<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:
[_] CONFIDENTIAL, FOR USE OF THE
[_] Preliminary Proxy Statement COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[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)
------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[X] Fee paid previously with preliminary materials.
[_] 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 the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
LOGO
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
HARLEY-DAVIDSON, INC.
3700 WEST JUNEAU AVENUE
MILWAUKEE, WISCONSIN 53208
(414) 342-4680
March 31, 1995
Dear Fellow Shareholder:
On behalf of the Board of Directors and management of Harley-Davidson, Inc.,
I cordially invite you to attend the 1995 Annual Meeting of Shareholders of
Harley-Davidson, Inc. to be held at 10:30 a.m., local time, on Saturday, May 6,
1995 at the Century Center, 120 South Saint Joseph Street, South Bend, Indiana.
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 1995 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 6, 1995
The 1995 Annual Meeting of Shareholders (the "Annual Meeting") of Harley-
Davidson, Inc. (the "Company") will be held at the Century Center, 120 South
Saint Joseph Street, South Bend, Indiana, on May 6, 1995 at 10:30 a.m., local
time, for the following purposes:
1. To elect two directors for a three-year term to expire at the
Company's 1998 Annual Meeting of Shareholders;
2. To approve the adoption of the Company's 1995 Stock Option Plan;
3. To approve an amendment to the Company's Restated Articles of
Incorporation to increase the total number of authorized shares of common
stock from 100,000,000 to 200,000,000;
4. To ratify the selection of Ernst & Young LLP, independent public
accountants, to audit the annual financial statements of the Company for
the year ending December 31, 1995; and
5. 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 16, 1995 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
March 31, 1995
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 AND SIGN,
DATE 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
MARCH 31, 1995
----------------
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
1995 Annual Meeting of Shareholders of the Company to be held on May 6, 1995
and at any adjournment thereof (the "Annual Meeting"). This Proxy Statement and
the accompanying proxy were first sent to shareholders on or about March 31,
1995.
The only outstanding class of voting securities of the Company is its Common
Stock (the "Common Stock"). On March 16, 1995, the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting, 76,389,241 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 5, 1995 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. 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.
Effective November 28, 1994, substantially all of the assets and operations
of the Motorcycle Division of the Company were transferred to Harley-Davidson
Motor Company, a new subsidiary of the Company. As used in this Proxy
Statement, "Motor Company" refers to the Motorcycle Division prior to the
transfer and to Harley-Davidson Motor Company after the transfer.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 16, 1995 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 (collectively with the Chief Executive
Officer, the "named executive officers") 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..................... 2,000 * 0
William F. Andrews................. 4,000 * 0
Vaughn L. Beals, Jr................ 503,010(4) * 0
Jeffrey L. Bleustein............... 387,557 * 117,268
Thomas A. Gelb..................... 118,806 * 42,274
C. William Gray.................... 42,596(5) * 40,330
Richard J. Hermon-Taylor........... 4,000 * 0
Donald A. James.................... 20,000(6) * 0
Richard G. LeFauve................. 1,000 * 0
James A. Norling................... 2,000 * 0
William B. Potter.................. 0 .00% 0
Martin R. Snoey.................... 9,042 * 8,032
Richard F. Teerlink................ 1,009,426 1.31% 552,600
All Directors and Executive
Officers as a Group (16
Individuals)...................... 2,578,462 3.34% 909,332
</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 16, 1995.
(3) Only includes stock options exercisable within 60 days of March 16, 1995.
Directors who are not employees of the Company are not eligible to receive
stock options under the Company's stock option plans.
(4) Includes 190,380 shares of Common Stock held by Mr. Beals' wife. Mr. Beals
has shared voting and investment power over such shares.
(5) Includes 20 shares of Common Stock held by Mr. Gray's children. Mr. Gray
has shared voting and investment power over such shares.
(6) Includes 20,000 shares of Common Stock held by Fred Deeley Imports Ltd. Mr.
James has sole voting power and shared 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 nine members, three of whom have terms that
expire at the Annual Meeting (Class I Directors), three of whom have terms that
expire at the 1996 annual meeting of shareholders (Class II Directors) and
three of whom have terms that expire at the 1997 annual meeting of shareholders
(Class III Directors). William B. Potter, who is a Class I Director, will
retire as a director upon the expiration of his current term at the Annual
Meeting. The Board has acted to reduce the size of the Board to eight members
effective as of the expiration of the current term for Class I Directors at the
Annual Meeting.
The two nominees for director set forth below, both of whom are currently
Class I Directors, are proposed to be elected at the Annual Meeting to serve
until the 1998 annual meeting of shareholders. The remaining six directors will
continue to serve as members of the Board for terms as set forth below. Both
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 nonvotes, 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 (including 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 16, 1995, 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 I DIRECTORS--TERMS EXPIRING AT 1998 ANNUAL MEETING
Barry K. Allen, 46, has been a director of the Company since 1992. He is
currently President and Chief Operating Officer and a director 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.
Mr. Allen is also a director of Banta Corporation.
Richard G. LeFauve, 60, has been a director of the Company since December
1993. He has been Group Executive, NAO Small Car Group of General Motors
Corporation, an automobile manufacturer, since 1994, President of Saturn
Corporation, an automobile manufacturer, since 1986 and a Vice President of
General Motors Corporation since 1985.
3
<PAGE>
CLASS II DIRECTORS--TERMS EXPIRING AT 1996 ANNUAL MEETING
William F. Andrews, 63, has been a director of the Company since 1990. Mr.
Andrews has been the Chairman of Schrader Inc., a manufacturer of valves, since
March 1995. He was a consultant with the investment banking firm Investor (USA)
International from 1992 to 1994, Chairman and Chief Executive Officer of Amdura
Corp., a specialty manufacturer of products for the overhead lifting and waste
recycling and disposal markets, from 1993 to 1994 and Chairman of Utica Corp.,
a manufacturer of precision-forged turbine airfoils for both aircraft and land-
based engines, from 1993 to 1994. 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, 53, has been a director of the Company since 1986.
He has been President of BioScience International, Inc., a technology transfer
company, since 1987, and a Vice President of Symmetrix, Inc., a business
consulting firm, since March 1994. 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.
Richard F. Teerlink, 58, 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. He is also a director of Johnson Controls, Inc. and
Outboard Marine Corporation.
CLASS III DIRECTORS--TERMS EXPIRING AT 1997 ANNUAL MEETING
Vaughn L. Beals, Jr., 67, 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.
Donald A. James, 51, has been a director of the Company since 1991. Mr. James
is a co-founder and 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, since 1989. From 1981 to 1989 he served as President of Fred Deeley
Imports Ltd.
James A. Norling, 53, 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.
4
<PAGE>
COMMITTEES OF THE BOARD
The Board has three committees: the Audit Committee, the Human Resources
Committee and the Nominating and Director Affairs Committee.
The Audit Committee, the current members of which are Barry K. Allen, William
F. Andrews (Chairman), Richard J. Hermon-Taylor, Donald A. James, Richard G.
LeFauve, James A. Norling and William B. Potter, met two times during 1994. 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 (Chairman), William F. Andrews, Richard G. LeFauve and James A. Norling,
met three times during 1994. 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 and Director Affairs Committee, the current members of which
are Barry K. Allen (Chairman), William F. Andrews, Richard J. Hermon-Taylor,
Donald A. James, Richard G. LeFauve, James A. Norling and William F. Potter,
met three times during 1994. The Nominating Committee identifies and recommends
to the full Board candidates for service on the Board and reviews Board
performance. Shareholders may recommend candidates by writing to the Nominating
and Director Affairs Committee in care of the Secretary of the Company. Such
recommendations for the 1996 annual meeting of shareholders must be received by
the Company on or before December 4, 1995. Any shareholder who desires to
nominate directly a director candidate for consideration by the shareholders
must give written notice thereof to the Secretary of the Company in advance of
the applicable meeting in compliance with the terms and within the time periods
specified in the Company's Restated Articles of Incorporation.
The Board met six times during 1994. All directors attended at least 75% of
the meetings of the Board and the Board committees on which they served during
1994.
