<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
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):
[x] No fee required
[_] 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:
-------------------------------------------------------------------------
[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 2, 1998
The 1998 Annual Meeting of the Shareholders (the "Annual Meeting") of
Harley-Davidson, Inc. (the "Company") will be held at the Pfister Hotel, 424
East Wisconsin Avenue, Milwaukee, Wisconsin, on May 2, 1998 at 10:30 a.m.,
local time, for the following purposes:
1. To elect three directors for a three-year term to expire at the
Company's 2001 annual meeting of shareholders;
2. To ratify the selection of Ernst & Young LLP, independent public
accountants, to be the auditors of the annual financial statements of the
Company for the year ending December 31, 1998; and
3. To take action upon any other business as may properly come before the
Annual Meeting and any adjournment thereof.
The Board of Directors of the Company has fixed the close of business on
March 17, 1998 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
Gail A. Lione
Secretary
Milwaukee, Wisconsin
March 25, 1998
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. TO AVOID THE
ADDITIONAL EXPENSE TO THE COMPANY OF FURTHER SOLICITATION, WE ASK YOUR
COOPERATION IN MAILING YOUR PROXY PROMPTLY.
<PAGE>
LOGO
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
HARLEY-DAVIDSON, INC.
3700 WEST JUNEAU AVENUE
MILWAUKEE, WISCONSIN 53208
(414) 342-4680
March 25, 1998
Dear Fellow Shareholder:
On behalf of the Board of Directors and management of Harley-Davidson, Inc.,
I cordially invite you to attend the 1998 Annual Meeting of the Shareholders
of Harley-Davidson, Inc. to be held at 10:30 a.m., local time, on Saturday,
May 2, 1998, at the Pfister Hotel, 424 East Wisconsin Avenue, Milwaukee,
Wisconsin.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the Meeting. During the Meeting, there
will be brief reports on the operations of the Company. Once the business of
the Meeting has been concluded, shareholders will be given the opportunity to
ask questions.
We sincerely hope you will be able to attend our 1998 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
Richard F. Teerlink
Chairman of the Board
<PAGE>
LOGO
3700 WEST JUNEAU AVENUE
MILWAUKEE, WISCONSIN 53208
MARCH 25, 1998
----------------
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 1998 Annual Meeting of Shareholders of the Company to be held on May 2,
1998 and at any adjournment thereof (the "Annual Meeting"). This Proxy
Statement and the accompanying proxy were first sent to shareholders on or
about March 25, 1998.
The only outstanding class of voting securities of the Company is its common
stock (the "Common Stock"). On March 17, 1998, the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting, 151,932,482 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 April 30, 1998 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.
As used in this Proxy Statement, "Motor Company" refers to the Company's
principal subsidiary, Harley-Davidson Motor Company.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 17, 1998
(except as noted) with respect to the Common Stock ownership of each director,
the Chief Executive Officer, the four executive officers of the Company
identified in the Summary Compensation Table below (collectively with the
Chief Executive Officer, the "named executive officers"), all directors and
executive officers as a group and each person or group of persons known by the
Company to own beneficially more than 5% of the Common Stock.
<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.......................... 8,000 * 0
Vaughn L. Beals, Jr..................... 752,152(4) * 0
Richard I. Beattie...................... 2,000 * 0
Jeffrey L. Bleustein.................... 803,831 * 262,444
C. William Gray......................... 228,000 * 186,880
Richard J. Hermon-Taylor................ 8,000 * 0
Donald A. James......................... 105,000(5) * 0
Richard G. LeFauve...................... 4,000 * 0
Sara L. Levinson........................ 2,000 * 0
James A. McCaslin....................... 144,870 * 61,132
James A. Norling........................ 4,000 * 0
Richard F. Teerlink..................... 1,434,817 * 1,420,200
James L. Ziemer......................... 123,156 * 70,062
All Directors and Executive Officers as
a Group (19 Individuals)............... 4,285,100 2.8% 2,512,735
The Equitable Companies Incorporated
1290 Avenue of the Americas
New York, NY 10104..................... 9,779,550(6) 6.4% 0
Ruane, Cunniff & Co., Inc.
