UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities
Exchange Act of 1934
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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Polaris Industries Inc.
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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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):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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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.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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Notice of
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2017 Annual Meeting
of
Shareholders
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Thursday,
April 27, 2017
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9:00
a.m. Local Time
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2100
Highway 55, Medina, Minnesota, 55340
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Polaris Industries Inc.
2100 Highway 55
Medina, Minnesota 55340
763-542-0500
Fax: 763-542-0599
Dear Fellow Shareholder:
The Board of Directors of Polaris Industries
Inc. (“Polaris”) joins me in extending a cordial invitation to attend our 2017 Annual Meeting of Shareholders which
will be held at our corporate headquarters, 2100 Highway 55, Medina, Minnesota, 55340, on Thursday, April 27, 2017 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’ 2016 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.
Again this year, we will be using the “Notice
and Access” method of furnishing proxy materials to you over the Internet. We believe that this process will provide you
with a convenient and quick way to access your proxy materials and vote your shares, while allowing us to reduce the environmental
impact of our Annual Meeting and the costs of printing and distributing the proxy materials. On or about March 10, 2017, we will
mail to many of our shareholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions
on how to access our Proxy Statement and Annual Report and vote electronically over the Internet. The Notice also contains instructions
on how to receive a paper copy of your proxy materials. We will not be mailing the Notice to shareholders who previously elected
to receive paper copies of the proxy materials, but rather will mail those shareholders a full set of the proxy materials.
It is important that your shares be represented
at the meeting whether or not you plan to attend in person. Please vote electronically over the Internet or, if you receive a paper
copy of the proxy card by mail, by telephone or by returning your signed proxy card in the envelope provided. If you do attend
the meeting and desire to vote in person, you may do so by following the procedures described in the Proxy Statement 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,
Scott W. Wine
Chairman of the Board and Chief
Executive Officer
March 10, 2017
Enclosures
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Polaris Industries Inc.
2100 Highway 55
Medina, Minnesota 55340
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Notice of
Annual Meeting
of Shareholders
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Thursday, April 27, 2017
9:00 a.m. Local Time
2100 Highway 55, Medina, Minnesota, 55340
Polaris Industries Inc. will hold its
2017 Annual Meeting of Shareholders at its corporate headquarters located at 2100 Highway 55, Medina, Minnesota, 55340, on
Thursday, April 27, 2017. The meeting will begin at 9:00 a.m. local time. The proxy materials were either made available to
you over the Internet or mailed to you beginning on or about March 10, 2017. At the meeting, our shareholders will be asked
to:
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1.
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Elect two Class II directors for three-year terms ending in 2020.
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2.
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Approve an amendment to the Restated Articles of Incorporation to require a majority vote for the election of directors in uncontested elections.
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3.
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Ratify the selection
of Ernst & Young LLP as our independent registered public accounting firm for fiscal 2017.
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4.
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Submit an advisory vote to approve the compensation of our Named Executive Officers (as described in the accompanying Proxy Statement).
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5.
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Submit an advisory vote on whether future votes to approve the compensation of our Named Executive Officers should occur every one, two or three years.
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6.
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Act on any other matters that may properly come before the meeting.
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The Board recommends that shareholders vote
FOR
each of the following:
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1.
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The director nominees named in the accompanying Proxy Statement.
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2.
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The approval of an amendment to the Restated Articles of Incorporation to require a majority vote for the election of directors in uncontested elections.
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3.
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The ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for fiscal 2017.
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4.
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The advisory vote to approve the compensation of our Named Executive Officers.
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The Board recommends that shareholders vote
that future votes to approve the compensation of our Named Executive Officers should occur every year; however, shareholders are
not voting to approve or disapprove the Board’s recommendation on this matter and may vote for any of the available choices
on the matter.
Only shareholders of record at the close of business on February
28, 2017 may vote at the Annual Meeting or any adjournment thereof.
