<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
POLARIS INDUSTRIES 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
POLARIS INDUSTRIES INC. 1225 Highway 169 North
Minneapolis, Minnesota 55441-5078
612-542-0500
Fax: 612-542-0599
March 30, 1995
Dear Fellow Shareholder:
The Board of Directors of Polaris Industries Inc. joins me in extending a
cordial invitation to attend our 1995 Annual Meeting of Shareholders which will
be held at the Holiday Inn West, Highway 394, Minneapolis, Minnesota on
Wednesday, May 10, 1995 at 10:00 a.m. local time.
In addition to voting on the matters described in the accompanying Notice of
Annual Meeting and Proxy Statement, we will review Polaris' 1994 business and
discuss our direction for the coming years. There will also be an opportunity,
after conclusion of the formal business of the meeting, to discuss other matters
of interest to you as a shareholder.
It is important that your shares be represented at the meeting whether or
not you plan to attend in person. Therefore, please sign and return the enclosed
proxy in the envelope provided. If you do attend the meeting and desire to vote
in person, you may do so even though you have previously sent a proxy.
We hope that you will be able to attend the meeting, and we look forward to
seeing you.
Sincerely,
[LOGO]
W. Hall Wendel, Jr.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Enclosures
<PAGE>
[POLARIS LOGO]
POLARIS INDUSTRIES INC.
1225 HIGHWAY 169 NORTH
MINNEAPOLIS, MINNESOTA 55441
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 10, 1995
------------------------
TO POLARIS SHAREHOLDERS:
The 1995 Annual Meeting of Shareholders of Polaris Industries Inc. will be
held at the Holiday Inn West, Highway 394, Minneapolis, Minnesota 55441, at
10:00 a.m. local time on Wednesday, May 10, 1995 for the following purposes:
1. To elect two directors for three-year terms ending in 1998 (Proposal 1);
2. To approve the Polaris Industries Inc. 1995 Stock Option Plan (Proposal
2);
3. To approve the Polaris Industries Inc. Deferred Compensation Plan for
Directors (Proposal 3);
4. To approve the Polaris Industries Inc. Employee Stock Purchase Plan
(Proposal 4);
5. To transact such other business as may properly come before the Annual
Meeting or any postponements or adjournments thereof.
Shareholders of record at the close of business on March 13, 1995 are
entitled to notice of and to vote at the Annual Meeting or any postponements or
adjournments thereof.
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN
IT IN THE ACCOMPANYING ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING.
YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU DECIDE TO ATTEND THE
MEETING.
By order of the Board of Directors
[B]
John H. Grunewald
EXECUTIVE VICE PRESIDENT, CHIEF
FINANCIAL OFFICER
AND SECRETARY
Minneapolis, Minnesota
March 30, 1995
<PAGE>
POLARIS INDUSTRIES INC.
1225 HIGHWAY 169 NORTH
MINNEAPOLIS, MINNESOTA 55441
------------------------
PROXY STATEMENT
------------------------
PROXIES AND VOTING
This Proxy Statement and the accompanying form of proxy are furnished in
connection with the solicitation by the Board of Directors and management of
Polaris Industries Inc., a Minnesota corporation (the "Company"), of proxies for
use at the Annual Meeting of Shareholders of the Company (the "Annual Meeting")
to be held at 10:00 a.m., local time, on May 10, 1995, at the Holiday Inn West,
Highway 394, Minneapolis, Minnesota 55441 for the purposes set forth in the
accompanying Notice of Meeting.
Each shareholder entitled to vote at the Annual Meeting who signs and
returns a proxy in the form enclosed with this Proxy Statement may revoke such
proxy at any time prior to its use by giving notice of such revocation to the
Company in writing or in open meeting. Unless so revoked, the proxy will be
voted in accordance with the instructions contained therein at the Annual
Meeting and any postponements or adjournments thereof. Presence at the Annual
Meeting of a shareholder will not, in itself, constitute revocation of a
previously granted proxy.
This Proxy Statement and the accompanying proxy were first mailed to
shareholders on or about March 30, 1995.
Only shareholders of record at the close of business on March 13, 1995 will
be entitled to notice of and to vote the shares of common stock, $.01 par value
per share, of the Company (the "Common Stock") held by them on that date at the
Annual Meeting or any postponements or adjournments thereof. At the close of
business on March 13, 1995, the Company had outstanding 18,206,258 shares of
Common Stock.
Holders of Common Stock of record at the close of business on March 13, 1995
will be entitled to one vote per share on the (1) election of directors, (2)
approval of the Polaris Industries Inc. 1995 Stock Option Plan, (3) approval of
the Polaris Industries Inc. Deferred Compensation Plan for Directors, (4)
approval of the Polaris Industries Inc. Employee Stock Purchase Plan, and (5)
any other business to be transacted at the Annual Meeting.
The quorum required to hold the meeting is a majority of the shares of
Common Stock entitled to vote at the meeting present in person or by proxy. If a
quorum is present, the affirmative vote, in person or by proxy, of a majority of
shares of Common Stock present and entitled to vote at the Annual Meeting, will
be necessary for the adoption of proposals 1, 2, 3 and 4 listed in the Notice of
Meeting. Broker non-votes are treated as not being present in person or by proxy
at the Annual Meeting. Abstentions are treated as being present and, because the
affirmative vote of a majority of the shares of Common Stock present and
entitled to vote on a particular proposal is necessary for adoption of such
proposal, the effect of an abstention is a vote against the proposal.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of March 13, 1995 by each
shareholder known to the Company who then beneficially owned more than 5% of the
outstanding shares of Common Stock, each director of the Company, each nominee
for director, each executive officer named in the Compensation Table set forth
later in this Proxy Statement and all such officers and directors as a group. As
of March 13, 1995, there were 18,206,258 shares of Common Stock outstanding.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OF CLASS
- --------------------------------------------- ----------- ------------
<S> <C> <C>
W. Hall Wendel, Jr. (1) 988,900 5.4%
Chairman of the Board of Directors
and Chief Executive Officer
1225 Highway 169 North
Minneapolis, Minnesota 55441
Kenneth D. Larson (2) 108,376 *
President and Chief Operating Officer
and Director
John H. Grunewald 7,000 *
Executive Vice President, Chief
Financial Officer and Secretary
Charles A. Baxter 280,000 1.5%
Vice President -- Engineering and
Product Safety
Ed Skomoroh 49,020 *
Vice President -- Sales and
Marketing
Andris A. Baltins (3) 5,550 *
Director
Beverly F. Dolan 1,000 *
Director
Robert S. Moe (4) 418,400 2.3%
Director
Gregory R. Palen 1,600 *
Director
Stephen G. Shank 400 *
Director
Victor K. Atkins 1,213,818 6.7%
33 Flying Point Road
Southampton, New York 11968
Lehman Brothers Holdings Inc. (5) 1,336,852 7.3%
3 World Financial Center
New York, New York 10285
All directors and executive officers as 1,883,208 10.3%
a group (12 persons)
<FN>
- ------------------------
* Represents less than 1%.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
(1) Includes 28,000 shares held in a trust for Mr. Wendel's daughter as to
which he disclaims any beneficial interest and 100,000 shares held in the
Hall and Deborah Wendel Foundation of which Mr. Wendel is president.
(2) Includes 100 shares held in trust for Mr. Larson's child and 10,200 shares
owned by Mr. Larson's spouse, as to which he disclaims any beneficial
interest.
(3) Includes 1,000 shares held in trust for Mr. Baltins' children. Other
members of the law firm of Kaplan, Strangis and Kaplan, P.A., of which Mr.
Baltins is a member and which serves of counsel to the Company,
beneficially own 39,750 shares.
(4) Includes 222,400 shares held in trust for Mr. Moe's children, as to which
he disclaims any beneficial interest.
(5) Includes shares held by certain wholly owned subsidiaries of Lehman
Brothers Holdings Inc.
</TABLE>
PROPOSAL 1 -- ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
The Board of Directors of the Company consists of seven directors. The Board
is divided into three classes serving staggered three-year terms. Each of the
directors, with the exception of Mr. Wendel who has been a director since
September 1994, became a director of the Company upon the conversion of Polaris
Industries Partners L.P. to corporate form in December 1994. The term of office
of directors in Class I, Messrs. Larson and Baltins, expires at the 1995 Annual
Meeting. The term of office of directors in Class II, Messrs. Dolan and Moe,
expires in 1996 and the term of office of directors in Class III, Messrs. Palen,
Shank, and Wendel, expires in 1997. There are no family relationships between or
among any executive officers or directors of the Company.
The Board of Directors proposes that the following nominees, both of whom
are currently serving as Class I directors, be elected as Class I directors for
a new term of three years and until their successors are duly elected and
qualified:
Kenneth D. Larson
Andris A. Baltins
Except where authority has been withheld by a shareholder, the enclosed
proxy will be voted for the election of the two nominees to the Company's Board
of Directors. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
PROPOSAL TO ELECT THE NOMINEES AS CLASS I DIRECTORS OF THE COMPANY.
In the event either or both of the nominees shall become unavailable to
serve as a director before election, votes will be cast pursuant to authority
granted by the enclosed proxy for such person or persons as may be designated by
the Board of Directors.
INFORMATION CONCERNING NOMINEES AND DIRECTORS
DIRECTORS STANDING FOR ELECTION -- CLASS I
KENNETH D. LARSON Director since 1994
Mr. Larson, 54, has been the President and Chief Operating Officer of the
Company since the conversion of Polaris Industries Partners L.P. to corporate
form in December 1994. He was the President and Chief Operating Officer of
Polaris Industries Capital Corporation ("PICC"), the managing general partner of
Polaris Industries Associates L.P. which was the operating general partner of
Polaris Industries L.P. from October 1988 through December 1994. Prior thereto,
Mr. Larson was Executive Vice President of Toro Company responsible for its
commercial, consumer and international equipment business, and held a number of
general management positions after joining Toro Company in 1975. Mr. Larson
serves as a director and a member of the audit committee of Featherlite
Trailers, a manufacturer of stock and car trailers and as a director and a
member of the compensation
3
<PAGE>
committee of Destron Fearing Corp., a manufacturer of animal identification
devices. Mr. Larson also is a director of various private corporations. Mr.
Larson serves on the Executive Committee of the Board of Directors of the
Company.
ANDRIS A. BALTINS Director since 1994
Mr. Baltins, 49, has been a member of the law firm of Kaplan, Strangis and
Kaplan, P.A. since 1979. He is a director of Affinity Group, Inc., a
membership-based marketing company. Mr. Baltins is also a director of various
private and non-profit corporations. Mr. Baltins serves on the Audit Committee
and the Compensation Committee of the Board of Directors of the Company.
DIRECTORS CONTINUING IN OFFICE
CLASS II -- TERM EXPIRES AT THE 1996 ANNUAL MEETING
BEVERLY F. DOLAN Director since 1994
Mr. Dolan, 67, was the Chairman and Chief Executive Officer of Textron,
Inc., a multi-industry company with operations in aerospace technology,
commercial products and financial services, from 1986 through 1992. Since 1992,
Mr. Dolan has been a private investor and currently serves as a director of
Textron, Inc.; First Union Corporation, a bank holding company; Ruddick
Corporation, a multi-industry company with operations in retail grocery, thread
manufacturing and printing; and FPL Group, Inc., a Florida electrical power
producer. Mr. Dolan also served on President Bush's Export Council and was
elected Vice Chairman of that Council in November 1990. Mr. Dolan is Chairman of
the Compensation Committee of the Board of Directors of the Company.
ROBERT S. MOE Director since 1994
Mr. Moe, 63, was Executive Vice President and Treasurer of PICC or its
predecessor from 1981 through 1992. Since 1992, he has been a private investor.
Mr. Moe serves on the Compensation Committee and the Executive Committee of the
Board of Directors of the Company.
