<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/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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>
[POLARIS LOGO]
POLARIS INDUSTRIES INC. 1225 Highway 169 North
Minneapolis, Minnesota 55441-5078
612-542-0500
Fax: 612-542-0599
March 28, 1997
Dear Fellow Shareholder:
The Board of Directors of Polaris Industries Inc. joins me in extending a
cordial invitation to attend our 1997 Annual Meeting of Shareholders which will
be held at the Radisson Hotel and Conference Center, 3131 Campus Drive,
Plymouth, Minnesota 55441, on Thursday, May 22, 1997 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' 1996 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>
[POLARIS LOGO]
POLARIS INDUSTRIES INC.
1225 HIGHWAY 169 NORTH
MINNEAPOLIS, MINNESOTA 55441-5078
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 22, 1997
------------------------
TO POLARIS SHAREHOLDERS:
The 1997 Annual Meeting of Shareholders of Polaris Industries Inc. will be
held at the Radisson Hotel and Conference Center, 3131 Campus Drive, Plymouth,
Minnesota 55441, at 10:00 a.m. local time on Thursday, May 22, 1997 for the
following purposes:
1. To elect three directors for three-year terms ending in 2000 and to
elect one director for a two-year term ending in 1999 (Proposal 1); and
2. To transact such other business as may properly come before the Annual
Meeting or any postponements or adjournments thereof (Proposal 2).
Shareholders of record at the close of business on March 26, 1997 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/ Michael W. Malone
Michael W. Malone
VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND SECRETARY
Minneapolis, Minnesota
March 28, 1997
<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 22, 1997, at the Radisson Hotel and
Conference Center, 3131 Campus Drive, Plymouth, 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 28, 1997.
Only shareholders of record at the close of business on March 26, 1997 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 26, 1997, the Company had outstanding 27,006,077 shares of
Common Stock.
Holders of Common Stock of record at the close of business on March 26, 1997
will be entitled to one vote per share on the (1) election of directors, and (2)
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 3, 1997 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 3, 1997, there were 26,915,212 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)(2) 1,508,070 5.6%
Chairman of the Board of Directors
and Chief Executive Officer
1225 Highway 169 North
Minneapolis, Minnesota 55441
Kenneth D. Larson (2)(3) 176,544 *
President, Chief Operating Officer
and Director
John H. Grunewald (4) 20,000 *
Vice President, Chief Financial Officer,
Treasurer and Secretary
Charles A. Baxter (2) 428,040 1.6%
Vice President -- Engineering
Ed Skomoroh (2) 80,070 *
Vice President -- Sales and Marketing
Andris A. Baltins (5) 12,325 *
Director
Raymond J. Biggs 2,000
Director
Beverly F. Dolan 9,500 *
Director
Robert S. Moe (6) 627,600 2.3%
Director
Gregory R. Palen 4,000 *
Director
Stephen G. Shank 600 *
Director
All directors and executive officers as a
group (13 persons) (2) 2,916,941 10.8%
</TABLE>
- ------------------------
* Represents less than 1%.
(1) Includes 37,500 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
<PAGE>
(2) Includes 9,720, 6,480, 2,790 and 2,790 restricted shares of Common Stock
awarded to Messrs. Wendel, Larson, Baxter and Skomoroh respectively and
25,030 aggregate restricted shares of Common Stock awarded to all executive
officers as a group under Polaris' 1996 Restricted Stock Plan. The
restricted shares become freely tradeable only upon the Company achieving
certain compounded earnings growth targets within a four year period.
(3) 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.
(4) Mr. Grunewald retired in January of 1997.
(5) Includes 2,500 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 59,655 shares.
(6) 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 eight 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 and Mr. Biggs who has been a director since May 1996, 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
III, Messrs. Palen, Shank and Wendel, expires in 1997. The term of office of Mr.
Biggs, who was elected by the Board of Directors in 1996 to serve as a Class II
director, also expires in 1997. The term of office of directors in Class I,
Messrs. Larson and Baltins, expires in 1998 and the term of office of directors
other than Mr. Biggs in Class II, Messrs. Dolan and Moe, expires in 1999. 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, all of whom are
currently serving as Class III directors, be elected as Class III directors for
a new term of three years and until their successors are duly elected and
qualified:
Gregory R. Palen
Stephen G. Shank
W. Hall Wendel, Jr.
Except where authority has been withheld by a shareholder, the enclosed
proxy will be voted for the election of the three 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 III DIRECTORS OF THE COMPANY.
