<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] 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.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
<PAGE>
[HARLEY DAVIDSON LOGO APPEARS HERE]
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
Harley-Davidson, Inc.
3700 West Juneau Avenue
Milwaukee, Wisconsin 53208
(414) 343-4680
March 29, 1999
Dear Fellow Shareholder:
On behalf of the Board of Directors and management of Harley-Davidson, Inc.,
I cordially invite you to attend the 1999 Annual Meeting of the Shareholders
of Harley-Davidson, Inc. to be held at 10:30 a.m., local time, on Saturday,
May 8, 1999, 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 1999 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,
/s/ Jeffrey L. Bleustein
Jeffrey L. Bleustein
Chairman of the Board and
Chief Executive Officer
<PAGE>
[HARLEY DAVIDSON LOGO APPEARS HERE]
Notice of Annual Meeting of Shareholders
May 8, 1999
The 1999 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 Saturday May 8, 1999 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 2002 annual meeting of shareholders;
2. To approve the adoption of the Company's amended Corporate Short Term
Incentive Plan;
3. 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, 1999; and
4. 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, 1999 as the record date for the determination of shareholders
entitled to notice of and to vote at the Annual Meeting (the "Shareholders")
and any adjournment thereof.
By Order of the Board of Directors,
/s/ Gail A. Lione
Gail A. Lione
Secretary
Milwaukee, Wisconsin
March 29, 1999
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>
[HARLEY DAVIDSON LOGO APPEARS HERE]
3700 West Juneau Avenue
Milwaukee, Wisconsin 53208
March 29, 1999
----------------
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 1999 Annual Meeting of Shareholders of the Company to be held on May 8,
1999 and at any adjournment thereof (the "Annual Meeting"). This Proxy
Statement and the accompanying proxy were first sent to shareholders on or
about March 29, 1999.
The only outstanding class of voting securities of the Company is its common
stock (the "Common Stock"). On March 17, 1999, the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting, 153,354,908 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 6, 1999 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, 1999
(except as noted) 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"), 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 Percent Upon Exercise of
Name of Beneficial Owner of Shares of Class Stock Options(3)
- ------------------------ ---------------- ------------ ----------------
<S> <C> <C> <C>
Barry K. Allen............... 9,397 * 700
Richard I. Beattie........... 3,397 * 700
Jeffrey L. Bleustein......... 909,987 * 368,444
C. William Gray.............. 86,027 * 43,909
Richard J. Hermon-Taylor..... 9,397 * 700
Donald A. James.............. 106,397(4) * 700
Richard G. LeFauve........... 5,397 * 700
Sara L. Levinson............. 3,397 * 700
James A. McCaslin............ 172,880 * 89,862
James A. Norling............. 5,397 * 700
Richard F. Teerlink.......... 1,150,910 * 1,136,000
James L. Ziemer.............. 164,941 * 109,309
All Directors and Executive
Officers as a Group (18
Individuals)................ 3,390,941 2.2% 2,348,947
The Equitable Companies
Incorporated
1290 Avenue of the Americas
New York, NY 10104.......... 11,448,425(5) 7.5% 0
Ruane, Cunniff & Co., Inc.
767 Fifth Avenue
New York, NY 10153-4798..... 8,552,480(6) 5.6% 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, 1999. Includes shares of
Common Stock held in the Company's 401(k) plan and the Company's Dividend
Reinvestment Plan, as of December 31, 1998.
(3) Only includes stock options exercisable within 60 days of March 17, 1999.
(4) 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.
(5) Information derived from the Schedule 13G filed by The Equitable Companies
Incorporated and its affiliates. As of December 31, 1998, The Equitable
Companies Incorporated and its affiliates had sole voting power over
6,873,180 shares, shared voting power over 2,262,790 shares, sole
dispositive power over 11,436,135 shares and shared dispositive power over
3,490 shares.
(6) Information derived from the Schedule 13G filed by Ruane, Cunniff & Co.,
Inc. As of December 31, 1998, Ruane, Cunniff & Co., Inc. had sole voting
power over 6,691,020 shares, sole dispositive power over 3,625,080 shares
and shared dispositive power over 4,927,400 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 II Directors), three of whom have terms
that expire at the 2000 annual meeting of shareholders (Class III Directors)
and three of whom have terms that expire at the 2001 annual meeting of
shareholders (Class I Directors).
The three nominees for director set forth below, all of whom are currently
Class II Directors, are proposed to be elected at the Annual Meeting to serve
until the 2002 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, 1999, 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 II Directors--Terms Expiring at 2002 Annual Meeting
Richard J. Hermon-Taylor, 57, 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, 48, 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. She is also a director of Federated Department Stores Inc.
Richard F. Teerlink, 62, has been a director of the Company since 1982. From
May 1996 to December 1998, he served as Chairman of the Board of the Company.
He 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.
3
<PAGE>
Class III Directors--Terms Expiring at 2000 Annual Meeting
Jeffrey L. Bleustein, 59, has been a director of the Company since 1996. In
December 1998, Mr. Bleustein was elected Chairman of the Board of the Company.
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, 55, 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, 57, has been a director of the Company since 1993. He has
served as Executive Vice President, Deputy to Chief Executive Officer and
President of Europe, Middle East and Africa for Motorola, Inc., a manufacturer
of electronics, since December 1998. Mr. Norling served as President and
General Manager, Messaging, Information and Media Sector, for Motorola from
January 1997 until December 1998. He was President, Europe, Middle East and
Africa, and Chairman, European Management Board, for Motorola from 1993 to
1996.
Class I Directors--Terms Expiring at 2001 Annual Meeting
Barry K. Allen, 50, 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.
Richard I. Beattie, 59, 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, 64, has been a director of the Company since 1993. In
December 1998, Mr. LeFauve retired as President of GM University and a Senior
Vice President of General Motors Corporation, an automobile manufacturer, a
position which he held since April 1997. He was Group Executive, NAO Small Car
Group of General Motors Corporation from 1994 to April 1997, 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.
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 twice
during 1998. 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, Richard J. Hermon-Taylor and Richard G. LeFauve (Chairman), met three
times during 1998. 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.
