and (ii) to
change the definition of "Subsidiary";
3. To approve the adoption of the Company's Corporate Short Term
Incentive Plan;
4. To approve the proposed restructuring of the Company's Motorcycle
Division, which may include the transfer of substantially all of the
Company's assets to one or more direct or indirectly wholly-owned
subsidiaries of the Company;
5. To ratify the selection of Ernst & Young, independent public
accountants, to audit the annual financial statements of the Company for
the year ending December 31, 1994; and
6. To take action upon any other business as may properly come before the
Annual Meeting and any adjournment thereof.
The Board of Directors of the Company has fixed the close of business on
March 17, 1994 as the record date for the determination of shareholders
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof.
By Order of The Board of Directors,
LOGO
Timothy K. Hoelter
Secretary
Milwaukee, Wisconsin
April 4, 1994
YOUR VOTE IS IMPORTANT,
NO MATTER HOW MANY SHARES YOU OWNED
ON THE RECORD DATE.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND
SIGN IT, AND RETURN IT IN THE ENVELOPE PROVIDED WHICH IS ADDRESSED FOR YOUR
CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE TO THE COMPANY OF FURTHER SOLICITATION, WE ASK
YOUR COOPERATION IN MAILING YOUR PROXY PROMPTLY.
<PAGE>
LOGO
3700 WEST JUNEAU AVENUE
MILWAUKEE, WISCONSIN 53208
APRIL 4, 1994
----------------
PROXY STATEMENT
----------------
The Proxy accompanying this Proxy Statement is solicited by the Board of
Directors (the "Board") of Harley-Davidson, Inc. (the "Company") for use at the
1994 Annual Meeting of Shareholders of the Company to be held on May 14, 1994
and at any adjournment thereof (the "Annual Meeting"). This Proxy Statement and
the accompanying proxy were first sent to shareholders on or about April 4,
1994.
The only outstanding class of voting securities of the Company is its Common
Stock. On March 17, 1994, the record date for the determination of shareholders
entitled to notice of and to vote at the Annual Meeting, 38,091,491 shares of
Common Stock were outstanding. Holders of the Common Stock are entitled to one
vote per share on all matters.
Shareholders who execute proxies may revoke them at any time prior to the
voting thereof by delivery of a subsequently dated proxy or written notice (1)
to the Secretary of the Company at the Company's address shown above on or
before May 13, 1994 or (2) to the secretary of the Annual Meeting at the Annual
Meeting. Unless so revoked, the shares represented by proxies received by the
Board will be voted at the Annual Meeting and any adjournment thereof. Where a
shareholder specifies a choice by means of the ballot provided in the proxy,
the shares will be voted in accordance with such specification.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 17, 1994 with
respect to the Common Stock ownership of each director, the Chief Executive
Officer, the four other executive officers of the Company identified in the
Summary Compensation Table below and all directors and executive officers as a
group. No person or group of persons is known by the Company to own
beneficially more than 5% of the Common Stock of the Company.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
OWNERSHIP(1)(2)
--------------------- SHARES ISSUABLE
NUMBER OF PERCENT UPON EXERCISE OF
NAME OF BENEFICIAL OWNER SHARES OF CLASS STOCK OPTIONS(3)
- ------------------------ --------- -------- ----------------
<S> <C> <C> <C>
Barry K. Allen.......... 1,001 * 0
William F. Andrews...... 2,000 * 0
Vaughn L. Beals, Jr..... 255,580(4) * 0
Jeffrey L. Bleustein.... 165,423 * 40,367
Fred L. Brengel......... 6,000 * 0
Thomas A. Gelb.......... 45,656 * 11,184
C. William Gray......... 7,443 * 7,196
Richard J. Hermon-
Taylor................. 2,000 * 0
Donald A. James......... 10,000(5) * 0
Richard G. LeFauve...... 0 * 0
James A. Norling........ 0 * 0
William B. Potter....... 700(6) * 0
Richard F. Teerlink..... 472,458(7) 1.2 236,800
James L. Ziemer......... 54,664 * 20,772
All Directors and
Executive Officers as
a Group (17
Individuals)........... 1,182,718 3.1 352,698
</TABLE>
- --------
*The amount shown is less than 1% of the outstanding shares of Common Stock.
(1) Except as otherwise noted, all persons have sole voting and investment
power over the shares listed.
(2) Includes shares of Common Stock issuable upon the exercise of stock options
exercisable within 60 days of March 17, 1994.
(3) Only includes stock options exercisable within 60 days of March 17, 1994.
Directors who are not employees of the Company are not eligible to receive
stock options under the Company's stock option plans.
(4) Includes 95,190 shares of Common Stock held by Mr. Beals' wife. Mr. Beals
has shared voting and investment power over such shares.
(5) Mr. James has sole voting power and shared investment power over such
shares.
(6) Includes 700 shares of Common Stock held by Mr. Potter's wife. Mr. Potter
has shared voting and investment power over such shares.
(7) Includes 400 shares of Common Stock held in a custodial account for Mr.
Teerlink's daughter. Mr. Teerlink has shared voting and investment power
over such shares.
2
<PAGE>
1--ELECTION OF DIRECTORS
The Restated Articles of Incorporation of the Company provide for a Board of
not less than six (6) nor more than fifteen (15) members, as determined from
time to time by the affirmative vote of a majority of the Directors then in
office. The Board is divided into three classes, with one class of Directors
elected each year for a term of three years.
The Board currently consists of ten members, four of whom have terms that
expire at the Annual Meeting (Class III Directors), three of whom have terms
that expire at the 1995 annual meeting of shareholders (Class I Directors) and
three of whom have terms that expire at the 1996 annual meeting of shareholders
(Class II Directors). Fred L. Brengel, who is a Class III Director, has
announced that he will retire as a Director prior to the Annual Meeting. The
Board has acted to reduce the size of the Board to nine members effective upon
Mr. Brengel's retirement.
The three nominees for director set forth below, all of whom are currently
Class III Directors, are proposed to be elected at the Annual Meeting to serve
until the 1997 Annual Meeting. The remaining six Directors will continue to
serve as members of the Board for terms as set forth below. All of the nominees
have advised the Company that they will serve if elected. Directors are elected
by a plurality of the votes cast (assuming a quorum is present at the Annual
Meeting). Thus, any shares not voted, whether due to abstentions or broker non-
votes, will not have an impact on the election of Directors. A quorum consists
of a majority of the shares entitled to vote represented at the Annual Meeting
in person or by proxy, including proxies reflecting abstentions or broker
nonvotes. Broker nonvotes arise from proxies delivered by brokers and others
where the record holder has not received authority to vote on one or more
matters. Once a share is represented at the Annual Meeting, it will be deemed
present for quorum purposes throughout the Annual Meeting and any adjournment
thereof unless a new record date is or must be set for such adjournment.
Proxies solicited by the Board will be voted "FOR" the following nominees
unless a shareholder specifies otherwise. Should any such nominee become unable
to serve, proxies may be voted for another person designated by the Board.
THE BOARD RECOMMENDS A VOTE "FOR" THE FOLLOWING NOMINEES.
The names, ages as of March 17, 1994, and principal occupations for the past
five years of each of the Directors and nominees and the names of any other
public companies of which each is presently serving as a director are set forth
below:
NOMINEES FOR CLASS III DIRECTORS--TERMS EXPIRING AT 1997 ANNUAL MEETING
Vaughn L. Beals, Jr., 66, has been a Director and Chairman of the Board of
the Company since 1981. He served as Chief Executive Officer of the Company
from 1981 until his retirement in 1989 and as President of the Company from
1981 until 1988.
Donald A. James, 50, has been a Director of the Company since 1991. Since
1989 Mr. James has been the Vice Chairman and Chief Executive Officer of Fred
Deeley Imports Ltd., the largest independent motorcycle distributorship in
Canada and the exclusive distributor of the Company's motorcycles in that
country. He is a co-founder and from 1981 to 1989 served as President of Fred
Deeley Imports Ltd.
James A. Norling, 52, has been a Director of the Company since December 1993.
Mr. Norling has served as President, Europe, Middle East and Africa and as
Chairman, European Management Board for Motorola, Inc., a manufacturer of
electronics, since April 1993 and as an Executive Vice President of Motorola,
Inc. since 1990. From 1990 to April 1993 he was President and General Manager
of Motorola's Semiconductor Products Sector and from 1986 to 1990 was Executive
Vice President and General Manager of Motorola's Semiconductor Products Sector.
3
<PAGE>
CLASS I DIRECTORS--TERMS EXPIRING AT 1995 ANNUAL MEETING
Barry K. Allen, 45, has been a Director of the Company since 1992. He is
currently President and Chief Operating Officer of Marquette Electronics, Inc.,
a manufacturer of medical equipment and systems. From July 1993 to September
1993 he was President of Illinois Bell, Inc., a provider of communications and
information services to Illinois customers, and from 1989 to July 1993 he was
President and Chief Executive Officer of Wisconsin Bell, Inc., a provider of
communications and information services to Wisconsin customers. From 1987 to
1989 Mr. Allen was President and Chief Executive Officer of Ameritech
Publishing Inc., a publishing and marketing company. Mr. Allen is also a
director of Banta Corporation.
William B. Potter, 56, was elected a Director of the Company in March 1991.
He has been an independent investor and consultant since February 1993. He was
Chairman of the Board, President and Chief Executive Officer of Preston
Corporation, a transportation holding company, from 1986 to February 1993. Mr.
Potter is also a director of Mercantile Bankshares Corporation and its
subsidiary Mercantile Safe Deposit & Trust Company.
Richard G. LeFauve, 59, was elected a Director of the Company in December
1993. He has been President of Saturn Corporation, an automobile manufacturer,
since 1986 and a Vice President of General Motors Corporation, an automobile
manufacturer, since 1985.
CLASS II DIRECTORS--TERMS EXPIRING AT 1996 ANNUAL MEETING
William F. Andrews, 62, has been a Director of the Company since 1990. Mr.