The Board of Directors proposes that Raymond J. Biggs, who is currently
serving as a Class II director, be elected for the remainder of the term of
Class II directors expiring in 1999 and until his successor is duly elected and
qualified. Except where authority has been withheld by a shareholder, the
enclosed proxy will be voted for Mr. Biggs. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THE PROPOSAL TO ELECT THE NOMINEE AS A CLASS II DIRECTOR
OF THE COMPANY.
In the event any or all 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.
3
<PAGE>
INFORMATION CONCERNING NOMINEES AND DIRECTORS
DIRECTORS STANDING FOR ELECTION -- CLASS III
GREGORY R. PALEN Director since 1994
[PHOTO] Mr. Palen, 41, 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, 53, 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.
W. HALL WENDEL, JR. Director since 1994
[PHOTO] Mr. Wendel, 54, is the Chairman and Chief Executive Officer
of the Company and was Chief Executive 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 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.
4
<PAGE>
DIRECTOR STANDING FOR ELECTION -- CLASS II
RAYMOND J. BIGGS Director since 1996
[PHOTO] Mr. Biggs, 59, was the Chairman of Huntington Bancshares of
Michigan, a financial institution, from 1990 through 1994.
From 1971 through 1990, Mr. Biggs was Chairman of a
predecessor of Huntington Bancshares. Since 1994, Mr. Biggs
has been a private investor and currently serves as a
director of Huntington Bancshares. Mr. Biggs is also a
director of the Michigan State University Business School
and various private and non-profit corporations. Mr. Biggs
is a member of the Stock Award Compensation Committee of the
Board of Directors of the Company.
DIRECTORS CONTINUING IN OFFICE
CLASS I -- TERM EXPIRES AT THE 1998 ANNUAL MEETING
KENNETH D. LARSON Director since 1994
[PHOTO] Mr. Larson, 56, 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 and
compensation committees 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, 51, has been a member of the law firm of
Kaplan, Strangis and Kaplan, P.A. since 1979. He 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.
5
<PAGE>
CLASS II -- TERM EXPIRES AT THE 1999 ANNUAL MEETING
BEVERLY F. DOLAN Director since 1994
[PHOTO] Mr. Dolan, 69, 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; FPL Group, Inc., a Florida electrical power
producer; and Banco Santander, a Spanish financial
institution. Mr. Dolan is Chairman of both the Compensation
Committee and the Stock Award Compensation Committee of the
Board of Directors of the Company.
ROBERT S. MOE Director since 1994
[PHOTO] Mr. Moe, 66, was Executive Vice President and Treasurer of
PICC from 1987 through 1992. From 1981 to 1987, Mr. Moe was
Executive Vice President and Treasurer of a predecessor of
the Company. Since 1992, Mr. Moe has been a private investor
and currently serves as a director and member of the audit
committee of Digi International Inc., a provider of data
communications hardware and software. Mr. Moe serves on the
Compensation Committee and 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 1997, 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 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.
6
<PAGE>
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
1996. 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 four 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 1996. 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 1996. 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, 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 two
meetings and acted through one unanimous written action in 1996. The Stock Based
Compensation Committee, formed in 1996 and consisting of Messrs. Dolan and
Biggs, makes recommendations to the Board of Directors regarding stock-based
incentives. The Stock Based Compensation Committee did not meet in 1996.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Polaris Industries Inc., a Delaware corporation wholly owned by the Company,
(the "Operating Subsidiary"), 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 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 and 1996, the
Operating Subsidiary 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 ended December 31, 1996, 1995 and 1994 were $482,000,
$469,000 and $456,000 respectively. The term of the lease expires in 2002.
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 during 1996. It is anticipated that Kaplan, Strangis and Kaplan,
P.A. will provide certain legal services to the Company in 1997.
7
<PAGE>
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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 1996 and written
representations that no other reports were required, the Company believes that
during 1996, all filing requirements applicable to its directors, executive
officers and 10% beneficial owners, if any, were complied with.