4
<PAGE>
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 three times during 1998. 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 2000 annual meeting of shareholders must be received by the Company on or
before November 30, 1999. 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 five times
during 1998. All directors attended at least 75% of the meetings of the Board
and the Board committees on which they served during 1998.
Directors who are employees of the Company do not receive any special
compensation for their services as directors. Directors who are not employees
of the Company ("Non-employee Directors") receive 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. In May 1998,
the Board adopted the 1998 Director Stock Plan (the "Director Plan"), which
provides, among other things, that a Non-Employee Director may elect to
receive 50% or 100% of the annual fee to be paid in each calendar year in the
form of Common Stock. In 1998, all of the Non-Employee Directors elected to
receive shares of Common Stock in lieu of the $25,000 annual fee. As a result,
each director received 697 shares of Common Stock. In addition, on the first
business day after the annual meeting of shareholders of the Company, each
Non-Employee Director who serves as a member of the Board immediately
following the annual meeting is automatically granted an immediately
exercisable option for the purchase of such number of shares of Common Stock
equal to the annual fee divided by the fair market value of a share of Common
Stock on the day of grant (rounded up to the nearest multiple of 100). In
1998, each Non-employee Director received an option to purchase 700 shares of
Common Stock.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table shows the aggregate compensation, including incentive
compensation, paid by the Company for 1998, 1997 and 1996 to the Chief
Executive Officer and each of the four other most highly compensated executive
officers of the Company for 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation Awards
------------------------------ ---------------------
Other Restricted Securities All Other
Annual Stock Underlying Compensa-
Name and Principal Salary Compensation Awards(1) Options tion(2)
Position Year ($) Bonus ($) ($) ($) (#) ($)
- ------------------ ---- ------- --------- ------------ ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Jeffrey L. Bleustein
Chairman and CEO (3)..... 1998 586,250 1,172,500 41,027 0 130,000 52,621
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
Richard F. Teerlink
Chairman (3)............. 1998 555,000 820,000 43,487 0 24,000 21,812
Chairman (3)............. 1997 547,500 820,000 42,994 0 120,000 33,465
Chairman of the Board,
President and CEO....... 1996 518,751 715,000 41,818 0 180,000 32,042
James L. Ziemer
Vice President and CFO... 1998 227,134 275,000 21,484 0 32,673 14,814
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
James A. McCaslin (4)
Vice President,
Continuous Improvement--
Motor Company........... 1998 240,181 211,359 48,745 0 34,549 51,485
Vice President,
Continuous Improvement--
Motor Company........... 1997 228,744 225,313 28,192 0 25,462 32,360
C. William Gray
Vice President,
Human Resources......... 1998 221,799 195,183 23,078 0 31,905 16,259
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
</TABLE>
- --------
(1) As of December 31, 1998, 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
$1,895,000, $3,790,000 and $1,553,900, respectively. Dividends are paid on
shares of unvested restricted stock.
(2) The 1998 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 $5000, a $200 health care
spending account credit (Messrs. Bleustein and Ziemer only) and a non-
qualified deferred compensation plan matching contribution of $33,587, $0,
$8,965, $8,181 and $7,896, respectively.
6
<PAGE>
(3) Mr. Bleustein became Chief Executive Officer of the Company in June 1997.
Mr. Teerlink served as the Chairman of the Board of the Company until
December 9, 1998 at which time Mr. Bleustein was elected Chairman of the
Board.
(4) Mr. McCaslin was an employee of the Company in 1996, but was not an
executive officer.
Stock Options
During 1998, the Human Resources Committee granted options to purchase
shares of Common Stock under the Company's 1995 Stock Option Plan to the Chief
Executive Officer and the other named executive officers as follows:
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Appreciation
Individual Grants (1) for Option Term (2)
----------------------------------------- ------------------------------------
Number of Percent
Securities of Total
Underlying Options Exercise
Options Granted to Price Expiration
Name Granted Employees ($/Sh) Date 0% 5% 10%
---- ---------- ---------- -------- ---------- --- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jeffrey L. Bleustein.... 130,000 12.7% $28.81 2/18/08 $ 0 $ 2,354,788 $ 5,967,025
Richard F. Teerlink..... 24,000 2.3 28.81 2/18/08 0 434,730 1,101,605
James A. McCaslin....... 34,549 3.4 28.81 2/18/08 0 625,812 1,585,806
James L. Ziemer......... 32,673 3.2 28.81 2/18/08 0 591,831 1,499,697
C. William Gray......... 31,905 3.1 28.81 2/18/08 0 577,919 1,464,446
All Optionees (3)....... 1,025,161 100.0 28.81 2/18/08 0 18,276,914 46,313,847
All Shareholders........ N/A N/A N/A N/A 0 2,746,963,058(4) 6,961,343,695(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 20,000 shares of the Common Stock with an
expiration date of May 3, 2008 and an exercise price of $35.91, and
options to purchase 21,082 shares of the Common Stock with an expiration
date of December 8, 2008 and an exercise price of $42.38.
(4) Represents corresponding gain to all shareholders on 151,604,287 shares of
Common Stock outstanding on February 19, 1998, the date on which
substantially all of the options included in the table were granted,
calculated based on the fair market value of such Common Stock on such
date.
Shown below is information relating to the exercise of options by the Chief
Executive Officer and the other named executive officers during 1998 and the
value of unexercised options held by such persons as of December 31, 1998.
7
<PAGE>
AGGREGATED OPTION EXERCISES IN 1998
AND OPTION VALUES AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options At At December 31, 1998
Acquired On Value December 31, 1998 (#) ($)(2)
Exercise Realized -------------------------- -------------------------
Name (#) ($)(1) Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- Exercisable ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey L. Bleustein.... 0 $ 0 262,444 282,000 $ 8,721,229 $6,750,110
Richard F. Teerlink..... 320,000 12,583,616 1,100,200(3) 249,000 42,153,133 7,019,775
James A. McCaslin....... 0 0 61,132 76,351 2,012,311 1,857,502
James L. Ziemer......... 0 0 70,062 96,181 2,212,988 2,427,516
C. William Gray......... 186,880 4,441,591 0 100,239 0 2,578,246
</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 $47.375 on December
31, 1998, less the option exercise price.
(3) Includes 123,000 options in which vesting was accelerated by the Board on
April 20, 1998.