CLASS III -- TERM EXPIRES AT THE 1997 ANNUAL MEETING
GREGORY R. PALEN Director since 1994
Mr. Palen, 39, has been Chairman and Chief Executive Officer of Spectro
Alloys, an aluminum manufacturing company since 1989 and Chief Executive Officer
of Palen/Kimball Company, a heating and air conditioning company, since 1980. He
is a director of Valspar Corporation, a painting and coating manufacturing
company. Mr. Palen is also a director of various private and non-profit
corporations. Mr. Palen serves on the Audit Committee of the Board of Directors
of the Company.
STEPHEN G. SHANK Director since 1994
Mr. Shank, 51, has been the President and Chief Executive Officer of
Learning Ventures, Inc., a provider of education programs, since September 1991.
Prior thereto, from 1988, he was Chairman and Chief Executive Officer of Tonka
Corporation, a marketer and manufacturer of toy and game products. Mr. Shank is
a director of National Computer Systems, Inc., an information services company,
and Advance Circuits, Inc., a manufacturer of printed circuit boards and
electronic interconnect devices. Mr. Shank is also a director of various private
and non-profit corporations. Mr. Shank is the Chairman of the Audit Committee of
the Board of Directors of the Company.
W. HALL WENDEL, JR. Director since 1994
Mr. Wendel, 52, is the Chairman and Chief Executive Officer of the Company
and was Chief Executive Officer of PICC from 1987 through the conversion of
Polaris Industries Partners L.P. to corporate form in 1994. From 1981 to 1987,
Mr. Wendel was Chief Executive Officer of the predecessor of Polaris Industries
Partners L.P., which was formed to purchase the snowmobile assets of the Polaris
E-Z-GO Division of Textron, Inc. Before that time, Mr. Wendel was President of
the Polaris E-Z-GO
4
<PAGE>
Division for two years and prior thereto, held marketing positions as Vice
President of Sales and Marketing and National Sales Manager since 1974. Mr.
Wendel is Chairman of the Board of Directors and Chairman of the Executive
Committee of the Board of Directors of the Company.
DIRECTORS' REMUNERATION
Directors who are also full-time employees of the Company receive no
additional compensation for service as directors. During fiscal year 1995, the
Company intends to pay each nonemployee director an annual director's fee of
$27,500, at least $5,000 of which will be payable in restricted stock of the
Company. If the Deferred Compensation Plan for Directors described under
Proposal No. 3 of this Proxy Statement is approved by shareholders, directors
may then choose to defer the payment of fees as more fully described under
Proposal No. 3 below.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held its first meeting on January 26, 1995. All
directors were in attendance.
The Board of Directors has designated three standing committees. The
Executive Committee, consisting of Messrs. Wendel, Moe and Larson, reviews and
makes recommendations to the Board of Directors regarding the strategic plans
and allocation of resources of the Company and exercises the authority of the
Board of Directors on specific matters as delegated to it from time to time. The
Audit Committee, consisting of Messrs. Shank, Baltins and Palen, reviews and
makes recommendations to the Board of Directors with respect to the financial
and legal posture of the Company, recommends the appointment of independent
public accountants, reviews the reports and evaluations of the Company's
independent public accountants and monitors improvements of any financial
reporting discrepancies, receives internal audit reports and ensures corrections
are made on any financial reporting deficiencies, monitors adherence to
established corporate policies and practices including standards of business
conduct and initiates and monitors any special audits that it may deem
appropriate. The Compensation Committee, consisting of Messrs. Dolan, Moe and
Baltins, reviews and makes recommendations to the Board of Directors regarding
the compensation of officers of the Company, employee profit sharing,
stock-based incentives and other benefit plans and also provides recommendations
to the Board of Directors regarding a management succession plan for the
Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Polaris Industries Partners L.P., a partnership wholly owned by the Company,
(the "Partnership"), leases office and warehouse space in a suburb of
Minneapolis, Minnesota from 1225 North County Road 18 Limited Partnership (the
"1225 Partnership"). Mr. Baxter, Vice President -- Engineering and Product
Safety of the Company, Mr. Wendel and Mr. Moe are among the partners in the 1225
Partnership. Under the lease, which was entered into in 1983 and amended in
1990, the Partnership leases 60,127 square feet of warehouse space and 31,733
square feet of office space from the 1225 Partnership. The lease is on a "triple
net" basis and provides for annual rent of $2.50 per square foot of warehouse
space and $5.50 per square foot of office space and is adjusted annually by
increases in the consumer price index, not to exceed 3.5% annually. Total lease
payments for the years ending 1994, 1993 and 1992 were $456,000, $443,000 and
$429,000 respectively. The term of the lease expires in 1997.
Andris A. Baltins, a member of the Board of Directors, is also a member of
the law firm of Kaplan, Strangis and Kaplan, P.A. which provided legal services
to the Partnership and the Company in 1994. Of the approximately $12.3 million
in fees and expenses incurred in connection with the conversion of the
Partnership to corporate form in 1994, Kaplan, Strangis and Kaplan, P.A. was
paid an aggregate amount of approximately $1 million. It is anticipated that
Kaplan, Strangis and Kaplan, P.A. will provide certain legal services to the
Company in 1995.
5
<PAGE>
VOTING ARRANGEMENTS
In connection with the conversion of the Partnership to corporate form, Mr.
Wendel and Mr. Victor Atkins entered into an agreement dated as of August 25,
1994 which provides, among other things, that for so long as Mr. Atkins owns no
less than 3% of the outstanding shares of the Common Stock, he will vote such
shares in favor of the Company's nominees for election to the Board of Directors
of the Company.
COMPLIANCE WITH BENEFICIAL OWNERSHIP REPORTING RULES
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers to file initial reports of ownership and
reports of changes of ownership of the Company's common stock with the
Securities and Exchange Commission. Executive officers and directors are
required to furnish the Company with copies of all Section 16(a) reports that
they file. Based upon a review of the copies of those reports furnished to the
Company since December 22, 1994, the date the Partnership converted to corporate
form, and written representations that no other reports were required, the
Company believes that during 1994, all filing requirements applicable to its
directors and executive officers were complied with except that the initial
report by Mr. Dolan was inadvertently filed three days late.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
Set forth below is information concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal years
ended December 31, 1994, 1993 and 1992 of those persons who were, as of December
31, 1994, (i) the Chief Executive Officer and (ii) the four other most highly
paid executive officers whose total annual salary and bonus exceeded $100,000
during the fiscal year ended December 31, 1994 (the "Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------------
ANNUAL COMPENSATION PAYOUTS
---------------------------------- RESTRICTED AWARDS ----------
OTHER ANNUAL STOCK ------------ LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(A) ($)(B) ($)(C) (#) ($) ($)(D)
- --------------------------------- ---- -------- -------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
W. Hall Wendel, Jr. 1994 $240,000 $480,000 -- $ 282,000 0 $0 $ 6,000
Chairman of the Board 1993 $240,000 $328,800 -- $0 0 $0 $ 7,075
and Chief Executive Officer 1992 $240,000 $249,600 -- $0 0 $3,736,049 $ 6,866
Kenneth D. Larson 1994 $190,000 $437,000 -- $ 352,500 0 $0 $ 6,000
Chief Operating Officer 1993 $185,433 $278,149 -- $0 0 $ 744,002 $ 7,075
and President 1992 $183,750 $199,920 -- $0 0 $ 858,297 $ 6,866
John H. Grunewald 1994 $170,000 $340,000 -- $ 352,500 0 $0 $ 5,231
Executive Vice President 1993 $ 42,500 $ 31,875 -- $ 337,500 0 0 0
and Chief Financial Officer (E) 1992 N/A N/A -- N/A N/A N/A N/A
Charles A. Baxter 1994 $150,000 $205,500 -- $ 176,250 0 $0 $ 6,000
Vice President -- 1993 $150,000 $144,000 -- $0 0 $0 $ 7,075
Engineering and Product Safety 1992 $150,000 $118,500 -- $0 0 $1,245,335 $ 6,866
Ed Skomoroh 1994 $129,400 $177,281 -- $ 176,250 0 $0 $ 6,000
Vice President -- Sales 1993 $129,402 $121,636 -- $0 0 $ 248,045 $ 7,075
and Marketing 1992 $129,402 $102,228 -- $0 0 $ 286,069 $ 6,866
<FN>
- ------------------------------
(A) Bonus payments are reported for the year in which the related services were
performed.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
(B) The Company provides health club memberships, club dues, financial planning
and tax preparation, Execucare coverage, as well as standard employee
medical, dental, and disability coverage to its senior executives. The
value of all such "Other Annual Compensation" is less than the minimum of
$50,000 or 10% of the total cash compensation for each person reported
above.
(C) On March 1, 1994 an aggregate of 112,000 First Rights were granted to
Polaris employees pursuant to the 1987 Management Ownership Plan, including
8,000, 10,000, 10,000, 5,000, and 5,000 for Messrs. Wendel, Larson,
Grunewald, Baxter and Skomoroh respectively. In addition, 10,000 First
Rights were granted to Mr. Grunewald in September, 1993. These First Rights
convert to stock on January 1, 1997 (50%) and the remainder convert on
January 1, 1998 (50%). These are the total outstanding restricted shares or
stock units held by the Chief Executive Officer and other four highest paid
executive officers as of December 31, 1994. The share price at the close of
business on December 31, 1994 was $51.625; therefore, the value of the
total outstanding restricted shares for the Executive Officers at the end
of the fiscal year was $413,000, $516,250, $1,032,500, $258,125 and
$258,125 respectively, for Messrs. Wendel, Larson, Grunewald, Baxter and
Skomoroh.
(D) Consists of Company matching contributions to the 401(k) retirement savings
plan.
(E) Mr. John H. Grunewald was hired on September 27, 1993.
</TABLE>
The Company did not maintain a stock option plan or stock appreciation
rights plan during the fiscal year ended December 31, 1994. No awards were made
by the Company to any Executive Officers under any long term incentive plans
during the fiscal year ended December 31, 1994 other than the First Rights
grants referred to in footnote (C) above.
The Company does not maintain any defined benefit or actuarial pension plan
under which benefits are determined primarily by final compensation and years of
service.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
An agreement with Mr. Wendel provides benefits in the event of death,
disability, retirement or severance. If, during the term of his employment, Mr.
Wendel becomes totally disabled, the Company will pay monthly disability
payments of $4,167 during his lifetime until age 65. In the event of the death
of Mr. Wendel during his employment or while receiving disability payments, the
Company will pay Mr. Wendel's designated beneficiary a total of $500,000 in
monthly payments over ten years. In the event of termination of employment
without cause, the Company will pay a total of $500,000 in monthly installments
over ten years commencing on Mr. Wendel's 65th birthday or, if later,
retirement. In the event of voluntary termination of employment by Mr. Wendel,
the Company will pay $50,000 for each full year of service (including the period
during which disability payments are received) after September 14, 1982, up to
$500,000 in monthly installments over ten years commencing on Mr. Wendel's 65th
birthday or, if later, retirement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors, which was established
on December 22, 1994, consists of Beverly F. Dolan, Robert S. Moe and Andris A.
Baltins. Mr. Moe was Executive Vice President and Treasurer of a predecessor of
the Company from 1981 through 1992. Mr. Baltins is a member of the law firm of
Kaplan, Strangis and Kaplan, P.A., which provided legal services to the
Partnership and the Company during 1994. Of the approximately $12.3 million in
fees and expenses incurred in connection with the conversion of the Partnership
to corporate form in 1994, Kaplan, Strangis and Kaplan, P.A. was paid an
aggregate amount of approximately $1 million. It is anticipated that Kaplan,
Strangis and Kaplan, P.A. will provide certain legal services to the Company
during 1995.
COMPENSATION COMMITTEE EXECUTIVE COMPENSATION PHILOSOPHY
Levels of base compensation and participation in bonus and profit sharing
pools for executive officers of the Partnership for 1994 were established by a
compensation committee of the board of directors of the operating general
partner of the Partnership. Members of that compensation committee do not
currently serve as directors or officers of the Company.