8
<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, 1996, 1995 and 1994 of those persons who were, as of December
31, 1996, (i) the Chief Executive Officer and (ii) the four other most highly
paid executive officers whose total annual salary and bonus exceeded $100,000
during the fiscal year ended December 31, 1996 (the "Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------- --------------------- --------
OTHER ANNUAL STOCK RESTRICTED OPTIONS/ LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) STOCK SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) (A) ($) (B) ($) (C) ($) (D) ($) (E) (#) (F) ($) ($) (G)
- ----------------------------- ---- -------- -------- ------------- ---------- ----------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
W. Hall Wendel, Jr. 1996 $240,000 $230,400 -- $ 0 $ 328,050 21,000 $ 0 $ 25,200
Chairman of the Board 1995 $240,000 $264,000 -- $ 391,500 $ 0 40,500 $ 0 $ 13,500
and Chief Executive Officer 1994 $240,000 $480,000 -- $ 282,000 $ 0 0 $ 0 $ 6,000
Kenneth D. Larson 1996 $190,000 $216,600 -- $ 0 $ 218,700 14,000 $ 0 $ 21,850
Chief Operating 1995 $190,000 $247,000 -- $ 0 $ 0 27,000 $ 0 $ 12,250
Officer and President 1994 $190,000 $437,000 -- $ 352,500 $ 0 0 $ 0 $ 6,000
Charles A. Baxter 1996 $150,000 $124,500 -- $ 0 $ 94,163 6,000 $ 0 $ 12,981
Vice President -- 1995 $150,000 $127,500 -- $ 43,500 $ 0 13,500 $ 0 $ 11,142
Engineering 1994 $150,000 $205,500 -- $ 176,250 $ 0 0 $ 0 $ 6,000
John H. Grunewald 1996 $148,846 $ 78,888 -- $ 0 $ 0 0 $ 0 $ 12,707
Vice President and 1995 $170,000 $102,000 -- $ 0 $ 0 19,500 $ 0 $ 11,750
Chief Financial Officer (H) 1994 $170,000 $340,000 -- $ 352,500 $ 0 0 $ 0 $ 5,231
Ed Skomoroh 1996 $140,000 $116,200 -- $ 0 $ 94,163 6,000 $ 0 $ 12,615
Vice President -- 1995 $135,516 $128,740 -- $ 0 $ 0 12,000 $ 0 $ 11,000
Sales and Marketing 1994 $129,400 $177,281 -- $ 176,250 $ 0 0 $ 0 $ 6,000
</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 health club memberships, club dues, financial planning
and tax preparation, Exec-U-Care coverage, as well as standard employee
medical, dental, and disability 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%) provided
that the Executive Officer is employed by the Company at that time. 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 vested immediately. These are the total
outstanding restricted shares or stock units with respect to First Rights
held by the Chief Executive Officer and the other four highest paid
executive officers as of December 31, 1996. The share price at the close of
business on December 31, 1996 was $23.75; therefore, the value of the total
outstanding restricted shares for the Executive Officers at the end of the
fiscal year was $285,000, $356,250, $178,125, $356,250 and $178,125
respectively for Messrs. Wendel, Larson, Baxter, Grunewald and Skomoroh.
(E) The Company granted restricted stock awards to the named officers on May 8,
1996. The 1996 restricted stock awards were approved by the Compensation
Committee of the Board of Directors and in accordance with the 1996
Restricted Stock Plan. The amounts shown in this column are the value of the
restricted shares as of the date of grant. The restricted shares become
freely tradeable only upon the Company achieving certain compounded earnings
growth targets within a four year period. The total number and value of
restricted stock holdings as of December 31, 1996 for the named officers are
as follows: Messrs. Wendel, 9,720, $230,850, Larson, 6,480, $153,900,
Baxter, 2,790, $66,263, Grunewald, 0, $0 and Skomoroh, 2,790, $66,263.
(F) The Company granted stock options to employees (including the Executive
Officers) on May 8, 1996. The 1996 Stock Option grants were approved by the
Compensation Committee of the Board of Directors and in accordance with the
1995 Stock Option Plan.
(G) 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
$17,700, $14,350, $5,481, $5,207, and $5,115 respectively for Messers
Wendel, Larson, Baxter, Grunewald and Skomoroh.
(H) John H. Grunewald retired in January of 1997.
The Company does not maintain any defined benefit or actuarial pension plan
under which benefits are determined primarily by final compensation and years of
service.