Retirement Benefits
The following table shows at different levels of remuneration and years of
credited service the estimated net annual benefits payable as a straight life
annuity to each of the named executive officers under the Salaried Pension
Plan, the Restoration Plan and the Supplemental Agreements (all as defined
below), assuming retirement at age 62:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
----------------------------------------------------------------------
Total Pay($) 5 10 15 20 25 30 35 15+ (1)
- ------------ ------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 200,000.............. $15,269 $ 30,539 $ 45,808 $ 61,078 $ 76,347 $ 91,617 $106,886 $100,000
300,000.............. 23,269 46,539 69,808 93,078 116,347 139,617 162,886 150,000
400,000.............. 31,269 62,539 93,808 125,078 156,347 187,617 218,886 200,000
500,000.............. 39,269 78,539 117,808 157,078 196,347 235,617 274,886 250,000
600,000.............. 47,269 94,539 141,808 189,078 236,347 283,617 330,886 300,000
800,000.............. 63,269 126,539 189,808 253,078 316,347 379,617 442,886 400,000
1,000,000.............. 79,269 158,539 237,808 317,078 396,347 475,617 554,886 500,000
1,250,000.............. 99,269 198,539 297,808 397,078 496,347 595,617 694,886 625,000
</TABLE>
- --------
(1) This column applies only to Messrs. Bleustein, Teerlink, McCaslin and
Ziemer 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 Security covered compensation multiplied
by years of service. The benefit of a person with service on or after
8
<PAGE>
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, 1998, annualized final average earnings and years of credited service
under the Salaried Pension Plan and the Restoration Plan were as follows:
$779,273 and 27.9 years, respectively, for Mr. Bleustein; $1,165,891 and 17.4
years, respectively, for Mr. Teerlink; $389,499 and 6.3 years, respectively,
for Mr. McCaslin; $363,374 and 23.2 years, respectively, for Mr. Ziemer; and
$356,580 and 8.3 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. 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, Gray and certain other key executives 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. Bleustein and 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 annual perquisite
payment. Such individuals will also receive immediate vesting in any
retirement, incentive, stock option and other deferred compensation plans. In
9
<PAGE>
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 the Chief Executive Officer and the other named executive officers. 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 1998 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 independent human resources consultants 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. Each of the independent human
resources consultants 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
(collectively, the "Independent Compensation Analysis"). The Independent
Compensation Analysis includes median base salary (including the percentage
increase over the prior year), median annual
10
<PAGE>
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 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 at or below the median amounts
paid to executives with similar qualifications, experience and
responsibilities at other comparable businesses. Executives' base 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.
1998 Base Salary
Executive base salaries are reviewed annually. In February 1998, the Human
Resources Committee, in consultation with the Vice President, Human Resources,
increased Mr. Bleustein's base salary by 28%. Mr. Bleustein's salary was
increased to match the competitive median salary of chief executive officers
as stated by the Independent Compensation Analysis and was based upon the
Human Resources Committee's subjective assessment of Mr. Bleustein's past
performance (including his leadership and his role in the financial
performance of the Company) and its expectations for his future contribution
in leading the Company. Also in February 1998, the Human Resources Committee
reviewed, with the Chief Executive Officer and the 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 of the 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. 1998 base salaries for the named executive officers are
set forth in the Summary Compensation Table. Based on the Independent
Compensation Analysis, the Human Resources Committee believes that the base
salaries paid to the Company's executive officers are generally at or below
the median of base salaries paid to comparable executive officers of
comparable companies.
1998 Incentive Cash Compensation
The Company had two separate short term incentive plans in which executive
officers participated for 1998: Messrs. Bleustein, Teerlink and Ziemer
participated in the Company's Corporate Short Term Incentive Plan (the
"Corporate STIP"), and the other named executive officers and certain other
executive officers participated in the Motor Company 1998 Short Term Incentive
Plan (the "Motor Company STIP"). In December 1997, the Human Resources
Committee reviewed and approved the Motor Company STIP for 1998 and target
awards for participants in the Motor Company STIP. Also in December 1997, the
Human Resources Committee established the performance target (consolidated net
income) and target awards under the Corporate STIP for 1998 for
11
<PAGE>
participating executives. Award payouts under the Motor Company STIP were
based upon Motor Company financial targets related to earnings before interest
and taxes (weighted 70%) and Motor Company objectively measured strategic
targets related to product quality and retail sales performance (weighted 10%
for Buell retail sales, 10% for European retail sales and 10% for start-up
quality). The resulting performance Payout for 1998 under the Motor Company
STIP was 176% of target award. The target awards for the five named executive
officers ranged from 50% to 100% of their respective 1998 base salaries (the
"Individual Target Award"). Mr. Bleustein's Individual Target Award for 1998
was 100% of his base annual salary. The amount of each executive's Individual
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.
The Human Resources Committee selected consolidated net income as the sole
performance criterion for the 1998 Corporate STIP formula. This mathematical
formula would have provided a bonus of 209% of the Individual Target Award.
However, the terms of the Corporate STIP limit the performance percentage to a
maximum of 200% and the total dollar payment to any one individual to $1
million per year. Under the terms of the Corporate STIP, the Human Resources
Committee also has the discretion to reduce awards determined by the formula
by up to 50%. Given these terms and limitations, Mr. Bleustein was eligible to
receive a maximum award of $1 million for 1998, and the Human Resources
Committee determined that Mr. Bleustein's actual 1998 Corporate STIP award
would be the maximum amount of $1,000,000. The Human Resources Committee
further considered Mr. Bleustein's strategic leadership and the significant
increase in shareholders' value and, in addition to his Corporate STIP award,
granted Mr. Bleustein a discretionary bonus for 1998 of $172,500. The Human
Resources Committee determined that Mr. Teerlink's actual 1998 STIP award
would be $820,000; and Mr. Ziemer's actual 1998 Corporate STIP award would be
$275,000. The awards for the other executive officers were determined
mathematically under the Motor Company STIP. All short term incentive plan
awards paid or payable for 1998 by the Company with respect to the named
executive officers and Mr. Bleustein's discretionary bonus are set forth in
the Summary Compensation Table.
1998 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 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 1998 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
12
<PAGE>
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).