767 Fifth Avenue
New York, NY 10153-4798................ 8,661,675(7) 5.7% 0
</TABLE>
- --------
* The amount shown is less than 1% of the outstanding shares of Common Stock.
(1) Except as otherwise noted, all persons have sole voting and investment
power over the shares listed.
(2) Includes shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days of March 17, 1998. Includes shares of
Common Stock held in the Company's 401(k) plan as of December 31, 1997.
(3) Only includes stock options exercisable within 60 days of March 17, 1998.
Directors who are not employees of the Company are not eligible to receive
stock options under the Company's stock option plans.
(4) Includes 380,760 shares of Common Stock held by Mr. Beals' wife. Mr. Beals
has shared voting and investment power over such shares.
(5) All of such shares of Common Stock are held by Fred Deeley Imports Ltd.
Mr. James has sole voting power and shared investment power over such
shares.
(6) Information derived from the Schedule 13G filed by The Equitable Companies
Incorporated and its affiliates. As of December 31, 1997, The Equitable
Companies Incorporated and its affiliates had sole voting power over
5,224,390 shares, shared voting power over 2,802,800 shares, sole
dispositive power over 9,778,290 shares and shared dispositive power over
1,260 shares.
(7) Information derived from the Schedule 13G filed by Ruane, Cunniff & Co.,
Inc. As of December 31, 1997, Ruane, Cunniff & Co., Inc. had sole voting
power over 6,796,020 shares, sole dispositive power over 3,680,475 shares
and shared dispositive power over 4,981,200 shares.
2
<PAGE>
1--ELECTION OF DIRECTORS
The Restated Articles of Incorporation of the Company provide for a Board of
not less than six (6) nor more than fifteen (15) members, as determined from
time to time by the affirmative vote of a majority of the directors then in
office. The Board is divided into three classes, with one class of directors
elected each year for a term of three years.
The Board currently consists of ten members, three of whom have terms that
expire at the Annual Meeting (Class I Directors), three of whom have terms
that expire at the 1999 annual meeting of shareholders (Class II Directors)
and four of whom have terms that expire at the 2000 annual meeting of
shareholders (Class III Directors). In accordance with the Company's mandatory
retirement policy for directors, Vaughn L. Beals, Jr., who is a Class III
Director, will retire as a director effective upon the expiration of the
current term of the Class I Directors at the Annual Meeting. The Board has
acted to reduce the size of the Board to nine members and the number of Class
III Directors to three effective upon the expiration of the current term of
the Class I Directors at the Annual Meeting.
The three nominees for director set forth below, all of whom are currently
Class I Directors, are proposed to be elected at the Annual Meeting to serve
until the 2001 annual meeting of shareholders. The remaining six directors
will continue to serve as members of the Board for terms as set forth below.
The nominees have advised the Company that they will serve if elected.
Directors are elected by a plurality of the votes cast (assuming a quorum is
present at the Annual Meeting). Thus, any shares not voted, whether due to
abstentions or broker 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 and has no discretion to vote on such
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 17, 1998, 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 2001 ANNUAL MEETING
Barry K. Allen, 49, has been a director of the Company since 1992. Mr. Allen
has served as Executive Vice President of Ameritech Corporation, a
telecommunications company, since August 1995. From September 1993 to August
1995, he was 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, and from 1989 to July 1993, he was
President and Chief Executive Officer of Wisconsin Bell, Inc., a provider of
communications and information services.
Richard I. Beattie, 58, has been a director of the Company since 1996. He
has been a partner of Simpson Thacher & Bartlett, a law firm, since 1977 and
has served as Chairman of the Executive Committee of that firm since 1991.
Richard G. LeFauve, 63, has been a director of the Company since 1993. He
has been President of GM University and a Senior Vice President of General
Motors Corporation, an automobile manufacturer, since April 1997. He was Group
Executive, NAO Small Car Group of General Motors Corporation from 1994 to
April 1997,
3
<PAGE>
Chairman of Saturn Corporation, an automobile manufacturer, from 1995 to April
1997, a Vice President of General Motors Corporation from 1985 to April 1997,
and President of Saturn Corporation from 1986 to 1995.