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 1994 an annual fee of $25,000
plus $1,500 for each regular 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
$159,840 per year after the consulting term expires until his death. In the
event of Mr. Beals' death prior to the end of the consulting term, the
consulting agreement provides, as a death benefit, the continuation of certain
payments under the consulting agreement through July 1, 1999.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table shows the aggregate compensation, including incentive
compensation, paid by the Company for 1994, 1993 and 1992 to the Chief
Executive Officer and each of the four other most highly compensated executive
officers of the Company for 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------ ------------
AWARDS
OTHER ------------ ALL
ANNUAL SECURITIES OTHER
NAME AND PRINCIPAL COMPENSA- UNDERLYING COMPENSA-
POSITION YEAR SALARY ($) BONUS ($) TION ($) OPTIONS (#) TION ($)(1)
------------------ ---- ---------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Richard F. Teerlink
President and Chief
Executive Officer..... 1994 440,901 700,000 39,481 100,000 27,541
President and Chief
Executive Officer..... 1993 425,672 546,000 35,072 0 24,038
President and Chief
Executive Officer..... 1992 397,926 283,161 31,506 100,000 7,081
Jeffrey L. Bleustein
President and Chief
Operating Officer--
Motor Company......... 1994 283,257 265,297 35,866 50,000 23,553
President and Chief
Operating Officer--
Motor Company......... 1993 275,004 301,624 32,249 0 8,129
President and Chief
Operating Officer--
Motor Company......... 1992 229,171 112,701 20,486 40,888 2,882
Thomas A. Gelb
Vice President,
Continuous
Improvement........... 1994 250,839 194,834 26,533 40,000 18,302
Vice President,
Continuous
Improvement........... 1993 239,442 218,850 23,778 0 14,157
Vice President,
Continuous
Improvement........... 1992 222,292 109,013 21,103 40,000 3,879
C. William Gray
Vice President, Human
Resources............. 1994 175,129 136,190 22,173 19,140 34,227
Vice President, Human
Resources--
Motor Company......... 1993 165,881 151,615 21,025 0 31,381
Vice President, Human
Resources--
Motor Company......... 1992 158,674 78,845 11,945 15,644 26,122
Martin R. Snoey(2)
President and Chief
Operating Officer--
Holiday Rambler....... 1994 181,462 126,672 28,798 20,128 30,139
President and Chief
Operating Officer--
Holiday Rambler....... 1993 161,538 52,500 35,289 6,000 51,644
</TABLE>
--------
(1) The 1994 amounts for Messrs. Teerlink, Bleustein, Gelb and Gray include the
value of split dollar life insurance provided by the Company, a 401(k)
matching contribution of $4,204 and a Motor Company non-qualified deferred
compensation plan matching contribution of $11,375, $11,763, $6,552 and
$4,716, respectively. The 1994 amount for Mr. Gray also includes $20,000 of
loan forgiveness and $3,039 of imputed interest relating to an interest
free relocation loan. The 1994 amount for Mr. Snoey includes the value of
split dollar life insurance provided by the Company, a 401(k) matching
contribution of $4,500 and $24,401 of relocation expense reimbursements.
(2) Mr. Snoey joined the Company in 1993.
6
<PAGE>
STOCK OPTION PLANS
Stock options have been granted to executive officers and other key employees
of the Company pursuant to the Company's 1986 Stock Option Plan, the Company's
1988 Stock Option Plan and the Company's 1990 Stock Option Plan which are
administered by the Human Resources Committee. During 1994, options to purchase
shares of Common Stock were granted under the Company's 1990 Stock Option Plan
to the Chief Executive Officer and the other named executive officers as
follows:
OPTION GRANTS IN 1994
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
-----------------------------------------
POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES OF STOCK
SECURITIES TOTAL APPRECIATION FOR
UNDERLYING OPTIONS EXERCISE OPTION TERM(2)
OPTIONS GRANTED TO PRICE EXPIRATION ------------------------------------
NAME GRANTED EMPLOYEES ($/SH) DATE 0% 5% 10%
---- ---------- ---------- -------- ---------- --- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard F. Teerlink..... 100,000 13.7% $24.34 2/15/04 $ 0 $ 1,530,200 $ 3,877,521
Jeffrey L. Bleustein.... 50,000 6.9 24.34 2/15/04 0 765,100 1,938,760
Thomas A. Gelb.......... 40,000 5.5 24.34 2/15/04 0 612,080 1,551,008
C. William Gray......... 19,140 2.6 24.34 2/15/04 0 292,880 742,157
Martin R. Snoey......... 20,128 2.8 24.34 2/15/04 0 307,999 780,467
All Optionees........... 728,410 100.0 (3) (3) 0 11,161,815 28,286,231
All Shareholders........ N/A N/A N/A N/A 0 1,164,271,221(4) 2,950,491,865(4)
</TABLE>
--------
(1) Options granted under the Stock Option Plans are non-qualified stock
options. The option price per share is 100% of the fair market value of a
share of common stock on the date of the grant. The Human Resources
Committee has the authority to grant options and set or amend the terms and
conditions of the option agreements. The exercise price of an option may be
paid in cash, shares of common stock or a combination of cash and stock
(subject to the conditions that may be set by the Human Resources
Committee). The options may be exercised one year after the date of grant,
not to exceed 25% of the shares in the first year, with an additional 25%
to be exercisable in each of the following years. Each option granted under
the 1990 Stock Option Plan has a limited right which permits the holder to
surrender the option within 30 days after a change of control of the
Company and receive the difference between the exercise price of the option
and the highest closing price of the Common Stock during the 60-day period
preceding the change of control of the Company.
(2) The dollar amounts under these columns are the results of calculations at
0% and at the 5% and 10% rates set by the Securities and Exchange
Commission and therefore are not intended to forecast possible future
appreciation, if any, in the market price of the Common Stock.
(3) Options granted with exercise prices from $24.34 to $26.16 and expiration
dates from 2/15/04 to 8/16/04.
(4) Represents corresponding gain to all shareholders on 76,059,892 shares of
Common Stock outstanding calculated based on fair market value of such
Common Stock on February 16, 1994.
Shown below is information relating to the exercise of options by the Chief
Executive Officer and the other named executive officers during 1994 and the
value of unexercised options held by such persons as of December 31, 1994.
AGGREGATED OPTION EXERCISES IN 1994
AND OPTION VALUES AT DECEMBER 31, 1994
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT DECEMBER 31, 1994 AT DECEMBER 31, 1994
ACQUIRED ON VALUE (#) ($)(2)
EXERCISE REALIZED ---------------------------------- -------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- --------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard F. Teerlink..... 0 0 527,600 175,000 $11,573,208 $1,281,750
Jeffrey L. Bleustein.... 0 0 104,768 77,256 2,078,871 496,904
Thomas A. Gelb.......... 0 0 32,274 53,406 556,244 301,257
C. William Gray......... 12,000 227,220 35,544 32,200 627,028 236,884
Martin R. Snoey......... 0 0 1,500 24,628 16,170 122,178
</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 $28.00 as of December
31, 1994 less the option exercise price.
7
<PAGE>
RETIREMENT BENEFITS
The following table shows at different levels of remuneration and years of
credited service the estimated net annual benefits payable as a straight life
annuity to each of the named executive officers (other than Mr. Snoey, who does
not participate in any Company defined benefit retirement plans) under the
Salaried Pension Plan, the Restoration Plan and the Supplemental Benefits (all
as defined below), assuming retirement at age 62:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------
REMUNERATION 5 10 15(1) 15-30(2)
------------ ------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 200,000............................. $15,417 $ 30,834 $ 46,251 $100,000
300,000............................. 23,417 46,834 70,251 150,000
400,000............................. 31,417 62,834 94,251 200,000
500,000............................. 39,417 78,834 118,251 250,000
600,000............................. 47,417 94,834 142,251 300,000
800,000............................. 63,417 126,834 190,251 400,000
1,000,000............................. 79,417 158,834 238,251 500,000
1,250,000............................. 99,417 198,834 298,251 625,000
</TABLE>
--------
(1) This column applies only to Mr. Gray, since he would not have 15 years of
service upon retirement at age 62 and therefore would not be entitled to
the Supplemental Benefits.
(2) This column applies only to Messrs. Teerlink, Bleustein and Gelb.
The Company maintains the Retirement Annuity Plan for Salaried Employees of
Harley-Davidson, a noncontributory defined benefit pension plan ("Salaried
Pension Plan"). Under the Salaried Pension Plan, salaried employees of the
Company (excluding Holiday Rambler and certain other subsidiaries), including
the Chief Executive Officer and the other named executive officers (other than
Mr. Snoey), are generally eligible to retire with unreduced benefits at age 62
or later. Benefits are based upon monthly "final average earnings" as defined
in the Salaried Pension Plan. Prior to December 31, 1994, the monthly benefit
is .016 multiplied by final average earnings less .009 multiplied by primary
monthly social security benefit multiplied by years of service. On and after
December 31, 1994, the revised benefit is .012 multiplied by final average
earnings multiplied by years of service plus .004 multiplied by final average
earnings in excess of Social Security covered compensation for the year
multiplied by years of service. The benefit of a person with service on or
after December 31, 1994, is the greater of his or her benefit determined using
the revised formula for all service or the sum of his or her benefit under the
former formula for service through December 31, 1993, and his or her benefit
under the revised formula for service after that date. For the named executive
officers (other than Mr. Snoey), final average earnings equal one-twelfth of
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 the earlier of five years of service or age 65. 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 surviving 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.