The Compensation Committee of the Board of Directors of the Company was
established in December 1994. The Company's future compensation programs will be
tied closely to Company performance and aimed at enabling the Company to attract
and retain the best possible executive talent, aligning the financial interests
of the Company's management with those of its shareholders
7
<PAGE>
and rewarding those executives commensurately with their ability to drive
increases in shareholder value. It is anticipated that in the future,
compensation for each of the Company's executive officers will consist of a base
salary, an annual performance-based bonus, benefits, perquisites and stock
options. Accordingly, the Board of Directors is recommending approval of the
stock option plan described in Proposal 2.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
The following graph compares the cumulative total investor return of the
Partnership and the Company with the Standard and Poor's 500 Composite Stock
Index and Media General's Sport Vehicles Industry Group Index. The graph assumes
the investment of $100 on January 1, 1990 in units of Beneficial Assignment of
Class A Limited Partnership Interests ("BACs") of the Partnership and the two
indexes mentioned above, the reinvestment of all distributions and dividends,
and the exchange of BACs for shares of Common Stock of the Company on December
22, 1994. The returns of the Partnership, the Company and each index have been
weighted annually for their market capitalization on December 31st of each year.
The investor return shown on the graph is not necessarily indicative of
future investor return. Additionally, some portion of the historical total
cumulative investor return of the Partnership, attributable to its structure as
a master limited partnership, may not be available in Polaris' present corporate
structure. As a partnership, Polaris and its investors were subject to a single
level of federal income taxation on partnership earnings at the investor level.
The Company is subject to corporate taxation on earnings. In addition, its
shareholders are subject to taxation on dividends to the extent of earnings and
profits. Furthermore, as a partnership, Polaris followed a policy of
distributing a substantial percentage of cash generated from operations to
investors. The Board of Directors of the Company will consider a number of
factors, including the after-tax earnings and the capital requirements of the
Company, in declaring dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
POLARIS INDS.
INC. SPORT VEHICLE INDEX S&P 500 INDEX
<S> <C> <C> <C>
1989 100 100 100
1990 131.11 92.12 96.88
1991 212.52 169.02 126.42
1992 284.09 269.73 136.08
1993 455.93 322.07 149.8
1994 745.9 334.59 151.78
</TABLE>
SOURCE: MEDIA GENERAL FINANCIAL SERVICES.
8
<PAGE>
The following table shows the cumulative total return values used in the
above graph.
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Polaris Industries Inc..................... $ 100.00 $ 131.11 $ 212.52 $ 284.09 $ 455.93 $ 745.90
Sport Vehicle Index........................ $ 100.00 $ 92.12 $ 169.02 $ 269.73 $ 322.07 $ 334.59
S&P 500 Index.............................. $ 100.00 $ 96.88 $ 126.42 $ 136.08 $ 149.80 $ 151.78
<FN>
SOURCE: MEDIA GENERAL FINANCIAL SERVICES
</TABLE>
PROPOSAL 2 -- APPROVAL OF POLARIS INDUSTRIES INC.
1995 STOCK OPTION PLAN
On March 15, 1995, the Company's Board of Directors adopted and approved a
new stock option plan for the Company, the Polaris Industries Inc. 1995 Stock
Option Plan (the "Stock Option Plan") under which stock options awards may be
made to employees of the Company. A copy of the Stock Option Plan is attached
hereto as Annex A. The purpose of the Stock Option Plan is to promote the
interests of the Company and its shareholders by establishing a direct link
between the financial interests of participating employees and the performance
of the Company and enabling the Company to attract and retain highly competent
employees. The amount of benefits to be received under the Stock Option Plan by
any particular person or group is not determinable at this time.
GENERAL PROVISIONS
DURATION OF THE STOCK OPTION PLAN; SHARE AUTHORIZATION. The Stock Option
Plan became effective on the date it was adopted by the Board of Directors,
subject to the approval of the Company's shareholders, and it will remain
effective until the tenth anniversary of the effective date unless terminated
earlier by the Board of Directors. If shareholder approval is not obtained the
Stock Option Plan will not be implemented.
The maximum number of shares of Common Stock which may be issued or
delivered and as to which awards may be granted under the Stock Option Plan will
be 900,000 shares. No employee of the Company may receive options in respect of
more than 400,000 shares in any calendar year. The exercise price for a stock
option must be at least equal to 100% of the fair market value of the Common
Stock on the date of grant of such stock option.
The shares of Common Stock to be issued or delivered under the Stock Option
Plan will be authorized and unissued shares or previously issued and outstanding
shares of Common Stock reacquired by the Company. Shares of Common Stock covered
by any unexercised portions of terminated options and shares of Common Stock
subject to any awards which are otherwise surrendered by Stock Option Plan
participants without receiving any payment or other benefit with respect thereto
may again be subject to new awards under the Stock Option Plan.
On March 13, 1995, the closing price of the Common Stock on the New York
Stock Exchange was $46.50 per share.
STOCK OPTION PLAN ADMINISTRATION. The Stock Option Plan is to be
administered by the Compensation Committee of the Board of Directors. The
Compensation Committee is comprised solely of non-employee directors of the
Company who are not eligible to participate in the Stock Option Plan. The
Compensation Committee will determine the employees who will be eligible for and
granted awards, determine the amount and type of awards, establish rules and
guidelines relating to the Stock Option Plan, establish, modify and determine
terms and conditions of awards and take such other action as may be necessary
for the proper administration of the Stock Option Plan.
STOCK OPTION PLAN PARTICIPANTS. Any employee of the Company may be selected
by the Compensation Committee to receive an award under the Stock Option Plan.
Presently, there are approximately 2,850 employees eligible to participate in
the Stock Option Plan. The amount and type of awards to be made under the Stock
Option Plan have not yet been determined.
9
<PAGE>
AWARDS AVAILABLE UNDER STOCK OPTION PLAN
Awards to employees under the Stock Option Plan may take the form of stock
options meeting the requirements of Section 422 of the Internal Revenue Code of
1986 ("Incentive Stock Options") and stock options which do not meet such
requirements ("Nonqualified Stock Options"). The duration of each option will be
determined by the Compensation Committee, but no option will be exercisable more
than ten years after the date of grant. The exercise price for stock options
must be at least equal to 100% of the fair market value of the Common Stock on
the date of grant of such option. The exercise price will be payable in cash or
in such other form as the Compensation Committee may approve in the applicable
award agreement, including, without limitation, by a cashless exercise through a
broker or the delivery to the Company of (i) a promissory note equal to the
exercise price (but the par value of the shares must be paid in cash) or (ii)
shares of Common Stock owned by the participant for at least six months.
The options will be subject to restrictions on exercise, such as exercise in
periodic installments or upon attainment of specified performance criteria, as
determined by the Compensation Committee. Stock options granted under the Stock
Option Plan will not be transferable except by will or the laws of descent and
distribution and may be exercised only by a participant during his or her
lifetime.
Unless otherwise determined by the Compensation Committee and provided in
the applicable option agreement, options will be exercisable within thirty days
of any termination of employment other than termination due to disability, death
or normal retirement (but not later than the expiration date of the option). The
options will be exercisable within one year of a termination of employment by
reason of disability, death or normal retirement (but not later than the
expiration date of the option), but an Incentive Stock Option will not be
exercisable more than three months after retirement.
TERMINATION AND AMENDMENT
The Board may amend or terminate the Stock Option Plan at any time but,
without an optionee's consent, no such action will affect or in any way impair
the rights of such optionee under any award granted prior to such action, and no
amendment will be made without the approval of the Company's shareholders if
such approval is required to maintain the compliance of the Stock Option Plan
with Rule 16b-3 of the Securities and Exchange Commission or Section 162(m) of
the Internal Revenue Code of 1986.
ANTIDILUTION PROVISIONS
The amount of shares authorized to be issued under the Stock Option Plan,
and the terms of outstanding stock options, may be adjusted to prevent dilution
or enlargement of rights in the event of any stock dividend, reorganization,
reclassification, recapitalization, stock split, combination, merger,
consolidation or other capitalization change of similar effect.
WITHHOLDING OBLIGATIONS
The Company has the right to deduct from an optionee's salary, bonus or
other compensation any taxes required to be withheld with respect to options
granted under the Stock Option Plan. Alternatively, an optionee can satisfy his
or her withholding obligations under the Stock Option Plan by tendering shares
of Common Stock owned by such optionee or reducing the number of shares issuable
pursuant to the award.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal federal income tax
consequences of awards under the Stock Option Plan based upon current federal
income tax laws. The summary is not intended to be exhaustive and, among other
things, does not describe state, local or foreign tax consequences.
An optionee is not subject to federal income tax either at the time of grant
or at the time of exercise of an Incentive Stock Option. However, some optionees
are subject to the "alternative minimum tax" and the amount by which the fair
market value of the Common Stock subject to an
10
<PAGE>
Incentive Stock Option on the date of exercise exceeds the exercise price will
generally be added to the optionee's income for purposes of calculating his or
her alternative minimum taxable income. If an optionee does not dispose of
shares of Common Stock acquired through the exercise of an Incentive Stock
Option within one year after their receipt and within two years after the date
of grant of the Incentive Stock Option (either event, a "disqualifying
disposition") the taxable income recognized upon the sale of such shares will be
taxed at the long-term capital gains rate.
The Company will not receive any tax deduction in connection with the
exercise of an Incentive Stock Option unless there is a disqualifying
disposition. If there is a disqualifying disposition, the optionee will be
treated as receiving compensation subject to ordinary income tax in the year of
the disqualifying disposition and the Company will be entitled to an equal
deduction for compensation expense. The tax will be imposed on the lesser of (i)
the difference between the fair market value of the stock at the time of
exercise and the exercise price or (ii) the amount of gain realized on the
disposition. Any appreciation in value after the time of exercise will be taxed
as capital gain and will not result in any deduction by the Company.
If Nonqualified Stock Options are granted to an optionee, there are no
federal income tax consequences at the time of grant. Upon exercise of the
option, the optionee will recognize ordinary income in an amount equal to the
difference between the exercise price and the fair market value of the Common
Stock on the date of exercise. The Company will receive a commensurate tax
deduction at the time of exercise. When the optionee thereafter sells the
shares, the difference between any amount realized on such sale and the fair
market value of the shares at the time of exercise will be taxed as capital gain
or loss, which will be short-term or long-term, depending on whether the
applicable capital gain holding period has been satisfied.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE STOCK OPTION PLAN.
PROPOSAL 3 -- APPROVAL OF POLARIS INDUSTRIES INC.
DEFERRED COMPENSATION PLAN FOR DIRECTORS
The Board of Directors approved the Polaris Industries Inc. Deferred
Compensation Plan for Directors (the "Deferred Compensation Plan") on January
26, 1995, subject to approval of the Company's shareholders. A copy of the
Deferred Compensation Plan is attached hereto as Annex B.
The purposes of the Deferred Compensation Plan are to promote the interests
of the Company and its shareholders by attracting, retaining and providing an
incentive to non-employee directors by giving them an opportunity for tax
deferral and the ability to acquire an increased proprietary interest in the
Company, thereby more closely aligning the interests of directors with those of
the shareholders of the Company, to encourage the highest level of director
performance by providing directors with a direct interest in the Company's
attainment of its financial goals and to provide a financial incentive that will
help attract and retain the most qualified directors.
GENERAL PROVISIONS
The Deferred Compensation Plan will become effective upon approval by the
shareholders at the Annual Meeting and will remain effective until the close of
business on the tenth anniversary of such approval, unless terminated earlier by
the Board.
Under the Deferred Compensation Plan, directors who are not officers or
employees of the Company ("Outside Directors") will receive annual awards of
Common Stock Equivalents and can elect to defer all or a portion of their cash
directors' fees and have the deferred amounts deemed invested in additional
Common Stock Equivalents. These "Common Stock Equivalents" are phantom stock
units, i.e., each Common Stock Equivalent represents the equivalent of one share
of Common
11
<PAGE>
Stock. Dividends will be credited to Outside Directors as if the Common Stock
Equivalents were outstanding shares of Common Stock. Such dividends will be
converted into additional Common Stock Equivalents.