9
<PAGE>
OPTION GRANTS FOR 1996 AND POTENTIAL REALIZABLE VALUES
The following table sets forth as to each of the named executive officers
information with respect to option grants during 1996 and the potential
realizable value of such option grants: (i) the number of shares of Common Stock
underlying options granted during 1996, (ii) the percentage that such option
represent of all options granted to employees during 1996, (iii) the exercise
price, (iv) the expiration date and (v) the potential realizable value, assuming
a 5% and 10% annual rate of appreciation, for all stockholders. The 5% and 10%
assumed rates of growth are for illustrative purposes only. They are not
intended to predict future stock prices, which will depend on market conditions
and other factors such as the Company's performance.
OPTION GRANTS DURING 1996 AND
ASSUMED POTENTIAL REALIZABLE VALUES
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE
--------------------------- AT ASSUMED ANNUAL
% OF TOTAL RATES OF STOCK PRICE
OPTIONS APPRECIATION
NUMBER OF GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5% 10%
- ------------------------------------- ----------- -------------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
W. Hall Wendel, Jr................... 21,000 15.35% $ 33.75 05/07/06 $ 445,729 $ 1,129,565
Kenneth D. Larson.................... 14,000 10.23% $ 33.75 05/07/06 $ 297,153 $ 753,043
Charles A. Baxter.................... 6,000 4.39% $ 33.75 05/07/06 $ 127,351 $ 322,733
Ed Skomoroh.......................... 6,000 4.39% $ 33.75 05/07/06 $ 127,351 $ 322,733
</TABLE>
OPTION EXERCISES AND VALUES FOR 1996
The following table sets forth as to each of the named executive officers
information with respect to option exercises during 1996 and the status of their
options on December 31, 1996: (i) the number of shares of Common Stock
underlying options exercised during 1996, (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, 1996 and (iv)
the aggregate dollar value of in-the-money exercisable options on December 31,
1996.
AGGREGATED OPTION EXERCISES DURING 1996 AND
OPTION VALUES ON DECEMBER 31, 1996
<TABLE>
<CAPTION>
VALUE OF
IN-THE-MONEY
SHARES COVERED BY OUTSTANDING OPTIONS
SHARES GAIN AT OUTSTANDING OPTIONS 12/31/96 (A)
COVERED EXERCISE ----------------------------- -----------------------------
NAME BY EXERCISES DATE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
W. Hall Wendel, Jr................ -- -- 0 61,500 -- $ 0
Kenneth D. Larson................. -- -- 0 41,000 -- $ 0
Charles A. Baxter................. -- -- 0 19,500 -- $ 0
John H. Grunewald (B)............. -- -- 0 19,500 -- $ 0
Ed Skomoroh....................... -- -- 0 18,000 -- $ 0
</TABLE>
- ------------------------
(A) Stock options were granted in 1995 and 1996. The exercise price for the 1995
options is $29.00 per share and the exercise price for the 1996 options is
$33.75 per share. The closing Common Stock price reported for the New York
Stock Exchange Composite Transactions on December 31, 1996 (the last trading
day of calendar year 1996) was $23.750.
(B) John H. Grunewald retired in January of 1997.
10
<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.
The Company has employment agreements (the "Agreements") with the persons
named in the Summary Compensation Table and other key employees of the Company
which become effective only upon a Change in Control (as defined in the
Agreements). If upon or within 24 months after a Change in Control, any of the
persons named in the Summary Compensation Table terminates his employment for
Good Reason or such employee's employment is terminated without Cause (as such
terms are defined in the Agreements), he will be entitled to all accrued but
unpaid compensation and benefits and a lump-sum cash payment equal to two times
such employee's average annual cash compensation (including cash bonuses, but
excluding the award or exercise of stock options or stock grants) for the three
fiscal years (or lesser number of years if the employee's employment has been of
shorter duration) of the Company immediately preceding such termination. If such
termination occurs before a cash bonus for any preceding fiscal year has been
paid, the Company is required to pay to the employee the amount of the
employee's cash bonus for such preceding fiscal year as soon as it is
determinable and such amount is to be included in the determination of the
payment to be made pursuant to the Agreement. No cash bonus shall be paid for
any part of the fiscal year in which the termination occurs.
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 during 1996. It is anticipated that
Kaplan, Strangis and Kaplan, P.A. will provide certain legal services to the
Company during 1997.
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, restricted stock, 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.
1996 EXECUTIVE COMPENSATION
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 the minimal guaranteed/fixed compensation.
11
<PAGE>
There are no executives who received compensation in excess of $1 million
during 1996 as defined by Section 162(m) of the Internal Revenue Code.