Conclusion
Over the last five calendar years, shareholders of the Company have enjoyed
a total return of 442%. During that same period of time the Standard & Poor's
500 and MidCap 400 Indexes had total returns of 294% and 237%, 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*
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Harley-Davidson, Inc. $100.00 $127.62 $131.91 $216.77 $252.79 $441.48
------------------------------------------------------------------------
S&P MidCap 400 100.00 96.41 126.25 150.53 199.06 237.06
------------------------------------------------------------------------
S&P 500 100.00 101.32 139.40 171.40 228.58 293.91
</TABLE>
- --------
* Assumes $100 invested on December 31, 1993.
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 1998,
Deeley Imports paid the Company approximately $74 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 arm's-length negotiation. The Company
anticipates that it will do a similar amount of business with Deeley Imports
in 1999.
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 1998. The Company anticipates that it will continue to retain Simpson
Thacher & Bartlett as outside counsel for various legal matters in 1999.
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. In February 1998, Mr. Brostowitz, Vice President,
Controller and Treasurer of the Company exercised stock options which exercise
was reported late on Form 4. The Company believes that all of the other
Company's directors and executive officers complied with their obligations
under Section 16(a) during 1998.
2--APPROVAL OF THE AMENDED CORPORATE SHORT TERM INCENTIVE PLAN
The Company is seeking shareholder approval of the Harley-Davidson, Inc.
Corporate Short Term Incentive Plan, as amended ("Corporate STIP"). The
Corporate STIP has been used by the Company to provide incentive compensation
to select executives since the approval by the Company's shareholders in May
1994. To enable the Company to continue to pay compensation under the
Corporate STIP that will constitute "qualified performance-based compensation"
for purposes of Section 162(m) of the Internal Revenue Code ("Section
162(m)"), the Company must, at the Annual Meeting, again obtain shareholder
approval of the Corporate STIP. In the context of seeking such approval, at
its February 18, 1999 meeting, the Board chose to amend the Corporate STIP in
certain respects to update the Corporate STIP and to provide the Human
Resources Committee of the Board (the "Human Resources Committee") with
greater flexibility in administering the Corporate STIP. The Board's action is
subject to shareholder approval. The following description is qualified in its
entirety by the terms of the Corporate STIP attached hereto as Exhibit A.
Summary of Proposal
The Corporate STIP is designed to provide short term incentives to select
executive officers of the Company. Under the Corporate STIP, potential awards
and pertinent performance criteria are established at the beginning of each
year or portion of a year that ends on the last day of the year. Final
incentive awards are determined after each year based upon actual performance.
The Company has had in effect the Corporate STIP and/or plans similar to the
Corporate STIP for more than fifteen years, and amounts paid under such plans
over the past three years for the five named executive officers are included
in bonus amounts set forth in the Summary Compensation Table.
The Human Resources Committee administers the Corporate STIP. Only the
Company's "executives" as defined in Section 2.11 of the Corporate STIP (a
term that could include a person who is only an officer of a subsidiary of the
Company) are eligible to participate in the Corporate STIP. As of December 31,
1998 the Company's executives included the five persons named in the Summary
Compensation Table as well as six other persons. The Company does not believe
that the number of its executives will increase significantly in the
foreseeable future.
15
<PAGE>
The Human Resources Committee selects in its sole discretion the executives
who will participate in the Corporate STIP for a given year or portion of a
year. At the time of selection, the Human Resources Committee also fixes a
target percentage for each participant, which cannot exceed 100%. A
participant's target award for the period is equal to the participant's target
percentage multiplied by the participant's base salary.
The Human Resources Committee determines, with respect to each participant
for a year or portion of a year, the corporate performance measures that will
be applied to determine the size of the participant's final incentive award.
The Corporate STIP specifies that the Human Resources Committee may use any
one or more of the financial performance categories set forth in Section 2.15
of the Corporate STIP for any one or more participants. If the Human Resources
Committee chooses more than one performance category for any one or more
participants, then the Human Resources Committee gives each performance
category a weight so that for each participant the total weight of all
applicable performance categories equals 100%.
The Corporate STIP does not specify target performance for the performance
categories. Rather, as to each performance category that the Human Resources
Committee selects as the basis for potential awards in any year or portion of
a year, the Human Resources Committee also establishes a performance scale. On
the scale, 0% represents below minimum performance in the performance category
for the applicable year or portion of a year, 100% represents target
performance, and a percentage equal to or greater than 100% represents maximum
performance. The Human Resources Committee must approve a scale so that, at
the end of the year, a performance percentage may be objectively calculated
for any given level of actual performance within that category during the year
or portion of a year.
Following completion of each year, the final incentive award amount is
calculated for each participant. A performance percentage is determined for
each performance category based upon actual performance and the applicable
performance scale. Where more than one performance category applies to a
participant, the resulting percentages are reduced to reflect weighting. The
resulting total percentage is applied to a participant's target award to
determine the maximum performance award a participant is eligible to receive
under the Corporate STIP for the relevant year or portion of a year. The Human
Resources Committee must approve the calculations and may, in its sole
discretion, reduce the amount of any maximum performance award by up to 50%.
The maximum performance award, less any reduction by the Human Resources
Committee, equals the final incentive award payable for the applicable year or
portion of a year. Under the Corporate STIP, the final incentive award paid to
a participant for any one year (or for multiple periods within a year) cannot
exceed $2 million.
Payments of final incentive awards under the Corporate STIP are to be made,
in the sole discretion of the Human Resources Committee, in cash, Common Stock
or a combination of cash and Common Stock. Where Common Stock is used, it is
valued at fair market value on the date prior to payment. To the extent an
award is paid in Common Stock, a participant cannot defer payment of the award
under the terms of any deferred compensation or other plan of the Company. Not
more than 2,000,000 shares of Common Stock may be issued under the Corporate
STIP, subject to adjustment for stock splits, stock dividends and certain
other corporate transactions.
Under the Corporate STIP, the Human Resources Committee is required to fix
target awards and performance criteria prior to the commencement of each year
or portion of a year (or such later date as may be permitted under Section
162(m)).