CLASS II DIRECTORS--TERMS EXPIRING AT 1999 ANNUAL MEETING
Richard J. Hermon-Taylor, 56, has been a director of the Company since 1986.
He has served as a Group Vice President of Abt Associates, Inc., a business
consulting firm, since June 1997 and as President of BioScience International,
Inc., a technology transfer company, since 1987. He was a Vice President of
Symmetrix, Inc., a business consulting firm, from 1994 to 1997.
Sara L. Levinson, 47, has been a director of the Company since 1996. She has
been President of NFL Properties, Inc., the trademark licensing company for
the National Football League, since September 1994. From 1986 to September
1994, she held various executive positions with Viacom, Inc., a media and
entertainment company, including President--Business Director of MTV from 1993
to September 1994 and Executive Vice President--Business Operations of MTV
from 1991 to 1993. She is also a director of Federated Department Stores Inc.
Richard F. Teerlink, 61, has been a director of the Company since 1982. He
has been Chairman of the Board of the Company since May 1996 and served as
Chief Executive Officer of the Company from 1989 to June 1997 and President of
the Company from 1988 to June 1997. He is also a director of Johnson Controls,
Inc. and Snap-on Incorporated.
CLASS III DIRECTORS--TERMS EXPIRING AT 2000 ANNUAL MEETING
Jeffrey L. Bleustein, 58, has been a director of the Company since 1996. He
has served as President and Chief Executive Officer of the Company and Chief
Executive Officer of the Motor Company since June 1997 and as President and
Chief Operating Officer of the Motor Company since 1993. He was Executive Vice
President of the Company from 1991 to June 1997. He is also a director of
Brunswick Corporation.
Donald A. James, 54, has been a director of the Company since 1991. Mr.
James is a co-founder and, since 1989, 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.
James A. Norling, 56, has been a director of the Company since 1993. Mr.
Norling has served as President and General Manager, Messaging, Information
and Media Sector, for Motorola, Inc., a manufacturer of electronics, since
January 1997 and as an Executive Vice President of Motorola since 1990. He was
President, Europe, Middle East and Africa, and Chairman, European Management
Board, for Motorola from 1993 to 1996. From 1986 to 1993, he served as
President and General Manager of Motorola's Semiconductor Products Sector.
BOARD OF DIRECTORS--COMMITTEE AND OTHER INFORMATION
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 Richard I. Beattie,
Donald A. James, Sara L. Levinson and James A. Norling (Chairman), met two
times during 1997. 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.
4
<PAGE>
The Human Resources Committee, the current members of which are Barry K.
Allen, Richard J. Hermon-Taylor and Richard G. LeFauve (Chairman), met four
times during 1997. 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), Richard I. Beattie, Richard J. Hermon-Taylor,
Donald A. James, Richard G. LeFauve, Sara L. Levinson and James A. Norling,
met eight times during 1997. The Nominating and Director Affairs Committee
identifies and recommends to the full Board candidates for service on the
Board and reviews Board performance and Board committee composition.
Shareholders may recommend candidates for consideration by the Nominating and
Director Affairs Committee by writing to the Nominating and Director Affairs
Committee in care of the Secretary of the Company. Such recommendations for
the 1999 annual meeting of shareholders must be received by the Company on or
before November 25, 1998. 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 has four regular quarterly meetings per year and met seven times
during 1997. All directors attended at least 75% of the meetings of the Board
and the Board committees on which they served during 1997.