Andrews has been a consultant with the investment banking firm Investor (USA)
International (formerly known as Instoria Providentia, Inc.) since January
1992, Chairman and Chief Executive Officer of Amdura Corp., a specialty
manufacturer of products for the overhead lifting and waste recycling and
disposal markets, since January 1993 and Chairman of Utica Corp., a
manufacturer of precision-forged turbine airfoils for both aircraft and land-
based engines, since January 1993. From 1990 to 1991, he was President and
Chief Executive Officer of UNR Industries, Inc., a diversified manufacturer of
steel products. From 1990 to 1991 Mr. Andrews was President of Massey
Investment Company, a private investment company, and from 1986 to 1989 was
Chairman and Chief Executive Officer of Singer Sewing Machine Company, a
producer of sewing machines, furniture and consumer durables. Mr. Andrews is
also a director of Navistar, Inc., Southern New England Telephone Company,
Corrections Corporation of America, Johnson Controls, Inc., Katy Industries,
Inc., MB Communications, Inc. and Northwestern Steel & Wire Corporation.
Richard J. Hermon-Taylor, 52, has been a Director of the Company since 1986.
He has been President of Bioscience International Inc., a technology transfer
company, since 1987. From 1990 to 1992 he was Chief Executive Officer of
Tonometrics, Inc., a manufacturer of medical devices. Mr. Hermon-Taylor is also
a director of Alliance Technology Fund, Inc. and Galileo Electro-Optics
Corporation.
Richard F. Teerlink, 57, has been a Director of the Company since 1982. He
has been Chief Executive Officer of the Company since 1989 and President of the
Company since 1988. Mr. Teerlink was Chief Operating Officer of the Company
from 1988 to 1989, Chief Financial Officer of the Company from 1981 to 1990 and
President and Chief Operating Officer of the Company's Motorcycle Division from
1987 to 1988. He is also a director of Outboard Marine Corporation.
4
<PAGE>
COMMITTEES OF THE BOARD
The Board has three committees: an Audit Committee, a Human Resources
Committee and a Nominating Committee.
The Audit Committee, the current members of which are Barry K. Allen, William
F. Andrews (Chairman), Fred L. Brengel, Richard J. Hermon-Taylor, Donald A.
James and William B. Potter, met two times during 1993. The Audit Committee
selects, subject to shareholder ratification, and engages independent public
accountants to audit the books, records and accounts of the Company. The Audit
Committee also determines the scope of such audits and reviews the adequacy of
the internal accounting controls of the Company.
The Human Resources Committee, the current members of which are Barry K.
Allen, William F. Andrews, Fred L. Brengel (Chairman), Richard G. LeFauve and
James A. Norling, met three times during 1993. The Human Resources Committee
approves certain compensation and benefits actions, reviews performance of
senior management and advises management on matters of succession planning,
career development and human resources strategies.
The Nominating Committee, the current members of which are Barry K. Allen
(Chairman), William F. Andrews, Fred L. Brengel, Richard J. Hermon-Taylor,
Donald A. James, Richard G. LeFauve, James A. Norling and William F. Potter,
met two times during 1993. The Nominating Committee identifies and selects
future Board candidates. Shareholders may recommend candidates by writing to
the Nominating Committee in care of the Secretary of the Company. Such
recommendations for the 1995 Annual Meeting must be received by the Company on
or before December 4, 1994.
The Board met four times during 1993. All Directors attended at least 75% of
the meetings of the Board and the Board committees on which they served during
1993 with the exception of Messrs. Allen and Brengel, who attended 73% of such
meetings, and Mr. Norling, who missed one meeting of the Human Resources
Committee.
Directors who are employees of the Company do not receive any special
compensation for their services as Directors. Except for Mr. Beals, Directors
who are not employees of the Company received in 1993 an annual fee of $25,000
plus $1,500 for each meeting of the Board and $750 for each Audit Committee
meeting and each Human Resources Committee meeting. The Company reimburses
Directors for any travel expenses incurred in connection with attendance at
Board or Board committee meetings.
The Company has a consulting contract with Mr. Beals pursuant to which Mr.
Beals is paid $242,240 per year. The consulting term expires June 30, 1998. The
consulting contract also provides for supplemental retirement benefits of
$159,840 per year after the consulting term until his death. In the event of
Mr. Beals' death prior to the end of the consulting term, the consulting
agreement provides, as a death benefit, the continuation of certain payments
under the consulting agreement through July 1, 1999.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table shows the aggregate compensation, including incentive
compensation, paid by the Company for 1993, 1992 and 1991 to the Chief
Executive Officer and each of the four other most highly compensated executive
officers of the Company for 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION(1)
---------------------------- ---------------
AWARDS ALL
OTHER --------------- OTHER
ANNUAL SECURITIES COMPEN-
NAME AND PRINCIPAL COMPEN- UNDERLYING SATION
POSITION YEAR SALARY($) BONUS($) SATION($) OPTIONS(#) ($)(2)
- ------------------ ---- --------- -------- --------- --------------- -------
<S> <C> <C> <C> <C> <C> <C>
Richard F. Teerlink
President and Chief
Executive Officer..... 1993 425,672 546,000 41,468 0 12,288
President and Chief
Executive Officer..... 1992 397,926 283,161 31,506 50,000 7,081
President and Chief
Executive Officer..... 1991 375,012 245,610 50,000
Jeffrey L. Bleustein
President and Chief
Operating Officer--
Motorcycle Division... 1993 275,004 301,624 32,962 0 8,129
President and Chief
Operating Officer--
Motorcycle Division... 1992 229,171 112,701 20,486 20,444 2,882
Executive Vice
President............. 1991 203,758 93,537 13,624
Thomas A. Gelb
Vice President,
Continuous
Improvement........... 1993 239,442 218,850 24,505 0 8,612
Vice President,
Continuous
Improvement........... 1992 222,292 109,013 21,103 20,000 3,879
Vice President,
Continuous
Improvement........... 1991 191,775 54,710 13,624
C. William Gray
Vice President, Human
Resources-- Motorcycle
Division.............. 1993 165,881 151,615 21,025 0 28,761
Vice President, Human
Resources-- Motorcycle
Division.............. 1992 158,674 78,845 11,945 7,822 26,122
Vice President, Human
Resources-- Motorcycle
Division.............. 1991 144,000 66,692 10,480
James L. Ziemer
Vice President and
Chief Financial
Officer............... 1993 160,690 147,337 21,007 0 4,655
Vice President and
Chief Financial
Officer............... 1992 154,375 82,082 11,620 6,888 395
Vice President and
Chief Financial
Officer............... 1991 148,325 69,480 9,170
</TABLE>
- --------
(1) At December 31, 1993 the following named executive officers held restricted
Common Stock which vests on December 31, 1994: Mr. Teerlink held 126,700
shares with a market value of $5,590,638; Mr. Bleustein held 14,056 shares
with a market value of $620,221; Mr. Gelb held 6,972 shares with a market
value of $307,640 and Mr. Ziemer held 13,764 shares with a market value of
$607,337. During the period of restriction, the holder is entitled to vote
the restricted shares and received dividends thereon.
(2) The 1993 amounts include a $4,227 401(k) matching contribution for each
executive and the value of split dollar life insurance provided by the
Company in 1993 to each executive. In addition, the 1993 amount for Mr.
Gray includes $20,000 of loan forgiveness and $3,466 of imputed interest
relating to an interest free relocation loan provided to Mr. Gray in
connection with his joining the Company in 1990.
6
<PAGE>
STOCK OPTION PLANS
Stock options may be granted to executive officers and other key employees of
the Company pursuant to the Company's 1986 Stock Option Plan, the Company's
1988 Stock Option Plan and the Company's 1990 Stock Option Plan which are
administered by the Human Resources Committee. No options to purchase shares of
Common Stock were granted to the Chief Executive Officer or the other named
executive officers during 1993.
Shown below is information relating to the exercise of options by the Chief
Executive Officer and the other named executive officers during 1993 and the
value of unexercised options held by such persons as of December 31, 1993.
AGGREGATED OPTION EXERCISES IN 1993
AND OPTION VALUES AT DECEMBER 31, 1993
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT DECEMBER 31, 1993 AT DECEMBER 31, 1993(2)
ACQUIRED ON VALUE (#) ($)
EXERCISE REALIZED -------------------------------- -------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- -------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard F. Teerlink..... 0 0 223,475 77,825 7,533,095 1,378,582
Jeffrey L. Bleustein.... 0 0 38,881 27,131 1,167,413 441,352
Thomas A. Gelb.......... 0 0 11,184 11,656 280,664 159,170
C. William Gray......... 3,000 78,375 13,196 17,106 340,355 367,724
James L. Ziemer......... 0 0 20,772 14,250 623,028 301,677
</TABLE>
- --------
(1) Value based on the fair market value of Common Stock on the date of
exercise less the option exercise price.
(2) Value based on a fair market value of Common Stock of $44.125 as of
December 31, 1993 less the option exercise price.
RETIREMENT BENEFITS
The following table shows at different levels of remuneration and years of
credited service the estimated annual benefits payable as a straight life
annuity to each of the executive officers named in the Summary Compensation
Table under the Company's retirement plans and agreements applicable to such
officers as presently in effect, which are described below, assuming retirement
at age 62:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------
REMUNERATION 5 10 15 20 25 30 35
- ------------ ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 150,000....... $11,381 $ 22,761 $ 34,142 $ 45,522 $ 56,903 $ 68,284 $ 79,664
200,000....... 15,381 33,961 50,942 67,922 84,903 101,884 118,864
250,000....... 19,381 38,761 58,142 77,522 96,903 116,284 135,664
300,000....... 23,381 46,761 70,142 93,522 116,903 140,284 163,664
400,000....... 31,381 62,761 94,142 125,522 156,903 188,284 219,664
500,000....... 39,381 78,761 118,142 157,522 196,903 236,284 275,664
600,000....... 47,381 94,761 142,142 189,522 236,903 284,284 331,664
700,000....... 55,381 110,761 166,142 221,522 276,903 332,284 387,664
800,000....... 63,381 126,761 190,142 253,522 316,903 380,284 443,664
900,000....... 71,381 142,761 214,142 285,522 356,903 428,284 499,664
1,000,000....... 79,381 158,761 238,142 317,522 396,903 476,284 555,664
1,100,000....... 87,381 174,761 262,142 349,522 436,903 524,284 611,664
</TABLE>
7
<PAGE>
The Company maintains the Retirement Annuity Plan for Salaried Employees of
Harley-Davidson, Inc., a noncontributory defined benefit pension plan
("Salaried Pension Plan"). Under the Salaried Pension Plan, salaried employees
of Company (excluding Holiday Rambler and certain other subsidiaries),
including the Chief Executive Officer and the other named executive officers,
generally are entitled to receive upon retirement at age 62 a monthly benefit
based upon "final average earnings," as defined in the Salaried Pension Plan,
less the amount of certain Social Security benefits. For named executive
officers, final average earnings equal the highest average annual total
compensation (consisting of base salary and bonus as shown in the Summary
Compensation Table) paid over five consecutive calendar years within the last
ten years of service prior to the participant's retirement or other date of
termination. Vesting under the Salaried Pension Plan occurs upon five years of
service and normal retirement is age 62. An employee who retires after age 55
and before age 62 with a minimum of 5 years of service will receive an
actuarially reduced benefit under the Salaried Pension Plan. The spouse of an
employee who is eligible for early retirement or who is vested at death is also
entitled to certain benefits under the Salaried Pension Plan.