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Dated: March 10, 2017
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By Order of the Board of Directors
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Stacy L. Bogart
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Senior Vice President-General Counsel
and Secretary
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YOUR VOTE IS IMPORTANT
Whether or not you plan to attend the meeting,
we urge you to vote as soon as possible via the Internet as described in the Notice of Internet Availability of Proxy Materials.
If you received a copy of the proxy card by mail, you may vote by Internet or telephone as instructed on the proxy card, or you
may sign, date and mail the proxy card in the envelope provided.
IMPORTANT NOTICE REGARDING THE
AVAILABILITY OF PROXY MATERIALS FOR THE
2017 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 27, 2017.
Our Proxy Statement for the 2017 Annual Meeting of Shareholders,
our Annual Report to Shareholders for the fiscal year ended December 31, 2016 and our Annual Report on Form 10-K for the fiscal
year ended December 31, 2016 are available at https://materials.proxyvote.com/731068.
Table of Contents
POLARIS INDUSTRIES INC.
2100 Highway 55
Medina, Minnesota 55340
PROXY STATEMENT
Questions and Answers about the Annual
Meeting and Voting
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Q:
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Why
did I receive a notice in the mail regarding the Internet availability of proxy materials instead of a paper copy of the proxy
materials?
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A:
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“Notice and Access” rules adopted by the United States Securities and Exchange Commission (the “SEC”) permit us to furnish proxy materials, including this Proxy Statement and our Annual Report for 2016, to our shareholders by providing access to such documents on the Internet instead of mailing printed copies. Most shareholders will not receive printed copies of the proxy materials unless they request them. Instead, the Notice, which was mailed to most of our shareholders, will instruct how you may access and review all of the proxy materials on the Internet. The Notice also instructs how you may submit your proxy on the Internet. If you would like to receive a paper or email copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice. Any request to receive proxy materials by mail will remain in effect until you revoke it.
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Q:
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Who
can vote?
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A:
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You can vote if you were a shareholder at the close of business on the record date of February 28, 2017. There were a total of 62,930,847 shares of our common stock outstanding on February 28, 2017. The Notice of Internet Availability of Proxy Materials (the “Notice”), this Proxy Statement and any accompanying proxy card, along with the 2016 Annual Report to Shareholders and the 2016 Annual Report on Form 10-K, were first made available to you beginning on or about March 10, 2017. The Proxy Statement summarizes the information you need to vote at the Annual Meeting.
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Q:
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What
constitutes a quorum to conduct business at the Annual Meeting?
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A:
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A majority of the outstanding shares
of our common stock represented in person or by proxy is necessary to constitute a quorum for the transaction of business at the
Annual Meeting. As of the record date, 62,930,847 shares of our common stock were issued and outstanding. A majority of
those shares, or 31,465,424 shares of our common stock, will constitute a quorum. If you submit a valid proxy or attend the Annual
Meeting, your shares will be counted to determine whether there is a quorum. A properly executed proxy marked “ABSTAIN”
with respect to a proposal will be counted for purposes of determining whether there is a quorum and will be considered present
in person or by proxy and entitled to vote on that proposal, but will not be deemed to have been voted in favor of such proposal.
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Q:
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What
am I voting on, what vote is required to approve each proposal and how does the Board recommend I vote?