The above discussion reflects the terms of the Corporate STIP as amended by
Board action on February 18, 1999. At such time, the Board amended the
Corporate STIP to
(1) increase the maximum final incentive award that may be paid to a
participant for any one year from $1 million to $2 million;
(2) eliminate the former 200% upper limit on the performance scale that
may apply to any performance category for a year or portion of a year, but
require the Human Resources Committee to establish such an
16
<PAGE>
upper limit for each performance category for a year or portion of a year
at the time it selects such performance category and approves the related
performance scale; and
(3) give the Human Resources Committee the flexibility, at any time
during the course of a year, to select an executive as a participant in the
Corporate STIP for the year and make an award to such participant that
takes into account performance during a portion of a year or the entire
year.
The Human Resources Committee selected Messrs. Bleustein and Ziemer to
participate in the Corporate STIP for 1999 and, based on information currently
available, no other officers or employees of the Company will participate in
the Corporate STIP for all or part of 1999. The following table identifies the
1999 target award under the Corporate STIP for each of the 1999 participants,
each of which is contingent on shareholder approval of the amended Corporate
STIP:
New Plan Benefits
Harley-Davidson, Inc. Corporate Short-Term Incentive Plan
<TABLE>
<CAPTION>
Target Award
Name and Dollar value
Position ($) (1)
-------- ------------
<C> <S> <C>
Jeffrey L. Bleustein,
Chairman of the Board
and Chief Executive
Officer............... 665,000
James L. Ziemer, Vice
President and Chief
Financial Officer..... 172,173
</TABLE>
- --------
(1) Assumes no change in base salary after April 1, 1999.
A participant whose employment terminates prior to the end of a year
generally is not entitled to receive any performance award for that year or
portion of a year. However, the Human Resources Committee may, in its sole
discretion, provide for a partial or complete payment if termination is due to
death, disability or retirement. In addition, in connection with a Change of
Control Event (as defined in Section 2.2 of the Corporate STIP) during a year,
the Human Resources Committee may, in its sole discretion, provide for the
immediate payment to all participants of either (i) awards for the entire year
or a portion of the year based upon annualizing performance through the end of
the most recently completed fiscal month prior to the payment or (ii) target
awards for the year or portion of a year. The Board may from time to time or
at any time suspend or terminate the Corporate STIP or amend the Corporate
STIP in any manner without obtaining further shareholder approval. However, if
the Board amends the Corporate STIP to increase the maximum final incentive
award that can be paid to a participant for any one year (or for multiple
periods within a year) or to change the financial performance categories set
forth in the Corporate STIP, then further shareholder approval would be
required to retain the benefits afforded by shareholder approval of the
Corporate STIP under the Internal Revenue Code in respect of awards to which
such changes apply.
The Company has also adopted, but is not seeking shareholder approval for,
short-term incentive ("STIP") plans for its divisions and subsidiaries that
operate similarly to the Corporate STIP for 1999, in which approximately 1,900
salaried employees are eligible to participate. The Company expects to
continue to adopt incentive plans for such employees for future years. An
executive is not eligible to participate in any such STIP plan in any year in
which he or she participates in the Corporate STIP.
The affirmative vote of a majority of the votes cast on the proposal at the
Annual Meeting is required for approval of the amended Corporate STIP. For
purposes of determining the vote regarding this proposal, abstentions and
broker nonvotes will have no impact on the vote. Proxies solicited by the
Board will be voted "FOR" approval of the proposal to approve the amended
Corporate STIP, unless a shareholder specifies otherwise.
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDED CORPORATE STIP.
17
<PAGE>
3--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, 1998.
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,
1999, 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.
4--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.
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 of shareholders pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934, as amended ("Rule 14a-8"), that are intended to be
presented at the 2000 annual meeting of shareholders must be received by the
Company no later than November 30, 1999 to be included in the Company's proxy
materials for that meeting.
However, a shareholder who otherwise intends to present business at the 2000
meeting must also comply with the requirements set forth in the Company's
Restated Articles of Incorporation (the "Articles of Incorporation"). The
Articles of Incorporation state, among other things, that to bring business
before an annual meeting, a shareholder must give written notice that complies
with the Articles of Incorporation to the Secretary of the Company not less
than 60 days in advance of the date in the applicable fiscal year of the
Company corresponding to the date the Company released its proxy statement to
shareholders in connection with the annual
18
<PAGE>
meeting for the immediately preceding fiscal year. Thus, since the Company
anticipates mailing its proxy statement for the 1999 annual meeting on March
29, 1999, the Company must receive notice of a shareholder proposal for the
2000 annual meeting, submitted other than pursuant to Rule 14a-8, prior to
January 29, 2000.
If the notice is received after January 29, 2000, then the notice will be
considered untimely and the Company is not required to present such proposal
at the 2000 annual meeting. If the Board chooses to present such proposal at
the 2000 annual meeting, then the persons named in the proxies solicited by
the Board for the 2000 annual meeting may exercise discretionary voting power
with respect to such proposal.
By Order of the Board of Directors,
/s/ Gail A. Lione
Gail A. Lione
Secretary
Milwaukee, Wisconsin
March 29, 1999
19
<PAGE>
EXHIBIT A
HARLEY-DAVIDSON, INC.
CORPORATE SHORT TERM INCENTIVE PLAN
ARTICLE I
PURPOSE
The purpose of the Harley-Davidson, Inc. Corporate Short Term Incentive Plan
is to provide certain Executives an increased financial incentive to
contribute to the future success and prosperity of the Company.
ARTICLE II
DEFINITIONS
The following capitalized terms used in the Plan shall have the respective
meanings set forth in this Article:
2.1. Board: The Board of Directors of Harley-Davidson, Inc.
2.2. Change of Control Event: Change of Control Event as defined in the
Harley-Davidson, Inc. 1990 Stock Option Plan, as amended.
2.3. Code: The Internal Revenue Code of 1986, as amended.
2.4. Committee: The Human Resources Committee of the Board (including any
successor committee thereto); provided, however, that if any member or members
of the Human Resources Committee of the Board would cause the Human Resources
Committee of the Board not to satisfy the administration requirement of Code
section 162(m)(4)(C) or the disinterested administration requirement of Rule
16b-3 under the Exchange Act, the Committee shall be comprised of the Human
Resources Committee of the Board without such member or members.