As of each quarterly date on which retainer fees are payable to Outside
Directors, each Outside Director will automatically receive an award of Common
Stock Equivalents having a fair market value of $1,250 ($3,750, in the case of
the initial quarterly award to Outside Directors who are members of the Board on
the date the Deferred Compensation Plan becomes effective). For purposes of the
Deferred Compensation Plan, fair market value will be based on the closing price
of the Common Stock on the New York Stock Exchange (or other stock exchange or
stock quotation system on which the Common Stock is then listed or quoted) on
the applicable date. A new Outside Director whose Board service begins between
quarterly fee payment dates will receive a pro rated award for the first
quarter.
An Outside Director can also defer all or a portion of the retainer and/or
meeting fees that would otherwise be paid to him or her in cash. Such deferred
amounts will be converted into additional Common Stock Equivalents based on the
then fair market value of the Common Stock.
As soon as practicable after an Outside Director's Board service terminates,
he or she will receive a distribution of a number of shares of Common Stock
equal to the number of Common Stock Equivalents then credited to him or her
under the Deferred Compensation Plan. Upon the death of an Outside Director, the
shares will be issued to his or her beneficiary. Upon a change in control of the
Company (as defined in the Deferred Compensation Plan), however, each Outside
Director will receive a cash payment equal to the value of his or her
accumulated Common Stock Equivalents.
The Board of Directors can amend or terminate the Deferred Compensation Plan
at any time. However, amendments must be approved by the Company's shareholders
if shareholder approval is required in order for the Deferred Compensation Plan
to meet applicable statutory or regulatory requirements.
A maximum of 50,000 shares of Common Stock will be available for issuance
under the Deferred Compensation Plan. Such shares will be authorized and
unissued shares or previously issued and outstanding shares of Common Stock
reacquired by the Company.
The Chief Financial Officer of the Company will administer the Deferred
Compensation Plan, but will have no discretion regarding the eligibility or
amount and timing of awards.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal federal income tax
consequences of the Deferred Compensation Plan based upon current federal income
tax laws. The summary is not intended to be exhaustive and, among other things,
does not describe state, local or foreign tax consequences.
Awards of Common Stock Equivalents, and amounts voluntarily deferred
pursuant to the Deferred Compensation Plan and converted into Common Stock
Equivalents, will not be taxable to the Outside Director until a distribution is
made to the Outside Director or to his or her beneficiary. An Outside Director
will recognize ordinary income in an amount equal to the amount of cash received
or the fair market value of the shares of Common Stock distributed. The Company
will be entitled to take a corresponding tax deduction for the tax year in which
the Outside Director recognizes ordinary income. Any appreciation in value of
Common Stock from the distribution date to the date the Outside Director
disposes of such Common Stock will be taxed as capital gain, short-term or
long-term, depending on the length of time the Common Stock was held.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE DEFERRED COMPENSATION PLAN.
12
<PAGE>
PROPOSAL 4 -- APPROVAL OF POLARIS INDUSTRIES INC.
EMPLOYEE STOCK PURCHASE PLAN
On January 26, 1995, the Company's Board of Directors adopted, subject to
the approval of shareholders, the Polaris Industries Inc. Employee Stock
Purchase Plan (the "Stock Purchase Plan"). A copy of the Stock Purchase Plan is
attached hereto as Annex C. The effective date of the Stock Purchase Plan is
January 1, 1997 or such earlier date as the Board of Directors may determine.
This deferred effective date is appropriate because the current organizational
structure of the Company and its affiliates would preclude broad-based
participation by employees at the present time. The amount of benefits to be
received under the Stock Purchase Plan by any particular person or group is not
determinable at this time.
DESCRIPTION OF PLAN
Under the Stock Purchase Plan, options ("Purchase Options") to purchase up
to an aggregate of 500,000 shares of Common Stock may be granted to eligible
employees. Such shares may be authorized but unissued shares or previously
issued and outstanding shares of Common Stock reacquired by the Company.
The Stock Purchase Plan is designed to help the Company in retaining and
attracting personnel of outstanding competence by rewarding them for their
achievements. The Stock Purchase Plan also is intended to encourage a sense of
proprietary interest by such personnel by providing them with a means to acquire
a shareholder interest in the Company.
The Stock Purchase Plan will be administered by a committee appointed by the
Board of Directors (the "Stock Purchase Plan Committee"). None of the members of
the Stock Purchase Plan Committee will be eligible to purchase Common Stock
under the Stock Purchase Plan. The Stock Purchase Plan Committee will establish
such rules and procedures as are necessary or advisable to administer the Stock
Purchase Plan. The interpretation and construction by the Stock Purchase Plan
Committee of any provisions of the Stock Purchase Plan will be final.
Each employee of the Company who is customarily employed on a full-time or
part-time basis and who is regularly scheduled to work more than 20 hours per
week will be eligible to participate in the Stock Purchase Plan after completing
six months of employment. An employee may not receive a Purchase Option under
the Stock Purchase Plan if, immediately after the Purchase Option is granted,
the employee would own stock possessing 5% or more of the total combined voting
power or value of all classes of stock of the Company. Approximately 2,300
employees would be eligible to participate in the Stock Purchase Plan if it were
to be implemented at the present time.
In addition, no participant will be granted a Purchase Option under the
Stock Purchase Plan or an option under any other employee stock purchase plan
maintained by the Company to the extent that the participant's right to purchase
shares of Common Stock under all such options would accrue at a rate at which
the fair market value of the shares (determined at the time the option is
granted) would exceed $25,000 for each calendar year in which any of the options
granted to such employee is outstanding at any time. Also, unless the Stock
Purchase Plan Committee otherwise determines, executive officers of the Company
will not be eligible to participate in the Stock Purchase Plan.
The Common Stock purchased under the Stock Purchase Plan will be paid for by
payroll deductions. If an employee elects to participate in the Stock Purchase
Plan, he or she must specify a percentage of base pay (up to a maximum of 10%)
which the participant wants contributed to the Stock Purchase Plan on his or her
behalf. These payroll deductions will be credited to a bookkeeping account
established in the employee's name. A participating employee may change his or
her payroll contributions as of the first day of any calendar quarter.
On the first day of each month, a participant will be deemed to have been
granted a Purchase Option for the maximum number of whole shares of Common Stock
that can be purchased at the applicable option price with the payroll deductions
credited to his account for that month. Each
13
<PAGE>
participant automatically and without any act on his or her part will be deemed
to have exercised each of his or her Purchase Options on the last day of each
month. The number of shares of Common Stock subject to each Purchase Option
equals the quotient of the balance credited to the Participant's account as of
the last day of the month divided by the option price, except that fractional
shares will not be issued. The applicable option price will be an amount equal
to 85% of the averages of the closing prices per share of Common Stock on the
New York Stock Exchange (or other stock exchange or stock quotation system on
which the Common Stock is then quoted or traded) as of the first day and the
last day of the month. Any balance remaining in a participant's account at the
end of a calendar year after payment of the option price for shares purchased
pursuant to the Stock Purchase Plan during that year will be promptly refunded
to the participant.
Shares of Common Stock purchased by a participant under the Stock Purchase
Plan will be held in trust by a trustee until withdrawn by the participant. A
participant may withdraw in whole, but not in part, from the Stock Purchase Plan
at any time. Upon such a withdrawal, all cash and shares of Common Stock
credited to the Participant's account will be promptly delivered to the
participant. A participant who withdraws from the Stock Purchase Plan will not
be eligible to participate in the Stock Purchase Plan for a period of at least
six months after the date of withdrawal.
If any participant's employment with the Company terminates for any reason,
any unexercised Purchase Option granted to such participant will terminate as of
the date of the termination of the participant's employment. The Company
promptly will refund to the participant the amount of payroll deductions then
credited to the participant's account, and will deliver to the participant one
or more stock certificates representing the number of shares of Common Stock
credited to the participant under the Plan.
Purchase Options granted under the Stock Purchase Plan will not be
transferable otherwise than by will or the laws of descent and distribution, and
will be exercisable during the participant's lifetime only by the participant.
The Board of Directors has the authority to terminate or amend the Stock
Purchase Plan, but approval by the Company's shareholders will be required to
(i) increase the number of shares issuable under the Stock Purchase Plan (other
than as provided in the next paragraph), (ii) amend the eligibility provisions
of the Stock Purchase Plan or (iii) permit members of the Stock Purchase Plan
Committee to participate. The Stock Purchase Plan will automatically terminate
at the close of business on the tenth anniversary of the effective date, unless
terminated sooner by action of the Board of Directors.
The number and kind of shares subject to, and the option price of,
outstanding Purchase Options, and the number of shares of Common Stock remaining
available for issuance under the Stock Purchase Plan, may be appropriately
adjusted to reflect the impact of certain significant events involving the
Company, such as mergers, recapitalizations, stock splits and the like.
FEDERAL INCOME TAX CONSEQUENCES
The Stock Purchase Plan is intended to be an "employee stock purchase plan"
under Section 423 of the Internal Revenue Code of 1986. The federal income tax
consequences to an employee who participates in the Stock Purchase Plan
generally are summarized below. The summary is not intended to be exhaustive
and, among other things, does not describe state, local or foreign tax
consequences.
A participant must pay Federal income and Federal Insurance Contributions
Act (FICA) taxes on amounts that are deducted from his or her pay to purchase
Common Stock under the Stock Purchase Plan. However, a participant will not be
subject to tax upon the receipt of a Purchase Option under the Stock Purchase
Plan or upon the purchase of shares of Common Stock pursuant to the Purchase
Option.
14
<PAGE>
If the participant disposes of the shares acquired pursuant to a Purchase
Option more than two years following the date of grant of the Purchase Option
and more than one year following the date of exercise of the Purchase Option,
then the amount realized upon the disposition of the shares will be taxed as
long-term capital gain; provided, however, that upon such disposition (or in the
event of the participant's death while owning the shares) the participant will
recognize as ordinary income (rather than capital gain) an amount equal to the
lesser of: (i) the difference between the fair market value of the shares as of
the date of grant of the Purchase Option and the option price paid for the
shares, or (ii) the difference between the fair market value of such shares on
the date as of which the shares were sold and the option price paid for the
shares.
If the participant disposes of the shares before the one-year and two-year
holding requirements are met, in the year of disposition he will recognize
ordinary income equal to the difference between (i) the fair market value of the
shares as of the date of exercise or the amount realized upon disposition of the
shares, whichever is less, and (ii) the option price paid for the shares. Any
additional amount realized upon disposition of the shares will be taxed as
either short-term or long-term capital gain, depending upon how long the shares
were held.
The Company will be entitled to a Federal income tax deduction with respect
to the Stock Purchase Plan only if and when a participant disposes of Common
Stock before the one and two-year holding periods are met. The amount of this
deduction will equal the amount of ordinary income that the participant
recognizes in connection with such disposition.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE STOCK PURCHASE PLAN.
NEW PLAN BENEFITS
The following table shows plan benefits that would accrue to or be allocated
to each of the five named Executive Officers, all executives as a group, all
non-executive directors as a group and all non-executive officer employees as a
group under the three plans proposed for approval at the Annual Meeting.
<TABLE>
<CAPTION>
DEFERRED
STOCK OPTION COMPENSATION STOCK
NAME AND POSITION PLAN PLAN PURCHASE PLAN
- --------------------------------------------------------------- ------------ ------------- -------------
<S> <C> <C> <C>
W. Hall Wendel, Jr.
Chairman of the Board and Chief Executive Officer * N/A *
Kenneth D. Larson
Chief Operating Officer and President * N/A *
John H. Grunewald
Executive Vice President and Chief Financial Officer * N/A *
Charles A. Baxter
Vice President -- Engineering and Product Safety * N/A *
Ed Skomoroh
Vice President -- Sales and Marketing * N/A *
Executive Group (including the five named executives above) * N/A *
Non-Executive Director Group (five persons) N/A $ 37,500** N/A
All Non-Executive Officer Employees as a Group * N/A *
<FN>
- ------------------------
* The amount of benefits to be received under the Stock Option Plan and the
Stock Purchase Plan by any particular person or group is not determinable
at this time.