The Company has adopted a pension benefit restoration plan (the "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. Calculated as of December 31, 1994, annualized final
average earnings and years of credited service under the Salaried Pension Plan
and the Restoration Plan were as follows: $709,819 and 18.4 years (including a
grant of 5 additional years of service under the Restoration Plan),
respectively, for Mr. Teerlink; $384,195 and 23.9 years, respectively, for Mr.
Bleustein; $337,277 and 25.2 years (including a grant of 6 additional years of
service under the Restoration Plan), respectively, for Mr. Gelb; and $204,782
and 4.3 years, respectively, for Mr. Gray.
8
<PAGE>
The Board has approved supplemental executive retirement benefits (the
"Supplemental Benefits") for the Chief Executive Officer and the other named
executive officers (other than Mr. Snoey). Under such benefits, a participant
who retires at or after age 55 with 15 years of service (including the grant of
5 additional years of service for Mr. Teerlink and 6 additional years for Mr.
Gelb) is entitled to a yearly retirement benefit payment equal to 35% of the
executive's annualized final average earnings at age 55 increasing in equal
increments to 50% of annualized final average earnings at age 62, reduced by
the amount of any pension payable by the Company under the Salaried Pension
Plan, by any other defined benefit retirement programs of the Company and by
the amount of benefits under the Restoration Plan. Amounts payable under the
Restoration Plan and the Supplemental Benefits may be partially or fully funded
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 Summary Compensation Table) 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. Such
employment agreements do not establish minimum base salary levels for such
employees.
The Company has entered into transition agreements with Messrs. Teerlink,
Bleustein, Gelb and Snoey 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 a tax gross-up.
A "change of control" for purposes of the transition agreements includes the
following events: (i) continuing directors no longer constitute at least two-
thirds of the directors serving on the Board, (ii) any person or group becomes
a beneficial owner of 20% or more of the Common Stock, (iii) the Company's
shareholders approve a merger involving the Company, the sale of substantially
all of the Company's assets or the liquidation or dissolution of the Company,
unless in the case of a merger continuing directors constitute at least two-
thirds of the directors serving on the board of directors of the survivor of
such merger, or (iv) at least two-thirds of the continuing directors determine
that a proposed action, if taken, would constitute a change of control of the
Company and such action is taken. A continuing director is a director of the
Company who was a director on a specified date (generally on or shortly prior
to the date of the applicable transition agreement) or who was designated by a
majority of the continuing directors as a continuing director at the time of
his or her initial election to the Board.
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.
9
<PAGE>
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 1994 as they affected the Chief Executive Officer and the
Company's other executive officers, including the other 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, in addition to benefit
plans available to salaried employees generally, consisted of base salary,
annual incentive compensation, annual stock option grants, annual perquisite
payments, a non-qualified pension plan, a non-qualified pension benefit
restoration plan, a 401(k) plan (with a Company matching feature), a non-
qualified deferred compensation plan and life insurance benefits.
In addition to the experience and knowledge of the Human Resources Committee
and the Company's Human Resources staff, the Human Resources Committee utilizes
the services of an independent human resources consultant in making its
executive compensation decisions. Each year the Company's Human Resources staff
selects several executive or other senior officer positions for benchmarking
against comparable companies. The comparable companies are Fortune 500 "make
and sell" companies with annual sales of $1 billion to $1.5 billion having
comparable performance. The independent human resources consultant retained by
the Company conducts a survey of compensation packages for the specified types
of executive or senior officer positions at the comparable companies and
prepares a written analysis (the "Independent Compensation Analysis"). The
Independent Compensation Analysis includes median base salary (including the
percentage increase over the prior year), median annual bonus percentage and
median stock option information for the comparable companies by position. The
Independent Compensation Analysis also recommends ranges for base salary,
annual bonus and stock option compensation for the selected Company executive
or senior officer positions.
The comparable companies used to benchmark executive compensation are not
included on the Performance Graph included below 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 contributions 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 named executive officers
and other executives when establishing or adjusting any element of their
compensation package.
10
<PAGE>
1994 Base Salary
Executive base salaries are reviewed annually. In February 1994, the Human
Resources Committee, in consultation with the Vice President, Human Resources
for the Motor Company, increased Mr. Teerlink's base salary by 4%. This
increase was within the range recommend by the Independent Compensation
Analysis and was based upon the Human Resources Committee's subjective
assessment of Mr. Teerlink's past performance (including his leadership, his
role in the financial performance of the Company and his role in implementing
new educational programs at all levels of the Company) and its expectations for
his future contributions in leading the Company. Also in February 1994, the
Human Resources Committee reviewed, with the Chief Executive Officer and Vice
President, Human Resources for the Motor Company, and approved, with
modifications it deemed appropriate, the annual salary plan for the Company's
other executive officers. The annual salary plan was developed by the Motor
Company's Human Resources staff under the direction of the President of the
Motor Company based primarily upon each executive's individual performance
evaluation for the prior year, the anticipated future contribution of each
executive and the Independent Compensation Survey. 1994 base salaries for the
named executive officers are set forth in the Summary Compensation Table. Based
on the annual Independent Compensation Analysis, the Human Resources Committee
believes that the base salaries paid to its executive officers are generally
below the median of base salaries paid to comparable executive officers of
comparable companies.
1994 Incentive Cash Compensation
The Company had three separate short term incentive plans in which executive
officers participated for 1994: Messrs. Teerlink, Gelb and one other executive
officer participated in the Company's 1994 Corporate Short Term Incentive Plan
(the "Corporate STIP"); the other named executive officers (other than Mr.
Snoey) and certain other executive officers participated in the Motor Company
1994 Short Term Incentive Plan (the "Motor Company STIP"); and Mr. Snoey
participated in the Holiday Rambler Corporate 1994 Short Term Incentive Plan
(the "Holiday Rambler STIP"). In December 1993, the Human Resources Committee
reviewed and approved the Motor Company STIP, the Holiday Rambler STIP and
target awards for participants in such plans. In February 1994, the Board
adopted the Corporate STIP and the Human Resources Committee established the
performance targets (consolidated net income) and target awards under the
Corporate STIP for 1994 for participating executives. Award payouts under the
Motor Company STIP and the Holiday Rambler STIP were based upon performance
targets included in the plans approved by the Human Resources Committee in
December 1993. The Motor Company STIP included both Motor Company financial
targets related to earnings and working capital (weighted 55%) and Motor
Company strategic targets related to product quality, schedule attainment and
the Motor Company's manufacturing strategy (weighted 45%). The Holiday Rambler
STIP included both Holiday Rambler financial targets related to earnings
(weighted 50%) and Holiday Rambler strategic targets related to quality,
variance to plan, unit volume and production times. The target awards for the
five named executive officers ranged from 50% to 100% of their respective 1994
base salaries. The amount of each executive's target award is reviewed annually
based upon the Independent Compensation Analysis, 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, the
subjective determination of the Human Resources Committee with respect to
downward adjustments, actual short term incentive plan awards can range from 0%
to 200% of the target award.
Under the Corporate STIP formula based on the consolidated net income
performance criteria selected by the Human Resources Committee and actual
Company performance, Mr. Teerlink was eligible to receive a maximum award of
$788,463 for 1994, or 178.83% of the target award. Under the terms of the
Corporate STIP, the Human Resources Committee has the discretion to reduce
awards determined by the formula by up to 50%. The Human Resources Committee
exercised its discretion and determined that Mr. Teerlink's actual 1994 STIP
award would be $700,000. The Human Resources Committee based its determination
in part on the percentage payout for 1994 under the Motor Company STIP (154.6%)
and the Holiday Rambler STIP (116.64%) and the financial and strategic
performance of the Company as a whole. The Human Resources Committee considered
in particular that the financial and strategic results at the Motor Company
were significantly above target, while the financial and strategic results at
Holiday Rambler were generally at
11
<PAGE>
expected levels. An evaluation of the financial and strategic performance of
the Company as a whole indicated significant accomplishment in both categories.