As of December 31, 1993, final average earnings and years of credited service
under the Salaried Pension Plan were as follows: $624,981 and 12.4 years,
respectively, for Mr. Teerlink; $326,665 and 22.9 years, respectively, for Mr.
Bleustein; $305,809 and 18.2 years, respectively, for Mr. Gelb; $174,292 and
3.3 years, respectively, for Mr. Gray; and $203,675 and 18.2 years,
respectively for Mr. Ziemer. In addition to the amounts shown above, the Board
has credited Mr. Teerlink and Mr. Gelb with 5 and 6 additional years of
service, respectively. The Company has adopted a pension benefit restoration
plan pursuant to which the Company will pay participants amounts that exceed
certain limitations the Internal Revenue Code imposes on benefits payable under
the Salaried Pension Plan. In addition, the Board has approved supplemental
executive retirement benefits for the Chief Executive Officer and the other
named executive officers. Under such benefits, a participant who retires at or
after age 55 with 15 years of service (including the additional years of
service for Mr. Teerlink and Mr. Gelb described above) is entitled to a yearly
retirement benefit payment equal to 35% of the executive's final average
earnings at age 55 increasing in equal increments to 50% of final average
earnings at age 62, reduced by the amount of any pension payable by the Company
under the Salaried Pension Plan, the pension benefit restoration plan and any
other defined benefit retirement programs of the Company and by the amount of
certain Social Security benefits. Amounts payable pursuant to the credited
additional years of service, the pension benefit restoration plan and the
supplemental executive retirement benefits become fully securitized at
retirement through the use of split dollar life insurance, lump sum cash
payments and/or other means.
AGREEMENTS
The Company has entered into employment agreements with Messrs. Teerlink,
Bleustein and Gelb, which provide that, upon termination of employment for
reasons other than cause, the Company will pay each such employee certain
amounts, including such employee's base compensation in effect on the date of
such termination (which currently would approximate the amount of cash
compensation set forth in the table above) for a period not exceeding one year
(three years in the case of Mr. Teerlink), together with other benefits to
which such employee was entitled prior to termination.
The Company has entered into transition agreements with Messrs. Teerlink,
Bleustein, Gelb and Ziemer which become effective upon a change of control of
the Company as defined therein. The transition agreements provide that in the
event of termination of such individual's employment with the Company for any
reason (other than death or disability) within one year (three years in the
case of Mr. Teerlink) after a change of control of the Company, such individual
will receive a cash payment in an amount equal to the product of three
multiplied by the sum of (1) the individual's highest annual base salary during
the five-year period preceding termination and (2) the highest annual bonus
paid during the five-year period preceding termination. Such individual will
also receive immediate vesting in any retirement, incentive, stock option and
other deferred compensation plans. The contracts state that if any of the
payments to the employees are considered "excess parachute payments" as defined
in Section 280G of the Internal Revenue Code the Company will pay the penalty
imposed upon the employee plus the tax gross up.
8
<PAGE>
BOARD OF DIRECTORS HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Human Resources Committee is responsible for establishing, reviewing and
revising the compensation policies for the Company's executive officers. The
Human Resources Committee is composed entirely of directors who are not
employees or former employees of the Company and who do not have a business
relationship with the Company other than in their capacity as directors.
This report is being included pursuant to Securities and Exchange Commission
("SEC") rules designed to enhance disclosure of public companies' executive
compensation policies. This report addresses the Company's compensation
policies for 1993 as they affected the Chief Executive Officer and the
Company's other executive officers, including the four named executive
officers.
General
Under the supervision of the Human Resources Committee, the Company has
developed and implemented compensation policies, plans and programs that seek
to attract and retain qualified and talented employees and enhance the
profitability of the Company. In furtherance of these goals, the Company's
executive compensation policies, plans and programs consist of base salary,
annual incentive compensation, annual stock option grants, annual perquisite
payments, a qualified pension plan, a non-qualified pension benefit restoration
plan, a 401(k) plan (with a Company matching feature), a deferred compensation
plan and life insurance benefits.
In addition to the experience and knowledge of the Human Resources Committee
and the recommendations of the Human Resources Departments at the Motorcycle
Division and Holiday Rambler, the Human Resources Committee utilized the
results of a compensation analysis (the "CEO Compensation Analysis") prepared
by an independent compensation consultant in making its 1993 executive
compensation decisions. The CEO Compensation Analysis, which was presented to
the Human Resources Committee in February 1993, addressed the median
compensation for chief executive officers of "make and sell" companies of
comparable size to the Company. The CEO Compensation Analysis included median
base salary (including the percentage increase over the prior year), median
annual bonus percentage and median stock option information for the comparable
companies and recommended ranges for Mr. Teerlink's compensation in 1993. The
CEO Compensation Analysis was based upon information derived from a broad cross
section of Fortune 500 companies selected by the independent compensation
consultant.
The comparable companies used by the human resources staff and the Human
Resources Committee to benchmark executive compensation are not included on the
Performance Graph because they change from year to year depending on both the
Company's and other companies' performance. The purpose of the Performance
Graph is to compare the performance of the Company's Common Stock over a five-
year period against a stock index or a fixed group of companies. In contrast,
the Company generally utilizes compensation surveys to compare its executive
compensation policies against companies that have specified performance and
other characteristics similar to those of the Company during a limited period
of time. The Company believes that including such companies as a separate group
on the Performance Graph would be confusing and potentially misleading.
In general, it is the policy of the Human Resources Committee to fix
executive base salary range midpoints at levels below the median amounts paid
to executives with similar qualifications, experience and responsibilities at
other comparable businesses. Executives' actual salaries are determined by
individual performance evaluations and potential future contribution to the
Company. It is also the policy of the Human Resources Committee generally to
establish maximum incentive cash compensation and stock option grants at levels
above the median amounts paid or granted to executives with similar
qualifications, experience and responsibilities at other comparable businesses.
The Company intends to provide a total compensation opportunity for Company
executives that is above average, but with an above average amount of the total
compensation opportunity at risk and dependent upon continuously improving
Company performance. In all cases, the Human Resources Committee considers the
total potential compensation payable to each of the
9
<PAGE>
named executive officers and other executives when establishing or adjusting
any element of their compensation package.
1993 Base Salary
Executive base salaries are reviewed annually. In February 1993, the Human
Resources Committee, in consultation with the Vice President of Human Resources
for the Motorcycle Division, increased Mr. Teerlink's base salary by 7%. This
increase was within the range suggested by the CEO Compensation Analysis and
was based upon the Human Resources Committee's assessment of Mr. Teerlink's
past performance and its expectations for his future contributions in leading
the Company. Mr. Teerlink's base salary increase for 1994 is 4%. Also in
February 1993, the Human Resources Committee reviewed, with the Chief Executive
Officer and Vice President of Human Resources for the Motorcycle Division, and
approved, with modifications it deemed appropriate, the annual salary plan for
the Company's executive officers (other than the Chief Executive Officer and an
executive who is an employee of Holiday Rambler), including the named executive
officers. The annual salary plan was developed by the Motorcycle Division's
human resources staff under the direction of the President of the Motorcycle
Division based primarily upon each executive's individual performance
evaluation for the prior year, the anticipated future contribution of each
executive and a survey, conducted by an independent human resources consulting
firm, of total compensation packages for specified types of executive
positions, including all of the positions held by the named executives and
certain other senior officers of the Company, at ten comparably performing and
similarly sized companies selected by the Company (the "Executive Compensation
Survey"). 1993 base salaries for the named executive officers are set forth in
the Summary Compensation Table. In February 1993, the Human Resources Committee
also reviewed and approved, with the Chief Executive Officer and the Vice
President of Human Resources for Holiday Rambler, the compensation for one non-
named executive officer of the Company who is an employee of Holiday Rambler.
Such executive officer's salary was determined using the same general approach
as described above for Motorcycle Division and corporate employees.
1993 Incentive Cash Compensation
In 1993, the Company had a separate Short Term Incentive Plan ("STIP") for
each of (1) certain of its corporate employees (Messrs. Teerlink and Ziemer),
(2) certain of its corporate and Motorcycle Division employees (including the
other named executive officers) and (3) certain of its Holiday Rambler
employees. In December 1992, the Human Resources Committee reviewed and
approved the Motorcycle Division 1993 STIP plan, the Holiday Rambler 1993 STIP
plan and the target award for 1993 for each executive officer, including the
named executive officers, under all three STIP plans. Award payouts under the
Motorcycle Division and Holiday Rambler 1993 STIP plans were based upon
performance targets included in the plans approved by the Human Resources
Committee in December 1992. The Motorcycle Division STIP plan included both
Motorcycle Division financial targets related to earnings and expenses
(weighted 50%) and Motorcycle Division strategic targets related to schedule
attainment and product quality (weighted 50%). The Holiday Rambler STIP plan
included only Holiday Rambler financial targets related to earnings and working
capital usage (weighted 100%). The target awards for the named executive
officers ranged from 50% to 70% of their respective 1993 base salaries. The
amount of each executive's target award is reviewed annually based upon
comparable company data, such as the CEO Compensation Analysis and the
Executive Compensation Survey, the executive's individual performance
evaluation for the prior year and the Human Resources Committee's appraisal of
the executive's anticipated future contribution to the Company. Depending on
Company performance (and, in the case of the corporate STIP plan, the
subjective determination of the Human Resources Committee), STIP awards can
range from 0% to 200% of the target award.