</TABLE>
15
<PAGE>
<TABLE>
<S> <C>
** This represents the aggregate award date value of Common Stock equivalents
to be awarded to the group of five Outside Directors for the first four
quarterly fee payment dates following the effective date of the Deferred
Compensation Plan. Each Outside Director can also defer all or a portion of
the annual retainer that would otherwise be payable to him or her in cash
under the Deferred Compensation Plan and have such deferred amounts deemed
to be invested in Common Stock Equivalents.
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Company was formed in 1994 for purposes of converting the Partnership to
corporate form. McGladrey and Pullen, LLP are the Company's independent public
accountants for the fiscal year ended December 31, 1994 and have been the
accountants for the Company's predecessor since 1987. The Board of Directors has
not, as of the date hereof, selected independent public accountants for the
current year. Representatives of McGladrey and Pullen, LLP will be present at
the Annual Meeting, afforded an opportunity to make a statement and available to
respond to appropriate questions.
SUBMISSION OF SHAREHOLDER PROPOSALS
Any proposal of a shareholder intended to be presented at the Company's 1996
Annual Meeting of Shareholders must be received by the Secretary of the Company,
for inclusion in the Company's proxy statement relating to the 1996 Annual
Meeting, by December 1, 1995.
OTHER MATTERS
The Board of Directors knows of no business that will be presented for
consideration at the Annual Meeting other than the proposals referred to above.
Proxies in the enclosed form will be voted in respect of any other business that
is properly brought before the Annual Meeting in accordance with the judgment of
the person or persons voting the proxies.
ADDITIONAL INFORMATION
A copy of the Annual Report of the Company for the year ended December 31,
1994, has also been mailed under this cover to each shareholder. Additional
copies of the Annual Report, the Notice of Annual Meeting, this Proxy Statement
and the accompanying proxy may be obtained from John H. Grunewald, the Executive
Vice President, Chief Financial Officer and Secretary of the Company.
The Polaris Industries Inc. Annual Report on Form 10-K, on file with the
Securities and Exchange Commission, may be obtained without charge, upon request
to Polaris Industries Inc., 1225 Highway 169 North, Minneapolis, Minnesota
55441, attention: Investor Relations. Copies of exhibits to Form 10-K may be
obtained upon payment to the Company of the reasonable expense incurred in
providing such exhibits.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting, the form of proxy and other material which may be sent
to the shareholders will be borne by the Company. The Company has retained D.F.
King & Co., Inc., 77 Water Street, New York New York 10005, to aid in the
solicitation of proxies. For these services, the Company will pay D.F. King &
Co., Inc. a fee of $10,000 and reimbursement of its expenses. In addition,
directors, officers and regular employees of the Company, at no additional
compensation, may solicit proxies by telephone, facsimile, telegram or in
person. Upon request, the Company will reimburse brokers and other persons
holding
16
<PAGE>
shares of Common Stock for the benefit of others for their expenses in
forwarding proxies and accompanying material and in obtaining authorization from
beneficial owners of the Company's Common Stock to give proxies.
By Order of the Board of Directors
[LOGO]
John H. Grunewald
EXECUTIVE VICE PRESIDENT, CHIEF
FINANCIAL OFFICER
AND SECRETARY
March 30, 1995
17
<PAGE>
ANNEX A
POLARIS INDUSTRIES INC.
1995 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
The purpose of the Polaris Industries Inc. 1995 Stock Option Plan (the
"PLAN") is to promote the interest of Polaris Industries Inc. (the "COMPANY")
and its subsidiaries (the "SUBSIDIARIES") by (i) attracting and retaining
employees of outstanding ability, (ii) motivating employees, by means of
performance-related incentives, to achieve longer-range performance goals and
(iii) enabling employees to participate in the long-term growth and financial
success of the Company.
2. ADMINISTRATION
The Plan shall be administered by the Compensation Committee (the
"COMMITTEE") of the Board of Directors of the Company (the "BOARD"). The
Committee shall have the sole and absolute power, authority and discretion to
interpret the Plan, to prescribe, amend and rescind rules and regulations to
further the purposes of the Plan, and to make all other determinations necessary
for the administration of the Plan. All such actions by the Committee shall be
final and binding. To the extent permitted by law, members of the Committee
shall be indemnified and held harmless by the Company with respect to any loss,
cost, liability or expense that may be reasonably incurred in connection with
any claim, action, suit or proceeding which arises by reason of any act or
omission under the Plan so long as such act or omission is taken in good faith
and within the scope of the authority delegated herein.
3. INCENTIVE AND NONQUALIFIED STOCK OPTIONS
Awards under the Plan may be in the form of stock options ("OPTIONS") which
qualify as "incentive stock options" ("INCENTIVE STOCK OPTIONS") within the
meaning of Section 422 or any successor provision of the Internal Revenue Code
of 1986, as amended (the "CODE"), or stock options which do not so qualify
("NONQUALIFIED STOCK OPTIONS"). Each award of an Option shall be designated in
the applicable award agreement as an Incentive Stock Option or a Nonqualified
Stock Option, as appropriate.
4. SHARES SUBJECT TO THE PLAN
Options in respect of an aggregate of up to 900,000 shares of the Common
Stock of the Company, par value $.01 per share (the "COMMON STOCK"), shall be
available for award under the Plan. In any calendar year during the term of this
Plan, no employee shall be awarded Options in respect of more than 400,000
shares of Common Stock. No more than 900,000 shares of Common Stock may be
issued pursuant to Incentive Stock Option awards. If any Option shall cease to
be exercisable in whole or in part for any reason, the shares which were covered
by such Option but as to which the Option had not been exercised shall again be
available under the Plan. Shares issuable under the Plan shall be made available
from authorized and unissued shares or previously issued and outstanding shares
of Common Stock reacquired by the Company.
5. PARTICIPANTS; OPTION AWARDS
The Committee shall determine and designate from time to time those
employees of the Company and the Subsidiaries who shall be awarded Options under
the Plan and the number of shares of Common Stock to be covered by each such
Option. In making its determinations, the Committee shall take into account the
present and potential contributions of the respective employees to the success
of the Company and the Subsidiaries, and such other factors as the Committee
shall deem relevant in connection with accomplishing the purposes of the Plan.
Each Option award shall be evidenced by an award agreement in such form as the
Committee shall approve from time to time.
6. FAIR MARKET VALUE
For all purposes under the Plan, the term "FAIR MARKET VALUE" shall mean, as
of any applicable date: (i) if the Common Stock is listed on a national
securities exchange or is authorized for quotation
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on the National Association of Securities Dealers Inc.'s NASDAQ National Market
System ("NASDAQ/NMS"), the closing price, regular way, of the Common Stock on
such exchange or NASDAQ/NMS, as the case may be, or if no such reported sale of
the Common Stock shall have occurred on such date, on the next preceding date on
which there was such a reported sale; or (ii) if the Common Stock is not listed
for trading on a national securities exchange or authorized for quotation on
NASDAQ/NMS, the closing bid price as reported by the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), or if no such prices
shall have been so reported for such date, on the next preceding date for which
such prices were so reported; or (iii) if the Common Stock is not listed for
trading on a national securities exchange or authorized for quotation on NASDAQ,
the last reported bid price published in the "pink sheets" or displayed on the
NASD Electronic Bulletin Board, as the case may be; or (iv) if the Common Stock
is not listed for trading on a national securities exchange, or is not
authorized for quotation on NASDAQ/NMS or NASDAQ, or is not published in the
"pink sheets" or displayed on the NASD Electronic Bulletin Board, the Fair
Market Value of the Common Stock as determined in good faith by the Committee.
7. EXERCISE PRICE
Options shall be granted at an exercise price of not less than 100% of the
Fair Market Value of the underlying shares of Common Stock on the date of grant;
provided, however, that Incentive Stock Options granted to a participant who at
the time of such grant owns (within the meaning of Section 424(d) of the Code)
more than ten percent of the total combined voting power of all classes of stock
of the Company or its parent or subsidiary corporation (a "10% HOLDER") shall be
granted at an exercise price of not less 110% of the Fair Market Value of the
underlying shares of Common Stock on the date of grant.
8. OPTION PERIOD
The Committee shall determine the period or periods of time within which
Options may be exercised by participants, in whole or in part, provided,
however, that the term of an Option shall not exceed ten years from the date of
grant; and provided further, however, that the term of an Incentive Stock Option
granted to a 10% Holder shall not exceed five years from the date of grant.
9. OTHER TERMS AND CONDITIONS
The Committee shall have the discretion to determine terms and conditions,
consistent with this Plan, that will be applicable to Options granted hereunder.
Options granted to the same or different participants, or at the same or
different times, need not contain similar provisions. The aggregate Fair Market
Value (determined on the date of grant) of Common Stock with respect to which
Incentive Stock Options granted to a participant become exercisable for the
first time in any single calendar year shall not exceed $100,000. The Committee
shall have the discretion to accelerate the exercise date of an Option whenever
it decides, in its absolute discretion, that such action is in the best
interests of the Company and is equitable to the participant.
10. PAYMENT FOR COMMON STOCK
Full payment for shares of Common Stock purchased upon the exercise of the
Option shall be made at the time the Option is exercised in whole or in part.
Payment of the purchase price shall be made in cash or in such other form as the
Committee may approve in the applicable award agreement, including, without
limitation, payment in accordance with a cashless exercise program under which,
if so instructed by the participant, shares may be issued directed to the
participant's broker or dealer upon receipt of the purchase price in cash from
the broker or dealer, or by the delivery to the Company by the participant of
(i) a full recourse promissory note containing such terms as the Committee may
determine or (ii) shares of Common Stock that have been held by the participant
for at least six months prior to exercise of the Option, valued at the Fair
Market Value of such shares on the date of exercise; provided, however, that if
payment is made pursuant to clause (i), the par value of the purchased shares
shall be paid in cash. No shares of Common Stock shall be issued to the
participant until such payment has been made, and a participant shall have none
of the rights of a stockholder with respect to Options held except to the extent
such Options have been exercised.
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11. TERMINATION OF OPTIONS
Unless otherwise determined by the Committee and provided in the applicable
award agreement or an amendment thereto, a participant shall be entitled to
exercise the participant's Options, to the extent such Options were exercisable
on the date of termination, for a period of (a) 30 days (but not after the
scheduled expiration date of such Options) following the date of termination of
the participant's employment for any reason other than the participant's
disability (within the meaning of Section 22(e)(3) of the Internal Revenue
Code), death or retirement on or after his normal retirement age in accordance
with the Company's retirement policy for officers and/or employees, as
appropriate, and (b) one year (but not after the scheduled expiration date of
such Options) following the date of termination of employment by reason of the
participant's disability (within the meaning of Section 22(e)(3) of the Internal
Revenue Code), death or retirement on or after his normal retirement age in
accordance with the Company's retirement policy for employees; provided,
however, that an Incentive Stock Option shall not be exercisable more than three
months after the participant's retirement.
12. EFFECT OF CHANGE IN STOCK SUBJECT TO THE PLAN
In the event of any subdivision or combination of the outstanding shares of
Common Stock, stock dividend, recapitalization, reclassification of shares,
sale, lease or transfer of substantially all of the assets of the Company,
substantial distributions to stockholders, merger, consolidation or other
corporate transactions which would result in a substantial dilution or
enlargement of the rights or economic benefits inuring to participants
hereunder, the Committee shall make such equitable adjustments as it may deem
appropriate in the Plan and the outstanding Options, including, without
limitation, any adjustment in the total number of shares of Common Stock which
may thereafter be available under the Plan.
13. NONASSIGNABILITY
Options shall not be transferable other than by will or the laws of descent
and distribution and are exercisable during participant's lifetime only by the
participant.
14. WITHHOLDING
The Company shall have the right to deduct from all amounts paid to a
participant in cash as salary, bonus or other compensation any taxes required by
law to be withheld in respect of Options under this Plan. In the Committee's
discretion, a participant may be permitted to elect to have withheld from the
shares otherwise issuable to the participant upon exercise of an Option, or to
tender to the Company, the number of shares of Common Stock whose Fair Market
Value equals the amount required to be withheld.