Mr. Gelb's actual 1994 Corporate STIP award was determined by the Committee in
a similar manner. The awards for the other executive officers were determined
mathematically under the Motor Company STIP or the Holiday Rambler STIP. All
short term incentive plan awards paid or payable for 1994 by the Company with
respect to the named executive officers are set forth in the Summary
Compensation Table.
1994 Stock Option Grants
While the short term incentive 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' long 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 President, Human Resources
and, except in the case of his own 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 subjectively determined by the Human
Resources Committee based upon the annual Independent Compensation Analysis,
the executive's individual performance evaluation for the prior year, the
executive's base salary and the Human Resources Committee's appraisal of the
executive's anticipated long term future contribution to the Company. The stock
options granted to the named executive officers in 1994 are set forth in the
Summary Compensation and Option Grants Tables.
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 benefit 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 benefit
plans and programs remain competitive. The Human Resources Committee reviewed
such data in February 1994.
Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code 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).
Conclusion
Over the last three calendar years, shareholders of the Company have enjoyed
a total return of 152%. During that same period of time the Standard & Poor's
500 and MidCap 400 Indexes had total returns of 20% and 23%, 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, investors, government
and society).
Barry K. Allen, Chairman
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*
LOGO
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Harley-Davidson, Inc. $100.00 $98.09 $228.03 $383.44 $450.90 $575.45
----------------------------------------------------------------------------------------
S&P MidCap 400 100.00 94.88 142.42 159.38 181.62 175.11
----------------------------------------------------------------------------------------
S&P 500 100.00 96.89 126.41 136.05 149.76 151.74
</TABLE>
--------
*Assumes $100 invested on December 31, 1989.
13
<PAGE>
CERTAIN TRANSACTIONS
Mr. James, a director of the Company, is Vice Chairman, Chief Executive
Officer and an equity owner of Fred Deeley Imports Ltd. ("Deeley Imports"), the
exclusive distributor of the Company's motorcycles in Canada. In 1994, Deeley
Imports paid the Company approximately $42 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 1995.
Mr. Gray, Vice President, Human Resources, 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 1994 was
$70,000. As of March 31, 1995, $50,000 was outstanding under the relocation
loan.
2--APPROVAL OF HARLEY-DAVIDSON, INC.
1995 STOCK OPTION PLAN
The Company is seeking shareholder approval of the Harley-Davidson, Inc. 1995
Stock Option Plan (the "1995 Plan"). The Board adopted the 1995 Plan on
February 2, 1995, subject to shareholder approval. The following summary
description of the 1995 Plan is qualified in its entirety by reference to the
full text of the 1995 Plan which is attached to this Proxy Statement as Exhibit
A.
SUMMARY OF PROPOSAL
The purpose of the 1995 Plan is to provide favorable opportunities for
certain selected employees of the Company and its subsidiaries to purchase
shares of Common Stock or to benefit from the appreciation thereof. Such
opportunities are expected to provide an increased incentive for these
employees to contribute to the future success and prosperity of the Company,
thus enhancing the value of the Common Stock for the benefit of the
shareholders and increasing the ability of the Company to attract and retain
individuals of exceptional skill upon whom, in large measure, its sustained
progress, growth and profitability depend.
The Company currently has in effect the Company's 1986 Stock Option Plan (the
"1986 Plan"), the 1988 Stock Option Plan (the "1988 Plan") and the 1990 Stock
Option Plan (the "1990 Plan" and, with the 1986 Plan and the 1988 Plan, the
"Existing Plans"). As of March 16, 1995, a total of 421,851 shares of Common
Stock remained available for the granting of additional awards under the
Existing Plans. Upon adoption of the 1995 Plan, the Existing Plans will be
terminated (except with respect to outstanding options) and no additional
options will be granted under the Existing Plans.
The 1995 Plan will be administered by the Human Resources Committee of the
Board. Key employees of the Company or any of its subsidiaries, as well as
persons who have been engaged to become key employees, are eligible to
participate in the 1995 Plan. Key employees will comprise, in general, those
who contribute to the management, direction and overall success of the Company,
including those who are members of the Board. Members of the Board who are not
employees of the Company are not eligible to participate in the 1995 Plan. As
of March 31, 1995, there were approximately 300 employees of the Company and
its subsidiaries participating in the Existing Plans and eligible to
participate in the 1995 Plan. The number of eligible employees is expected to
increase over time based upon future growth of the Company.
The 1995 Plan authorizes the granting to key employees of options to purchase
Common Stock ("Options"), which may be either "incentive stock options" meeting
the requirements of Section 422 of the Internal Revenue Code ("ISOs") or non-
qualified Options. The total number of shares of Common Stock available for
grants of Options is 3,800,000, provided that Options for not more than 200,000
shares of Common Stock may be granted to any participant in any calendar year
under the 1995 Plan, which amount will be reduced by the amount of Common Stock
subject to Options granted to the participant in such calendar year under any
other stock option plan of the Company. Options may not be granted under the
1995 Plan after April 26, 2005.
14
<PAGE>
The exercise price per share of Common Stock subject to an Option will be
determined by the Committee, provided that the exercise price may not be less
than the fair market value of the underlying Common Stock on the date of grant.
The Committee determines the date after which Options may be exercised in whole
or in part and the date on which each Option expires, which date cannot be more
than ten years from the date of grant. The exercise price of an Option may be
paid in cash or, subject to such conditions or prohibitions as may be set by
the Committee, by delivering shares of Common Stock or a combination of cash
and stock. Subject to the discretion of the Committee, a participant may elect
to have the Company withhold shares of Common Stock otherwise issuable to the
participant upon the exercise of an Option for purposes of paying withholding
amounts relating to income or other taxes incurred by reason of the exercise.
Options may not be transferred except by reason of the death of the
participant.
Under the 1995 Plan, the 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 the
exercise of the stock appreciation right, in lieu of exercising the Option,
paying the exercise price and 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. The Existing Plans also
allow the Committee to grant stock appreciation rights, but no stock
appreciation rights have been granted as of March 31, 1995.
In the event of a participant's retirement at age 62 (or earlier with the
consent of the Committee), any outstanding Option will, in general, be
exercisable by the participant or his or her beneficiary within three years
after such event (but not subsequent to the expiration of the Option). In the
event of a participant's death or disability, any outstanding Option may be
exercisable by the participant or his or her beneficiary for a period of up to
one year after such event (but not subsequent to the expiration of the Option).
In the event of a participant's voluntary or involuntary termination of
employment with the Company or its subsidiaries for any reason other than
retirement, death or disability, any outstanding Options will expire on the
date of termination of employment.
Each Option granted under the 1995 Plan will have a limited right that will
permit the holder to surrender the Option within 30 days after a change of
control of the Company and receive the difference between the exercise price of
the Option and the highest closing price of the Common Stock in the 60-day
period preceding the change of control of the Company. For this purpose,
"change of control" includes any of the following events: (i) continuing
directors (any person who was either a director on February 2, 1995 or was
designated before such person's initial election to the Board of Directors as a
continuing director by a majority of the continuing directors) no longer
constitute at least two-thirds of the directors serving on the Board; (ii) any
person or group becomes a beneficial owner of 20% or more of the Common Stock;
(iii) the Company's shareholders approve a merger involving the Company, the
sale of substantially all of the Company's assets or the liquidation or
dissolution of the Company, unless in the case of a merger the continuing
directors constitute at least two-thirds of the directors serving on the board
of directors of the survivor of such merger; or (iv) at least two-thirds of the
outside, continuing directors determine that a proposed action, if taken, would
constitute a change of control of the Company and such action is taken.
The Board of Directors may suspend or terminate the 1995 Plan in whole or in
part or amend it as the Board deems appropriate. However, no amendment may be
made without approval of the shareholders if such amendment would (a)
materially modify the eligibility requirements for receiving Options; (b)
increase the aggregate number of shares of Common Stock that may be issued
pursuant to Options granted under the 1995 Plan, except under an adjustment of
the type described below; (c) increase the number of shares of Common Stock
that may be issued pursuant to Options granted to a participant in any calendar
year, except under an adjustment of the type described below; (d) reduce the
minimum option price, except under an adjustment of the type described below;
(e) extend the period of granting Options under the 1995 Plan; or (f)
materially increase in any other way the benefits accruing to participants.