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 1997 an annual fee of $25,000
plus $1,500 for each regular meeting of the Board, $750 for each special
meeting of the Board and $750 for each Board committee meeting, provided that
directors do not receive any additional compensation for more than two Board
committee meetings in connection with any Board meeting. The Company
reimburses directors for any travel expenses incurred in connection with
attending 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
$159,840 per year after the consulting term expires until his death. In the
event of Mr. Beals' death prior to the end of the consulting term, the
consulting agreement provides, as a death benefit, the continuation of certain
payments under the consulting agreement through July 1, 1999.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table shows the aggregate compensation, including incentive
compensation, paid by the Company for 1997, 1996 and 1995 to the Chief
Executive Officer and each of the four other most highly compensated executive
officers of the Company for 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------------- ---------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS(1) OPTIONS COMPENSATION(2)
POSITION YEAR ($) ($) ($) ($) (#) ($)
- ------------------ ---- ------- ------- ------------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jeffrey L. Bleustein
President and CEO (3).. 1997 440,260 700,000 37,117 0 116,000 33,171
President and COO--
Motor Company......... 1996 370,227 362,082 36,673 0 82,000 27,945
President and COO--
Motor Company......... 1995 318,183 269,183 35,945 538,800 96,000 22,935
Richard F. Teerlink
Chairman (3)........... 1997 547,500 820,000 42,994 0 120,000 33,465
Chairman, President and
CEO................... 1996 518,751 715,000 41,818 0 180,000 32,042
President and CEO...... 1995 486,303 500,000 40,140 0 180,000 27,683
James A. McCaslin (4)
Vice President,
Continuous
Improvement--Motor
Company............... 1997 228,744 225,313 28,192 0 25,462 32,360
James L. Ziemer
Vice President and CFO. 1997 216,319 212,339 21,549 0 43,142 14,090
Vice President and CFO. 1996 201,522 196,282 21,497 0 43,442 11,894
Vice President and CFO. 1995 177,633 139,993 21,304 0 37,716 9,364
C. William Gray
Vice President, Human
Resources............. 1997 211,237 208,069 23,080 0 42,128 14,589
Vice President, Human
Resources............. 1996 199,832 162,863 23,088 586,300 45,350 43,492
Vice President, Human
Resources............. 1995 185,436 130,732 22,213 0 56,248 33,008
</TABLE>
- --------
(1) As of December 31, 1997, the named executive officers of the Company
holding unvested restricted stock were Messrs. Bleustein, McCaslin and
Gray, who held 40,000, 80,000 and 32,800 shares, respectively, valued at
$1,090,000, $2,180,000 and $893,800, respectively. Dividends are paid on
shares of unvested restricted stock.
(2) The 1997 amounts for Messrs. Bleustein, Teerlink, McCaslin, Ziemer and
Gray include the value of split dollar life insurance provided by the
Company, a 401(k) matching contribution of $4,750, a $200 health care
spending account credit (Messrs. McCaslin and Ziemer only), and a non-
qualified deferred compensation plan matching contribution of $19,320,
$12,500, $7,427, $7,628 and $6,473, respectively. The amount for Mr.
McCaslin also includes $18,380 of relocation expense reimbursement.
(3) Mr. Bleustein became President and Chief Executive Officer of the Company
in June 1997. Mr. Teerlink continues to serve as the Chairman of the Board
of the Company.
(4) Mr. McCaslin was an employee of the Company in 1995 and 1996 but was not
an executive officer.
6
<PAGE>
STOCK OPTIONS
During 1997, the Human Resources Committee granted options to purchase
shares of Common Stock under the Company's 1995 Stock Option Plan to the Chief
Executive Officer and the other named executive officers as follows:
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
INDIVIDUAL GRANTS (1) APPRECIATION FOR OPTION TERM (2)
----------------------------------------- ------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL
UNDERLYING OPTIONS EXERCISE
OPTIONS GRANTED TO PRICE EXPIRATION
NAME GRANTED EMPLOYEES ($/SH) DATE 0% 5% 10%
---- ---------- ---------- -------- ---------- --- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jeffrey L. Bleustein.... 116,000 11.0% $20.78 2/18/07 $ 0 $ 1,515,659 $ 3,840,443
Richard F. Teerlink..... 120,000 11.3 20.78 2/18/07 0 1,567,923 3,972,872
James A. McCaslin....... 25,462 2.4 20.78 2/18/07 0 332,687 842,977
James L. Ziemer......... 43,142 4.1 20.78 2/18/07 0 563,694 1,428,314
C. William Gray......... 42,128 4.0 20.78 2/18/07 0 550,445 1,394,743
All Optionees (3)....... 1,058,178 100.0 20.78 2/18/07 0 13,826,178 35,033,382
All Shareholders........ N/A N/A N/A N/A 0 1,976,515,563(4) 5,008,878,502(4)
</TABLE>
- --------
(1) The options granted under the 1995 Stock Option Plan are non-qualified
stock options. The exercise 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 three years.
