<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 22, 1996
Dear Fellow Shareholder:
The Board of Directors of Polaris Industries Inc. joins me in extending a
cordial invitation to attend our 1996 Annual Meeting of Shareholders which will
be held at the Ramada Plaza Hotel, 12201 Ridgedale Drive, Minnetonka, Minnesota
on Thursday, May 9, 1996 at 9:00 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' 1995 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,
/s/ W. Hall Wendel, Jr.
W. Hall Wendel, Jr.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Enclosures
<PAGE>
[LOGO]
POLARIS INDUSTRIES INC.
1225 HIGHWAY 169 NORTH
MINNEAPOLIS, MINNESOTA 55441
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 9, 1996
------------------------
TO POLARIS SHAREHOLDERS:
The 1996 Annual Meeting of Shareholders of Polaris Industries Inc. will be
held at the Ramada Plaza Hotel, 12201 Ridgedale Drive, Minnetonka, Minnesota
55305, at 9:00 a.m. local time on Thursday, May 9, 1996 for the following
purposes:
1. To elect two directors for three-year terms ending in 1999 (Proposal 1);
2. To approve the Polaris Industries Inc. 1996 Restricted Stock Plan
(Proposal 2); and
3. 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 15, 1996 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
/s/ John H. Grunewald
John H. Grunewald
EXECUTIVE VICE PRESIDENT, CHIEF
FINANCIAL OFFICER
AND SECRETARY
Minneapolis, Minnesota
March 22, 1996
<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 9:00 a.m., local time, on May 9, 1996, at the Ramada Plaza Hotel,
12201 Ridgedale Drive, Minnetonka, Minnesota 55305 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 22, 1996.
Only shareholders of record at the close of business on March 15, 1996 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 15, 1996, the Company had outstanding 27,532,086 shares of
Common Stock.
Holders of Common Stock of record at the close of business on March 15, 1996
will be entitled to one vote per share on the (1) election of directors, (2)
approval of the Polaris Industries Inc. 1996 Restricted Stock Plan, and (3) 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 and 2 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 1, 1996 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 1, 1996, there were 27,532,086 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) 1,496,850 5.4%
Chairman of the Board of Directors
and Chief Executive Officer
1225 Highway 169 North
Minneapolis, Minnesota 55441
Kenneth D. Larson (2) 162,564 *
President, Chief Operating Officer
and Director
John H. Grunewald 10,500 *
Executive Vice President, Chief
Financial Officer and Secretary
Charles A. Baxter 421,500 1.5%
Vice President -- Engineering and
Product Safety
Ed Skomoroh 73,530 *
Vice President -- Sales and
Marketing
Andris A. Baltins (3) 11,325 *
Director
Beverly F. Dolan 9,500 *
Director
Robert S. Moe (4) 627,600 2.3%
Director
Gregory R. Palen 4,000 *
Director
Stephen G. Shank 600 *
Director
All directors and executive officers as 2,850,911 10.4%
a group (12 persons)
</TABLE>
- ------------------------
* Represents less than 1%.
(1) Includes 42,000 shares held in a trust for Mr. Wendel's daughter as to which
he disclaims any beneficial interest and 150,000 shares held in the Hall and
Deborah Wendel Foundation of which Mr. Wendel is president.
(2) Includes 150 shares held in trust for Mr. Larson's child and 15,300 shares
owned by Mr. Larson's spouse, as to which he disclaims any beneficial
interest.
2
<PAGE>
(3) Includes 1,500 shares held in trust for Mr. Baltins' children and 3,000 held
in trust for one of Mr. Baltins' parents. 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 58,875 shares.
(4) Includes 333,600 shares held in trust for Mr. Moe's children, as to which he
disclaims any beneficial interest.
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 II, Messrs. Dolan and Moe, expires in 1996. The term of
office of directors in Class III, Messrs. Palen, Shank, and Wendel, expires in
1997 and the term of the office of directors in Class I, Messrs. Larson and
Baltins, expires in 1998. 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 II directors, be elected as Class II directors
for a new term of three years and until their successors are duly elected and
qualified:
Beverly F. Dolan
Robert S. Moe
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 II 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 II
BEVERLY F. DOLAN Director since 1994
[PHOTO] Mr. Dolan, 68, 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.
3
<PAGE>
ROBERT S. MOE Director since 1994
[PHOTO] Mr. Moe, 65, was Executive Vice President and Treasurer 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
1987 through 1992. From 1981 to 1987, Mr. Moe was Executive Vice
President and Treasurer of a predecessor of the Company. 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.
DIRECTORS CONTINUING IN OFFICE
CLASS III -- TERM EXPIRES AT THE 1997 ANNUAL MEETING
GREGORY R. PALEN Director since 1994
[PHOTO] Mr. Palen, 40, 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
[PHOTO] Mr. Shank, 52, 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.
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.
4
<PAGE>
W. HALL WENDEL, JR. Director since 1994
[PHOTO] Mr. Wendel, 53, 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 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.
CLASS I -- TERM EXPIRES AT THE 1998 ANNUAL MEETING
KENNETH D. LARSON Director since 1994
[PHOTO] Mr. Larson, 55, 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 PICC from October 1988
through December 1994. Prior thereto, Mr. Larson was Executive
Vice President of The Toro Company, responsible for its
commercial, consumer and international equipment business, and
held a number of general management positions after joining The
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 committee of Destron Fearing Corp., a
manufacturer of animal identification devices. Mr. Larson is also
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
[PHOTO] Mr. Baltins, 50, 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 and is
a director of Adams Outdoor Advertising, Inc., the managing
general partner of Adams Outdoor Advertising Limited Partnership,
an outdoor advertising 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' REMUNERATION
Directors who are also full-time employees of the Company receive no
additional compensation for service as directors. During fiscal year 1996, 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 Common Stock Equivalents
(as described below).