If the Company declares a dividend payable in, or subdivides or combines, its
Common Stock or any other event occurs which, in the judgment of the Committee,
necessitates an equitable adjustment of amounts
15
<PAGE>
under the 1995 Plan to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the 1995 Plan, then the
Committee will generally have the authority to make appropriate adjustment to
(i) the number and type of shares of Common Stock subject to the 1995 Plan;
(ii) the number of shares of Common Stock that may be issued pursuant to
Options granted to any participant in any calendar year; (iii) the number and
type of shares of Common Stock subject to outstanding Options; and (iv) the
grant, purchase or exercise price with respect to any Option.
The number of Options that will be granted under the 1995 Plan 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 1995 under the Existing Plans 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 $26.94 per share. The closing
price of the Common Stock on the New York Stock Exchange was $23.125 per share
on March 16, 1995. Options granted under the Existing Plans to the named
executive officers during 1994 are disclosed above under the caption "Executive
Compensation."
1995 OPTION GRANTS
<TABLE>
<CAPTION>
NUMBER OF SHARES UNDERLYING
OPTIONS GRANTED ON
NAME FEBRUARY 2, 1995
---- ---------------------------
<S> <C>
Richard F. Teerlink.......................... 90,000
Jeffrey L. Bleustein......................... 48,000
Thomas A. Gelb............................... 36,211
C. William Gray.............................. 28,124
Martin R. Snoey.............................. 20,337
All Executive Officers as a Group (8
Persons).................................... 255,058
All Employees as a Group..................... 805,360
</TABLE>
Directors and other persons who are not employees of the Company and who are
not engaged to become employees of the Company are not eligible to receive
Options under the 1995 Plan or the Existing Plans.
The grant of an Option under the 1995 Plan will create no income tax
consequences to the participant or to the Company. A participant who is granted
a nonqualified Option will generally recognize ordinary income at the time of
exercise in an amount equal to the excess of the fair market value of the
Common Stock at such time over the exercise price. The Company will be entitled
to a deduction in the same amount and at the same time as ordinary income is
recognized by the participant. Amounts payable in connection with the
settlement of stock appreciation rights receive similar treatment. A subsequent
disposition of Common Stock acquired on exercise of an Option will give rise to
capital gain or loss to the extent the amount realized from the sale differs
from the tax basis, i.e., the fair market value of the Common Stock on the date
of exercise. This capital gain or loss will be a long-term capital gain or loss
if the Common Stock had been held for more than one year from the date of
exercise. Generally, for ISOs, the appreciated value of the underlying stock
received upon exercise will be taxable to the participant as a capital gain
upon sale of the stock, and the Company will not receive any tax deduction.
The affirmative vote of a majority of the shares of Common Stock present or
represented at the Annual Meeting is required for approval of the 1995 Plan,
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 the 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 1995 Plan unless a shareholder
specifies otherwise.
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1995 PLAN.
16
<PAGE>
3--AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION
INCREASING AUTHORIZED COMMON STOCK
The Company currently has 102,000,000 shares of capital stock authorized
consisting of 100,000,000 shares of Common Stock and 2,000,000 shares of
Preferred Stock (the "Preferred Stock"). The Board has approved for submission
to shareholders and recommends an amendment to the Company's Restated Articles
of Incorporation to (i) increase the total number of authorized shares of
capital stock to 202,000,000 and (ii) increase the total number of authorized
shares of Common Stock to 200,000,000.
The purpose of increasing the number of shares of Common Stock is to have
additional shares available for general corporate purposes, including stock
dividends, stock splits, issuing stock in connection with various employee
incentive and retirement plans, raising additional capital and other uses. By
approving an increase in authorized Common Stock in advance of any specific
need, the Company may avoid the delay and expense of obtaining shareholder
approval at a later special meeting. As of March 16, 1995, 76,389,241 shares of
Common Stock were outstanding and there were 3,760,542 shares reserved for
issuance upon the exercise of outstanding options under the Existing Plans.
Assuming the 1995 Plan is approved by the shareholders at the Annual Meeting,
there will be an additional 3,800,000 shares reserved for issuance under the
1995 Plan. Holders of outstanding Common Stock are not entitled to preemptive
rights.
Article IV (a) of the Company's Restated Articles of Incorporation currently
provides that the total number of shares of all classes of stock that the
Company is authorized to issue is 102,000,000 consisting of 100,000,000 shares
of Common Stock and 2,000,000 shares of Preferred Stock. The proposed amendment
to the first sentence of the first paragraph of Article IV (a) of the Company's
Restated Articles of Incorporation would delete the existing provision and in
its place insert the following:
"(a) Authorized Shares. The total number of shares of all classes of
stock that the Corporation is authorized to issue is two hundred two
million (202,000,000), consisting of (i) two hundred million (200,000,000)
shares of Common Stock of $.01 par value, and (ii) two million (2,000,000)
shares of Preferred Stock of $1.00 par value."
The proposed amendment to the Restated Articles of Incorporation will be
approved if a majority of the outstanding shares of Common Stock are voted
"FOR" the proposed amendment. For purposes of determining the vote, abstentions
and broker nonvotes will not be counted and will have the same effect as a vote
against the proposal. Proxies solicited by the Board will be voted "FOR"
approval of the proposed amendment unless a shareholder specifies otherwise.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF THE AMENDMENT TO
THE RESTATED ARTICLES OF INCORPORATION.
4--RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Ernst & Young LLP, independent public accountants, audited the Company's
consolidated financial statements for the fiscal year ended December 31, 1994.
Representatives of Ernst & Young LLP will be present at the Annual Meeting to
respond to appropriate questions and to make a statement, if they so desire.
Ernst & Young LLP 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 prior to the Annual Meeting Ernst & Young LLP 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 Annual Meeting will
be subject to ratification by the shareholders at the Annual Meeting. If the
shareholders fail to ratify the engagement of Ernst & Young LLP at the Annual
Meeting, the Board will reconsider its selection of
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independent auditors. Proxies solicited by the Board will be voted "FOR"
ratification of the selection of Ernst & Young LLP as independent auditors of
the Company for the fiscal year ending December 31, 1995, unless the
shareholder specifies otherwise.
THE BOARD RECOMMENDS A VOTE "FOR" RATIFICATION OF THE SELECTION OF ERNST &
YOUNG LLP AS INDEPENDENT AUDITORS.
5--OTHER MATTERS
The matters referred to herein are, as far as management now knows, the only
matters which will be presented for consideration at the Annual Meeting. Among
other things, to bring business before an annual meeting, a shareholder must
give written notice thereof to the Secretary of the Company in advance of the
meeting in compliance with the terms and within the time periods specified in
the Company's Restated Articles of Incorporation. 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.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers to file reports of ownership and changes in
ownership of Common Stock with the Securities and Exchange Commission. Mr.
Allen, a director of the Company, failed to report on a timely basis the sale
during 1994 of 1.35 shares held by him in the Company's Dividend Reinvestment
Plan. Such sale was reported on a Form 5 which Mr. Allen filed on a timely
basis.
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
PROPOSALS BY SHAREHOLDERS WHICH ARE INTENDED TO BE PRESENTED AT THE 1996
ANNUAL MEETING OF SHAREHOLDERS MUST BE RECEIVED BY THE COMPANY NO LATER THAN
DECEMBER 4, 1995, TO BE ELIGIBLE FOR INCLUSION IN THE COMPANY'S PROXY MATERIALS
FOR THAT MEETING.
By Order of the Board of Directors,
LOGO
Timothy K. Hoelter
Secretary
Milwaukee, Wisconsin
March 31, 1995
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EXHIBIT A
HARLEY-DAVIDSON, INC.
1995 STOCK OPTION PLAN
ARTICLE I
PURPOSE
The purpose of the Harley-Davidson, Inc. 1995 Stock Option Plan is to provide
favorable opportunities for certain selected employees of Harley-Davidson, Inc.
and its subsidiaries to purchase or receive shares of Common Stock of Harley-
Davidson, Inc., or to benefit from the appreciation thereof. Such opportunities
should provide an increased incentive for these employees to contribute to the
future success and prosperity of Harley-Davidson, Inc., thus enhancing the
value of the stock for the benefit of the shareholders, and increase the
ability of Harley-Davidson, Inc. to attract and retain individuals of
exceptional skill upon whom, in large measure, its sustained progress, growth
and profitability depend.
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. Code: The Internal Revenue Code of 1986, as amended.
2.3. Committee: The Human Resources Committee of the Board; provided that
if any member of the Human Resources Committee is not both a Disinterested
Person and Outside Director, the Committee shall be comprised of only those
members of the Human Resources Committee who are both Disinterested Persons
and Outside Directors.