Options expire ten years from the date of grant. Each option granted under
the 1995 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 option term is ten years. 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. The potential realizable values are
not intended to forecast possible future appreciation, if any, in the
market price of the Common Stock.
(3) Includes options to purchase 16,000 shares of the Common Stock with an
expiration date of March 2, 2007 and an exercise price of $18.41, and
options to purchase 20,000 shares of the Common Stock with an expiration
date of September 1, 2007 and an exercise price of $26.98.
(4) Represents corresponding gain to all shareholders on 151,243,532 shares of
Common Stock outstanding on February 19, 1997, the date on which
substantially all of the options included in the table were granted,
calculated based on the fair market value of such Common Stock on such
date.
7
<PAGE>
Shown below is information relating to the exercise of options by the Chief
Executive Officer and the other named executive officers during 1997 and the
value of unexercised options held by such persons as of
December 31, 1997.
AGGREGATED OPTION EXERCISES IN 1997
AND OPTION VALUES AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT AT DECEMBER 31, 1997
ACQUIRED ON VALUE DECEMBER 31, 1997 (#) ($)(2)
EXERCISE REALIZED ------------------------- -------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey L. Bleustein.... 0 $ 0 163,944 250,500 $ 2,352,006 $2,365,523
Richard F. Teerlink..... 240,000 6,320,568 1,250,200 395,000 26,215,133 4,036,225
James A. McCaslin....... 0 0 30,382 72,552 424,312 732,639
James L. Ziemer......... 167,902 3,574,371 29,718 103,852 361,676 984,240
C. William Gray......... 0 0 141,385 113,829 2,416,596 1,123,214
</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 $27.25 on December
31, 1997, less the option exercise price.
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 under the Salaried Pension
Plan, the Restoration Plan and the Supplemental Agreements (all as defined
below), assuming retirement at age 62:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------------------------
REMUNERATION 5 10 15 20 25 30 35 15+(1)
- ------------ ------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 200,000.............. $15,382 $ 30,764 $ 46,147 $ 61,529 $ 76,911 $ 92,293 $107,676 $100,000
300,000.............. 23,382 46,764 70,147 93,529 116,911 140,293 163,676 150,000
400,000.............. 31,382 62,764 94,147 125,529 156,911 188,293 219,676 200,000
500,000.............. 39,382 78,764 118,147 157,529 196,911 236,293 275,676 250,000
600,000.............. 47,382 94,764 142,147 189,529 236,911 284,293 331,676 300,000
800,000.............. 63,382 126,764 190,147 253,529 316,911 380,293 443,676 400,000
1,000,000.............. 79,382 158,764 238,147 317,529 396,911 476,293 555,676 500,000
1,250,000.............. 99,382 198,764 298,147 397,529 496,911 596,293 695,676 625,000
</TABLE>
- --------
(1) This column applies only to Messrs. Teerlink and Bleustein, who are
entitled to supplemental benefits under their Supplemental Agreements upon
retirement at age 62. Mr. Gray also has a Supplemental Agreement but would
not have the required 15 years of service upon retirement at age 62.
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 certain subsidiaries), including the Chief Executive
Officer and the other named executive officers, 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 the difference between 1.6%
of the final average earnings and .9% of the primary monthly social security
benefit multiplied by years of service. On and after December 31, 1994, the
revised benefit is 1.2% of the final average earnings plus .4% of the final
average earnings in excess of Social
8
<PAGE>
Security covered compensation 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, 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 the 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, 1997, annualized final average earnings and years of credited service
under the Salaried Pension Plan and the Restoration Plan were as follows:
$599,181 and 26.9 years, respectively, for Mr. Bleustein; $1,032,275 and 16.4
years, respectively, for Mr. Teerlink; $333,098 and 5.3 years, respectively,
for Mr. McCaslin; $323,671 and 22.2 years, respectively, for Mr. Ziemer; and
$319,170 and 7.3 years, respectively, for Mr. Gray.