Mr. Teerlink's 1993 STIP award was determined subjectively by the Human
Resources Committee in February 1994. The Human Resources Committee based its
determination on the percentage payout under the Motorcycle Division 1993 STIP
plan (183%) and the Holiday Rambler 1993 STIP plan (0%) and the financial and
strategic performance of the Company as a whole. The Human Resources Committee
considered
10
<PAGE>
in particular that the financial and strategic results of the Motorcycle
Division were significantly above target, while the strategic and financial
performance at Holiday Rambler was not at expected levels. An evaluation of the
financial and strategic performance of the Company as a whole indicated
significant accomplishment in both categories. The Human Resources Committee
awarded Mr. Teerlink a STIP award of $546,000. Mr. Ziemer's 1993 STIP award was
established by the Committee in a similar manner. The STIP awards for the
remaining named executive officers were determined mathematically under the
Motorcycle Division 1993 STIP plan. 1993 STIP awards paid or payable by the
Company with respect to the named executive officers are set forth in the
Summary Compensation Table.
1993 Stock Option Grants
While the STIP plans provide Company executives with short term incentives to
maximize Company performance, the Human Resources Committee believes that it is
also important to provide incentives that more directly tie executives' longer
term compensation to long term returns to the Company's shareholders. This long
term incentive compensation opportunity is provided through the Company's Stock
Option Plans (the "Option Plans"). Annually, the Human Resources Committee
reviews, with the Vice Presidents of Human Resources for the Motorcycle
Division and Holiday Rambler and, except in the case of his stock option grant,
the Chief Executive Officer, and approves individual stock option grants for
each of the Company's executive officers, including the named executive
officers. The amount of each executive's stock option grant is determined based
upon comparable company data, such as the CEO Compensation Analysis and the
Executive Compensation Survey, the executive's individual performance
evaluation for the prior year and the Human Resources Committee's appraisal of
the executive's anticipated long term future contribution to the Company.
Historically, the Company granted stock options in December of each year. In
order to review all elements of executive compensation at the same time, the
Human Resources Committee decided in February 1993 to begin making annual stock
option grants in February of each year, beginning with February 1994.
Consequently, the Company granted no stock options to the named executive
officers in 1993 (one stock option grant was made to a non-named executive
officer in 1993 in connection with his joining the Company).
Other Compensation
The Human Resources Committee believes that the compensation paid or payable
pursuant to the Company's annual perquisite payments, pension plan, pension
benefit restoration plan, 401(k) plan, deferred compensation plan and life
insurance benefits are competitive with the benefits packages offered by
comparable employers. From time to time the Human Resources Departments of the
Motorcycle Division and Holiday Rambler obtain data to ensure that such
benefits plans and programs remain competitive. No such data was reviewed by
the Human Resources Committee in 1993.
Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code, adopted in 1993, provides that a
publicly held corporation will not be entitled to deduct for federal income tax
purposes compensation paid to a named executive officer in excess of $1 million
in any year. Incentive compensation based on company performance, provided it
is paid pursuant to a plan which has been approved by shareholders and meets
certain other criteria, is not subject to Section 162(m). It is the Human
Resources Committee's intention to continue to utilize incentive compensation
as a substantial component of the Company's executive compensation program and
to structure the payment of incentive compensation so that the Company will not
lose any deductions under Section 162(m). To that end, the Company has proposed
for shareholder approval at the Annual Meeting the Harley-Davidson, Inc.
Corporate Short Term Incentive Plan and certain amendments to the Harley-
Davidson, Inc. 1990 Stock Option Plan. Compensation pursuant to these plans, if
approved by shareholders, is not expected to be subject to Section 162(m).
11
<PAGE>
Conclusion
During the last three calendar years, shareholders of the Company have
enjoyed a total return of 360%. During that same period of time the Standard &
Poor's 500 and MidCap 400 Indexes had total returns of 55% and 91%,
respectively. The Human Resources Committee believes that the compensation
policies and practices of the Company described in this report have supported
this performance. In addition, the Human Resources Committee believes that
these compensation policies and practices are in the best interests of the
Company and consistent with the Company's commitment to balance the interests
of all of the Company's Stakeholders (customers, dealers, suppliers, employees,
shareholders, government and society).
Fred L. Brengel, Chairman
Barry K. Allen
William F. Andrews
Richard G. LeFauve
James A. Norling
12
<PAGE>
PERFORMANCE GRAPH
The SEC requires the Company to include in this Proxy Statement a line graph
presentation comparing cumulative five year Common Stock returns with a broad-
based stock index and either a nationally recognized industry index or an index
of peer companies selected by the Company. The Company has chosen to use the
Standard & Poor's 500 Index as the broad-based index and Standard & Poor's
MidCap 400 Index as a more specific comparison. The Standard & Poor's MidCap
400 Index was chosen because the Company does not believe that any other
published industry or line-of-business index adequately represents the current
operations of the Company or that it can identify a peer group that provides a
useful comparison.
PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
YEAR 1988 1989 1990 1991 1992 1993
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Harley-Davidson, Inc. $100.00 $154.68 $151.72 $352.71 $593.10 $697.55
---------------------------------------------------------------------------------------------
S&P MidCap 400 100.00 135.54 128.61 193.03 216.03 246.17
---------------------------------------------------------------------------------------------
S&P 500 100.00 131.69 127.60 166.47 179.15 197.21
</TABLE>
- --------
*Assumes $100 invested on December 31, 1988.
13
<PAGE>
CERTAIN TRANSACTIONS
Mr. James, a Director of the Company, is Vice Chairman and Chief Executive
Officer of Fred Deeley Imports Ltd. ("Deeley Imports"), the exclusive
distributer of the Company's motorcycles in Canada. In 1993, Deeley Imports
paid the Company approximately $40 million for motorcycles, parts and
accessories and related products and services. All such products and services
were provided in the ordinary course of business at prices and on terms and
conditions determined through arms-length negotiation. The Company anticipates
that it will do a similar amount of business with Deeley Imports in 1994.
Mr. Gray, Vice President of Human Resources of the Motorcycle Division,
received an interest-free relocation loan from the Company in connection with
his joining the Company in 1990. The largest amount outstanding under the
relocation loan in 1993 was $90,000. As of April 4, 1994, $70,000 was
outstanding under the relocation loan.
Mr. Martin R. Snoey, a Vice President of the Company and President and Chief
Operating Officer of Holiday Rambler Corporation, received an interest-free
relocation loan from the Company in connection with his joining the Company in
1993. The largest amount outstanding under the relocation loan in 1993 was
$100,000. Mr. Snoey repaid the relocation loan in full in October 1993.
2--PROPOSAL TO APPROVE AMENDMENTS TO STOCK OPTION PLANS
The Company is seeking shareholder approval of two amendments (the
"Amendments") to each of the Company's 1990 Stock Option Plan, the Company's
1988 Stock Option Plan and the Company's 1986 Stock Option Plan (individually
an "Option Plan" and collectively the "Option Plans"). The Amendments were
approved by the Board on February 16, 1994 subject to shareholder approval.
Options under the Option Plans may be granted by the Human Resources
Committee to key employees of the Company and its subsidiaries. The Option
Plans provide for the grant of both incentive stock options and nonqualified
stock options. No incentive stock options have been granted as of April 4,
1994. The exercise price for each option is fixed by the Human Resources
Committee, but may not be less than the fair market value of the underlying
Common Stock on the date of grant. The Committee determines at the time of
grant the periods during which options are exercisable. To date, all options
issued under the Option Plans have become exercisable for 25% of the underlying
shares on each of the first four anniversaries of the date of grant. All
options expire ten years from the date of grant. Options may not be transferred
except by reason of the death of the participant. Under the Option Plans, the
Human Resources Committee may grant a participant, at or after the time of the
option grant, a stock appreciation right for all or any portion of the option.
A stock appreciation right entitles the participant upon exercise of the stock
appreciation right, in lieu of receiving Common Stock, to receive in cash the
difference between the exercise price of the option and the fair market value
of the underlying common stock on the date of exercise. No stock appreciation
rights have been granted as of April 4, 1994.
A total of 3,000,000 shares were authorized to be issued pursuant to the
Option Plans. As of March 28, 1994, 598,948 shares of Common Stock remained
available for grants under the Option Plans and there were approximately 250
employees of the Company and its subsidiaries participating in the Option
Plans. The number of options that will be granted under the Option Plans in the
future to any single key employee or group of key employees is not
determinable. The following table shows the number of shares of Common Stock
underlying options granted in February 1994 to the named executive officers,
all executive officers as a group and all employees as a group. The options
were granted at an exercise price of $48.69 per share and the closing price of
the Common Stock on the New York Stock Exchange was $49.00 per share on March
21, 1994.
14
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING OPTIONS
GRANTED ON
NAME FEBRUARY 16, 1994
- ---- ------------------
<S> <C>
Richard F. Teerlink.......................................... 50,000
Jeffrey L. Bleustein......................................... 25,000
Thomas A. Gelb............................................... 20,000
C. William Gray.............................................. 9,570
James L. Ziemer.............................................. 9,271
All Executive Officers as a Group (8 Persons)................ 130,757
All Employees as a Group (239 Persons)....................... 359,038
</TABLE>
Directors and other persons who are not employees of the Company are not
eligible to receive options under the Option Plans.
Generally, upon the exercise of a stock option, the amount of appreciation in
the market value of the stock on that date over the exercise price is taxable
to the participant as ordinary income, and the Company is entitled to a tax
deduction for such amounts. Amounts payable in connection with the settlement
of stock appreciation rights receive similar treatment. Generally, for
incentive stock options, the appreciated value of the underlying stock received
upon exercise may be taxable to the participant as a capital gain upon sale of
the stock, and the Company may not receive any tax deduction.
The first amendment (the "Share Cap Amendment") to the Option Plans provides
that options for not more than 100,000 shares shall be issued to a participant
under the Option Plans in any calendar year. The 100,000 share limit is subject
to adjustment for stock splits, stock dividends and other significant corporate
events in the same manner as the maximum number of shares issuable under each
Option Plan is subject to adjustment. There is currently no limit on the number
of shares covered by options that may be issued to a participant under the
Option Plans, other than the maximum number of shares that may be issued to all
participants under each Option Plan. The Share Cap Amendment is intended to
permit options issued pursuant to the Option Plans to qualify as performance
based compensation under Section 162(m) of the Internal Revenue Code. See
"Human Resources Committee Report on Executive Compensation--Internal Revenue
Code Section 162(m)" for a discussion of Section 162(m).
The second amendment (the "Subsidiary Amendment") changes the definition of
"Subsidiary" for purposes of the Option Plans to include direct or indirect
majority owned or controlled corporations, partnerships, limited liability
companies, business trusts or other business entities (the same definition as
in Section 2.21 of the Corporate STIP, attached hereto as Exhibit A).