2.4. Common Stock: The common stock of Harley-Davidson, Inc.
2.5. Company: Harley-Davidson, Inc. and any of its Subsidiaries.
2.6. Disability: Disability within the meaning of Section 22(e)(3) of the
Code, as determined by the Committee.
2.7. Disinterested Persons: Disinterested persons within the meaning of
Rule 16b-3 as promulgated under the Securities Exchange Act of 1934, as
amended.
2.8. Employer: The entity that employs the employee or Optionee.
2.9. 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
date for which fair market value is being determined.
2.10. ISO: An incentive stock option within the meaning of Section 422 of
the Code and which is designated as an incentive stock option by the
Committee.
2.11. Non-ISO: A stock option which is not an ISO.
2.12. Option: A stock option granted under the Plan. Options include both
ISOs and Non-ISOs.
2.13. Option Price: The purchase price of a share of Common Stock under
an Option.
2.14. Optionee: A person who has been granted one or more Options.
2.15. Outside Directors: Outside Directors within the meaning of Section
162(m) of the Code and the regulations promulgated thereunder.
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2.16. Parent Corporation: The parent corporation, as defined in Section
424(e) of the Code.
2.17. Plan: The Harley-Davidson, Inc. 1995 Stock Option Plan.
2.18. Retirement: Retirement on or after age sixty-two or, with the
consent of the Committee, at an earlier age.
2.19. 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 Harley-Davidson, Inc.
2.20. Termination Date: A date fixed by the Committee but not later than
the day preceding the tenth anniversary of the date on which the Option is
granted.
ARTICLE III
ADMINISTRATION
3.1. The Committee shall administer the Plan and shall have full power to
grant Options, construe and interpret the Plan, establish and amend rules and
regulations for its administration, and perform all other acts relating to the
Plan, including the delegation of administrative responsibilities, which it
believes reasonable and proper.
3.2. Subject to the provisions of the Plan, the Committee shall, in its
discretion, determine who shall be granted Options, the number of shares
subject to option under any such Options, the dates after which Options may be
exercised, in whole or in part, whether Options shall be ISOs, and the terms
and conditions of the Options.
3.3. Any decision made, or action taken, by the Committee arising out of or
in connection with the interpretation and administration of the Plan shall be
final and conclusive.
ARTICLE IV
SHARES SUBJECT TO THE PLAN
4.1. The total number of shares of Common Stock available for grants of
Options under the Plan shall be 3,800,000 provided that Options for not more
than 200,000 shares of Common Stock shall be granted to an Optionee in any
calendar year under the Plan, which amount shall be reduced by the amount of
Common Stock subject to options granted to such Optionee in such calendar year
under any other stock option plan of the Company. The foregoing amounts shall
be subject to adjustment in accordance with Article VIII of the Plan. If an
Option or portion thereof shall expire, be canceled or terminate for any reason
without having been exercised in full, the unpurchased shares covered by such
Option shall be available for future grants of Options. An Option, or portion
thereof, exercised through the exercise of a stock appreciation right pursuant
to Section 6.7 of the Plan shall be treated, for the purposes of this Article,
as though the Option, or portion thereof, had been exercised through the
purchase of Common Stock, with the result that the shares of Common Stock
subject to the Option, or portion thereof, that was so exercised shall not be
available for future grants of Options.
ARTICLE V
ELIGIBILITY
5.1. Options may be granted to key employees of the Company or to persons who
have been engaged to become key employees of the Company. Key employees will
comprise, in general, those who contribute to the management, direction and
overall success of the Company, including those who are members of the Board.
Members of the Board who are not employees of the Company shall not be eligible
for Option grants.
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ARTICLE VI
TERM OF OPTIONS
6.1. Option Agreements: All Options shall be evidenced by written agreements
executed by the Company. Such Options shall be subject to the applicable
provisions of the Plan, and shall contain such provisions as are required by
the Plan and any other provisions the Committee may prescribe. All agreements
evidencing Options shall specify the total number of shares subject to each
grant, the Option Price and the Termination Date. Those Options that comply
with the requirements for an ISO set forth in Section 422 of the Code and are
designated ISOs by the Committee shall be ISOs and all other Options shall be
Non-ISOs.
6.2. Option Price: The Option Price shall be set by the Committee; provided,
however, that the price per share shall not be less than the Fair Market Value
of a share of Common Stock on the date the Option is granted.
6.3. Period of Exercise: The Committee shall determine the dates after which
Options may be exercised in whole or in part. If Options are exercisable in
installments, installments or portions thereof that are exercisable and not
exercised shall accumulate and remain exercisable. The Committee may also amend
an Option to accelerate the dates after which Options may be exercised in whole
or in part. However, no Option or portion thereof shall be exercisable after
the Termination Date.
6.4. Special Rules Regarding ISOs Granted to Certain Employees:
Notwithstanding any contrary provisions of Sections 6.2 and 6.3 of the Plan, no
ISO shall be granted to any employee who, at the time the Option is granted,
owns (directly or indirectly, within the meaning of Section 424(d) of the Code)
more than ten percent of the total combined voting power of all classes of
stock of the Employer or of any Subsidiary or Parent Corporation thereof,
unless (a) the Option Price under such Option is at least 110 percent of the
Fair Market Value of a share of Common Stock on the date the Option is granted
and (b) the Termination Date of such Option is a date not later than the day
preceding the fifth anniversary of the date on which the Option is granted.
6.5. Manner of Exercise and Payment: An Option, or portion thereof, shall be
exercised by delivery of a written notice of exercise to the Company and
payment of the full price of the shares being purchased pursuant to the Option.
An Optionee may exercise an Option with respect to less than the full number of
shares for which the Option may then be exercised, but an Optionee must
exercise the Option in full shares of Common Stock. The price of Common Stock
purchased pursuant to an Option, or portion thereof, may be paid:
a. in United States dollars in cash or by check, bank draft or money
order payable to the order of the Company.
b. through the delivery of shares of Common Stock with an aggregate Fair
Market Value on the date of exercise equal to the Option Price, or
c. by any combination of the above methods of payment.
The Committee shall determine acceptable methods for tendering Common Stock as
payment upon exercise of an Option and may impose such limitations and
prohibitions on the use of Common Stock to exercise an Option as it deems
appropriate, including, without limitation, any limitation or prohibition
designed to avoid certain accounting consequences which may result from the use
of Common Stock as payment upon exercise of an Option.
6.6. Withholding Taxes: The Company may, in its discretion, require an
Optionee to pay to the Company at the time of exercise the amount that the
Company deems necessary to satisfy its obligation to withhold Federal, state or
local income or other taxes incurred by reason of the exercise. Upon or prior
to the exercise of an Option requiring tax withholding, an Optionee may make a
written election to have shares of Common Stock withheld by the Company from
the shares otherwise to be received. The number of shares
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so withheld shall have an aggregate Fair Market Value on the date of exercise
sufficient to satisfy the applicable withholding taxes. The acceptance of any
such election by an Optionee shall be at the sole discretion of the Committee.
Where the exercise of an Option does not give rise to an obligation to withhold
Federal income taxes on the date of exercise, the Company may, in its
discretion, require an Optionee to place shares of Common Stock purchased under
the Option in escrow for the benefit of the Company until such time as Federal
income tax withholding is required on amounts included in the gross income of
the Optionee as a result of the exercise of an Option. At such time, the
Company, in its discretion, may require an Optionee to pay to the Company the
amount that the Company deems necessary to satisfy its obligation to withhold
Federal, state or local income or other taxes incurred by reason of the
exercise of the Option, in which case the shares of Common Stock will be
released from escrow to the Optionee. Alternatively, subject to acceptance by
the Committee, in its sole discretion, an Optionee may make a written election
to have shares of Common Stock held in escrow applied toward the Company's
obligation to withhold Federal, state or local income or other taxes incurred
by reason of the exercise of the Option, based on the Fair Market Value of the
shares on the date of the termination of the escrow arrangement. Upon
application of such shares toward the Company's withholding obligation, any
shares of Common Stock held in escrow and not, in the judgment of the
Committee, necessary to satisfy such obligation shall be released from escrow
to the Optionee.