The Company has Supplemental Executive Retirement Plan Agreements (the
"Supplemental Agreements") with the Chief Executive Officer and the other
named executive officers (other than Messrs. McCaslin and Ziemer). Under the
Supplemental Agreements, a participant who retires at or after age 55 with 15
years of service 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 Agreements 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. Bleustein
and Teerlink 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 offers a standard form of Severance Benefits Agreement to
certain senior managers. Most of these senior managers, including all of the
named executive officers, have executed this agreement. The Severance Benefits
Agreement provides for up to one year's salary and up to one year of certain
employee benefits in the event of a termination of employment by the Company
other than for cause.
The Company has entered into transition agreements with Messrs. Bleustein,
Teerlink, McCaslin, Ziemer and Gray 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) within two years (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 (i) the individual's highest annual base salary
during the five-year period preceding termination, (ii) the highest annual
bonus paid during the five-year period preceding termination and (iii) the
individual's
9
<PAGE>
annual perquisite payment. Such individuals will also receive immediate
vesting in any retirement, incentive, stock option and other deferred
compensation plans. In addition, the covered individuals will receive three
years of continued medical benefits and outplacement services. 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,
then 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 nominated or
elected by two-thirds of the continuing directors (except in the case of an
actual or threatened proxy or control contest).
Certain senior managers, including all of the named executive officers, are
entitled to receive a lump sum payment equal to one year's salary plus
applicable taxes upon retirement at or after age 55. This benefit has been
adopted by the Company in lieu of providing post-retirement life insurance.
The Company has entered into Supplemental Executive Retirement Plan Agreements
with Messrs. Bleustein, Teerlink and Gray. The terms of these agreements are
described above under "Retirement Benefits."
BOARD OF DIRECTORS HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Human Resources Committee is responsible for establishing, reviewing and
revising the compensation policies for the Company's executive officers. The
Human Resources Committee is composed entirely of directors who are not
employees or former employees of the Company and who do not have a business
relationship with the Company other than in their capacity as directors.
This report is being included pursuant to Securities and Exchange Commission
("SEC") rules designed to enhance disclosure of public companies' executive
compensation policies. This report addresses the Company's compensation
policies for 1997 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 and in addition to
benefit plans available to salaried employees generally, the Company's
executive compensation policies, plans and programs consisted of base salary,
annual incentive compensation, annual stock option grants, annual perquisite
payments, the Restoration Plan, the Supplemental Agreements, 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 $2
billion having comparable performance. The independent human resources
consultant retained by
10
<PAGE>
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 subjectively
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.
1997 Base Salary
Executive base salaries are reviewed annually. In February 1997, the Human
Resources Committee, in consultation with the Vice President, Human Resources,
increased Mr. Bleustein's base salary by 6.0% (he was President of the Motor
Company at that time) and Mr. Teerlink's base salary by 5.7% (he was President
and Chief Executive Officer of the Company at that time). These increases were
within the range recommended by the Independent Compensation Analysis and were
based upon the Human Resources Committee's subjective assessment of Mr.
Bleustein's and Mr. Teerlink's past performance (including their leadership,
their role in the financial performance of the Company and their role in
implementing new educational programs at all levels of the Company) and its
expectations for their future contributions in leading the Company. Also in
February 1997, the Human Resources Committee reviewed, with the Chief
Executive Officer and Vice President, Human Resources, and approved, with
modifications it deemed appropriate, the annual salary plan for the Company's
other executive officers. The annual salary plan was subjectively developed by
the Company's Human Resources staff under the direction of the Chief Executive
Officer and 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 Analysis. 1997 base salaries for the named executive officers are
set forth in the Summary Compensation Table. In June 1997, the Human Resources
Committee, in consultation with the Vice President, Human Resources, increased
Mr. Bleustein's salary an additional 19.2% in connection with his election as
President and Chief Executive Officer of the Company. Based on the annual
Independent Compensation Analysis, the Human Resources Committee believes that
the base salaries paid to the Company's executive officers are generally below
the median of base salaries paid to comparable executive officers of
comparable companies.