15. CONSTRUCTION OF THE PLAN
The validity, construction, interpretation, administration and effect of the
Plan and of its rules and regulations, and rights relating to the Plan, shall be
determined solely in accordance with the laws of the State of Minnesota, other
than the conflict of law provisions of such laws.
16. AMENDMENT
The Board may, by resolution, amend or revise the Plan, except that such
action shall not be effective without stockholder approval if such stockholder
approval is required to maintain the compliance of the Plan and/or awards
granted hereunder with Rule 16b-3 of the Securities and Exchange Commission or
the deductibility limits of Section 162(m) of the Code. The Board may not alter
or impair any Options previously granted under the Plan without the consent of
the holders thereof, except in accordance with the provisions of Paragraph 12.
17. EFFECTIVE DATE; TERMINATION OF PLAN
The Plan shall become effective on the date on which it is adopted by the
Board of Directors, subject to the approval of the Plan the stockholders of the
Company. The Plan shall terminate on the tenth anniversary of the effective
date, unless it is sooner terminated by the Board. The Board may terminate the
Plan at any time, in whole or in part, in its sole discretion. Termination of
the Plan shall not affect Options previously granted under the Plan.
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ANNEX B
POLARIS INDUSTRIES INC.
DEFERRED COMPENSATION PLAN FOR DIRECTORS
SECTION 1. INTRODUCTION
1.1 ESTABLISHMENT. Polaris Industries Inc., a Minnesota corporation (the
"Company"), hereby establishes the Polaris Industries Inc. Deferred Compensation
Plan for Directors (the "Plan") for those directors of the Company who are
neither officers nor employees of the Company. The Plan provides (i) for the
grant of awards in the form of Common Stock Equivalents to Directors and (ii)
the opportunity for Directors to defer receipt of all or a part of their cash
compensation and thereby be credited with additional Common Stock Equivalents.
1.2 PURPOSES. The purposes of the Plan are to align the interests of
Directors more closely with the interests of other shareholders of the Company,
to encourage the highest level of Director performance by providing the
Directors with a direct interest in the Company's attainment of its financial
goals, and to provide a financial incentive that will help attract and retain
the most qualified Directors.
1.3 EFFECTIVE DATE. This Plan shall be effective upon approval of the Plan
by a vote of a majority of shares of Stock represented in person or by proxy at
an annual meeting of the Company's shareholders.
SECTION 2. DEFINITIONS
2.1 DEFINITIONS. The following terms shall have the meanings set forth
below:
(a) "Board" means the Board of Directors of the Company.
(b) "Change in Control" means any of the events set forth below:
(i) The acquisition in one or more transactions, other than from the
Company, by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
a number of voting securities of the Company in excess of 30% of the
voting securities of the Company unless such acquisition has been
approved by the Board; or
(ii) Any election has occurred of persons to the Board that causes
two-thirds of the Board to consist of persons other than (A) persons who
were members of the Board on the effective date of the Plan and (B)
persons who were nominated for elections as members of the Board at a
time when two-thirds of the Board consisted of persons who were members
of the Board on the effective date of the Plan; provided, however, that
any person nominated for election by a Board at least two-thirds of whom
constituted persons described in clauses (A) and/or (B) or by persons who
were themselves nominated by such Board shall, for this purpose, be
deemed to have been nominated by a Board composed of persons described in
clause (A); or
(iii) Approval by the stockholders of the Company of a reorganization,
merger or consolidation, unless, following such reorganization, merger or
consolidation, all or substantially all of the individuals and entities
who were the respective beneficial owners of the voting securities of the
Company immediately prior to such reorganization, merger or
consolidation, following such reorganization, merger or consolidation
beneficially own, directly or indirectly, more than 60% of the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors of the entity resulting from such
reorganization, merger or consolidation in substantially the same
proportion as their ownership of the voting securities of the Company
immediately prior to such reorganization, merger of consolidation, as the
case may be; or
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(iv) Approval by the stockholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) a sale or other
disposition of all or substantially all the assets of the Company.
(c) "Chief Financial Officer" means the Chief Financial Officer of the
Company.
(d) "Common Stock Equivalent" means a hypothetical share of Stock which
shall have a value on any date equal to the Fair Market Value of one share
of Stock on that date.
(e) "Common Stock Equivalent Award" means an award of Common Stock
Equivalents granted to a Director pursuant to Section 5.1 of the Plan.
(f) "Deferred Stock Account" means the bookkeeping account established
by the Company in respect to each Director pursuant to Section 5.4 hereof
and to which shall be credited Common Stock Equivalents pursuant to the
Plan.
(g) "Director" means a member of the Board who is neither an officer nor
an employee of the Company. For purposes of the Plan, an employee is an
individual whose wages are subject to the withholding of federal income tax
under section 3401 of the Internal Revenue Code, and an officer is an
individual elected or appointed by the Board or chosen in such other manner
as may be prescribed in the Bylaws of the Company to serve as such.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
(i) "Fair Market Value" means as of any applicable date: (i) if the
Stock is listed on a national securities exchange or is authorized for
quotation on the National Association of Securities Dealers Inc.'s NASDQ
National Market System ("NASDQ/NMS"), the closing price, regular way, of the
Stock on such exchange or NASDAQ/NMS, as the case may be, or if no such
reported sale of the Stock shall have occurred on such date, on the next
preceding date on which there was such a reported sale; or (ii) if the Stock
is not listed for trading on a national securities exchange or authorized
for quotation on NASDAQ/NMS, the closing bid price as reported by the
National Association of Securities Dealers Automated Quotation System
("NASDAQ"), or if no such prices shall have been so reported for such date,
on the next preceding date for which such prices were so reported; or (iii)
if the Stock is not listed for trading on a national securities exchange or
authorized for quotation on NASDAQ, the last reported bid price published in
the "pink sheets" or displayed on the NASD Electronic Bulletin Board, as the
case may be; or (iv) if the Stock is not listed for trading on a national
securities exchange, or is not authorized for quotation on the NASD
Electronic Bulletin Board, the Fair Market Value of the Stock as determined
in good faith by the Chief Financial Officer.
(j) "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(k) "Stock" means the $.01 par value common stock of the Company.
(l) "Quarterly Payment Date" means each of the four dates each year on
which the Company pays retainer fees to Directors.
2.2 GENDER AND NUMBER. Except when otherwise indicated by the context, the
masculine gender shall also include the feminine gender, and the definitions of
any term herein in the singular shall also include the plural.
SECTION 3. PLAN ADMINISTRATION
The Plan shall be administered by the Chief Financial Officer. Subject to
the limitations of the Plan, the Chief Financial Officer shall have the sole and
complete authority: (i) to impose such limitations, restrictions and conditions
upon such awards as he or she shall deem appropriate, (ii) to interpret the Plan
and to adopt, amend and rescind administrative guidelines and other rules and
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regulations relating to the Plan and (iii) to make all other determinations and
to take all other actions necessary or advisable for the implementation and
administration of the Plan. Notwithstanding the foregoing, the Chief Financial
Officer shall have no authority, discretion or power to select the Directors who
will receive awards pursuant to the Plan, determine the awards to be granted
pursuant to the Plan, the number of shares of Stock to be issued thereunder or
the time at which such awards are to be granted, established the duration and
nature of awards or alter any other terms or conditions specified in the Plan,
except in the sense of administering the Plan subject to the provisions of the
Plan. The Chief Financial Officer's determinations on matters within his or her
authority shall be conclusive and binding upon the Company and other persons.
The Plan shall be interpreted and implemented in a manner so that Directors will
not fail, by reason of the Plan or its implementation, to be "disinterested
persons" within the meaning of Rule 16b-3 under Section 16 of the Exchange Act,
as such rule may be amended.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. There shall be authorized for issuance under the
Plan in accordance with the provisions of the Plan 50,000 shares of Stock. This
authorization may be increased from time to time by approval of the Board and by
the shareholders of the Company if such shareholder approval is required. The
Company shall at all times during the term of the Plan retain as authorized and
unissued Stock at least the number of shares from time to time required under
the provisions of the Plan, or otherwise assure itself of its ability to perform
its obligations hereunder. The shares of Stock issuable hereunder shall be
authorized and unissued shares or previously issued and outstanding shares of
Common Stock reacquired by the Company.
4.2 OTHER SHARES OF STOCK. Any shares of Stock that are subject to a
Common Stock Equivalent and for any reason are not issued to a Director shall
automatically become available again for use under the Plan.
4.3 ADJUSTMENTS UPON CHANGES IN STOCK. If there shall be any change in the
Stock of the Company, through merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, spinoff, split up, dividend in
kind or other change in the corporate structure or distribution to the
shareholders, appropriate adjustments shall be made by the Chief Financial
Officer (or if the Company is not the surviving corporation in any such
transaction, the board of directors of the surviving corporation) in the
aggregate number and kind of shares subject to the Plan, and the number and kind
of shares which may be issued under the Plan. Appropriate adjustments may also
be made by the Chief Financial Officer in the terms of Common Stock Equivalents
under the Plan to reflect such changes and to modify any other terms of
outstanding awards on an equitable basis as the Chief Financial Officer in his
or her discretion determines.
SECTION 5. COMMON STOCK EQUIVALENT AWARDS
5.1 GRANTS OF COMMON STOCK EQUIVALENT AWARDS. Common Stock Equivalents
having a Fair Market Value on the date of grant equal to $1,250 shall be granted
automatically, as of each Quarterly Payment Date, to each Director who is
entitled to receive a retainer fee on such date; provided, however, that in the
case of the first Quarterly Payment Date applicable to any person who is a
Director on the date the Plan becomes effective, $3,750 shall be substituted for
$1,250 in the foregoing provision. If a person becomes a member of the Board
between Quarterly Payment Dates, whether by action of the shareholders of the
Company or the Board, such person shall be granted automatically, as of the date
his or her Board service commences, a pro rata Common Stock Equivalent Award
equal to a full Award (determined pursuant to the immediately preceding sentence
as if the date such Director began serving on the Board was a Quarterly Payment
Date) multiplied by a fraction (not in excess of 1.0), the numerator of which is
the number of days during the period beginning with the date upon which such
Director commences Board service and ending with the next following Quarterly
Payment Date, and the denominator of which is the total number of days during
the period beginning on the Quarterly Payment Date immediately preceding the
commencement of Board service by the Director and ending on the next following
Quarterly Payment Date.
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5.2 DEFERRAL ELECTIONS. A Director may elect to defer receipt of all or a
specified portion of the annual retainer and/or meeting fees otherwise payable
in cash to the Director for serving on the Board or any committee thereof. A
Director may make the elections permitted hereunder by giving written notice to
the Company in a form approved by the Chief Financial Officer. The notice shall
include: (i) the percentage of meeting fees or annual retainer to be deferred,
and (ii) the time as of which deferral is to commence. Amounts deferred by a
Director pursuant to this Section 5.2 shall be converted into Common Stock
Equivalents in accordance with Section 5.4.
5.3 TIME FOR ELECTING DEFERRAL. Any election to defer annual retainer
and/or meeting fees shall be made prior to the date such fees are earned by the
Director. Any subsequent election to (i) alter the portion of such amounts
deferred or (ii) revoke an election to defer such amounts, must be made no later
than six months prior to the time such compensation is earned by the Director
and credited to the Director's Deferred Stock Account pursuant to Section 5.4
hereof.
5.4 DEFERRED STOCK ACCOUNTS. A Deferred Stock Account shall be established
for each Director. Fees deferred by a Director shall be credited to such Account
as of the date such amounts would have otherwise been paid in cash to the
Director, and shall be converted, based on Fair Market Value as of the date such
amounts would have otherwise been paid in cash to the Director, into additional
Common Stock Equivalents. A Director's Deferred Stock Account shall also be
credited with dividends and other distributions pursuant to Section 5.5.