Currently, the definition of Subsidiary only includes direct and indirect
majority owned corporations. The Subsidiary Amendment is intended to give the
Company additional flexibility in structuring its existing and future business
operations. Because of the limited definition of Subsidiary currently in the
Option Plans, as a practical matter the Company may be limited to organizing
its businesses as corporations.
The affirmative vote of a majority of the votes present or represented at the
Annual Meeting and entitled to be cast on the proposal is required for approval
of the Amendments, provided that shareholders holding a majority of the
outstanding shares of Common Stock cast votes on the proposal. For purposes of
determining the vote regarding this proposal, abstentions will have the effect
of a vote "Against" the proposal (but will not be counted as votes cast with
respect to the proposal for purposes of determining whether a majority of
outstanding shares were voted), and broker nonvotes will have no impact on the
vote. Proxies solicited by the Board will be voted "FOR" approval of the
proposed Amendments unless a shareholder specifies otherwise.
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENTS.
15
<PAGE>
3--APPROVAL OF CORPORATE SHORT TERM INCENTIVE PLAN
The Company is seeking shareholder approval of the Harley-Davidson, Inc.
Corporate Short Term Incentive Plan ("Corporate STIP"). The Corporate STIP was
adopted by the Board on February 16, 1994 subject to shareholder approval. The
following description is qualified in its entirety by the terms of the
Corporate STIP attached hereto as Exhibit A.
SUMMARY OF PROPOSAL
The Corporate STIP is designed to provide short term incentives to selected
executive officers of the Company. Under the Corporate STIP, potential awards
and pertinent performance criteria are established at the beginning of each
year. Final incentive awards are determined after each year based upon actual
performance. The Company has had in effect plans similar to the Corporate STIP
for more than ten years, and amounts paid under such plans over the past three
years for the five named executive officers are included in bonus amounts set
forth in the Summary Compensation Table.
The Corporate STIP is administered by the Human Resources Committee of the
Board. Only the Company's "executives" as defined in Section 2.11 of the
Corporate STIP (a term that could include a person who is only an officer of a
subsidiary of the Company) are eligible to participate in the Corporate STIP.
The Company's executives currently include the five persons named in the
Summary Compensation Table as well as three other persons. The Company does not
believe that the number of its executives will increase significantly in the
foreseeable future.
Annually, the Human Resources Committee selects in its sole discretion the
executives who will participate in the Corporate STIP for the following year.
At the time of selection, the Human Resources Committee also fixes a target
percentage for each participant, which cannot exceed 100%. A participant's
target award for the year is equal to the participant's target percentage
multiplied by the participant's base salary.
The Human Resources Committee determines, with respect to each participant
for a year, the corporate performance measures that will be applied to
determine the size of the participant's final incentive award. The Corporate
STIP specifies that the Human Resources Committee may use any one or more of
the financial performance categories set forth in Section 2.15 of the Corporate
STIP for any one or more participants. If the Human Resources Committee chooses
more than one performance category for any one or more participants, the Human
Resources Committee gives each performance category a weight so that for each
participant the total weight of all applicable performance categories equals
100%.
The Corporate STIP does not specify target performance for the performance
categories. Rather, as to each performance category that the Human Resources
Committee selects as the basis for potential awards in any year, the Human
Resources Committee also establishes a performance scale. On the scale, 0%
represents below minimum performance in the performance category for the
applicable year, 100% represents target performance, and 200% represents
maximum performance. The Human Resources Committee must approve a scale so
that, at the end of the year, a performance percentage may be objectively
calculated for any given level of actual performance within that category
during the year.
Following completion of each year, the final incentive award amount is
calculated for each participant. A performance percentage is determined for
each performance category based upon actual performance and the applicable
performance scale. Where more than one performance category applies to a
participant, the resulting percentages are reduced to reflect weighting. The
resulting total percentage is applied to a participant's target award to
determine the maximum performance award a participant is eligible to receive
under the Corporate STIP for that year. The Human Resources Committee must
approve the calculations and may, in its sole discretion, reduce the amount of
any maximum performance award by up to 50%. The maximum performance award, less
any reduction by the Human Resources Committee, equals the final
16
<PAGE>
incentive award payable for the applicable year. Under the Corporate STIP, a
participant's final incentive award cannot exceed 200% of the participant's
target award. In addition, the final incentive award paid to a participant for
any one year cannot exceed $1 million.
Payments of final incentive awards under the Corporate STIP are to be made,
in the sole discretion of the Human Resources Committee, in cash, Common Stock
or a combination of cash and Common Stock. Where Common Stock is used, it is
valued at fair market value on the date prior to payment. To the extent an
award is paid in Common Stock, a participant cannot defer payment of the award
under the terms of any deferred compensation or other plan of the Company. Not
more than 500,000 shares of Common Stock may be issued under the Corporate
STIP, subject to adjustment for stock splits, stock dividends and certain other
corporate transactions.
Under the Corporate STIP, the Human Resources Committee is required to fix
target awards and performance criteria prior to January 1 of each plan year (or
such later date as may be permitted under Section 162(m) of the Internal
Revenue Code). However, for 1994, the Human Resources Committee had the ability
to fix target awards and performance criteria on or before April 1, 1994. On
February 16, 1994 the Human Resources Committee selected Messrs. Teerlink, Gelb
and Ziemer to participate in the Corporate STIP for 1994. No other officers or
employees of the Company will participate in the Corporate STIP for 1994. The
following table identifies the 1994 target award under the Corporate STIP for
each of the 1994 participants:
NEW PLAN BENEFITS
HARLEY-DAVIDSON, INC. CORPORATE SHORT-TERM INCENTIVE PLAN
<TABLE>
<CAPTION>
TARGET AWARD
DOLLAR VALUE
NAME AND POSITION ($) (1)
- ----------------- ------------
<S> <C>
Richard F. Teerlink, President and Chief Executive Officer......... 440,750
Thomas A. Gelb, Vice President, Continuous Improvement............. 148,785
James L. Ziemer, Vice President and Chief Financial Officer........ 99,620
</TABLE>
- --------
(1) Assumes no change in base salary after April 1, 1994.
A participant whose employment terminates prior to the end of a year
generally is not entitled to receive any performance award for that year.
However, the Human Resources Committee may, in its sole discretion, provide for
a partial or complete payment if termination is due to death, disability or
retirement. In addition, in connection with a Change of Control Event (as
defined in Section 2.2 of the Corporate STIP) during a year, the Human
Resources Committee may, in its sole discretion, provide for the immediate
payment to all participants of either awards for the year based upon
annualizing performance through the end of the most recently completed fiscal
month prior to the payment or target awards for the year. The Board may from
time to time or at any time suspend or terminate the Corporate STIP or amend
the Corporate STIP in any manner without obtaining further shareholder
approval. However, to retain the benefits afforded by shareholder approval of
the Corporate STIP under the Internal Revenue Code and regulations of the
Securities and Exchange Commission, further shareholder approval would be
required if the plan is amended to materially increase benefits or the number
of shares of Common Stock issuable under the Corporate STIP or to materially
modify eligibility requirements.
The Company has also adopted, but is not seeking shareholder approval for,
STIP plans for its divisions and subsidiaries that operate similarly to the
Corporate STIP for 1994, in which approximately 450 salaried employees are
eligible to participate. The Company expects to adopt similar incentive plans
for such employees for future years. An executive is not eligible to
participate in any such STIP plan in any year in which he or she participates
in the Corporate STIP.
The affirmative vote of a majority of the votes present or represented at the
Annual Meeting and entitled to be cast on the proposal is required for approval
of the Corporate STIP, provided that shareholders holding
17
<PAGE>
a majority of the outstanding shares of Common Stock cast votes on the
proposal. For purposes of determining the vote regarding this proposal,
abstentions will have the effect of a vote "Against" the proposal (but will not
be counted as votes cast with respect to the proposal for purposes of
determining whether a majority of outstanding shares were voted), and broker
nonvotes will have no impact on the vote. Proxies solicited by the Board will
be voted "FOR" approval of the proposed Corporate STIP unless a shareholder
specifies otherwise.
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE CORPORATE STIP.
4--PROPOSAL TO APPROVE RESTRUCTURING OF THE MOTORCYCLE DIVISION
GENERAL
The Company currently conducts two principal businesses. The Company's
Motorcycle Division designs, manufactures and sells superheavyweight touring
and custom motorcycles and a broad range of related products. The Company's
Transportation Vehicles Division manufactures premium quality recreational
vehicles and commercial vehicles.
Currently, the Company holds the assets of the Motorcycle Division directly
and holds the assets of the Transportation Vehicles Division separately through
Holiday Rambler. The Board has determined that it would be in the best
interests of the Company and its shareholders for the Company to have the
flexibility to operate the Motorcycle Division as one or more separate
subsidiaries of the Company, in which case the Company would become a holding
company because all of its other operating assets are already held in separate
entities. Toward that end, the Board has unanimously approved, subject to
shareholder approval, the transfer of some or substantially all of the assets
of the Motorcycle Division (the "Motorcycle Assets") and related liabilities to
one or more direct or indirect wholly-owned subsidiaries (the "Motorcycle
Subsidiaries") of the Company (the transfers of some or all of the Motorcycle
Assets to one or more Motorcycle Subsidiaries is collectively referred to as
the "Restructuring"). The Motorcycle Assets in the aggregate represented
approximately 75% of the Company's consolidated assets at December 31, 1993,
based upon the book value thereof as reflected in the Company's audited
consolidated financial statements, and include all of the Company's office,
manufacturing and testing facilities, machinery and equipment in Milwaukee and
Tomahawk, Wisconsin, York, Pennsylvania and Talladega, Alabama. Within five
years following shareholder approval, the Company may choose to implement at
one time or in stages over time all or any portion of the Restructuring or may
elect not to effect the Restructuring at all. The Company anticipates that some
or all of the employees of the Motorcycle Division would be transferred to the
Motorcycle Subsidiaries in connection with any implementation of the
Restructuring. The Restructuring is not contingent upon any government or
regulatory approval.
The Restructuring will not have a material effect on the consolidated
financial statements of the Company. Notwithstanding the new structure, the
Company will continue to report its financial operations and condition on a
consolidated basis. The net income of the Motorcycle Subsidiaries, reflected as
income on the Company's consolidated financial statements, will be available
for the payment of dividends to shareholders of the Company to the extent the
Company has received dividends or other distributions from the Motorcycle
Subsidiaries. The Restructuring will not have a material effect on the payment
of dividends to shareholders of the Company.