The Company maintains a deferred compensation plan for directors, the
Polaris Industries Inc. Deferred Compensation Plan for Directors (the "Deferred
Compensation Plan"), under which directors who are not officers or employees of
the Company ("Outside Directors") will receive annual
5
<PAGE>
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 economic
equivalent of one share of Common 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. The Deferred Compensation Plan will remain effective until May 10,
2005, unless terminated earlier by the Board of Directors.
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.
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 Directors' 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.
A maximum of 75,000 shares of Common Stock will be available for issuance
under the Deferred Compensation Plan. The Deferred Compensation Plan may be
terminated or amended at any time.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held a total of three meetings during
1995. All directors attended at least 75 percent of the meetings of the Board of
Directors and any committee on which such directors served during the period.
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
Executive Committee acted through two unanimous written actions during 1995. 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 Audit Committee held a total of three meetings during 1995. 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. The Compensation
Committee held a total of three meetings and acted through one unanimous written
action during 1995.
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
6
<PAGE>
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 1995, 1994 and 1993 were $469,000, $456,000 and $443,000
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 Company and received approximately $450,000 in legal fees during 1995. It
is anticipated that Kaplan, Strangis and Kaplan, P.A. will provide certain legal
services to the Company in 1996.
VOTING ARRANGEMENTS
In connection with the conversion of Polaris Industries Partners L.P. 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. To the Company's knowledge, based solely upon a review of the copies
of those reports furnished to the Company during 1995 and written
representations that no other reports were required, the Company believes that
during 1995, all filing requirements applicable to its directors and executive
officers were complied with.
7
<PAGE>
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, 1995, 1994 and 1993 of those persons who were, as of December
31, 1995, (i) the Chief Executive Officer and (ii) the four other most highly
paid executive officers whose total annual salary and bonus exceeded $100,000
during the fiscal year ended December 31, 1995 (together with the Chief
Executive Officer, the "Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------------
ANNUAL COMPENSATION PAYOUTS
---------------------------------- AWARDS ---------
OTHER ANNUAL STOCK ------------ LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($)(A) ($)(B) ($)(C) ($)(D) (#)(E) ($) ($)(F)
- --------------------------------- ---- -------- -------- ------------ ----------- ------------ --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
W. Hall Wendel, Jr. 1995 $240,000 $264,000 -- $ 391,500 40,500 $0 $ 13,500
Chairman of the Board 1994 $240,000 $480,000 -- $ 282,000 0 $0 $ 6,000
and Chief Executive Officer 1993 $240,000 $328,800 -- $0 0 $0 $ 7,075
Kenneth D. Larson 1995 $190,000 $247,000 -- $0 27,000 $0 $ 12,250
Chief Operating Officer 1994 $190,000 $437,000 -- $ 352,500 0 $0 $ 6,000
and President 1993 $185,433 $278,149 -- $0 0 $ 744,002 $ 7,075
Charles A. Baxter 1995 $150,000 $127,500 -- $ 43,500 13,500 $0 $ 10,962
Vice President -- 1994 $150,000 $205,500 -- $ 176,250 0 $0 $ 6,000
Engineering and Product Safety 1993 $150,000 $144,000 -- $0 0 $0 $ 7,075
John H. Grunewald 1995 $170,000 $102,000 -- $0 19,500 $0 $ 11,750
Executive Vice President 1994 $170,000 $340,000 -- $ 352,500 0 $0 $ 5,231
and Chief Financial Officer (G) 1993 $ 42,500 $ 31,875 -- $ 337,500 0 $0 $0
Ed Skomoroh 1995 $135,516 $128,740 -- $0 12,000 $0 $ 11,000
Vice President -- 1994 $129,400 $177,281 -- $ 176,250 0 $0 $ 6,000
Sales and Marketing 1993 $129,402 $121,636 -- $0 0 $ 248,045 $ 7,075
</TABLE>
- ------------------------------
(A) Includes amounts deferred by the Executive Officers under the Company's
401(k) retirement savings plan and SERP.
(B) Bonus payments are reported for the year in which the related services were
performed.
(C) The Company provides club memberships, club dues, financial planning and
tax preparation, Exec-U-Care coverage, as well as standard employee medical
and dental coverage to its Executive Officers. 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.
(D) On March 1, 1994 an aggregate of 168,000 First Rights were granted to
Polaris employees pursuant to the 1987 Management Ownership Plan, including
12,000, 15,000, 7,500, 15,000 and 7,500 for Messrs. Wendel, Larson, Baxter,
Grunewald and Skomoroh. In addition, 15,000 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%).
Messrs. Wendel and Baxter were given special grants of 13,500 and 1,500
First Rights, respectively, in May, 1995 which immediately converted into
common stock as a reward for the successful conversion of the Company to a
publicly held corporation. These First Rights vest immediately. These are
the total outstanding restricted shares or stock units held by the Chief
Executive Officer and the other four highest paid executive officers as of
December 31, 1995. The share price at the close of business on December 29,
1995 was $29.375; therefore, the value of the total outstanding restricted
shares adjusted for the three-for-two stock split in October 1995, for the
Executive Officers at the end of the fiscal year was $352,500, $440,625,
$220,313, $881,250, and $220,313 respectively for Messrs. Wendel, Larson,
Baxter, Grunewald, and Skomoroh.
(E) The Company granted stock options to employees (including the Executive
Officers) on May 10, 1995. The number of options shown reflect the October
1995 three-for-two stock split. The 1995 Stock Option Plan and grants were
approved by the Compensation Committee of the Board of Directors.
(F) Consists of Company matching contributions to the 401(k) retirement savings
plan and SERP. The SERP plan began July 1, 1995 and is a nonqualified plan
which mirrors the 401(k) plan without the Internal Revenue Service
contribution limitations. The Executive Officers each received $7,500 in
matching contributions to the 401(k) plan. The SERP contributions were
$6,000, $4,750, $3,642, $5,250 and $3,500 respectively for Messrs. Wendel,
Larson, Baxter, Grunewald and Skomoroh.