6.7. Stock Appreciation Rights: At or after the grant of an Option, the
Committee, in its discretion, may provide an Optionee with an alternate means
of exercising an Option, or a designated portion thereof, by granting the
Optionee a stock appreciation right. A "stock appreciation right" is a right to
receive, upon exercise of an Option or any portion thereof, in the Committee's
sole discretion, an amount of cash equal to, and/or shares of Common Stock
having a Fair Market Value on the date of exercise equal to, the excess of the
Fair Market Value of a share of Common Stock on the date of exercise over the
Option Price, multiplied by the number of shares of Common Stock that the
Optionee would have received had the Option or portion thereof been exercised
through the purchase of shares of Common Stock at the Option Price, provided
that (a) such Option or portion thereof has been designated as exercisable in
this alternative manner, (b) such Option or portion thereof is otherwise
exercisable, and (c) the Fair Market Value of a share of Common Stock on the
date of exercise exceeds the Option Price.
6.8. Nontransferability of Options: Each Option shall, during the Optionee's
lifetime, be exercisable only by the Optionee, and neither it nor any right
hereunder shall be transferable otherwise than by will or the laws of descent
and distribution or be subject to attachment, execution or other similar
process. In the event of any attempt by the Optionee to alienate, assign,
pledge, hypothecate or otherwise dispose of an Option or of any right
hereunder, except as provided for herein, or in the event of any levy or any
attachment, execution or similar process upon the rights or interest hereby
conferred, the Company may terminate the Option by notice to the Optionee and
the Option shall thereupon become null and void.
6.9. Cessation of Employment of Optionee:
a. Cessation of Employment other than by Reason of Retirement, Disability
or Death. If an Optionee shall cease to be employed by the Company
otherwise than by reason of Retirement, Disability, or death, each Option
held by the Optionee, together with all rights hereunder, shall terminate
on the date of cessation of employment, to the extent not previously
exercised.
b. Cessation of Employment by Reason of Retirement or Disability. If an
Optionee shall cease to be employed by the Company by reason of Retirement
or Disability, each Option held by the Optionee shall remain exercisable,
to the extent it was exercisable at the time of cessation of employment,
until the earliest of:
i. the Termination Date,
ii. the death of the Optionee, or such later date not more than one
year after the death of the Optionee as the Committee, in its
discretion, may provide pursuant to Section 6.9(c) of the Plan,
iii. the third anniversary of the date of the cessation of the
Optionee's employment, if employment ceased by reason of Retirement, or
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iv. the first anniversary of the date of the cessation of the
Optionee's employment by reason of Disability;
and thereafter all such Options shall terminate together with all rights
hereunder, to the extent not previously exercised.
c. Cessation of Employment by Reason of Death. In the event of the death
of the Optionee while employed by the Company, an Option may be exercised
at any time or from time to time prior to the earlier of the Termination
Date or the first anniversary of the date of the Optionee's death, by the
person or persons to whom the Optionee's rights under each Option shall
pass by will or by the applicable laws of descent and distribution, to the
extent that the Optionee was entitled to exercise such Option on the
Optionee's date of death. In the event of the death of the Optionee while
entitled to exercise an Option pursuant to Section 6.9(b), the Committee,
in its discretion, may permit such Option to be exercised at any time or
from time to time prior to the Termination Date during a period of up to
one year from the death of the Optionee, as determined by the Committee, by
the person or persons to whom the Optionee's rights under each Option shall
pass by will or by the applicable laws of descent and distribution, to the
extent that the Option was exercisable at the time of cessation of the
Optionee's employment. Any person or persons to whom an Optionee's rights
under an Option have passed by will or by the applicable laws of descent
and distribution shall be subject to all terms and conditions of the Plan
and the Option applicable to the Optionee.
6.10. Notification of Sales of Common Stock: Any Optionee who disposes of
shares of Common Stock acquired upon the exercise of an ISO either (a) within
two years after the date of the grant of the ISO under which the stock was
acquired or (b) within one year after the transfer of such shares to the
Optionee, shall notify the Company of such disposition and of the amount
realized upon such disposition.
ARTICLE VII
LIMITATIONS AND ACCELERATIONS ON EXERCISABILITY
7.1. Notwithstanding any other provision of this Plan, in the case of an ISO,
the aggregate Fair Market Value (determined at the time the ISO is granted) of
the shares of Common Stock with respect to which all "incentive stock options"
(within the meaning of Section 422 of the Code) are first exercisable by the
Optionee during any calendar year (under this Plan and under all other
incentive stock option plans of the Employer, any Subsidiary and any Parent
Corporation) shall not exceed $100,000.
7.2. Each Option granted under the Plan shall have a limited right of
surrender allowing the Optionee to surrender that Option within the 30-day
period following a Change of Control Event and to receive cash, in lieu of
exercising the Option, in the amount by which the highest "COC Fair Market
Value" (as hereinafter defined) of the number of shares of Common Stock covered
by the Option during the 60 days preceding the date on which the Change of
Control Event occurs exceeds the exercise price for the shares of Common Stock
covered by the Option. For this purpose, the "COC Fair Market Value" of the
Common Stock means the closing price of one share of Common Stock as reported
on the New York Stock Exchange Composite Tape. If the Common Stock is not
listed or admitted to trading on the New York Stock Exchange, the COC Fair
Market Value of the Common Stock shall be the closing price of one share of
Common Stock on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or, if the Common Stock is not listed
or admitted to trading on any national securities exchange, the last quoted
sale price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market of the Common Stock, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other system then in use, or, if on any such date the Common
Stock is not quoted by any such organization, the average of the closing bid
and asked prices of the Common Stock as furnished by a professional market
maker making a market in the Common Stock selected by the Board. If on any such
date no market maker is making a market in the Common Stock or other Stock, the
COC Fair Market Value
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shall be determined in good faith by the Continuing Directors who are not
Disinterested Persons. For purposes of this Section 7.2:
(a) "Change of Control Event" means any one of the following: (i)
Continuing Directors no longer constitute at least two-thirds of the
Directors constituting the Board; (ii) any person or groups (as defined in
Rule 13d-5 under the Securities Exchange Act of 1934, as amended ("Exchange
Act")), together with its affiliates, becomes the beneficial owner,
directly or indirectly, of 20% or more of Harley-Davidson, Inc.'s then
outstanding Common Stock or 20% or more of the voting power of Harley-
Davidson, Inc.'s then outstanding securities entitled generally to vote for
the election of Harley-Davidson, Inc.'s Directors; (iii) the approval by
Harley-Davidson, Inc.'s stockholders of the merger or consolidation of
Harley-Davidson, Inc. with any other corporation, the sale of substantially
all of Harley-Davidson, Inc.'s assets or the liquidation or dissolution of
Harley-Davidson, Inc., unless, in the case of a merger or consolidation,
the Continuing Directors in office immediately prior to such merger or
consolidation constitute at least two-thirds of the directors constituting
the board of directors of the surviving corporation of such merger or
consolidation and any parent (as defined in Rule 12b-2 under the Exchange
Act) of such corporation; or (iv) at least two-thirds of the Continuing
Directors who are Disinterested Persons in office immediately prior to any
other action proposed to be taken by Harley-Davidson, Inc.'s stockholders
or by the Board determine that such proposed action, if taken, would
constitute a change of control of Harley-Davidson, Inc. and such action is
taken; and
(b) "Continuing Director" means any person who either (i) was a Director
on February 2, 1995, or (ii) was designated before such person's initial
election as a Director as a Continuing Director by a majority of the
Continuing Directors.
ARTICLE VIII
ADJUSTMENTS
8.1. If (a) the Company shall at any time be involved in a transaction to
which Section 424(a) of the Code is applicable; (b) the Company shall declare a
dividend payable in, or shall subdivide or combine, its Common Stock; or (c)
any other event shall occur which in the judgment of the Committee necessitates
an adjustment to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan, then the Committee may,
in such manner as it may deem equitable, adjust any or all of (i) the number
and type of securities subject to the Plan and which thereafter may be the
subject of Options; (ii) the number and type of securities subject to
outstanding Options; (iii) the Option Price with respect to any Option; and
(iv) the number of shares of Common Stock that may be issued pursuant to
Options granted to an Optionee in any calendar year; provided, however, that
each such adjustment, in the case of ISOs, shall be made in such a manner as
not to constitute a "modification" within the meaning of Section 424(h)(3) of
the Code. The judgment of the Committee with respect to any matter referred to
in this Article shall be conclusive and binding upon each Optionee.
ARTICLE IX
AMENDMENT AND TERMINATION OF PLAN
9.1. The Board may at any time, or from time to time, suspend or terminate
the Plan in whole or in part or amend it in such respects as the Board may deem
appropriate, provided, however, that no such amendment shall be made, which
would, without approval of the shareholders:
a. materially modify the eligibility requirements for receiving Options;
b. increase the aggregate number of Shares of Common Stock which may be
issued pursuant to Options granted under the Plan, except as is provided
for in accordance with Article VIII of the Plan;
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c. increase the number of shares of Common Stock which may be issued
pursuant to Options granted to an Optionee in any calendar year, except as
is provided for in accordance with Article VIII of the Plan;
d. reduce the minimum Option Price, except as is provided for in
accordance with Article VIII of the Plan;
e. extend the period of granting Options; or
f. materially increase in any other way the benefits accruing to
Optionees.