Shareholder approval is necessary under Wisconsin law to implement the
Restructuring because the Company believes the Restructuring, if fully
implemented, would involve the transfer of substantially all of the Company's
assets outside of the ordinary course of business. The submission of the
Restructuring for shareholder approval will not affect the Company's rights,
under applicable Wisconsin law, to dispose of less than substantially all of
its assets (including by transfer to one or more subsidiaries) without
shareholder approval. Thus, even if the Restructuring is not approved by the
shareholders, the Company may from time to time in the future transfer portions
of its assets to subsidiaries or other affiliated entities or to third parties
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on terms and for consideration approved by the Board, subject to applicable
Wisconsin law, without seeking shareholder approval. Approval of the
Restructuring by shareholders will not preclude the shareholders' right to
challenge any future dispositions by the Company of the stock or assets of the
Motorcycle Subsidiaries or of other subsidiaries or affiliated entities if such
dispositions are not made as part of the Restructuring or in compliance with
applicable Wisconsin law.
REASONS FOR THE RESTRUCTURING
If the Restructuring is fully implemented, the principal operations of the
Company's Motorcycle Division would be conducted by the Motorcycle
Subsidiaries. The Company believes that the new structure would permit greater
flexibility in the management and financing of existing and future business
operations. The holding company structure also would facilitate the Company's
entry into new businesses and the formation of joint ventures or other business
ventures with third parties. Finally, the Restructuring would further the
objective of operating the Company's businesses, and any additional businesses
acquired in the future, on a more self-sufficient, independent economic basis
while decreasing the risk that liabilities attributable to any one of the
Company's businesses could be imposed upon one or more of the Company's
unrelated businesses.
TRANSFER OF ASSETS; EFFECTS OF THE RESTRUCTURING
Implementation as Currently Planned
The Company currently plans to transfer substantially all Harley-Davidson
trademark rights and copyrights and certain other intellectual property rights
to a direct wholly-owned subsidiary of the Company (the "Holding Subsidiary").
The Company also currently plans to transfer substantially all of the remaining
Motorcycle Assets and related liabilities to an indirect wholly-owned
subsidiary (the "Motorcycle Operating Subsidiary"). The Company currently
intends to implement these transfers as soon as practicable following
shareholder approval of the Restructuring. The following diagrams show the
present structure of the Company and Holiday Rambler and the structure that
would result from the implementation of the Restructuring as currently planned:
CURRENT COMPANY STRUCTURE:
Harley-Davidson, Inc.
(including Motorcycle Division)
Holiday Rambler
STRUCTURE FOLLOWING RESTRUCTURING (AS CURRENTLY PLANNED):
Harley-Davidson, Inc.
-------------------------------------
Holding Subsidiary Holiday Rambler
Motorcycle Operating Subsidiary
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The foregoing diagram illustrates the effect of the Restructuring as currently
planned. However, if the shareholders approve the Restructuring, the Company
will have the authority to transfer some or substantially all of the Motorcycle
Assets to any one or more new or existing direct or indirect wholly-owned
subsidiaries formed under the laws of any state and the final structure may be
similar to or substantially different from the illustration. In addition, the
Company may choose not to implement the Restructuring at all. The Company would
have five years following shareholder approval to implement the Restructuring
in whole or in part.
Effect on Shareholders' Rights
The Restructuring will not alter shareholders' percentage ownership interests
in the Company, and the Common Stock will not be affected by the proposed
Restructuring. The shareholders of the Company will continue as such, with the
same voting, dividend and liquidation rights and ownership interests as before.
As a result of the Restructuring, the shareholders of the Company will not
directly elect the directors of the Motorcycle Subsidiary. Directors of the
Motorcycle Subsidiary will be elected at the direction of the Board.
Notwithstanding that fact, however, the overall management of the affairs and
operations of the Motorcycle Subsidiary will be under the direction of the
Board and is not expected to change significantly as a result of the
Restructuring.
Other Effects on the Company and Shareholders
Except for the changes described herein, consummation of the Restructuring is
not expected to result in any material change in the overall operations of the
Company. Similarly, the Restructuring will not result in any changes in the
current membership of the Board, and the officers of the Company are expected
to remain the same after consummation of the proposed restructuring. Persons
who are currently serving as officers of the Company or the Motorcycle Division
may become officers and/or directors of the Motorcycle Subsidiaries.
While the Restructuring is not expected to create any conflict of interests
between the Company and its shareholders, in the event that the Motorcycle
Subsidiaries, through public or private sale, should be owned in part by
persons other than the Company or its shareholders, such conflicts could arise.
However, the Company has no plans to effect a public or private sale of any
part of the ownership of the Motorcycle Subsidiaries.
POSSIBLE DISADVANTAGES
Some possible disadvantages of the proposal to the Company include the
requirement for observing corporate formalities between and among the Company
and the Motorcycle Subsidiaries, together with some possible increases in
accounting and administrative costs and possible duplication of some
administrative functions. The Board believes that these disadvantages are not
significant or material. In addition, the Company estimates that the cost to
implement the Restructuring as currently planned (consisting primarily of legal
costs and real estate transfer taxes) will be less than $1 million.
Shareholders of the Company will continue to have the same voting, dividend
and liquidation rights before and after implementation of the Restructuring.
However, as discussed above under "Effect on Shareholders' Rights,"
shareholders of the Company will not be entitled to elect the directors of the
Motorcycle Subsidiary. Instead, shareholders of the Company will elect the
directors of the Company who will have overall responsibility for the
management of the Company and its subsidiaries and affiliated entities.
Similarly, the shareholders' statutory right to inspect the books and records
of the Company under applicable Wisconsin law may not extend to the books and
records of the Motorcycle Subsidiaries. However, because the Company is a
public company subject to the reporting requirements of the Securities Exchange
Act of 1934 and the rules of the New York Stock Exchange, information regarding
the Company and its subsidiaries
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and affiliated companies is readily available to shareholders without resort to
the statutory right to inspect the Company's books and records.
It is also possible that the sale by the Motorcycle Subsidiaries of
substantially all of the Motorcycle Assets (including through the sale of the
stock of other Motorcycle Subsidiaries) outside of the ordinary course of
business following the Restructuring would not require the approval of the
shareholders of the Company under Wisconsin Law even though the sale of
substantially all of the Motorcycle Assets outside of the ordinary course of
business by the Company under the current structure would require shareholder
approval. However, the Company has no plans to sell material Motorcycle Assets
outside of the ordinary course of business.
The Board believes that the advantages of the proposal, as described under
"Reasons for the Restructuring" above, outweigh the possible disadvantages as
described above. For that reason, the Board has approved and recommends that
the shareholders approve the Restructuring. The Board further notes that
numerous national and international corporations conduct their operations
through holding company structures.
FEDERAL TAX CONSEQUENCES OF THE RESTRUCTURING
Any assets transferred pursuant to the Restructuring will be conveyed to the
Motorcycle Subsidiaries on a tax-free basis pursuant to Section 351 of the
Internal Revenue Code. The Motorcycle Subsidiaries will be directly or
indirectly wholly-owned by the Company. Although the Company has no plans to
change the ownership of the Motorcycle Subsidiaries, it is possible that one or
more of the Motorcycle Subsidiaries may not be wholly-owned in the future.
RIGHTS OF DISSENTING SHAREHOLDERS
Approval or consummation of the Restructuring will not entitle a shareholder
objecting to its terms or voting against the Restructuring to any appraisal or
similar rights under Wisconsin law.
VOTE REQUIRED
The affirmative vote by holders of a majority of the outstanding Common Stock
is required to approve the Restructuring. Shares not voted (whether by
abstention, broker nonvote or otherwise) have the same effect as a vote against
the proposal. Proxies solicited by the Board will be voted "FOR" approval of
the Restructuring unless a shareholder specifies otherwise.
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE RESTRUCTURING.
5--RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Ernst & Young, independent public accountants, audited the Company's
consolidated financial statements for the fiscal year ended December 31, 1993.
Representatives of Ernst & Young will be present at the Annual Meeting to
respond to appropriate questions and to make a statement, if they so desire.
Ernst & Young has been recommended by the Audit Committee and selected by the
Board to serve as independent auditors for the current fiscal year, and in
accordance with a resolution of the Board, this selection is being presented to
shareholders for ratification.
If the foregoing proposal is not approved by the holders of a majority of the
shares voting on the proposal, or if prior to the 1994 Annual Meeting Ernst &
Young shall decline to act or otherwise become incapable of acting, or if its
engagement shall be otherwise discontinued by the Board, then the Board will
appoint other independent auditors whose engagement for any period subsequent
to the 1994 Annual Meeting
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will be subject to ratification by the shareholders at that meeting. If the
shareholders fail to ratify the engagement of Ernst & Young at the Annual
Meeting, the Board will reconsider its selection of independent auditors.
Proxies solicited by the Board will be voted "FOR" ratification of the
selection of Ernst & Young as independent auditors of the Company for the
fiscal year ending December 31, 1994, unless the shareholder specifies
otherwise.
THE BOARD RECOMMENDS A VOTE "FOR" RATIFICATION OF THE SELECTION OF ERNST &
YOUNG AS INDEPENDENT AUDITORS.
6--OTHER MATTERS
Neither the Company nor its Board intends to bring before the Annual Meeting
any other matters. If any other matter should properly come before the Annual
Meeting, it is the intention of the persons named in the accompanying form of
proxy to vote the shares represented by them in accordance with their judgment.
The cost of soliciting proxies will be borne by the Company. Proxies may be
solicited by personal interview, telephone, telegraph and facsimile machine, as
well as by use of the mails. It is anticipated that banks, brokerage houses and
other custodians, nominees or fiduciaries will be requested to forward
soliciting materials to their principals and to obtain authorization for the
execution of proxies and that they will be reimbursed for their out-of-pocket
expenses incurred in that connection. Employees of the Company participating in
the solicitation of proxies will not receive any additional remuneration. The
Company has retained D. F. King & Co., Inc. to aid in the solicitation at an
estimated cost of approximately $6,000 plus out-of-pocket expenses.
SHAREHOLDER PROPOSALS
THE DATE BY WHICH SHAREHOLDER PROPOSALS MUST HAVE BEEN RECEIVED BY THE
COMPANY FOR INCLUSION IN PROXY MATERIALS RELATING TO THE 1994 ANNUAL MEETING OF
SHAREHOLDERS WAS NOVEMBER 27, 1993. THE CORRESPONDING DATE FOR THE 1995 ANNUAL
MEETING IS DECEMBER 4, 1994.