(G) Mr. John H. Grunewald was hired on September 27, 1993.
The Company does not maintain any defined benefit or actuarial pension plan
under which benefits are determined primarily by final compensation and years of
service.
8
<PAGE>
OPTION GRANTS FOR 1995 AND POTENTIAL REALIZABLE VALUES
The following table sets forth as to each of the Executive Officers
information with respect to option grants during 1995 and the potential
realizable value of such option grants: (i) the number of shares of Common Stock
underlying options granted during 1995, (ii) the percentage that such options
represent of all options granted to employees during 1995, (iii) the exercise
price, (iv) the expiration date and (v) the potential realizable value, assuming
a 5% and 10% annual rate of appreciation during the option terms. The 5% and 10%
assumed rates of growth are for illustrative purposes only. They are not
intended to predict future stock prices, which will depend on market conditions
and other factors such as the Company's performance.
OPTION GRANTS DURING 1995 AND
ASSUMED POTENTIAL REALIZABLE VALUES
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL
---------------------------- RATES OF STOCK
% OF TOTAL PRICE APPRECIATION
NUMBER OF OPTIONS GRANTED EXERCISE FOR OPTION TERM
OPTIONS TO EMPLOYEES IN PRICE ($/ EXPIRATION -------------------
NAME GRANTED (A) FISCAL YEAR (A) SHARE)(A) DATE 5% 10%
- ------------------------------ ----------- --------------- ---------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
W. Hall Wendel, Jr............ 40,500 15.91% $ 29.00 5/09/05 $738,637 $1,871,851
Kenneth D. Larson............. 27,000 10.61% $ 29.00 5/09/05 $492,425 $1,247,900
Charles A. Baxter............. 13,500 5.30% $ 29.00 5/09/05 $246,212 $ 623,950
John H. Grunewald............. 19,500 7.66% $ 29.00 5/09/05 $355,640 $ 901,261
Ed Skomoroh................... 12,000 4.71% $ 29.00 5/09/05 $218,855 $ 554,622
</TABLE>
- ------------------------
(A) Number of options granted and exercise price have been adjusted to reflect
the October 1995 three-for-two stock split.
OPTION EXERCISES AND VALUES FOR 1995
The following table sets forth as to each of the Executive Officers
information with respect to option exercises during 1995 and the status of their
options on December 31, 1995: (i) the number of shares of Common Stock
underlying options exercised during 1995, (ii) the aggregate dollar value
realized upon the exercise of such options, (iii) the total number of
exercisable and non-exercisable stock options held on December 31, 1995 and (iv)
the aggregate dollar value of in-the-money exercisable options on December 31,
1995.
AGGREGATED OPTION EXERCISES DURING 1995 AND
OPTION VALUES ON DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE OF IN-THE-MONEY
SHARES COVERED BY OUTSTANDING OPTIONS
OUTSTANDING OPTIONS 12/31/95 (A)
SHARES COVERED GAIN AT EXERCISE -------------------------- --------------------------
NAME BY EXERCISES DATE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- -------------- ---------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
W. Hall Wendel, Jr....... -- -- 0 40,500 -- $ 15,188
Kenneth D. Larson........ -- -- 0 27,000 -- $ 10,125
Charles A. Baxter........ -- -- 0 13,500 -- $ 5,063
John H. Grunewald........ -- -- 0 19,500 -- $ 7,313
Ed Skomoroh.............. -- -- 0 12,000 -- $ 4,500
</TABLE>
- ------------------------
(A) Values are calculated by subtracting the exercise price ($29.00/share) from
the fair market value of the underlying Common Stock. For purposes of this
table, fair market value is deemed to be $29.375, the closing Common Stock
price reported for the New York Stock Exchange Composite Transactions on
December 29, 1995 (the last trading day of calendar year 1995).
9
<PAGE>
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 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 Company and received approximately $450,000 in
legal fees during 1995. It is anticipated that Kaplan, Strangis and Kaplan, P.A.
will provide certain legal services to the Company during 1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION PHILOSOPHY
The Company's executive total compensation program is 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 and rewarding those
executives commensurably with their ability to drive increases in shareholder
value. The program consists of a combination of base salary, annual profit
sharing awards, stock options, group benefits and supplemental perquisites.
Executive officer guaranteed/fixed compensation is kept at a minimum with below
market 25th percentile level base salaries, benefits and perquisites.
When taken as a whole, the goal of Polaris' executive total compensation
program is to significantly correlate the level of executive compensation with
the level of Company performance. This is accomplished through the use of a
combination of annual profit sharing and long-term stock-based compensation
programs in conjunction with minimal guaranteed/fixed compensation.
The Compensation Committee is currently reviewing the requirements of
Section 162(m) of the Internal Revenue Code and developing a policy regarding
the deductibility for federal tax purposes of any compensation in excess of $1
million delivered to any executive officer in a single fiscal year.
1995 EXECUTIVE COMPENSATION
Polaris Industries Inc. conducted a formal review of its top seven
executives' 1995 total compensation with the assistance of executive
compensation consultants. In the review, Polaris' top seven executives' total
cash compensation and total compensation were compared to comparable market top
executive 75th percentile, median and 25th percentile compensation. Market data
for comparable positions was extracted from the proxy statements of
publicly-held peer companies and published market compensation surveys. The
results of the 1995 executive compensation review revealed the following for the
top seven executives:
- 1995 total cash compensation (sum of actual base salary and 1996 profit
sharing payouts for 1995 performance) is approximately at the market 25th
percentile.
10
<PAGE>
- 1995 total compensation (sum of total cash compensation, present value of
long-term incentive compensation grants, and company contributions for
benefits and perquisites) is approximately at the market median.