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A:
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The table below summarizes the proposals that will be voted on, the vote required to approve each item, how votes are counted and how the Board recommends you vote:
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2017 Proxy Statement -
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1
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Proposal
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Vote Required
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Voting Options
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Board
Recommendation
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Broker
Discretionary
Voting Allowed
(1)
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Impact
of
Withhold/
Abstention
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Proposal 1
– Elect two Class II directors for three-year terms ending in 2020
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Plurality of the votes cast
(2)
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FOR,
WITHHOLD
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FOR
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No
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None
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Proposal 2
– Approve an amendment to the Restated Articles of Incorporation to require a majority vote for the election of directors in uncontested elections
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Majority of votes present in person or by proxy and entitled to vote on this item
(3)
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FOR, AGAINST,
ABSTAIN
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FOR
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No
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AGAINST
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Proposal 3
– Ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for fiscal 2017
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Majority of votes present in person or by proxy and entitled to vote on this item
(3)
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FOR, AGAINST,
ABSTAIN
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FOR
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Yes
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AGAINST
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Proposal 4
– Advisory vote to approve the compensation of our Named Executive Officers
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We will consider our shareholders to have approved the compensation of our Named Executive Officers if there are more votes cast “For” the proposal than “Against”
(4)
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FOR, AGAINST,
ABSTAIN
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FOR
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No
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None
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Proposal 5
– Advisory vote on whether future votes to approve the compensation of our Named Executive Officers should occur every one, two or three years
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We will consider our shareholders to have selected the frequency option that receives the highest number of votes
(4)
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ONE YEAR,
TWO YEARS,
THREE YEARS
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ONE YEAR
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No
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None
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(1)
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A
“broker non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power with respect to that proposal and has not received voting instructions
from the beneficial owner. If a broker returns a “non-vote” proxy indicating a lack of authority to vote on a
proposal, then the shares covered by such a “non-vote” proxy will be deemed present at the meeting for purposes
of determining a quorum, but not present for purposes of calculating the vote with respect to that particular proposal. Broker
non-votes will generally have no effect in determining whether any proposals to be voted on at the Annual Meeting are approved,
although if a quorum for the Annual Meeting could not be established without including broker non-votes, then the broker non-votes
required to establish the minimum quorum would have the same effect as votes against Proposals 2 and 3 .
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(2)
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A
plurality means that the nominees with the greatest number of votes are elected as directors up to the maximum number of directors
to be chosen at the meeting. Our Corporate Governance Guidelines require that any director who fails to receive a majority
of the votes cast “for” and “withhold” in his or her election in an uncontested election must promptly
tender his or her resignation. In that event, the Corporate Governance and Nominating Committee must make a recommendation
to the Board on whether to accept or reject the tender of resignation. The Board, after taking into account the recommendation,
must publicly disclose its decision and rationale within 90 days after the election. The director who failed to receive a
majority vote will not participate in the decision.
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(3)
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The
voting standard assumes that the number of shares voted in favor of such proposal constitute more than 25% of the outstanding
shares of our common stock.
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(4)
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The
advisory votes to approve the compensation of our Named Executive Officers and the frequency of future votes to approve the
compensation of our Named Executive Officers are not binding on the Board, but the Compensation Committee will consider the
shareholders’ advisory input when establishing compensation for our Named Executive Officers in future years and determining
whether future votes to approve the compensation of our Named Executive Officers should occur every one, two or three years.
We will disclose the Board’s determination as to whether future votes to approve the compensation of our Named Executive
Officer will occur every one, two or three years in a Form 8-K filed within 4 business days of the Annual Meeting.
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Q:
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How
will the proxies vote on any other business brought up at the meeting?
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A:
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By submitting your proxy, you authorize the proxies to use their judgment to determine how to vote on any other matter brought before the Annual Meeting. We do not know of any other business to be considered at the Annual Meeting.
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The proxies’ authority to vote according to their judgment applies only to shares you own as the shareholder of record.
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2017 Proxy Statement -
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2
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Q:
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How
do I cast my vote?
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A:
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If you are a shareholder whose shares are registered in your name, you may vote your shares in person at the Annual Meeting or by using one of the three following methods:
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Vote by Internet by following the instructions for Internet voting shown on the Notice,
or if you requested printed proxy materials or you receive a paper copy of the proxy card, by following the instructions provided
with your proxy materials and on your proxy card.
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If you elected to receive printed proxy materials, you may also:
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•
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Vote by phone following
the instructions for telephone voting provided with your printed proxy materials and on your proxy card.
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•
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Vote by completing, signing, dating and mailing the proxy card
in the envelope provided. If you vote by phone or Internet, please do not mail your proxy card.
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If you are a street-name shareholder (meaning that your shares are registered in the name of your bank or broker), you will receive instructions from your bank, broker or other nominee describing how to vote your shares.
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Whichever method you use, the proxies identified on the proxy will vote the shares of which you are the shareholder of record in accordance with your instructions. If you submit a proxy without giving specific voting instructions, the proxies will vote those shares as recommended by the Board.