2.5. Common Stock: The Common Stock of Harley-Davidson, Inc.
2.6. Company: Harley-Davidson, Inc. and, unless the context otherwise
requires, its Subsidiaries.
2.7. Category Percentage: When two or more of the Performance Categories are
selected for a Participant or a group of Participants for any Plan Year, the
relative percentage weighting given to each selected Performance Category.
2.8. Disability: Disability within the meaning of section 22(e)(3) of the
Code, as determined by the Committee.
2.9. Exchange Act: The Securities Exchange Act of 1934, as amended.
2.10. Excluded Items: Any gains or losses from the sale of assets outside
the ordinary course of business, any gains or losses from discontinued
operations, any extraordinary gains or losses, the effects of accounting
changes, and any unusual, nonrecurring, transition, one-time or similar items
or charges.
2.11. Executive: An executive officer of the Company within the meaning of
Rule 3b-7 under the Exchange Act, which may include members of the Board.
A-1
<PAGE>
2.12. Fair Market Value: The average of the high and low reported sales
prices of Common Stock on the New York Stock Exchange Composite Tape on the
trading date immediately preceding the date on which the Performance Award
being paid in Common Stock, in whole or in part, is paid to the Participant.
2.13. Participant: With respect to a Plan Year, an Executive selected by the
Committee to participate in the Plan for such Plan Year.
2.14. Performance Award: With respect to a Participant for a Plan Year, an
award made pursuant to the Plan in an amount equal to the Target Award
multiplied by the Total Performance Percentage, subject to discretionary
reduction pursuant to section 5.5 hereof and the limit of section 5.6 hereof.
2.15. Performance Categories: The following categories (in all cases before
Excluded Items):
a. Net sales for the Plan Year (i) for the Company on a consolidated
basis, (ii) for any one or more Subsidiaries or divisions of the Company
and/or (iii) for any other business unit or units of the Company as defined
by the Committee at the time of selection.
b. Cost of goods sold for the Plan Year (i) for the Company on a
consolidated basis, (ii) for any one or more Subsidiaries or divisions of
the Company and/or (iii) for any other business unit or units of the
Company as defined by the Committee at the time of selection.
c. Gross profit for the Plan Year (i) for the Company on a consolidated
basis, (ii) for any one or more Subsidiaries or divisions of the Company
and/or (iii) for any other business unit or units of the Company as defined
by the Committee at the time of selection.
d. Selling, administrative and engineering expenses for the Plan Year (i)
for the Company on a consolidated basis, (ii) for any one or more
Subsidiaries or divisions of the Company and/or (iii) for any other
business unit or units of the Company as defined by the Committee at the
time of selection.
e. Income from operations for the Plan Year (i) for the Company on a
consolidated basis, (ii) for any one or more Subsidiaries or divisions of
the Company and/or (iii) for any other business unit or units of the
Company as defined by the Committee at the time of selection.
f. Income before interest and the provision for income taxes for the Plan
Year (i) for the Company on a consolidated basis, (ii) for any one or more
Subsidiaries or divisions of the Company and/or (iii) for any other
business unit or units of the Company as defined by the Committee at the
time of selection.
g. Income before provision for income taxes for the Plan Year (i) for the
Company on a consolidated basis, (ii) for any one or more Subsidiaries or
divisions of the Company and/or (iii) for any other business unit or units
of the Company as defined by the Committee at the time of selection.
h. Net income for the Plan Year (i) for the Company on a consolidated
basis, (ii) for any one or more Subsidiaries or divisions of the Company
and/or (iii) for any other business unit or units of the Company as defined
by the Committee at the time of selection.
i. Basic earnings per common share for the Plan Year for the Company on a
consolidated basis.
j. Diluted earnings per common share for the Plan Year for the Company on
a consolidated basis.
k. Average accounts receivable during the Plan Year, calculated by taking
the average of accounts receivable at the end of each fiscal month during
the Plan Year, (i) for the Company on a consolidated basis, (ii) for any
one or more Subsidiaries or divisions of the Company and/or (iii) for any
other business unit or units of the Company as defined by the Committee at
the time of selection.
l. Average inventories during the Plan Year, calculated by taking the
average of inventories at the end of each fiscal month during the Plan
Year, (i) for the Company on a consolidated basis, (ii) for any one or more
Subsidiaries or divisions of the Company and/or (iii) for any other
business unit or units of the Company as defined by the Committee at the
time of selection.
m. Return on average equity for the Plan Year, with average equity
calculated by taking the average of equity at the end of each fiscal month
during the Plan Year, (i) for the Company on a consolidated basis,
A-2
<PAGE>
(ii) for any one or more Subsidiaries or divisions of the Company and/or
(iii) for any other business unit or units of the Company as defined by the
Committee at the time of selection.
n. Return on year-end equity for the Plan Year (i) for the Company on a
consolidated basis, (ii) for any one or more Subsidiaries or divisions of
the Company and/or (iii) for any other business unit or units of the
Company as defined by the Committee at the time of selection.
o. Return on average assets for the Plan Year, with average assets
calculated by taking the average of assets at the end of each fiscal month
during the Plan Year, (i) for the Company on a consolidated basis, (ii) for
any one or more Subsidiaries or divisions of the Company and/or (iii) for
any other business unit or units of the Company as defined by the Committee
at the time of selection.
p. Net cash provided by operating activities for the Plan Year (i) for
the Company on a consolidated basis, (ii) for any one or more Subsidiaries
or divisions of the Company and/or (iii) for any other business unit or
units of the Company as defined by the Committee at the time of selection.
q. Net cash provided by operating activities less net cash used in
investing activities for the Plan Year (i) for the Company on a
consolidated basis, (ii) for any one or more Subsidiaries or divisions of
the Company and/or (iii) for any other business unit or units of the
Company as defined by the Committee at the time of selection.
r. Net increase (decrease) in cash and cash equivalents for the Plan Year
(i) for the Company on a consolidated basis, (ii) for any one or more
Subsidiaries or divisions of the Company and/or (iii) for any other
business unit or units of the Company as defined by the Committee at the
time of selection.
2.16. Performance Limit: A percentage relating to a Performance Category
that equals or exceeds one hundred percent (100%).