1995 CHIEF EXECUTIVE OFFICER COMPENSATION
1995 CEO GUARANTEED COMPENSATION (BASE SALARY, BENEFITS AND PERQUISITES)
- Base salary remained at $240,000 for 1995, the same level as the previous
three years.
- Benefits and perquisites paid to Mr. Wendel during 1995 included club
memberships, club dues, financial planning and tax preparation,
Exec-U-Care coverage, as well as standard employee medical, dental, and
401(k) retirement savings plan participation. In addition, the Company
adopted a supplemental executive retirement program on July 1, 1995 to
mirror the 401(k) plan.
1995 CEO ANNUAL BONUS (PROFIT SHARING AWARD)
- In accordance with the established Company profit sharing plan, Mr. Wendel
received a profit sharing payout of $264,000 in February 1996 for his and
the Company's 1995 performance. Company performance determines the amount
of funding for the profit sharing plan. The amount of Mr. Wendel's payout
was determined based on his individual contributions to the Company's
success.
1995 CEO STOCK OPTION GRANT
- On May 10, 1995, Mr. Wendel was granted 40,500 stock options at fair
market value (which reflects the October 1995 three-for-two stock split).
These options were granted in accordance with the 1995 Stock Option Plan.
1995 CEO FIRST RIGHTS GRANT
- On May 10, 1995, Mr. Wendel was given a special grant of 13,500 First
Rights (which reflects the October 1995 three-for-two stock split). These
Rights were immediately vested. These Rights were granted as a reward for
the successful conversion of the Company to a publicly held corporation.
1995 CEO TOTAL COMPENSATION IN COMPARISON TO THE MARKET
- In total, the compensation package delivered to Mr. Wendel in 1995 is
approximately at the 50th percentile of CEO compensation packages in
comparable companies in the marketplace.
SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE COMPANY'S BOARD OF DIRECTORS
BEVERLY F. DOLAN ROBERT S. MOE ANDRIS A. BALTINS
Compensation Committee Compensation Committee Compensation Committee
11
<PAGE>
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, 1991 in units of Beneficial Assignment of Class A Limited
Partnership Interests ("BACs") of Polaris Industries L.P. (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>
1990 100 100 100
1991 162.09 183.48 130.48
1992 216.68 292.82 140.46
1993 347.75 349.64 154.62
1994 568.92 363.23 156.66
1995 555.46 370.85 215.54
</TABLE>
SOURCE: MEDIA GENERAL FINANCIAL SERVICES.
12
<PAGE>
PROPOSAL 2 -- APPROVAL OF POLARIS INDUSTRIES INC.
1996 RESTRICTED STOCK PLAN
On January 25, 1996, the Company's Board of Directors adopted and approved a
new restricted stock plan for the Company, the Polaris Industries Inc. 1996
Restricted Stock Plan (the "Restricted Stock Plan") under which awards of
restricted shares of Common Stock ("Restricted Shares") may be made to employees
of the Company or its subsidiaries. A copy of the Restricted Stock Plan is
attached hereto as Annex A. The purpose of the Restricted Stock 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 and its subsidiaries to
attract and retain highly competent employees. The amount of benefits to be
received under the Restricted Stock Plan by any particular person or group is
not determinable at this time.
GENERAL PROVISIONS
DURATION; SHARE AUTHORIZATION. The Restricted Stock Plan became effective
on the date of Board approval, January 25, 1996, subject to the approval of the
Company's shareholders, and will remain effective until January 25, 2006 unless
terminated earlier by the Board.
The maximum number of shares of Common Stock which may be issued or
delivered and as to which awards may be granted under the Restricted Stock Plan
is 500,000 shares, and awards for no more than 250,000 shares may be made to any
participant in any calendar year. These share amounts are subject to adjustment
in the event of any stock dividend, stock split, combination or exchange of
shares, merger, consolidation or other relevant capitalization change.
The shares of Common Stock issued or delivered under the Restricted Stock
Plan may be authorized and unissued shares, or issued shares which have been
reacquired by the Company and held in its treasury. Forfeited Restricted Shares
may again be subject to awards under the Restricted Stock Plan.
ADMINISTRATION. The Restricted Stock Plan is to be administered by the
Compensation Committee of the Board of Directors or such other committee as the
Board may designate (the "Committee"). The Committee will determine the
employees who will be eligible for and granted awards, determine the amount of
awards, establish rules and guidelines relating to the Restricted Stock 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 Restricted
Stock Plan.
PARTICIPANTS. Any employee of the Company or its subsidiaries may be
selected by the Committee to receive an award under the Restricted Stock Plan.
At the present time, approximately 3,500 persons are eligible to participate in
the Restricted Stock Plan.
AWARDS UNDER RESTRICTED STOCK PLAN. The Committee may award to any
participant Restricted Shares that are subject to terms and conditions
established by the Committee. In general, Restricted Shares will be
non-transferable and subject to a risk of forfeiture during a period of time set
by the Committee. The Committee may provide for such transfer and forfeiture
restrictions to lapse in installments and/or upon the occurrence of specified
events. The restrictions may be based on performance goals, periods of service
or other standards established by the Committee.
The Restricted Stock Plan authorizes awards intended to qualify as
"performance-based" for purposes of Section 162(m) of the Internal Revenue Code
and awards that may not so qualify. Performance goals may include one or more of
the following: share price appreciation, earnings, cash flow, revenues and total
shareholder return.
13
<PAGE>
If the participant's employment with the Company terminates during the
restriction period, his or her rights with respect to the Restricted Shares will
be forfeited, except that all forfeiture restrictions will lapse if the
termination is a discharge without cause (as defined) or is due to the
participant's death, disability or retirement. Forfeiture restrictions also
lapse upon a change in control of the Company (as defined) or in cases of
special circumstances where the Committee deems a waiver of the restrictions to
be appropriate.