By Order of the Board of Directors,
LOGO
Timothy K. Hoelter
Secretary
Milwaukee, Wisconsin
April 4, 1994
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EXHIBIT A
HARLEY-DAVIDSON, INC.
CORPORATE SHORT TERM INCENTIVE PLAN
ARTICLE I
PURPOSE
The purpose of the Harley-Davidson, Inc. Corporate Short Term Incentive Plan
is to provide certain Executives an increased financial incentive to contribute
to the future success and prosperity of the Company.
ARTICLE II
DEFINITIONS
The following capitalized terms used in the Plan shall have the respective
meanings set forth in this Article:
2.1. Board: The Board of Directors of Harley-Davidson, Inc.
2.2. Change of Control Event: Change of Control Event as defined in the
Harley-Davidson, Inc. 1990 Stock Option Plan, as amended.
2.3. Code: The Internal Revenue Code of 1986, as amended.
2.4. Committee: The Human Resources Committee of the Board (including any
successor committee thereto); provided, however, that if any member or
members of the Human Resources Committee of the Board would cause the Human
Resources Committee of the Board not to satisfy the administration
requirement of Code section 162(m)(4)(C) or the disinterested
administration requirement of Rule 16b-3 under the Exchange Act, the
Committee shall be comprised of the Human Resources Committee of the Board
without such member or members.
2.5. Common Stock: The Common Stock of Harley-Davidson, Inc.
2.6. Company: Harley-Davidson, Inc. and, unless the context otherwise
requires, its Subsidiaries.
2.7. Category Percentage: When two or more of the Performance Categories
are selected for a Participant or a group of Participants for any Plan
Year, the relative percentage weighting given to each selected Performance
Category.
2.8. Disability: Disability within the meaning of section 22(e)(3) of the
Code, as determined by the Committee.
2.9. Exchange Act: The Securities Exchange Act of 1934, as amended.
2.10. Excluded Items: Any gains or losses from the sale of assets outside
the ordinary course of business, any gains or losses from discontinued
operations, any extraordinary gains or losses, the effects of accounting
changes, and any unusual, nonrecurring, transition, one-time or similar
items or charges.
2.11. Executive: An executive officer of the Company within the meaning
of Rule 3b-7 under the Exchange Act, which may include members of the
Board.
2.12. Fair Market Value: The average of the high and low reported sales
prices of Common Stock on the New York Stock Exchange Composite Tape on the
trading date immediately preceding the date on which the Performance Award
being paid in Common Stock, in whole or in part, is paid to the
Participant.
2.13. Participant: With respect to a Plan Year, an Executive selected by
the Committee to participate in the Plan for such Plan Year.
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2.14. Performance Award: With respect to a Participant for a Plan Year,
an award made pursuant to the Plan in an amount equal to the Target Award
multiplied by the Total Performance Percentage, subject to discretionary
reduction pursuant to section 5.5 hereof and the limit of section 5.6
hereof.
2.15. Performance Categories: The following categories (in all cases
before Excluded Items):
a. Net sales for the Plan Year (i) for the Company on a consolidated
basis, (ii) for any one or more Subsidiaries or divisions of the
Company and/or (iii) for any other business unit or units of the
Company as defined by the Committee at the time of selection.
b. Cost of goods sold for the Plan Year (i) for the Company on a
consolidated basis, (ii) for any one or more Subsidiaries or divisions
of the Company and/or (iii) for any other business unit or units of the
Company as defined by the Committee at the time of selection.
c. Gross profit for the Plan Year (i) for the Company on a
consolidated basis, (ii) for any one or more Subsidiaries or divisions
of the Company and/or (iii) for any other business unit or units of the
Company as defined by the Committee at the time of selection.
d. Selling, administrative and engineering expenses for the Plan Year
(i) for the Company on a consolidated basis, (ii) for any one or more
Subsidiaries or divisions of the Company and/or (iii) for any other
business unit or units of the Company as defined by the Committee at
the time of selection.
e. Income from operations for the Plan Year (i) for the Company on a
consolidated basis, (ii) for any one or more Subsidiaries or divisions
of the Company and/or (iii) for any other business unit or units of the
Company as defined by the Committee at the time of selection.
f. Income before interest and the provision for income taxes for the
Plan Year (i) for the Company on a consolidated basis, (ii) for any one
or more Subsidiaries or divisions of the Company and/or (iii) for any
other business unit or units of the Company as defined by the Committee
at the time of selection.
g. Income before provision for income taxes for the Plan Year (i) for
the Company on a consolidated basis, (ii) for any one or more
Subsidiaries or divisions of the Company and/or (iii) for any other
business unit or units of the Company as defined by the Committee at
the time of selection.
h. Net income for the Plan Year (i) for the Company on a consolidated
basis, (ii) for any one or more Subsidiaries or divisions of the
Company and/or (iii) for any other business unit or units of the
Company as defined by the Committee at the time of selection.
i. Net income per share assuming no dilution for the Plan Year for
the Company on a consolidated basis.
j. Net income per share assuming full dilution for the Plan Year for
the Company on a consolidated basis.
k. Average accounts receivable during the Plan Year, calculated by
taking the average of accounts receivable at the end of each fiscal
month during the Plan Year, (i) for the Company on a consolidated
basis, (ii) for any one or more Subsidiaries or divisions of the
Company and/or (iii) for any other business unit or units of the
Company as defined by the Committee at the time of selection.
l. Average inventories during the Plan Year, calculated by taking the
average of inventories at the end of each fiscal month during the Plan
Year, (i) for the Company on a consolidated basis, (ii) for any one or
more Subsidiaries or divisions of the Company and/or (iii) for any
other business unit or units of the Company as defined by the Committee
at the time of selection.
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m. Return on average equity for the Plan Year, with average equity
calculated by taking the average of equity at the end of each fiscal
month during the Plan Year, (i) for the Company on a consolidated
basis, (ii) for any one or more Subsidiaries or divisions of the
Company and/or (iii) for any other business unit or units of the
Company as defined by the Committee at the time of selection.
n. Return on year-end equity for the Plan Year (i) for the Company on
a consolidated basis, (ii) for any one or more Subsidiaries or
divisions of the Company and/or (iii) for any other business unit or
units of the Company as defined by the Committee at the time of
selection.
o. Return on average assets for the Plan Year, with average assets
calculated by taking the average of assets at the end of each fiscal
month during the Plan Year, (i) for the Company on a consolidated
basis, (ii) for any one or more Subsidiaries or divisions of the
Company and/or (iii) for any other business unit or units of the
Company as defined by the Committee at the time of selection.
p. Net cash provided by operating activities for the Plan Year (i)
for the Company on a consolidated basis, (ii) for any one or more
Subsidiaries or divisions of the Company and/or (iii) for any other
business unit or units of the Company as defined by the Committee at
the time of selection.
q. Net cash provided by operating activities less net cash used in
investing activities for the Plan Year (i) for the Company on a
consolidated basis, (ii) for any one or more Subsidiaries or divisions
of the Company and/or (iii) for any other business unit or units of the
Company as defined by the Committee at the time of selection.
r. Net increase (decrease) in cash and cash equivalents for the Plan
Year (i) for the Company on a consolidated basis, (ii) for any one or
more Subsidiaries or divisions of the Company and/or (iii) for any
other business unit or units of the Company as defined by the Committee
at the time of selection.
2.16. Performance Percentage: The percentage between zero percent (0%)
and two hundred percent (200%) derived from the Performance Scale for the
applicable Performance Category for a Plan Year, with two hundred percent
(200%) representing maximum performance, one hundred percent (100%)
representing target performance and zero percent (0%) representing below
minimum performance in such Performance Category for the Plan Year.
2.17. Performance Scale: A performance scale from which a Performance
Percentage may be objectively calculated for any given level of actual
performance within that Performance Category during the Plan Year. The
Performance Scale may be a linear function, a step function or a
combination.
2.18. Plan: The Harley-Davidson, Inc. Corporate Short Term Incentive
Plan.
2.19. Plan Year: The Company's fiscal year.
2.20. Retirement: Retirement on or after age sixty-five or, with the
consent of the Committee, at an earlier age.
2.21. Subsidiary: A corporation, limited partnership, general
partnership, limited liability company, business trust or other entity of
which more than fifty percent (50%) of the voting power or ownership
interest is directly and/or indirectly held by the Company.
2.22. Target Award: With respect to a Participant in any Plan Year, the
amount of such Participant's base salary in such Plan Year multiplied by
the Target Percentage for such Plan Year.
2.23. Target Percentage: With respect to a Participant, a percentage,
between fifteen percent (15%) and one hundred percent (100%).
2.24. Total Performance Percentage: With respect to a Participant for a
Plan Year, the sum of the Performance Percentage multiplied by the Category
Percentage for each Performance Category applicable to such Participant for
such Plan Year. If there is only one Performance Category for a Plan Year
for a Participant, then the Performance Percentage is also the Total
Performance Percentage.
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ARTICLE III
ADMINISTRATION
3.1. The Committee shall administer the Plan and shall have full authority to
set Target Percentages, Performance Categories, Category Percentages and
Performance Scales, to determine which Executives shall participate in the
Plan, to interpret the Plan, to establish and amend rules and regulations for
its administration and to perform all other acts relating to the Plan,
including the delegation of administrative responsibilities, which it believes
reasonable and proper.
3.2. The actions and determinations of the Committee on all matters relating
to the Plan shall be final and conclusive.
ARTICLE IV
ELIGIBILITY AND PARTICIPATION
All Executives shall be eligible to participate in the Plan. The Committee
shall select in writing, in its sole discretion, the Executives who shall
participate in the Plan for a Plan Year prior to the commencement of such Plan
Year (or such later time as may be permitted under Code section 162(m));
provided that the Executives participating in the Plan for the first Plan Year
(ending December 31, 1994) shall be fixed by the Committee on or before April
1, 1994. Members of the Board who are not employees of the Company shall not be
eligible to participate in the Plan.
ARTICLE V
PERFORMANCE AWARDS
5.1. Target Percentage: Prior to January 1st of each Plan Year (or such later
time as may be permitted under Code section 162(m)) the Committee shall fix in
writing a Target Percentage for each Participant for such Plan Year; provided
that the Target Percentage(s) shall be fixed by the Committee on or before
April 1, 1994 for the first Plan Year (ending December 31, 1994). If the
Committee does not fix a new Target Percentage for a Participant for any Plan
Year, the Target Percentage for such Participant for such Plan Year shall be
the same as such Participant's Target Percentage for the prior Plan Year.