9.2. No amendment, suspension or termination of this Plan shall, without the
Optionee's consent, alter or impair any of the rights or obligations under any
Option theretofore granted to an Optionee under the Plan.
9.3. The Board may amend this Plan, subject to the limitations cited above,
in such manner as it deems necessary to permit the granting of Options meeting
the requirements of future amendments or issued regulations, if any, to the
Code.
ARTICLE X
GOVERNMENT AND OTHER REGULATIONS
10.1. The obligation of the Company to issue or transfer and deliver shares
for Options exercised under the Plan shall be subject to all applicable laws,
regulations, rules, orders and approvals which shall then be in effect and
required by governmental entities and the stock exchanges on which Common Stock
is traded.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Plan Does Not Confer Employment or Shareholder Rights: The right of the
Employer to terminate (whether by dismissal, discharge, retirement or
otherwise) the Optionee's employment with it at any time at will, or as
otherwise provided by any agreement between the Company and the Optionee, is
specifically reserved. Neither the Optionee nor any person entitled to exercise
the Optionee's rights in the event of the Optionee's death shall have any
rights of a shareholder with respect to the shares subject to each Option,
except to the extent that, and until, such shares shall have been issued upon
the exercise of each Option.
11.2. Plan Expenses: Any expenses of administering this Plan shall be borne
by the Company.
11.3. Use of Exercise Proceeds: Payments received from Optionees upon the
exercise of Options shall be used for the general corporate purposes of the
Company, except that any stock received in payment may be retired, or retained
in the Company's treasury and reissued.
11.4. Indemnification: In addition to such other rights of indemnification as
they may have as members of the Board or the Committee, the members of the
Committee and the Board 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 party by reason of any action
taken or failure to act under or in connection with the Plan or any Option
granted thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except a judgment based upon a finding of bad faith;
provided that upon the institution of any such action, suit or proceeding a
Committee or Board member shall, in writing, give the Company notice thereof
and an opportunity, at its own expense, to handle and defend the same before
such Committee or Board member undertakes to handle and defend it on such
member's own behalf.
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ARTICLE XII
SHAREHOLDER APPROVAL AND EFFECTIVE DATES
12.1. The Plan shall become effective when it is approved by the shareholders
of Harley-Davidson, Inc. at a shareholders meeting by the requisite vote under
New York Stock Exchange Rules, Internal Revenue Code Section 162(m) and Rule
16b-3 under the Securities Exchange Act of 1934. Options may not be granted
under the Plan after April 26, 2005.
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HARLEY-DAVIDSON, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR MAY 6, 1995 ANNUAL MEETING OF SHAREHOLDERS
The undersigned appoints each of Vaughn L. Beals, Jr., Richard F. Teerlink and
Timothy K. Hoelter, attorney and agent, with full power of substitution and
resubstitution, to vote as proxy in the name, place and stead of the undersigned
at the Annual Meeting of Shareholders of HARLEY-DAVIDSON, INC. to be held on May
6, 1995 and at any adjournment thereof, according to the number of votes that
the undersigned would be entitled to vote if personally present.
1. ELECTION OF DIRECTORS:
FOR the nominees listed below [ ] WITHHOLD AUTHORITY [ ]
(except as marked to the to vote for all
contrary below) nominees listed below
Barry K. Allen, Richard G. LeFauve
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the following line:
______________________________________________________________________
_________________________________________
2. APPROVAL OF THE HARLEY-DAVIDSON, INC. 1995 STOCK OPTION PLAN:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. APPROVAL OF AMENDMENT TO RESTATED ARTICLES OF INCORPORATION OF HARLEY-
DAVIDSON, INC. TO INCREASE THE TOTAL NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK FROM 100,000,000 TO 200,000,000:
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.
4. RATIFICATION OF AUDITORS:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Without limiting the generality hereof, each of such persons is authorized to
vote:
1. as herein specified upon the proposals listed hereon and described in the
Proxy Statement for the Meeting; and
2. in his discretion upon any other matter that may properly come before the
Meeting.
The Board of Directors recommend a vote FOR the nominees as directors and Items
2, 3 and 4.
The shares represented by this Proxy shall be voted as specified. 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
<PAGE>
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: ,1995
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY. A STAMPED AND ADDRESSED
ENVELOPE HAS BEEN PROVIDED FOR YOUR USE.
<PAGE>
HARLEY-DAVIDSON, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR MAY 6, 1995 ANNUAL MEETING OF SHAREHOLDERS
The undersigned appoints each of Vaughn L. Beals, Jr., Richard F. Teerlink
and Timothy K. Hoelter, attorney and agent, with full power of substitution and
resubstitution, to vote as proxy in the name, place and stead of the undersigned
at the Annual Meeting of Shareholders of HARLEY-DAVIDSON, INC. to be held on May
6, 1995 and at any adjournment thereof, according to the number of votes that
the undersigned would be entitled to vote if personally present.
1. ELECTION OF DIRECTORS:
FOR the nominees listed below [ ] WITHHOLD AUTHORITY [ ]
(except as marked to to vote for all
the contrary below) nominees listed below
Barry K. Allen, Richard G. LeFauve
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the following line:
______________________________________________________________________
_________________________________________
2. APPROVAL OF THE HARLEY-DAVIDSON, INC. 1995 STOCK OPTION PLAN:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. APPROVAL OF AMENDMENT TO RESTATED ARTICLES OF INCORPORATION OF HARLEY-
DAVIDSON, INC. TO INCREASE THE TOTAL NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK FROM 100,000,000 TO 200,000,000:
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.
RETIREMENT SAVINGS PLAN
4. RATIFICATION OF AUDITORS:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Without limiting the generality hereof, each of such persons is authorized to
vote:
1. as herein specified upon the proposals listed hereon and described in the
Proxy Statement for the Meeting; and
2. in his discretion upon any other matter that may properly come before the
Meeting.
The Board of Directors recommend a vote FOR the nominees as directors and Items
2, 3 and 4.
The shares represented by this Proxy shall be voted as specified. If no
specification is made, the shares shall be voted as recommended by the Board of
Directors.
<PAGE>
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: ,1995
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY. A STAMPED AND ADDRESSED
ENVELOPE HAS BEEN PROVIDED FOR YOUR USE.
<PAGE>
HARLEY-DAVIDSON, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR MAY 6, 1995 ANNUAL MEETING OF SHAREHOLDERS
The undersigned appoints each of Vaughn L. Beals, Jr., Richard F. Teerlink
and Timothy K. Hoelter, attorney and agent, with full power of substitution and
resubstitution, to vote as proxy in the name, place and stead of the undersigned
at the Annual Meeting of Shareholders of HARLEY-DAVIDSON, INC. to be held on May
6, 1995 and at any adjournment thereof, according to the number of votes that
the undersigned would be entitled to vote if personally present.
1. ELECTION OF DIRECTORS:
FOR the nominees listed below [ ] WITHHOLD AUTHORITY [ ]
(except as marked to the to vote for all
contrary below) nominees listed below
Barry K. Allen, Richard G. LeFauve
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the following line:
______________________________________________________________________
_________________________________________
2. APPROVAL OF THE HARLEY-DAVIDSON, INC. 1995 STOCK OPTION PLAN:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. APPROVAL OF AMENDMENT TO RESTATED ARTICLES OF INCORPORATION OF HARLEY-
DAVIDSON, INC. TO INCREASE THE TOTAL NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK FROM 100,000,000 TO 200,000,000:
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.
EMPLOYEES' RETIREMENT PLAN
4. RATIFICATION OF AUDITORS:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Without limiting the generality hereof, each of such persons is authorized to
vote:
1. as here specified upon the proposals listed hereon and described in the Proxy
Statement for the Meeting; and
2. in his discretion upon any other matter that may properly come before the
Meeting.
The Board of Directors recommend a vote FOR the nominees as directors and Items
2, 3 and 4.
The shares represented by this Proxy shall be voted as specified. If no
specification is made, the shares shall be voted as recommended by the Board of
Directors.
<PAGE>
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: ,1995
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY. A STAMPED AND ADDRESSED
ENVELOPE HAS BEEN PROVIDED FOR YOUR USE.