As soon as practicable after the date of grant of Restricted Shares, stock
certificates representing such shares will be registered in the name of the
participant. Unless the Committee otherwise determines, during the restriction
period, these certificates will be held in custody by the Company or its
designee. Despite the restrictions, the participant will be the registered owner
of the Restricted Shares and will have the right to vote and receive dividends,
if any, with respect to such shares.
TERMINATION AND AMENDMENT. The Board may amend or terminate with Restricted
Stock Plan but, without a participant's consent, no such action shall affect or
in any way impair the rights of such participant under any award granted prior
to such action.
WITHHOLDING OBLIGATIONS. The Company has the right to deduct from a
participant's salary, bonus or other compensation any taxes required to be
withheld with respect to awards made under the Restricted Stock Plan. In the
Committee's discretion, a Participant may be permitted to elect to have withheld
from the shares otherwise issuable to the participant, or to tender to the
Company, the number of shares of Common Stock whose fair market value equals the
amount required to be withheld.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following is a brief summary
of the principal federal income tax consequences of awards under the Restricted
Stock 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.
Due to the presence of transfer and forfeiture restrictions, a grant of
Restricted Shares has generally no tax consequences to the Company or the
participant. Except as discussed below, the full fair market value of Common
Stock issued as Restricted Shares will be taxed as ordinary income to the
participant when the restrictions on the stock expire, with such value being
determined at the time of such expiration. The Company will receive a
corresponding tax deduction at the same time. Dividends received by the
participant during the restriction period are treated as compensation income and
therefore are taxed as ordinary income to the participant and are deductible by
the Company. Dividends received after the restriction period are treated as
dividends to the participant and are not deductible by the Company.
The participant may, under Section 83(b) of the Internal Revenue Code, elect
to report the current fair market value of Restricted Shares as ordinary income
in the year of grant of the Restricted Shares, even though the shares of Common
Stock are subject to forfeiture restrictions. If a participant makes such an
election, the Company will receive an immediate tax deduction for such fair
market value of the shares in the year of grant, but will receive no deduction
for any subsequent appreciation during or after the restriction period. In
addition, if a Section 83(b) election is made, dividends paid during or after
the restriction period will be treated as dividends to the participant and,
therefore, will not be deductible by the Company.
In the case of Restricted Shares as to which no Section 83(b) election is
filed, the participant's tax basis in the shares of Common Stock received equals
the amount of ordinary income recognized by the participant upon the lapse of
the restrictions with respect to such shares plus any amount paid by the
participant for the shares. Upon a subsequent sale or exchange of the shares,
the amount realized by the participant in excess of his or her tax basis will be
short-term or long-term capital gain or loss, depending on whether the
participant has held the shares for at least one year after the restrictions
lapse. The Company will receive no additional deduction at the time of
disposition of the Common Stock by the participant.
14
<PAGE>
In the case of Restricted Shares as to which a Section 83(b) election is
made, any appreciation in the value of the subject shares of Common Stock after
a date of grant will be recognized as capital gain by the participant at such
time as the participant disposes of the shares in a taxable transaction. Any
capital gain then realized will be long-term or short-term, depending upon
whether the participant has held the shares for at least one year from the date
of grant.
The deductibility by the Company of amounts recognized as ordinary income by
participants with respect to Restricted Shares may be limited under certain
provisions of the Internal Revenue Code, including the $1 million deduction
limit per executive under Section 162(m) and the limit with respect to certain
payments in connection with a change in control under Section 280G.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE RESTRICTED STOCK 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 Restricted Stock Plan proposed for approval at the Annual
Meeting.
<TABLE>
<CAPTION>
RESTRICTED
NAME AND POSITION STOCK PLAN
- ----------------------------------------------------------------------- ----------
<S> <C>
W. Hall Wendel, Jr.
Chairman of the Board and Chief Executive Officer *
Kenneth D. Larson
Chief Operating Officer and President *
Charles A. Baxter
Vice President -- Engineering and Product Safety *
John H. Grunewald
Executive Vice President and Chief Financial Officer *
Ed Skomoroh
Vice President -- Sales and Marketing *
Executive Group (including the five named executives above) *
Non-Executive Director Group (five persons) N/A
All Non-Executive Officer Employees as a Group *
</TABLE>
- ------------------------
* The amount of benefits to be received under the Restricted Stock Plan by any
particular person or group is not determinable at this time.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, on the recommendation of the Audit Committee,
selected the firm of Arthur Andersen LLP as its independent public accountants
to examine the financial statements of the Company and its subsidiaries for the
fiscal year ended December 31, 1995. Representatives of Arthur Andersen LLP will
be present at the Annual Meeting, will have an opportunity to make a statement
if they so desire, and will be available to respond to appropriate questions.
McGladrey and Pullen, LLP were the Company's independent public accountants
for the fiscal year ended December 31, 1994 and had been the accountants for the
Company's predecessor since 1987. On August 1, 1995, the Board of Directors, on
the recommendation of the Audit Committee, selected Arthur Andersen LLP as its
new independent public accountants to examine the financial statements of the
Company and its subsidiaries for the year ended December 31, 1995. The reports
of McGladrey & Pullen, LLP on the financial statements of the Company and its
predecessor for the
15
<PAGE>
fiscal years ended December 31, 1993 and 1994 contained no adverse opinion or
disclaimer of opinion and were not modified as to uncertainty, audit scope or
accounting principle and in connection with the audits of the Company for such
fiscal years and through August 1, 1995, (i) there were no disagreements with
McGladrey & Pullen, LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures, which
disagreements if not resolved to the satisfaction of McGladrey & Pullen, LLP
would have caused them to make reference thereto in their report in the
financial statements for such years and period. During such years and period,
there have been no reportable events (as defined in Item 304(a)(i)(v) of
Regulation S-K of the Securities and Exchange Commission) and (ii) neither the
Company or its predecessor consulted with Arthur Andersen LLP on items which
were or should have been subject to SAS 50 or concerned the subject matter of
disagreement or reportable event with McGladrey & Pullen, LLP.