5.5 HYPOTHETICAL DIVIDENDS ON COMMON STOCK EQUIVALENTS. Dividends and
other distributions on Common Stock Equivalents shall be deemed to have been
paid as if such Common Stock Equivalents were actual shares of Stock issued and
outstanding on the respective record or distribution dates. Common Stock
Equivalents shall be credited to the Deferred Stock Account in respect of cash
dividends and any other securities or property issued on the Stock in connection
with reclassifications, spinoffs and the like on the basis of the value of the
dividend or other asset distributed and the Fair Market Value of the Common
Stock Equivalents on the date of the announcement of the dividend or asset
distribution, all at the same time and in the same amount as dividends or other
distributions are paid or issued on the Stock. Fractional shares shall be
credited to a Director's Deferred Stock Account cumulatively but the balance of
shares of Common Stock Equivalents in a Director's Deferred Stock Account shall
be rounded to the next highest whole share for any payment to such Director
pursuant to Section 5.7 hereof.
5.6 STATEMENT OF ACCOUNTS. A statement will be sent to each Director as to
the balance of his or her Deferred Stock Account at least once each calendar
year.
5.7 PAYMENT OF ACCOUNTS. A Director shall receive a distribution of his or
her Deferred Stock Account as soon as practicable following his or her
termination of services as a Director. Such distribution shall consist of one
share of Stock for each Common Stock Equivalent credited to such Director's
Deferred Stock Account as of the Quarterly Payment Date immediately preceding
the date of distribution.
5.8 PAYMENTS TO A DECEASED DIRECTOR'S ESTATE. In the event of a Director's
death before the balance of his or her Deferred Stock Account is fully paid to
him, payment of the balance of the Director's Deferred Stock Account shall then
be made to his estate in the time and manner selected by the Chief Financial
Officer in the absence of a designation of a beneficiary pursuant to Section 5.9
hereof. The Chief Financial Officer may take into account the application of any
duly appointed administrator or executor of a Director's estate and direct that
the balance of the Director's Deferred Stock Account be paid to his estate in
the manner requested by such application.
5.9 DESIGNATION OF BENEFICIARY. A Director may designate a beneficiary on
a form approved by the Chief Financial Officer.
5.10 CHANGE IN CONTROL. Notwithstanding any provision of this Plan to the
contrary, in the event a Change in Control of the Company occurs, within ten
(10) days of the date of such Change in Control, each Director shall receive a
lump sum distribution in cash equal to the value of all Common
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Stock Equivalents credited to such Director's Deferred Stock Account as of the
Quarterly Payment Date immediately preceding the date of distribution (based
upon the highest Fair Market Value during the 30 days immediately preceding the
Change in Control).
SECTION 6. ASSIGNABILITY
The right to receive payments or distributions hereunder shall not be
transferable or assignable by a Director other than by will or the laws of
descent and distribution.
SECTION 7. PLAN TERMINATION, AMENDMENT AND MODIFICATION
The Plan shall automatically terminate at the close of business on the tenth
anniversary of the effective date unless sooner terminated by the Board. The
Board may at any time terminate, and from time to time may amend or modify the
Plan, provided, however, that no amendment or modification may become effective
without approval of the amendment or modification by the shareholders if
shareholder approval is required to enable the Plan to satisfy any applicable
statutory or regulatory requirements, and, provided further that no amendment or
modification shall be made more than once every six months that would change the
amount, price or timing of the Common Stock Equivalent Awards, other than to
comport with changes in the Internal Revenue Code, the Employee Retirement
Income Security Act of 1974, as amended, or the rules promulgated thereunder.
SECTION 8. GOVERNING LAW
The Plan and all agreements hereunder shall be construed in accordance with
and governed by the laws of the State of Minnesota.
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ANNEX C
POLARIS INDUSTRIES INC.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I -- PURPOSE
1.01 PURPOSE
The Polaris Industries Inc. Employee Stock Purchase Plan (the "PLAN") is
intended to provide a method whereby employees of Polaris Industries Inc. and
its subsidiary corporations (the "COMPANY") will have an opportunity to acquire
a proprietary interest in the Company through the purchase of shares of the
common stock, par value $.01 per share ("COMMON STOCK") of the Company. It is
the intention of the Company to have the Plan qualify as an "employee stock
purchase plan" under section 423 of the Internal Revenue Code of 1986, as
amended (the "CODE"). The provisions of the Plan shall be construed so as to
extend and limit participation in a manner consistent with the requirements of
that section of the Code.
ARTICLE II -- DEFINITIONS
2.01 BASE PAY
"Base Pay" shall mean a participant's wages, salary and other cash
remuneration from the Company. The term "Base Pay" is intended to coincide with
the definition of "Covered Compensation" as defined in the 401(k)
Retirement/Savings Plan of Polaris.
2.02 COMMITTEE
"Committee" shall mean the committee described in Article IX.
2.03 EMPLOYEE
"Employee" shall mean any person who is customarily employed on a full-time
or part-time basis by the Company or a Participating Subsidiary and is regularly
scheduled to work more than 20 hours per week.
2.04 FAIR MARKET VALUE
"Fair Market Value" shall mean, as of any applicable date: (i) if the Common
Stock is listed on a national securities exchange or is authorized for quotation
on the National Association of Securities Dealers Inc.'s NASDAQ National Market
System ("NASDAQ/NMS"), the closing price, regular way, of the Common Stock on
such exchange or NASDAQ/NMS, as the case may be, or if no such reported sale of
the Common Stock shall have occurred on such date, on the next preceding date on
which there was such a reported sale; or (ii) if the Common Stock is not listed
for trading on a national securities exchange or authorized for quotation on
NASDAQ/NMS, the closing bid price as reported by the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), or if no such prices
shall have been so reported for such date, on the next preceding date for which
such prices were so reported; or (iii) if the Common Stock is not listed for
trading on a national securities exchange or authorized for quotation on NASDAQ,
the last reported bid price published in the "pink sheets" or displayed on the
NASD Electronic Bulletin Board, as the case may be; or (iv) if the Common Stock
is not listed for trading on a national securities exchange, or is not
authorized for quotation on NASDAQ/NMS or NASDAQ, or is not published in the
"pink sheets" or displayed on the NASD Electronic Bulletin Board, the Fair
Market Value of the Common Stock as determined in good faith by the Committee.
2.05 FUND ACCOUNT
"Fund Account" shall mean the bookkeeping account established for each
participant to which the participant's payroll deductions shall be credited.
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2.06 INVESTMENT ACCOUNT
"Investment Account" shall mean the bookkeeping account established for each
participant to which Common Stock purchased by the participant under the Plan
shall be credited.
2.07 PARTICIPATING SUBSIDIARY
"Participating Subsidiary" shall mean any corporation which (i) is a
"subsidiary corporation" of Polaris as that term is defined in section 424 of
the Code and (ii) is designated as a participating employer under the Plan by
the Board of Directors of the Company.
2.08 TRUSTEE
"Trustee" shall mean the person(s) or institution designated by the Board of
Directors of the Company as trustee of the Plan, and any successors thereto.
ARTICLE III -- ELIGIBILITY AND PARTICIPATION
3.01 INITIAL ELIGIBILITY
Any Employee who shall have completed six months of employment with the
Company or a Participating Subsidiary and shall be employed by the Company or a
Participating Subsidiary on the date his or her participation in the Plan is to
become effective shall be eligible to participate in the Plan for calendar
months which commence on or after such six month period is completed.
3.02 RESTRICTIONS ON PARTICIPATION
Notwithstanding any provisions of the Plan to the contrary, no Employee
shall be granted an option under the Plan:
(a) if, immediately after the grant, such Employee would own stock,
and/or hold outstanding options to purchase stock, possessing 5% or more of
the total combined voting power or value of all classes of stock of the
Company (for purposes of this paragraph, the rules of section 424(d) of the
Code shall apply in determining stock ownership of any Employee); or
(b) which permits his or her rights to purchase stock under all Code
section 423 employee stock purchase plans of the Company to accrue at a rate
which exceeds $25,000 in fair market value of the stock (determined at the
time such option is granted) for each calendar year in which such option is
outstanding; or
(c) if such Employee is an officer of the Company for purposes of
section 16 of the Securities Exchange Act of 1934, as amended, unless the
Committee, in its sole discretion, determines that such officers shall be
eligible to participate in the Plan.
3.03 COMMENCEMENT OF PARTICIPATION
An eligible Employee may become a participant by completing an authorization
for a payroll deduction on the form provided by the Company and filing it with
the office of the Treasurer of the Company. Participation in the Plan and
payroll deductions for a participant shall commence on the first day of the
month following the date his or her authorization for a payroll deduction is
filed. A participant's payroll deduction authorization shall remain in effect
unless amended or terminated by the participant as provided in Section 4.03 or
Article VII.
3.04 SPECIAL PARTICIPATION WITH RESPECT TO PROFIT SHARING DISTRIBUTION
With the approval of the Committee, eligible Employees may be permitted to
participate in the Plan on a separate basis with respect to the participant's
distribution from the Polaris Industries Inc. Profit Sharing Plan (in addition
to any level of participation pursuant to the eligible Employee's regular
payroll deduction election) by completing an authorization for a deduction from
the profit sharing distribution on the form provided by the Company and filing
it with the office of the Treasurer of the Company on or before the date set
therefor by the Committee. References herein to "payroll" deductions shall be
deemed to include any amounts deducted from a participant's profit sharing
distribution.
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ARTICLE IV -- PAYROLL DEDUCTIONS
4.01 AMOUNT OF DEDUCTION
At the time a participant files his authorization for payroll deduction, he
or she shall elect to have deductions made from his or her Base Pay on each
payday during the time he or she is a participant computed as a percentage of
his Base Pay, not to exceed a maximum of ten percent.
4.02 PARTICIPANT'S FUND ACCOUNT
All payroll deductions made for a participant shall be credited to a Fund
Account established in his or her name under the Plan. A participant may not
make any separate cash payment into such account. No interest shall be credited
or paid on amounts credited to participants' Fund Accounts under the Plan.
4.03 CHANGES IN PAYROLL DEDUCTIONS
A participant may discontinue his participation in the Plan as provided in
Article VII, and may change his or her payroll deduction percentage as of the
first day of any calendar quarter.
ARTICLE V -- OPTIONS
5.01 NUMBER OF OPTIONS
On the first day of each month, a participant shall be deemed to have been
granted an option to purchase a maximum number of whole shares of Common Stock
as can be purchased at the applicable option price (as described in Section
5.02) with payroll deductions credited to his or her Fund Account during such
month.
5.02 OPTION PRICE
The option price of Common Stock purchased with payroll deductions made for
a participant shall be 85% of the average of the Fair Market Values of the
Common Stock on the date such option is granted (as set forth in Section 5.01)
and the date such option is exercised (as set forth in Section 6.01).
5.03 OPTION PERIOD
All options which shall be deemed granted under Section 5.01 of this Plan as
of the first day of a month shall be automatically exercised in accordance with
Section 6.01 unless sooner terminated in accordance with Article VII.
ARTICLE VI -- EXERCISE OF OPTIONS
6.01 AUTOMATIC EXERCISE
Unless a participant sooner withdraws from the Plan as provided in Article
VII, his option for the purchase of Common Stock with payroll deductions
credited to his or her Fund Account will be deemed to have been exercised
automatically on the last day of each calendar month, for the purchase from the
Company of the number of whole shares of Common Stock which the accumulated
payroll deductions credited to his or her Fund Account at that time will
purchase at the applicable option price (but not in excess of the number of
shares for which options have been granted to the participant pursuant to
Section 5.01). Any excess amount credited to a participant's Fund Account at the
end of the calendar year will be promptly returned to him or her.
6.02 FRACTIONAL SHARES
The shares of Common Stock purchased by a participant upon the deemed
exercise of his option as specified above shall not include fractional shares.
Amounts credited to a participant's Fund Account which would have been used to
purchase fractional shares shall remain credited to such Fund Account until
subsequently used to purchase shares or paid to the participant or his or her
beneficiary in accordance with Section 6.01 or Article VII.