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Q:
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Can
I vote my shares by filling out and returning the Notice?
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A:
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No. The Notice identifies the items to be voted on at the Annual Meeting, but you cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote by Internet, by requesting and returning a paper proxy card or voting instruction card, or by submitting a ballot in person at the meeting.
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Q:
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Can
I revoke or change my vote?
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A:
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You can revoke your proxy at any time before it is voted by:
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•
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Submitting
a new proxy with a more recent date than that of the first proxy given by (1) following the telephone voting instructions
or (2) following the Internet voting instructions or (3) completing, signing, dating and returning a new proxy card to us;
or
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•
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Giving written notice
before the vote at the meeting to our Secretary, stating that you are revoking your proxy.
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Unless
you decide to vote your shares in person, you should revoke your prior proxy in the same way you initially submitted it -
that is, by telephone, Internet or mail.
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Q:
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Who
will count the votes?
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A:
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Broadridge Financial Solutions, our independent proxy tabulator, will count the votes. A representative of Broadridge Financial Solutions and Sean Bagan, our Treasurer, will act as inspectors of election for the meeting.
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Q:
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Is
my vote confidential?
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A:
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All proxies and all vote tabulations that identify an individual shareholder are confidential. Your vote will not be disclosed, except:
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•
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To allow Broadridge
Financial Solutions to tabulate the vote;
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To allow Sean Bagan,
our Treasurer, and a representative of Broadridge Financial Solutions to certify the results of the vote; and
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•
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To meet applicable legal requirements.
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Q:
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What
shares are included on my proxy?
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A:
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Your proxy will represent all shares registered to your account in the same social security number and address, including any full and fractional shares you own under the Polaris Industries Inc. Amended and Restated 2007 Omnibus Incentive Plan (the “Omnibus Plan”) or the Polaris Industries Inc. Employee Stock Purchase Plan, as well as any shares you own through the Polaris Employee Stock Ownership Plan (the “ESOP”) and the Polaris 401(k) Retirement Savings Plan (the “401(k) Plan”).
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2017 Proxy Statement -
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3
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Q:
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What
happens
if
I
don’t
vote
the
shares
that
I
own?
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A:
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For shares registered in
your name
. If you do not vote shares that are registered in your name by voting in person at the Annual Meeting or by
proxy through the Internet, telephone or mail as described on the Notice, the Internet voting site or, if you requested printed
proxy materials or receive a paper copy of the proxy card, by following the instructions therein, your shares will
not
be counted in determining the presence of a quorum or in determining the outcome of the vote on the proposals presented
at the Annual Meeting.
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For shares held in street name
. If you hold shares through a broker, you will receive
voting instructions from your broker. If you do not submit voting instructions to your broker and your broker does not have
discretion to vote your shares on a particular matter, then your shares will not be counted in determining the outcome of
the vote on that matter at the Annual Meeting. See effect of “broker non-votes” as described above. Your broker
will not have discretion to vote your shares for any matter to be voted upon at the Annual Meeting other than the ratification
of the selection of our independent registered public accounting firm. Accordingly, it is important that you provide voting
instructions to your broker for the matters to be voted upon at the Annual Meeting.
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For shares held in certain employee plans
. If you hold shares in the ESOP or the
401(k) Plan and you do not submit your voting instructions by proxy through the mail, telephone or Internet as described on
the proxy card, those shares will be voted in the manner described in the following two questions.
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Q:
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How
are
common
shares
in
the
Polaris
Employee
Stock
Ownership
Plan
voted?
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A:
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If you hold shares of common
stock through the ESOP, your proxy card will instruct the trustee of the plan how to vote the shares allocated to your plan
account. If you do not return your proxy card (or you submit it with an unclear voting designation or with no voting designation
at all), then the plan trustee will vote the shares in your account in proportion to the instructions actually received by
the trustee from participants who give voting instructions. Votes under the ESOP receive the same confidentiality as all other
votes.
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Q:
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How
are
common
shares
in
the
Polaris
401(k)
Retirement
Savings
Plan
voted?