2.17. Performance Percentage: The percentage between zero percent (0%) and
the Performance Limit derived from the Performance Scale for the applicable
Performance Category for a Plan Year, with the Performance Limit representing
maximum performance, one hundred percent (100%) representing target
performance and zero percent (0%) representing below minimum performance in
such Performance Category for the Plan Year.
2.18. Performance Scale: A performance scale from which a Performance
Percentage may be objectively calculated for any given level of actual
performance within that Performance Category during the Plan Year. The
Performance Scale may be a linear function, a step function or a combination.
2.19. Plan: The Harley-Davidson, Inc. Corporate Short Term Incentive Plan.
2.20. Plan Year: The Company's full fiscal year (or, in the discretion of
the Committee, a period consisting of one or more full fiscal months of the
Company representing less than a full fiscal year that ends on the last day of
a fiscal year).
2.21. Retirement: Retirement on or after age sixty-five or, with the consent
of the Committee, at an earlier age.
2.22. Subsidiary: A corporation, limited partnership, general partnership,
limited liability company, business trust or other entity of which more than
fifty percent (50%) of the voting power or ownership interest is directly
and/or indirectly held by the Company.
2.23. Target Award: With respect to a Participant in any Plan Year, the
amount of such Participant's base salary in such Plan Year multiplied by the
Target Percentage for such Plan Year.
2.24. Target Percentage: With respect to a Participant, a percentage,
between fifteen percent (15%) and one hundred percent (100%).
A-3
<PAGE>
2.25. Total Performance Percentage: With respect to a Participant for a Plan
Year, the sum of the Performance Percentage multiplied by the Category
Percentage for each Performance Category applicable to such Participant for
such Plan Year. If there is only one Performance Category for a Plan Year for
a Participant, then the Performance Percentage is also the Total Performance
Percentage.
ARTICLE III
ADMINISTRATION
3.1. The Committee shall administer the Plan and shall have full authority
to set Target Percentages, Performance Categories, Category Percentages,
Performance Scales and Performance Limits, to determine which Executives shall
participate in the Plan, to interpret the Plan, to establish and amend rules
and regulations for its administration and to perform all other acts relating
to the Plan, including the delegation of administrative responsibilities,
which it believes reasonable and proper.
3.2. The actions and determinations of the Committee on all matters relating
to the Plan shall be final and conclusive.
ARTICLE IV
ELIGIBILITY AND PARTICIPATION
All Executives shall be eligible to participate in the Plan. The Committee
shall select in writing, in its sole discretion, the Executives who shall
participate in the Plan for a Plan Year prior to the commencement of the Plan
Year (or such later time as may be permitted under Code section 162(m)).
Without limitation, the Committee may (a) select an Executive as a Participant
at any time during the course of a Plan Year and (b) take action as a result
of which there is an additional Target Award in respect of an Executive who,
as to a Plan Year that is in progress, is already a Participant and as to whom
a Target Award is already in effect where the additional Target Award relates
to the same Plan Year or a Plan Year ending on the same date. Members of the
Board who are not employees of the Company shall not be eligible to
participate in the Plan.
ARTICLE V
PERFORMANCE AWARDS
5.1. Target Percentage: Prior to the commencement of each Plan Year (or such
later time as may be permitted under Code section 162(m)), the Committee shall
fix in writing a Target Percentage for each Target Award for each Participant
for each Plan Year. If the Committee does not fix a new Target Percentage for
a Participant for any Plan Year, the Target Percentage for such Participant
for such Plan Year shall be the same as such Participant's Target Percentage
for the prior Plan Year.
5.2. Performance Categories: Prior to the commencement of each Plan Year (or
such later time as may be permitted under Code section 162(m)), the Committee
shall select in writing one or more of the Performance Categories for each
Target Award for each Participant or group of Participants for each Plan Year.
If more than one Performance Category is chosen for any Participant or group
of Participants, then the Committee shall assign a Category Percentage to each
Performance Category selected for such Participant or group of Participants;
provided that the total of the Category Percentages for each Target Award must
equal 100% for such Participant or group of Participants. Performance
Categories and/or Category Percentages need not be the same for all
Participants for any Plan Year.
5.3. Performance Scale: Prior to the commencement of each Plan Year (or such
later time as may be permitted under Code section 162(m)), the Committee shall
approve in writing a Performance Scale (including without limitation a
Performance Limit) for each Performance Category selected for each Target
Award for each Plan Year.
A-4
<PAGE>
5.4. Payment of Performance Awards: The amount of Performance Awards for a
Plan Year shall be calculated by the Company, certified in writing by the
Committee and, following such certification, paid to Participants for such
Plan Year as soon as reasonably practicable following the end of such Plan
Year. Payments of Performance Awards shall be made, in the sole discretion of
the Committee, in cash, Common Stock or a combination of cash and Common
Stock. If a Performance Award is paid in Common Stock, the Common Stock shall
be valued at Fair Market Value. To the extent paid in Common Stock,
Performance Awards may not be deferred by a Participant under the terms of any
deferred compensation or other plan of the Company. A Participant whose
employment with the Company terminates prior to the end of a Plan Year shall
not be entitled to receive any Performance Award hereunder for such Plan Year.
Notwithstanding the foregoing sentence:
a. The Committee may, in its sole discretion, provide for payment, in whole
or in part, of the Performance Award for such Plan Year if the
Participant's employment with the Company terminates by reason of the
Participant's death, Disability or Retirement; and
b. Prior to, and for a period of ninety (90) days following, a Change of
Control Event during a Plan Year, the Committee may, in its sole discretion
and in lieu of any other payments under the Plan for such Plan Year,
provide for the payment to all Participants of either (i) Performance
Awards for such Plan Year based on annualizing the Company's actual
performance through the end of the Company's most recently completed fiscal
month prior to such Change of Control Event or (ii) Target Awards for such
Plan Year. Performance Awards or Target Awards payable under this section
5.4(b) shall be paid upon the occurrence of the Change of Control Event or
immediately following the Committee's decision to make such payment,
whichever is later.