11
<PAGE>
1997 Incentive Cash Compensation
The Company had two separate short term incentive plans in which executive
officers participated for 1997: Messrs. Teerlink and Ziemer participated in
the Company's Corporate Short Term Incentive Plan (the "Corporate STIP") and
Mr. Bleustein, the other named executive officers and certain other executive
officers participated in the Motor Company 1997 Short Term Incentive Plan (the
"Motor Company STIP"). In December 1996, the Human Resources Committee
reviewed and approved the Motor Company STIP for 1997 and target awards for
participants in the Motor Company STIP. Also in December 1996, the Human
Resources Committee established the performance target (consolidated net
income) and target awards under the Corporate STIP for 1997 for participating
executives. Award payouts under the Motor Company STIP were based upon Motor
Company financial targets related to earnings (weighted 70%) and Motor Company
objectively measured strategic targets related to product quality (weighted
30%). The target awards for the five named executive officers ranged from 50%
to 100% of their respective 1997 base salaries. The amount of each executive's
target award is subjectively 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
$895,710 for 1997, or 163.6% 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 subjectively determined that Mr. Teerlink's
actual 1997 STIP award would be $820,000. The Human Resources Committee based
its determination in part on the percentage payout for 1997 under the Motor
Company STIP (197.0%) and the financial and strategic performance of the
Company as a whole. An evaluation of the financial and strategic performance
of the Company indicated significant accomplishment in both categories. The
Human Resources Committee also took into account Mr. Teerlink's new role in
connection with the election of Mr. Bleustein as President and Chief Executive
Officer. The Human Resources Committee did not exercise its discretion to
reduce Mr. Ziemer's actual 1997 Corporate STIP award. The awards for the other
executive officers (including Mr. Bleustein) were determined mathematically
under the Motor Company STIP. In June 1997, the Human Resources Committee, in
consultation with the Vice President, Human Resources, increased Mr.
Bleustein's target award under the Motor Company STIP for the second half of
1997 from 60% to 75% in connection with his election as President and Chief
Executive Officer of the Company. All short term incentive plan awards paid or
payable for 1997 by the Company with respect to the named executive officers
and Mr. Bleustein's discretionary bonus are set forth in the Summary
Compensation Table.
The Human Resources Committee considered Mr. Bleustein's increased
responsibility for the financial and strategic performance of the Company as a
whole and, in addition to his Motor Company STIP award, granted Mr. Bleustein
a discretionary bonus for 1997 of $107,954, bringing his total 1997 bonus
payment to $700,000.
1997 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. 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
12
<PAGE>
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 1997 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, Restoration plan,
Supplemental Agreements, non-qualified deferred compensation plan, life
insurance benefits and the benefit plans available to salaried employees
generally is competitive with the benefit packages offered by comparable
employers. From time to time the Human Resources Department of the Motor
Company obtains data to ensure that such benefit plans and programs remain
competitive. The Human Resources Committee most recently reviewed such data in
December 1995.
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). Compensation paid under the
Company's stock option plans and the Corporate STIP qualifies as incentive
compensation under Section 162(m). It is the Human Resources Committee's
intention to utilize incentive compensation as a substantial component of the
Company's executive compensation program and to attempt to structure the
payment of compensation so that the Company will not lose deductions under
Section 162(m). There is a substantial likelihood, however, that the Company
will not be entitled to deduct a substantial portion of the compensation
arising out of the vesting of the restricted stock previously granted to
Messrs. Bleustein, McCaslin and Gray (See footnote 1 to Summary Compensation
Table). These grants of restricted stock were not structured as incentive
compensation under Section 162(m).
In February 1997, Mr. Bleustein, as President and Chief Operating Officer of
the Motor Company, was selected to participate in the Motor Company STIP for
1997. Because the terms of the Corporate STIP required participants for 1997
to be selected no later than March 1997, Mr. Bleustein was not eligible to
begin participating in the Corporate STIP following his election as President
and Chief Executive Officer of the Company in June 1997. The Motor Company
STIP does not qualify for incentive compensation treatment under Section
162(m). Consequently, the Company will not be entitled to a deduction for a
small portion of Mr. Bleustein's 1997 compensation. Mr. Bleustein has been
selected to participate in the Corporate STIP for 1998, which qualifies for
incentive compensation treatment under Section 162(m).
Conclusion
Over the last five calendar years, shareholders of the Company have enjoyed
a total return of 197%. During that same period of time the Standard & Poor's
500 and MidCap 400 Indexes had total returns of 152% and 127%, respectively,
as illustrated in the performance graph below. 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).