5.2. Performance Categories: Prior to January 1st of each Plan Year (or such
later time as may be permitted under Code section 162(m)) the Committee shall
select in writing one or more of the Performance Categories for each
Participant or group of Participants for such Plan Year; provided that the
Performance Category or Performance Categories shall be selected by the
Committee on or before April 1, 1994 for the first Plan Year (ending December
31, 1994). If more than one Performance Category is chosen for any Participant
or group of Participants, then the Committee shall assign a Category Percentage
to each Performance Category selected for such Participant or group of
Participants; provided that the total of the Category Percentages must equal
100% for such Participant or group of Participants. Performance Categories
and/or Category Percentages need not be the same for all Participants for any
Plan Year.
5.3. Performance Scale: Prior to January 1st of each Plan Year (or such later
time as may be permitted under Code section 162(m)), the Committee shall
approve in writing a Performance Scale for each Performance Category selected
for such Plan Year; provided that the Performance Scale or Performance Scales
shall be selected by the Committee on or before April 1, 1994 for the first
Plan Year (ending December 31, 1994).
5.4. Payment of Performance Awards: The amount of Performance Awards for a
Plan Year shall be calculated by the Company, certified in writing by the
Committee and, following such certification, paid to
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Participants for such Plan Year as soon as reasonably practicable following the
end of such Plan Year. Payments of Performance Awards shall be made, in the
sole discretion of the Committee, in cash, Common Stock or a combination of
cash and Common Stock. If a Performance Award is paid in Common Stock, the
Common Stock shall be valued at Fair Market Value. To the extent paid in Common
Stock, Performance Awards may not be deferred by a Participant under the terms
of any deferred compensation or other plan of the Company. A Participant whose
employment with the Company terminates prior to the end of a Plan Year shall
not be entitled to receive any Performance Award hereunder for such Plan Year.
Notwithstanding the foregoing sentence:
a. The Committee may, in its sole discretion, provide for payment, in
whole or in part, of the Performance Award for such Plan Year if the
Participant's employment with the Company terminates by reason of the
Participant's death, Disability or Retirement; and
b. Prior to, and for a period of ninety (90) days following, a Change of
Control Event during a Plan Year, the Committee may, in its sole discretion
and in lieu of any other payments under the Plan for such Plan Year,
provide for the payment to all Participants of either (i) Performance
Awards for such Plan Year based on annualizing the Company's actual
performance through the end of the Company's most recently completed fiscal
month prior to such Change of Control Event or (ii) Target Awards for such
Plan Year. Performance Awards or Target Awards payable under this section
5.4(b) shall be paid upon the occurrence of the Change of Control Event or
immediately following the Committee's decision to make such payment,
whichever is later.
5.5. Discretionary Reduction of Performance Award: The Committee may, in its
sole discretion, at any time prior to payment, reduce the amount of any
Performance Award by up to fifty percent (50%). Such reductions need not be
uniform among Participants. The Committee may, but shall not be required to,
give one or more reasons for any such reduction. This section 5.5 has been
included because the Board believes that even though the Company may have
performed well in the selected Performance Categories for the applicable Plan
Year, there is always a possibility that the Company's performance in the
selected Performance Categories will substantially exceed the Company's overall
financial and strategic performance for the Plan Year. In such a case, the
Board believes that the Committee must have the flexibility to reduce the
amount of the Performance Awards payable to one or more of the Participants
who, after all, are the Executives ultimately responsible for the Company's
performance. The Committee shall not have the discretionary authority to
increase the amount of any Performance Award above the amount determined in
accordance with the terms of the Plan. This section 5.5 shall not apply
following a Change of Control Event.
5.6. Performance Award: Notwithstanding anything in the Plan to the contrary,
the maximum Performance Award payable to a Participant for any one Plan Year
shall be one million dollars (before any withholding pursuant to section 6.2
hereof).
5.7. Maximum Number of Shares: Not more than 500,000 shares of Common Stock,
subject to adjustment in the same manner as provided in the Company's 1990
Stock Option Plan, as amended, shall be issued pursuant to the Plan.
ARTICLE VI
MISCELLANEOUS
6.1. Nonassignability: Performance Awards shall not be assigned, pledged or
transferred, other than by the laws of descent and distribution, and shall not
be subject to levy, attachment, execution or other similar process. If a
Participant attempts to assign, pledge or transfer any right to a Performance
Award or in the event of any levy, attachment, execution or similar process
upon the rights or interests conferred by the Plan, the Committee may terminate
the participation of the Participant in the Plan effective as of the date of
such notice and the Participant shall have no further rights hereunder.
6.2. Withholding Taxes: The Company shall withhold from the payment of each
Performance Award the amount that the Company deems necessary to satisfy its
obligation to withhold Federal, state and local income or other taxes incurred
by reason of the payment of the Performance Award.
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6.3. Amendment or Termination of the Plan: The Board may from time to time or
at any time amend, suspend or terminate the Plan.
6.4. Other Compensation: Nothing contained in this Plan shall be deemed in
any way to restrict or limit the Company from making any award or payment to a
Participant under any other plan, policy, program, understanding or
arrangement, whether now existing or hereinafter in effect.
6.5. Payments to Other Persons: If payment of a Performance Award, in whole
or in part, is legally required to be made to any person other than the
applicable Participant, any such payment will be a complete discharge of the
liability of the Company to such Participant for such amount.
6.6. Unfunded Plan: The Company shall have no obligation to purchase assets,
place assets in trust or otherwise take any action to fund, secure or segregate
any amounts to be paid under the Plan.
6.7. Indemnification: In addition to any other rights of indemnification they
may have as members of the Board or the Committee, the members of the Board and
the Committee shall be indemnified by the Company against all costs and
expenses reasonably incurred by them in connection with any action, suit or
proceeding to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan and against all
amounts paid by them in settlement thereof (provided that such settlement is
approved by independent legal counsel selected by the Company) or paid by them
in satisfaction of a judgement in any such action, suit or proceeding, except a
judgement based upon a finding of bad faith; provided that upon the institution
of any such action, suit or proceeding, the Board or Committee member shall
give the Company notice thereof in writing and an opportunity, at the Company's
expense, to handle and defend such action, suit or proceeding before such Board
or Committee member undertakes to handle and defend such action, suit or
proceeding on his or her own behalf.
6.8. No Employment Rights: Nothing in this Plan shall confer upon any
Executive or Participant any right to continued employment with the Company.
6.9. Plan Expenses: Any expenses of administering the Plan shall be borne by
the Company.
6.10. In Writing: For purposes of this Plan, actions taken by the Committee
"in writing" shall include, without limitation, actions recorded in the minutes
of any meeting of the Committee and any unanimous consent action of the
Committee in lieu of a meeting thereof.
6.11. Section Headings: The section headings contained herein are for
convenience only, and in the event of any conflict between the text of the Plan
and the section headings, the text of the Plan shall control.
6.12. Applicable Law: The Plan shall be governed by the internal laws of the
State of Wisconsin without regard to the conflict of law principles thereof.
6.13. Effective Date: The Plan shall be effective as of January 1, 1994.
However, the Plan shall terminate and no Performance Awards shall be paid
hereunder if the Plan has not been approved by the requisite vote of the
Company's shareholders under New York Stock Exchange Rules, Code section 162(m)
and Rule 16b-3 under the Exchange Act on or before December 31, 1994.
A-6
<PAGE>
HARLEY-DAVIDSON, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR MAY 14, 1994 ANNUAL MEETING OF SHAREHOLDERS
The undersigned appoints each of VAUGHN L. BEALS, JR., RICHARD F. TEERLINK
and TIMOTHY K. HOELTER, with full power of substitution and resubstitution, as
my proxy to vote all shares of Common Stock the undersigned is entitled to vote
at the Annual Meeting of Shareholders of HARLEY-DAVIDSON, INC. to be held on May
14, 1994 and at any adjournment thereof, as follows, hereby revoking any proxy
previously given:
A. ELECTION OF DIRECTORS:
FOR the nominees listed below / / WITHHOLD AUTHORITY / /
(EXCEPT AS MARKED TO THE CONTRARY to vote for all nominees listed below
BELOW)
VAUGHN L. BEALS, JR., DONALD A. JAMES, JAMES A. NORLING
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the following line:
____________________________________________________________________________
2. APPROVAL OF AMENDMENTS TO HARLEY-DAVIDSON, INC. 1990 STOCK OPTION PLAN,
HARLEY-DAVIDSON, INC. 1988 STOCK OPTION PLAN AND HARLEY-DAVIDSON, INC.
1986 STOCK OPTION PLAN:
FOR / / AGAINST / / ABSTAIN / /
3. APPROVAL OF HARLEY-DAVIDSON, INC. CORPORATE SHORT-TERM INCENTIVE PLAN:
FOR / / AGAINST / / ABSTAIN / /
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE MARK YOUR CHOICES ON BOTH SIDES AND SIGN ON THE
REVERSE SIDE AND RETURN PROMPTLY.
<PAGE>
4. APPROVAL OF RESTRUCTURING OF THE MOTORCYCLE DIVISION:
FOR / / AGAINST / / ABSTAIN / /
5. RATIFICATION OF AUDITORS:
FOR / / AGAINST / / ABSTAIN / /
6. In his discretion upon any other matter that may properly come before the
Meeting.
THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR THE NOMINEES LISTED IN ITEM 1 AND
FOR ITEMS 2, 3, 4, AND 5.
THE SHARES REPRESENTED BY THIS PROXY SHALL BE VOTED AS SPECIFIED HEREON. IF NO
SPECIFICATION IS MADE, THE SHARES SHALL BE VOTED AS RECOMMENDED BY THE BOARD OF
DIRECTORS.
IMPORTANT: Please sign your name or
names exactly as they appear on this
Proxy. Joint owners should each sign
personally. A corporation should
sign in full corporate name by duly
authorized officers. When signing as
attorney, executor or administrator,
trustee or guardian, please give your
full title as such.
----------------------------------------
Signature
----------------------------------------
Signature
Dated:----------------------------, 1994
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
A STAMPED AND ADDRESSED ENVELOPE HAS BEEN PROVIDED FOR YOUR USE.
B00057MW.003
02/28/94