5.5. Discretionary Reduction of Performance Award: The Committee may, in its
sole discretion, at any time prior to payment, reduce the amount of any
Performance Award by up to fifty percent (50%). Such reductions need not be
uniform among Participants. The Committee may, but shall not be required to,
give one or more reasons for any such reduction. This section 5.5 has been
included because the Board believes that even though the Company may have
performed well in the selected Performance Categories for the applicable Plan
Year, there is always a possibility that the Company's performance in the
selected Performance Categories will substantially exceed the Company's
overall financial and strategic performance for the Plan Year. In such a case,
the Board believes that the Committee must have the flexibility to reduce the
amount of the Performance Awards payable to one or more of the Participants
who, after all, are the Executives ultimately responsible for the Company's
performance. The Committee shall not have the discretionary authority to
increase the amount of any Performance Award above the amount determined in
accordance with the terms of the Plan. This section 5.5 shall not apply
following a Change of Control Event.
5.6. Maximum Performance Award: Notwithstanding anything in the Plan to the
contrary, no Participant shall be entitled to receive more than two million
dollars (before any withholding pursuant to section 6.2 hereof) in the
aggregate under Performance Awards in respect of one Plan Year or in respect
of more than one Plan Year where the Plan Years end on the same date.
5.7. Maximum Number of Shares: Not more than 2,000,000 shares of Common
Stock, subject to adjustment in the same manner as provided in the Company's
1995 Stock Option Plan, as amended, shall be issued pursuant to the Plan.
ARTICLE VI
MISCELLANEOUS
6.1. Nonassignability: Performance Awards shall not be assigned, pledged or
transferred, other than by the laws of descent and distribution, and shall not
be subject to levy, attachment, execution or other similar process. If a
Participant attempts to assign, pledge or transfer any right to a Performance
Award or in the event of any levy, attachment, execution or similar process
upon the rights or interests conferred by the Plan, the Committee
A-5
<PAGE>
may terminate the participation of the Participant in the Plan effective as of
the date of such notice and the Participant shall have no further rights
hereunder.
6.2. Withholding Taxes: The Company shall withhold from the payment of each
Performance Award the amount that the Company deems necessary to satisfy its
obligation to withhold Federal, state and local income or other taxes incurred
by reason of the payment of the Performance Award.
6.3. Amendment or Termination of the Plan: The Board may from time to time
or at any time amend, suspend or terminate the Plan.
6.4. Other Compensation: Nothing contained in this Plan shall be deemed in
any way to restrict or limit the Company from making any award or payment to a
Participant under any other plan, policy, program, understanding or
arrangement, whether now existing or hereinafter in effect.
6.5. Payments to Other Persons: If payment of a Performance Award, in whole
or in part, is legally required to be made to any person other than the
applicable Participant, any such payment will be a complete discharge of the
liability of the Company to such Participant for such amount.
6.6. Unfunded Plan: The Company shall have no obligation to purchase assets,
place assets in trust or otherwise take any action to fund, secure or
segregate any amounts to be paid under the Plan.
6.7. Indemnification: In addition to any other rights of indemnification
they may have as members of the Board or the Committee, the members of the
Board and the Committee shall be indemnified by the Company against all costs
and expenses reasonably incurred by them in connection with any action, suit
or proceeding to which they or any of them may be a party by reason of any
action taken or failure to act under or in connection with the Plan and
against all amounts paid by them in settlement thereof (provided that such
settlement is approved by independent legal counsel selected by the Company)
or paid by them in satisfaction of a judgement in any such action, suit or
proceeding, except a judgement based upon a finding of bad faith; provided
that upon the institution of any such action, suit or proceeding, the Board or
Committee member shall give the Company notice thereof in writing and an
opportunity, at the Company's expense, to handle and defend such action, suit
or proceeding before such Board or Committee member undertakes to handle and
defend such action, suit or proceeding on his or her own behalf.
6.8. No Employment Rights: Nothing in this Plan shall confer upon any
Executive or Participant any right to continued employment with the Company.
6.9. Plan Expenses: Any expenses of administering the Plan shall be borne by
the Company.
6.10. In Writing: For purposes of this Plan, actions taken by the Committee
"in writing" shall include, without limitation, actions recorded in the
minutes of any meeting of the Committee and any unanimous consent action of
the Committee in lieu of a meeting thereof.
6.11. Section Headings: The section headings contained herein are for
convenience only, and in the event of any conflict between the text of the
Plan and the section headings, the text of the Plan shall control.
6.12. Applicable Law: The Plan shall be governed by the internal laws of the
State of Wisconsin without regard to the conflict of law principles thereof.
6.13. Effective Date: The Plan has been effective since January 1, 1994.
Amendments to the Plan approved by the Board on February 18, 1999 shall be
effective as of January 1, 1999. However, the Plan shall terminate and no
Performance Awards shall be paid hereunder in respect of any Plan Year ending
after December 31, 1998 if the Plan has not been approved by the requisite
vote of the Company's shareholders under Code section 162(m) at the first
meeting of the Company's shareholders held after December 31, 1998.
A-6
<PAGE>
HARLEY-DAVIDSON, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR MAY 8, 1999 ANNUAL MEETING OF SHAREHOLDERS
The undersigned appoints each of Jeffrey L. Bleustein and James L. Ziemer
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 8, 1999 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
(Item 1.), approval of the Company's amended Corporate Short Term Incentive
Plan (Item 2.), and ratification of Ernst & Young LLP as auditors (Item 3.).
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.
PLEASE MARK, SIGN AND DATE BELOW,
DETACH AND RETURN PROMPTLY USING THE ENVELOPE PROVIDED
- -------------------------------------------------------------------------------
HARLEY-DAVIDSON, INC. 1999 ANNUAL MEETING
1. ELECTION OF DIRECTORS:
1. Richard J. Harrison-Taylor
2. Sara L. Levinson
3. Richard F. Teerlink
[_] FOR all nominees listed to the left (except as specified below).
[_] WITHHOLD AUTHORITY to vote for all nominees 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. APPROVAL OF THE COMPANY'S AMENDED CORPORATE SHORT TERM INCENTIVE PLAN:
FOR [_] AGAINST [_] ABSTAIN [_]
3. RATIFICATION OF AUDITORS:
FOR [_] AGAINST [_] ABSTAIN [_]
Check appropriate box. Indicate changes below:
Address Change? [_] Name Change? [_]
DATE:
_________________________________
-----------------------------------------------
-----------------------------------------------
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 only authorized officers. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