Richard G. LeFauve, Chairman
Barry K. Allen
Richard J. Hermon-Taylor
13
<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 the 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>
1992 1993 1994 1995 1996 1997
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Harley-Davidson, Inc. $100.00 $117.59 $150.08 $155.12 $254.91 $297.27
------------------------------------------------------------------------
S&P MidCap 400 100.00 113.92 109.83 143.82 171.48 226.76
------------------------------------------------------------------------
S&P 500 100.00 110.08 111.53 153.45 188.68 251.62
</TABLE>
- --------
* Assumes $100 invested on December 31, 1992.
14
<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 1997,
Deeley Imports paid the Company approximately $62 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 1998.
Mr. Beattie, a director of the Company, is a partner and Chairman of the
Executive Committee of Simpson Thacher & Bartlett, a law firm. Simpson Thacher
& Bartlett served as outside counsel for the Company in various legal matters
during 1997. The Company anticipates that it will continue to retain Simpson
Thacher & Bartlett as outside counsel for various legal matters in 1998.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1933, the Company's
directors and executive officers are required to disclose their holdings of
and transactions in the Common Stock on forms prescribed by the Securities and
Exchange Commission. The Company believes that all of the Company's directors
and executive officers complied with their obligations under Section 16(a)
during 1997.
2--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, 1997.
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 the Company's 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 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, then the Board will reconsider its
selection of independent auditors. Proxies solicited by the Board will be
voted "FOR" ratification of the selection of Ernst & Young LLP as the
independent auditors of the Company for the fiscal year ending December 31,
1998, unless the shareholder specifies otherwise.
THE BOARD RECOMMENDS A VOTE "FOR" RATIFICATION OF THE SELECTION OF ERNST &
YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
3--OTHER MATTERS
The matters referred to herein are, as far as management now knows, the only
matters that 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, then 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.
15
<PAGE>
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 that are intended to be presented at the 1999
annual meeting of shareholders must be received by the Company no later than
November 25, 1998, to be eligible for inclusion in the Company's proxy
materials for that meeting.
By Order of the Board of Directors,
LOGO
Gail A. Lione
Secretary
Milwaukee, Wisconsin
March 25, 1998
Printed on recycled paper
16
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<TABLE>
<CAPTION>
HARLEY-DAVIDSON, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR MAY 2, 1998 ANNUAL MEETING OF SHAREHOLDERS
The undersigned appoints each of Richard F. Teerlink and Jeffrey L. Bleustein
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 2, 1998 and at any
adjournment thereof (the "Meeting"), according to the number of votes that the
undersigned would be entitled to vote if personally present.
Without limiting the generality hereof, each of such persons is authorized to
vote:
(a) as herein specified upon the proposals listed hereon and described in the
Proxy Statement for the Meeting; and
(b) in his discretion upon any other matter that may properly come before the
Meeting.
The Board of Directors recommends a vote FOR the nominees as directors and FOR
Item 2.
The shares represented by the Proxy shall be voted as specified. If no
specification is made, the shares shall be voted as recommended by the Board of
Directors.
PLEASE MARK, SIGN AND DATE BELOW,
. DETACH AND RETURN PROMPTLY USING THE ENVELOPE PROVIDED .
HARLEY-DAVIDSON, INC. 1998 ANNUAL MEETING
<S> <C>
1. ELECTION OF DIRECTORS: 1-Barry K. Allen 2-Richard I. Beattle 3-Richard G. LeFauve
[_] FOR all nominees [_] WITHHOLD AUTHORITY
listed to the left (except to vote for all nominees
as specified below). listed to the left.
(Instruction: To withhold authority to vote for any nominee(s), write the number(s)
of the nominee(s) in the box provided to the right.) [_____________________________________]
2. RATIFICATION OF AUDITORS: [_] FOR [_] AGAINST [_] ABSTAIN
Check appropriate box Date___________________________________
Indicate changes below:
Address Change? [_] Name Change? [_]
[_______________________________________________________]
Signature(s) in Box
IMPORTANT: Please sign your name exactly as it appears 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.
</TABLE>