Based upon a formal study of executive compensation conducted in spring of
1996, 1995 executive total cash compensation (sum of actual base salary and
annual profit sharing payouts) was approximately at market 25th percentile. 1995
executive total compensation (sum of total cash compensation, present value of
long-term incentive grants, and Company contributions for benefits and
perquisites) is approximately at market median.
In fiscal year 1996, base salaries for executives remained relatively
constant; the four most highly compensated executives have not received any base
salary increases in the last three years. Annual bonuses for 1996 were paid in
accordance with the established Company profit sharing plan. Stock options for
1996 were approved by the Compensation Committee of the Board of Directors and
in accordance with the 1995 Stock Option Plan. In 1996, Polaris implemented the
1996 Restricted Stock Plan and granted restricted stock awards. The long-term
incentive opportunity for executives was divided approximately evenly between
stock options and restricted stock.
1996 CHIEF EXECUTIVE OFFICER COMPENSATION
1996 CEO GUARANTEED COMPENSATION (BASE SALARY, BENEFITS AND PERQUISITES)
- Base salary remained at $240,000 for 1996, the same level as the previous
four years.
- Benefits and perquisites paid to Mr. Wendel during 1996 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.
1996 CEO ANNUAL BONUS (PROFIT SHARING AWARD)
- In accordance with the established Company profit sharing plan, Mr. Wendel
received a profit sharing payout of $230,400 in March 1997 for his 1996
performance, a decrease of $33,600 from the prior year profit sharing
payout. Company performance determines the amount of aggregate funding for
the profit sharing plan. The specific amount of Mr. Wendel's payout was
determined based on his individual contributions to the Company's success.
1996 CEO STOCK OPTION AND RESTRICTED STOCK GRANTS
- On May 8, 1996, Mr. Wendel was granted 21,000 stock options and 9,720
restricted stock awards at $33.75/share. The options were granted in
accordance with the 1995 Stock Option Plan and vest on the third
anniversary of the date of grant. The restricted stock awards were granted
in accordance with the 1996 Restricted Stock Plan and the restricted
shares granted thereunder become freely tradeable only upon the Company
achieving certain compounded earnings growth targets within a four year
period.
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
12
<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 & 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, 1992 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>
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
OF POLARIS INDUSTRIES INC., SPORT VEHICLE INDEX, AND S&P 500
INDEX
POLARIS SPORT VEHICLE INDEX S&P 500 INDEX
<S> <C> <C> <C>
1991 $100.00 $100.00 $100.00
1992 $133.68 $159.59 $107.64
1993 $214.53 $190.55 $118.50
1994 $350.98 $197.96 $120.06
1995 $342.68 $202.11 $165.18
1996 $283.33 $261.52 $203.11
Assumes $100 Invested on Jan. 1, 1992
Assumes Dividend Reinvested
Fiscal Year Ending Dec. 31, 1996
</TABLE>
SOURCE: MEDIA GENERAL FINANCIAL SERVICES.
13
<PAGE>
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, 1996. 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.
SUBMISSION OF SHAREHOLDER PROPOSALS
Any proposal of a shareholder intended to be presented at the Company's 1998
Annual Meeting of Shareholders must be received by the Secretary of the Company,
for inclusion in the Company's proxy statement relating to the 1998 Annual
Meeting, by November 1, 1997.
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,
1996, 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 Michael W. Malone, the Vice
President -- Finance, 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 $7,000 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/ Michael W. Malone
Michael W. Malone
VICE PRESIDENT -- FINANCE, CHIEF
FINANCIAL OFFICER
AND SECRETARY
March 28, 1997
14
<PAGE>
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 Michael W. Malone,
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 26, 1997, at the Annual Meeting of
Shareholders to be held on May 22, 1997, or any postponements or adjournments
thereof.
1. ELECTION OF / / FOR all nominees listed / / WITHHOLD AUTHORITY to
DIRECTORS below (except as marked to vote for all nominees below
the contrary below)
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THE NOMINEE'S NAME IN THE SPACE PROVIDED BELOW)
Nominees to serve for a term of three years expiring at the 2000 Annual Meeting
of Shareholders.
- ------------------------- ------------------------- -------------------------
Gregory R. Palen Stephen G. Shank W. Hall Wendel, Jr.
Nominee to serve for a term of two years expiring at the 1999 Annual Meeting of
Shareholders.
-------------------------
Raymond J. Biggs
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 PROPOSAL 1.
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