SUBMISSION OF SHAREHOLDER PROPOSALS
Any proposal of a shareholder intended to be presented at the Company's 1997
Annual Meeting of Shareholders must be received by the Secretary of the Company,
for inclusion in the Company's proxy statement relating to the 1997 Annual
Meeting, by November 21, 1996.
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,
1995, 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 written
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 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
/s/ John H. Grunewald
John H. Grunewald
EXECUTIVE VICE PRESIDENT, CHIEF
FINANCIAL OFFICER
AND SECRETARY
March 22, 1996
16
<PAGE>
ANNEX A
POLARIS INDUSTRIES INC.
1996 RESTRICTED STOCK PLAN
ARTICLE I. PURPOSE AND ADOPTION OF THE PLAN
1.01 PURPOSE. The purpose of the Polaris Industries Inc. Restricted Stock
Plan is to assist the Corporation and its subsidiaries in attracting, retaining
and motivating selected key management employees who will contribute to the
Corporation's success. The Plan is intended to link the remunerative benefits
paid to eligible employees who have substantial responsibility for the
successful operation, administration and management of the Corporation with the
enhancement of shareholder value and provide eligible employees with an
opportunity to acquire a greater proprietary interest in the Corporation through
the grant of restricted shares of Stock which, in accordance with the terms and
conditions set forth below, will vest only if the employees meet the vesting
criteria established by the Committee. Awards under the Plan will act as an
incentive to participating employees to achieve long-term objectives which will
inure to the benefit of all shareholders of the Corporation. The Plan authorizes
awards intended to qualify as "performance-based" for purposes of Section 162(m)
of the Internal Revenue Code of 1986, as amended, as well as awards that may not
so qualify.
1.02 ADOPTION AND EFFECTIVE DATE. The Plan shall be effective on the date
it is approved by the Board, subject to the approval of the Corporation's
shareholders at the 1996 annual meeting of shareholders. The Plan will be so
approved if at such meeting a quorum is present and the votes of the holders of
a majority of the securities of the Corporation present or represented at such
meeting and entitled to vote with respect to the Plan shall be cast in favor of
its approval.
ARTICLE II. DEFINITIONS
For purposes of this Plan, the capitalized terms set forth below shall have
the following meanings:
2.01 AWARD AGREEMENT means a written agreement between the Corporation and
a Participant specifically setting forth the terms and conditions of an award of
Restricted Stock granted to a Participant pursuant to Article V of the Plan.
2.02 BOARD means the Board of Directors of the Corporation.
2.03 BUSINESS DAY means any day on which the New York Stock Exchange shall
be open for trading.
2.04 CAUSE means a determination by the Committee that a Participant has
engaged in conduct that is dishonest or illegal, involves moral turpitude or
jeopardizes the Corporation's right to operate its business in the manner in
which it is now operated.
2.05 CHANGE IN CONTROL means any of the events set forth below:
(a) Any election has occurred of persons to the Board that causes at
least one-half of the Board to consist of persons other than (i) persons who
were members of the Board on January 1, 1996 and (ii) persons who were
nominated for election by the Board as members of the Board at a time when
more than one-half of the members of Board consisted of persons who were
members of the Board on January 1, 1996; provided, however, that any person
nominated for election by the Board at a time when at least one-half of the
members of the Board were persons described in clauses (i) and/or (ii) 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 (i) (persons described or deemed described in clauses (i) and/or (ii)
are referred to herein as "Incumbent Directors"); or
(b) The acquisition in one or more transactions, other than from the
Corporation, 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
A-1
<PAGE>
Act) of a number of Corporation Voting Securities equal to or greater than
35% of the Corporation Voting Securities unless such acquisition has been
approved by the Incumbent Directors as an acquisition not constituting a
Change in Control for purposes hereof; or
(c) A liquidation or dissolution of the Corporation; or a
reorganization, merger or consolidation of the Corporation unless, following
such reorganization, merger or consolidation, the Corporation is the
surviving entity resulting from such reorganization, merger or consolidation
or at least one-half of the Board of Directors of the entity resulting from
such reorganization, merger or consolidation consists of Incumbent
Directors; or a sale or other disposition of all or substantially all of the
assets of the Corporation unless, following such sale or disposition, unless
at least one-half of the Board of Directors of the transferee consists of
Incumbent Directors.
2.06 COMMITTEE means the Compensation Committee of the Board or such other
committee of the Board as the Board may designate.
2.07 CORPORATION means Polaris Industries Inc., a Minnesota corporation,
and its successors.
2.08 CORPORATION VOTING SECURITIES means the combined voting power of all
outstanding voting securities of the Corporation entitled to vote generally in
the election of the Board.
2.09 DATE OF GRANT means the date as of which an award of Restricted Stock
is granted in accordance with Article V.
2.10 DISABILITY means any physical or mental injury or disease of a
permanent nature which renders a Participant incapable of meeting the
requirements of the employment performed by such Participant immediately prior
to the commencement of such disability. The determination of whether a
Participant is disabled shall be made by the Committee in its sole and absolute
discretion.
2.11 EFFECTIVE DATE means the date as of which the Plan shall become
effective, as determined in accordance with Section 1.02.
2.12 EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
2.13 FAIR MARKET VALUE means, as of any given 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 NASDAQ National Market System
("NASDAQ/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
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 Stock as
determined in good faith by the Committee.
2.14 OUTSTANDING STOCK means, at any time, the issued and outstanding
Stock.
2.15 PARTICIPANT means any person selected by the Committee, pursuant to
Section 3.02, to participate under the Plan.
2.16 PLAN means the Polaris Industries Inc. 1996 Restricted Stock Plan, as
the same may be amended from time to time.
2.17 RESTRICTED STOCK means shares of Stock awarded to a Participant
subject to restrictions as described in Article V.
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2.18 STOCK means the common stock, par value $0.01 per share, of the
Corporation.
ARTICLE III. ADMINISTRATION AND PARTICIPATION
3.01 ADMINISTRATION. The Plan shall be administered by the Committee which
shall have exclusive and final authority and discretion in each determination,
interpretation or other action affecting the Plan and its Participants. The
Committee shall have the sole and absolute authority and discretion to interpret
the Plan, to establish and modify administrative rules for the Plan, to select,
in accordance with Section 3.02, the persons who will be Participants hereunder,
to impose, in accordance with Section 5.01, such conditions and restrictions as
it determines appropriate and to take such other actions and makes such other
determinations in connection with the Plan as it may deem necessary or
advisable.
3.02 DESIGNATION OF PARTICIPANTS. Participants in the Plan shall be such
employees of the Corporation and its subsidiaries as the Committee, in its sole
discretion, may designate. The Committee's designation of a Participant with
respect to any Plan Year shall not require the Committee to designate such
person as a Participant with respect to any other Plan Year. The Committee shall
consider such factors as it deems pertinent in selecting Participants.
ARTICLE IV. STOCK ISSUABLE UNDER THE PLAN
4.01 NUMBER OF SHARES OF STOCK ISSUABLE. Subject to adjustments as
provided in Section 6.03, the maximum number of shares of Stock available for
issuance under the Plan shall be 500,000. The Stock to be offered under the Plan
shall be authorized and unissued Stock, or Stock which shall have been
reacquired by the Corporation and held in its treasury. In any calendar year, no
Participant shall receive awards in excess of 250,000 shares of Stock, subject
to adjustment as provided in Section 6.03.
4.02 SHARES SUBJECT TO TERMINATED AWARDS. Shares of Stock forfeited as
provided in Section 5.02 may again be issued under the Plan.
ARTICLE V. RESTRICTED STOCK
5.01 RESTRICTED STOCK AWARDS. The Committee may grant to any Participant
an award of Restricted Stock in respect of such number of shares of Stock, and
subject to such terms and conditions relating to forfeitability and restrictions
on delivery and transfer (whether based on performance standards, periods of
service or otherwise), as the Committee shall determine in its sole discretion.
The terms of all such Restricted Stock awards shall be set forth in an Award
Agreement between the Corporation and the Participant which shall contain such
provisions, not inconsistent with this Plan, as shall be determined by the
Committee.
(a) ISSUANCE OF RESTRICTED STOCK. As soon as practicable after the
Date of Grant of Restricted Stock, the Corporation shall cause to be
transferred on the books of the Corporation shares of Stock, registered on
behalf of the Participant, evidencing such Restricted Stock, but subject to
forfeiture to the Corporation retroactive to the Date of Grant if an Award
Agreement delivered to the Participant by the Corporation with respect to
the Restricted Stock is not duly executed by the Participant and timely
returned to the Corporation. Unless the Committee determines otherwise,
until the lapse or release of all restrictions applicable to an award of
Restricted Stock, the stock certificates representing such Restricted Stock
shall be held in custody by the Corporation or its designee.
(b) SHAREHOLDER RIGHTS. Beginning on the Date of Grant of the
Restricted Stock and subject to execution of the Award Agreement as provided
in Section 5.01(a), the Participant shall become a shareholder of the
Corporation with respect to all Stock subject to the Award Agreement and
shall have all of the rights of a shareholder, including, but not limited
to, the right to vote such Stock and the right to receive dividends and
other distributions paid with respect to such Stock; provided, however, that
any Stock distributed as a dividend or otherwise with respect to any
Restricted Stock as to which the restrictions have not yet lapsed shall be
subject to the same restrictions as such Restricted Stock and shall be held
as prescribed in Section 5.01(a).
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(c) RESTRICTION ON TRANSFERABILITY. None of the Restricted Stock may
be assigned, transferred (other than by will or the laws of descent and
distribution), pledged, sold or otherwise disposed of prior to lapse or
release of the restrictions applicable thereto.
(d) DELIVERY OF STOCK UPON RELEASE OF RESTRICTIONS. Upon expiration or
earlier termination of the forfeiture period without a forfeiture, and the
satisfaction of or release from any other conditions prescribed by the
Committee, the restrictions applicable to the Restricted Stock shall lapse.
As promptly as administratively feasible thereafter, subject to the
requirements of Section 6.02, the Corporation shall deliver to the
Participant or, in case of the Participant's death, to the Participant's
legal representatives, one or more stock certificates for the appropriate
number of shares of Stock, free of all such restrictions, except for any
restrictions that may be imposed by law.
5.02 TERMS OF RESTRICTED STOCK.
(a) FORFEITURE OF RESTRICTED STOCK. Subject to Section 5.02(b), all
Restricted Stock shall be forfeited and returned to the Corporation and all
rights of the Participant with respect to such Restricted Stock shall cease
and terminate in their entirety if during the forfeiture period the
employment of the Participant with the Corporation and its affiliates
terminates for any reason. The Committee, in its sole discretion, shall
establish the forfeiture period for each grant of Restricted Stock, and may
provide for the forfeiture period to lapse in installments. Notwithstanding
the foregoing, in the event of the discharge by the Corporation or an
affiliate of a Participant without Cause or termination of a Participant's
employment by reason of death, Disability or retirement pursuant to the
retirement policy of the Corporation or an affiliate, all forfeiture
restrictions imposed on Restricted Stock shall immediately and fully lapse.
In addition, upon the occurrence of a Change in Control, all forfeiture
restrictions imposed on Restricted Stock shall immediately and fully lapse.
(b) WAIVER OF FORFEITURE PERIOD. Notwithstanding anything contained in
this Article V to the contrary, the Committee may, in its sole discretion,
waive the forfeiture conditions set forth in any Award Agreement under
appropriate circumstances and subject to such terms and conditions
(including forfeiture of a proportionate number of the shares of Restricted
Stock) as the Committee may deem appropriate, provided that the Participant
shall at that time have completed at least one year of employment after the
Date of Grant.
ARTICLE VI. MISCELLANEOUS
6.01 LIMITATIONS ON TRANSFER. The rights and interest of a Participant
under the Plan may not be assigned or transferred other than by will or the laws
of descent and distribution. During the lifetime of a Participant, only the
Participant personally may exercise rights under the Plan.
6.02 TAXES. The Corporation shall be entitled to withhold (or secure
payment from the Participant in lieu of withholding) the amount of any
withholding or other tax required by law to be withheld or paid by the
Corporation with respect to any Stock issuable under this Plan, or with respect
to any income recognized upon the lapse of restrictions applicable to Restricted
Stock, and the Corporation may defer issuance of Stock hereunder until and
unless indemnified to its satisfaction against any liability for any such tax.
The amount of such withholding or tax payment shall be determined by the
Committee or its delegate and shall be payable by the Participant at such time
as the Committee determines. The Committee shall prescribe in each Award
Agreement one or more methods by which the Participant will be permitted to
satisfy his or her tax withholding obligation, which methods may include,
without limitation, the payment of cash by the Participant to the Corporation
and the tendering of previously acquired shares of Stock of the Participant, or
the withholding, at the appropriate time, of shares of Stock otherwise issuable
to the Participant, in a number sufficient, based upon the Fair Market Value of
such Stock, to satisfy such tax withholding requirements. The Committee shall be
authorized, in its sole discretion, to establish such rules and procedures
relating to any such withholding methods as it deems necessary or appropriate,
including, without limitation,
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rules and procedures relating to elections by Participants who are subject to
the provisions of Section 16 of the Exchange Act to tender Stock have Stock
withheld to meet such tax withholding obligations.
6.03 ADJUSTMENTS TO REFLECT CAPITAL CHANGES. The amount and kind of Stock
available for issuance under the Plan and the limit on the number of shares of
Stock in respect of which awards may be made to any Participant in any calendar
year shall be appropriately adjusted to reflect any stock dividend, stock split,
combination or exchange of shares, merger, consolidation or other change in
capitalization with a similar substantive effect upon the Plan. The Committee
shall have the power and sole discretion to determine the nature and amount of
the adjustment, if any, to be made pursuant to this Section 6.03.
6.04 NO RIGHT TO AWARD; NO RIGHT TO EMPLOYMENT. No employee or other
person shall have any claim of right to be permitted to participate or be
granted an award under this Plan. Neither the Plan nor any action taken
hereunder shall be construed as giving any employee any right to be retained in
the employ of the Corporation.
6.05 AWARDS NOT INCLUDABLE FOR BENEFIT PURPOSES. Income recognized by a
Participant pursuant to the provisions of the Plan shall not be included in the
determination of benefits under any employee pension benefit plan (as such term
is defined in Section 3(2) of the Employee Retirement Income Security Act of
1974) or group insurance or other benefit plans applicable to the Participant
which are maintained by the Corporation, except as may be provided under the
terms of such plans or determined by resolution of the Board.
6.06 GOVERNING LAW. The Plan and all determinations made and actions taken
pursuant to the Plan shall be governed by the laws of the State of Minnesota
other than the conflict of laws provisions of such laws, and shall be construed
in accordance therewith.
6.07 NO STRICT CONSTRUCTION. No rule of strict construction shall be
implied against the Corporation, the Committee, or any other person in the
interpretation of any of the terms of the Plan, any award granted under the Plan
or any rule or procedure established by the Committee.
6.08 CAPTIONS. The captions (i.e., all Section and subsection headings)
used in the Plan are for convenience only, do not constitute a part of the Plan,
and shall not be deemed to limit, characterize or affect in any way any
provisions of the Plan, and all provisions of the Plan shall be construed as if
no captions had been used in the Plan.
6.09 SEVERABILITY. Whenever possible, each provision in the Plan and every
Award Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of the Plan or any Award Agreement
shall be held to be prohibited by or invalid under applicable law, then (a) such
provision shall be deemed amended to accomplish the objectives of the provision
as originally written to the fullest extent permitted by law and (b) all other
provisions of the Plan and every Award Agreement shall remain in full force and
effect.
6.10 LEGENDS. All certificates for Stock delivered under the Plan shall be
subject to such transfer restrictions set forth in the Plan and such other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed and any applicable federal or state
securities law, and the Committee may cause a legend or legends to be endorsed
on any such certificates making appropriate references to such restrictions.
6.11 AMENDMENT AND TERMINATION.
(a) AMENDMENT. The Board shall have complete power and authority to
amend the Plan at any time it is deemed necessary or appropriate. No
termination or amendment of the Plan may, without the consent of the
Participant to whom any award shall theretofore have been granted
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under the Plan, adversely affect the right of such individual under such
award; provided, however, that the Committee may, in its sole discretion,
make such provision in the Award Agreement for amendments which, in its sole
discretion, it deems appropriate.
(b) TERMINATION. The Board shall have the right and the power to
terminate the Plan at any time. Unless sooner terminated by action of the
Board, the Plan shall automatically terminate, without further action of the
Board or the Corporation's shareholders, on the tenth anniversary of the
Effective Date. No award shall be granted under the Plan after the
termination of the Plan, but the termination of the Plan shall not have any
other effect and any award outstanding at the time of the termination of the
Plan shall continue in effect in accordance with its terms as if the Plan
has not terminated.
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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 15, 1996, at the Annual Meeting of
Shareholders to be held on May 9, 1996, 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)
- --------------------------------------------------------------------------------
Beverly F. Dolan Robert S. Moe
All nominees to serve for a term of three years expiring at the 1999 Annual
Meeting of Shareholders.
2. PROPOSAL TO APPROVE THE POLARIS INDUSTRIES INC. 1996 RESTRICTED STOCK PLAN.
/ / FOR / / AGAINST / / ABSTAIN
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 AND 2.
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