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6.03 INVESTMENT ACCOUNTS
All shares of Common Stock purchased under the Plan shall be maintained by
the Trustee in separate Investment Accounts for participants. All cash dividends
paid with respect to the shares so purchased shall be reinvested in Common Stock
and added to the shares held for a participant in his or her Investment Account.
ARTICLE VII -- WITHDRAWAL
7.01 IN GENERAL
A participant may withdraw payroll deductions credited to his or her Fund
Account and the shares of Common Stock credited to his or her Investment Account
under the Plan at any time by giving written notice of withdrawal to the
Treasurer of the Company. All of the cash credited to his or her Fund Account
and not used to buy Common Stock shall be paid to the participant and one or
more stock certificates representing the shares of Common Stock credited to his
or her Investment Account shall be delivered to the participant promptly after
receipt of his or her notice of withdrawal, and no further payroll deductions
will be made from his or her pay except as provided in Section 7.02. Upon such a
withdrawal, all unexercised options of the participant shall immediately
terminate.
7.02 EFFECT ON SUBSEQUENT PARTICIPATION
If a participant withdraws from participation in the Plan as provided in
Section 7.01, such participant shall not be eligible to participate in the Plan
for a period of time following the date of such withdrawal. If the withdrawal
occurs during the period from January 1 to June 30 of a year, participation may
begin again no earlier than January 1 of the next year. If the withdrawal occurs
during the period from July 1 to December 31 of a year, participation may begin
again no earlier than July 1 of the next year.
7.03 TERMINATION OF EMPLOYMENT
Upon termination of the participant's employment for any reason, including
retirement, his or her unexercised options shall immediately terminate and the
payroll deductions credited to his or her Fund Account and not used to buy
Common Stock will be paid to him or her, and one or more stock certificates
representing the shares of Common Stock credited to his or her Investment
Account will be delivered to the participant, or, in the case of his or her
death subsequent to the termination of his employment, to the person or persons
entitled thereto under Section 10.01.
ARTICLE VIII -- COMMON STOCK
8.01 MAXIMUM NUMBER OF SHARES
The maximum number of shares of Common Stock which the Company shall have
authority to issue under this Plan, subject to adjustment upon changes in
capitalization of the Company as provided in Section 10.04, shall be 500,000
shares. Such shares may be authorized but unissued shares or reacquired shares
of Common Stock, as the Company shall determine. If the total number of shares
for which options are exercised on any exercise date exceeds the maximum number
of shares available, the Company shall make a pro rata allocation of the shares
available for delivery and distribution in as nearly a uniform manner as shall
be practicable and as it shall determine to be equitable, and the balance of
payroll deductions credited to the Fund Account of each participant under the
Plan shall be returned to him or her as promptly as possible.
8.02 PARTICIPANT'S INTEREST IN OPTION STOCK
The participant will have no interest in Common Stock covered by his or her
option until such option has been exercised.
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8.03 REGISTRATION OF STOCK
Shares of Common Stock purchased under the Plan will be held by the Trustee
for the benefit of participants, until withdrawn by the participant in
accordance with Article VII. Upon such withdrawal, the shares shall be
registered in the name of the participant, or, if the participant so directs by
written notice to the Treasurer of the Company, in the names of the participant
and one such other person as may be designated by the participant, as joint
tenants with rights of survivorship or as tenants by the entireties, to the
extent permitted by applicable law.
8.04 RESTRICTIONS ON EXERCISE
The Board of Directors of the Company may, in its discretion, require as
conditions to the exercise of any option that the shares of Common Stock
reserved for issuance upon the exercise of the option shall have been duly
listed, upon official notice of issuance, on a stock exchange, and that either:
(a) a Registration Statement under the Securities Act of 1933, as
amended, with respect to said shares shall be effective, or
(b) the participant shall have represented at the time of purchase, in
form and substance satisfactory to the Company, that it is his or her
intention to purchase the shares for investment and not for resale or
distribution.
ARTICLE IX -- ADMINISTRATION
9.01 APPOINTMENT OF COMMITTEE
The Board of Directors of the Company shall appoint a Committee to
administer the Plan. No member of the Committee shall be eligible to purchase
Common Stock under the Plan.
9.02 AUTHORITY OF COMMITTEE
Subject to the express provisions of the Plan, the Committee shall have
plenary authority in its sole and absolute discretion to interpret and construe
any and all provisions of the Plan, to adopt rules and regulations for
administering the Plan, and to make all other determinations deemed necessary or
advisable for administering the Plan. The Committee's determination on the
foregoing matters shall be conclusive.
9.03 RULES GOVERNING THE ADMINISTRATION OF THE COMMITTEE
The Board of Directors of the Company may from time to time appoint members
of the Committee in substitution for or in addition to members previously
appointed and may fill vacancies, however caused, in the Committee. The
Committee may select one of its members as its Chairman and shall hold its
meetings at such times and places as it shall deem advisable and may hold
telephonic meetings. A majority of the members of the Committee shall constitute
the vote of a quorum. All determinations of the Committee shall be made by a
majority of its members present. The Committee may correct any defect or
omission or reconcile any inconsistency in the Plan, in the manner and to the
extent it shall deem desirable. Any decision or determination reduced to writing
and signed by a majority of the members of the Committee shall be as fully
effective as if it had been made by a majority vote at a meeting duly called and
held. The Committee may appoint a secretary and shall make such rules and
regulations for the conduct of its business as it shall deem advisable.
ARTICLE X -- MISCELLANEOUS
10.01 DESIGNATION OF BENEFICIARY
A participant may file a written designation of a beneficiary who is to
receive any cash and shares of Common Stock credited to the participant's
Investment and Fund Accounts upon the participant's death. Such designation of
beneficiary may be changed by the participant at any time by written notice to
the Treasurer of the Company. Upon the death of a participant and upon receipt
by the Company of proof of identity and existence at the participant's death of
a beneficiary validly designated by him under the Plan, the Company shall
deliver such cash and shares of Common Stock to such beneficiary.
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In the event of the death of a participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such
participant's death, the Company shall deliver such cash and shares of Common
Stock to the executor or administrator of the estate of the participant, or if
no such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such cash and shares of
Common Stock to the spouse or to any one or more dependents of the participant
as the Company may designate. No beneficiary shall, prior to the death of the
participant by whom he has been designated, acquire any interest in the cash and
shares of Common Stock credited to the participant under the Plan.
10.02 TRANSFERABILITY
During a participant's lifetime, his or her options can only be exercised by
him or her. Neither the amounts credited to a participant's Fund Account nor any
rights with regard to the exercise of an option or to receive stock under the
Plan may be assigned, transferred, pledged, or otherwise disposed of in any way
by the participant other than by will or the laws of descent and distribution.
Any such attempted assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
withdraw funds in accordance with Section 7.01.
10.03 USE OF FUNDS
All payroll deductions received or held by the Company under this Plan may
be used by the Company for any corporate purpose and the Company shall not be
obligated to segregate such amounts.
10.04 ADJUSTMENT UPON CHANGES IN CAPITALIZATION
(a) If the outstanding shares of Common Stock are increased, decreased,
changed into, or been exchanged for a different number or kind of shares or
securities of the Company through reorganization, merger recapitalization,
reclassification, stock split, reverse stock split or similar transaction,
appropriate and proportionate adjustments may be made by the Committee in the
number and/or kind of shares which are available for issuance under the Plan or
subject to purchase under outstanding options and on the option exercise price
or prices applicable to outstanding options. No adjustments shall be made for
stock dividends. For the purposes of this paragraph, any distribution of shares
to shareholders in an amount aggregating less than twenty percent (20%) of the
outstanding shares shall be deemed a stock dividend.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or stock of the Company to
another corporation, the holder of each option then outstanding under the Plan
will thereafter be entitled to receive at the next exercise date upon the
exercise of such option for each share as to which such option shall be
exercised, as nearly as reasonably may be determined, the cash, securities
and/or property which a holder of one share of the Common Stock was entitled to
receive upon and at the time of such transaction. The Board of Directors of the
Company shall take such steps in connection with such transactions as the Board
shall deem necessary to assure that the provisions of this Section 10.04 shall
thereafter be applicable, as nearly as reasonably may be determined, in relation
to the said cash, securities and/or property as to which such holder of such
option might thereafter be entitled to receive.
10.05 AMENDMENT AND TERMINATION
The Board of Directors of the Company shall have complete power and
authority to terminate or amend the Plan; provided, however, that the Board of
Directors of the Company shall not, without the approval of the stockholders of
the Company (i) increase the maximum number of shares which the Company may
purchase to provide participants with stock under the Plan; (ii) amend the
requirements as to the class of employees eligible to purchase stock under the
Plan; or (iii) permit the members of the Committee to purchase Common Stock
under the Plan. No termination, modification, or amendment of the Plan may,
without the consent of an Employee then having an option under the
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Plan to purchase Common Stock, adversely affect the rights of such Employee
under such option. The Plan shall automatically terminate at the close of
business on the tenth anniversary of the effective date of the Plan unless
sooner terminated by action of the Board of Directors.
10.06 EFFECTIVE DATE
The Plan shall become effective as of January 1, 1997, or such earlier date
as the Board of Directors may determine, subject to approval by the holders of
the majority of the Common Stock present and represented at a special or annual
meeting of the shareholders of the Company to be held within 12 months before or
after the date the Plan is adopted by the Board of Directors of the Company. If
the Plan is not so approved, the Plan shall not become effective.
10.07 NO EMPLOYMENT RIGHTS
The Plan does not, directly or indirectly, create any right for the benefit
of any employee or class of employees to purchase any shares under the Plan, or
create in any employee or class of employees any right with respect to
continuation of employment by the Company, and it shall not be deemed to
interfere in any way with the Company's right to terminate, or otherwise modify,
an employee's employment at any time.
10.08 COSTS AND EXPENSES
No brokerage commissions or fees shall be charged by the Company in
connection with the purchase of shares of Common Stock by participants under the
Plan. All costs and expenses incurred in administering the Plan shall be borne
by the Company.
10.09 EFFECT OF PLAN
The provisions of the Plan shall, in accordance with its terms, be binding
upon, and inure to the benefit of all, all successors of each Employee
participating in the Plan, the executors, administrators or trustees thereof,
heirs and legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such Employee.
10.10 GOVERNING LAW
The law of the State of Minnesota, other than the conflict of laws
provisions of such law, shall govern all matters relating to this Plan except to
the extent it is superseded by the laws of the United States.
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POLARIS INDUSTRIES INC.
1225 HIGHWAY 169 NORTH
MINNEAPOLIS, MINNESOTA 55441
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints W. Hall Wendel, Jr. and John H. Grunewald,
and each of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes such Proxies to represent and to vote, as designated below,
all the shares of Common Stock, $.01 par value of Polaris Industries Inc. held
of record by the undersigned on March 13, 1995, at the Annual Meeting of
Shareholders to be held on May 10, 1995, or any postponements or adjournments
thereof.
1. ELECTION OF / / FOR all nominees listed / / WITHHOLD
DIRECTORS below (except as marked to the AUTHORITY to vote for
contrary below) all nominees below
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THE NOMINEE'S NAME IN THE SPACE PROVIDED BELOW)
- --------------------------------------------------------------------------------
Kenneth D. Larson Andris A. Baltins
All nominees to serve for a term of three years expiring at the 1998 Annual
Meeting of Shareholders.
2. PROPOSAL TO APPROVE THE POLARIS INDUSTRIES INC. 1995 STOCK OPTION PLAN.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO APPROVE THE POLARIS INDUSTRIES INC. DEFERRED COMPENSATION PLAN
FOR DIRECTORS.
/ / FOR / / AGAINST / / ABSTAIN
4. PROPOSAL TO APPROVE THE POLARIS INDUSTRIES INC. EMPLOYEE STOCK PURCHASE
PLAN.
/ / FOR / / AGAINST / / ABSTAIN
5. The Proxies are authorized to vote in their discretion with respect to
other matters which may come before the meeting.
(CONTINUED ON REVERSE SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
--------------------------------
Signature
--------------------------------
Signature if held jointly
Dated:
--------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE