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A:
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If you hold shares of our common stock
through the 401(k) Plan, your proxy card will instruct the trustee of the plan how to vote the shares allocated to your plan
account. If you do not return your proxy card (or you submit it with an unclear voting designation or with no voting designation
at all), then the shares in your account will not be voted. Votes under the 401(k) Plan receive the same confidentiality as
all other votes.
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Q:
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What
does
it
mean
if
I
get
more
than
one
Notice
or
proxy
card?
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A:
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Your shares are probably registered
in more than one account. You should provide voting instructions for all Notices and proxy cards you receive.
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Q:
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How
many
votes
can
I
cast?
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A:
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You are entitled to one vote per share
on all matters presented at the meeting.
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Q:
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When
are
shareholder
proposals
and
nominees
due
for
the
2018
Annual
Meeting
of
Shareholders?
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A:
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If you want
to submit a shareholder proposal or nominee for the 2018 Annual Meeting of Shareholders, you must submit the proposal in
writing to our Corporate Secretary, Polaris Industries Inc., 2100 Highway 55, Medina, Minnesota 55340, so it is received by
the relevant date set forth on page 57 under the caption “
Submission of Shareholder Proposals and
Nominations.
”
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Q:
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How
is
this
proxy
solicitation
being
conducted?
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A:
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We engaged D.F. King & Co., Inc.
to assist in the distribution of proxy materials and the solicitation of votes for a fee of $16,500, plus out-of-pocket expenses.
We will pay for the cost of soliciting proxies and we will reimburse brokerage houses and other custodians, nominees and fiduciaries
for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to our shareholders. In addition,
some of our employees may solicit proxies. D.F. King & Co., Inc. and our employees may solicit proxies in person, by telephone
and by mail. Our employees will not receive special compensation for these services, which the employees will perform as part
of their regular duties.
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2017 Proxy Statement -
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4
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Security Ownership of Certain Beneficial
Owners and Management
The following table sets forth certain information
with respect to the beneficial ownership of our common stock as of February 17, 2017 by each person known to us who then beneficially
owned more than 5% of the outstanding shares of our common stock, each director, each nominee for director, each Named Executive
Officer named in the Summary Compensation Table appearing below and all current executive officers and directors as a group. As
of February 17, 2017, there were 62,939,102 shares of common stock outstanding. Except as otherwise indicated, the named beneficial
owner has sole voting and investment powers with respect to the shares held by such beneficial owner. The table also includes
information with respect to common stock equivalents and deferred stock units credited as of February 17, 2017 to the accounts
of each director as described in this Proxy Statement under the heading “
Director Compensation.
”
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Name and Address of Beneficial Owner
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Amount and
Nature of Beneficial
Ownership
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Percent
of Class
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Common Stock
Equivalents
(11)
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Deferred Stock
Units
(12)
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BlackRock,
Inc.
(1)
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5,146,283
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8.2
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%
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The
Vanguard Group
(2)
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5,119,025
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8.1
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%
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Manulife
Financial Corporation
(3)
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4,730,656
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7.5
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%
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State
Street Corporation
(4)
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4,361,394
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6.9
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%
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Polaris
Industries Inc. Employee Stock Ownership Plan
(5)
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3,811,031
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6.1
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%
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Wells
Fargo & Company
(6)
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3,481,851
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5.5
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%
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Scott
W. Wine
(7)
Chairman of the Board and Chief Executive Officer
|
|
|
906,707
|
|
|
1.4
|
%
|
|
|
|
|
|
|
|
Michael T.
Speetzen
Executive Vice President – Finance and Chief Financial Officer
|
|
|
5,333
|
|
|
*
|
|
|
|
|
|
|
|
|
Robert P.
Mack
(7)
Senior Vice President – Corporate Development and Strategy, and President – Adjacent Markets
|
|
|
1,500
|
|
|
*
|
|
|
|
|
|
|
|
|
Kenneth
J. Pucel
(7)(8)
Executive Vice President – Global Operations,
Engineering & Lean
|
|
|
60,972
|
|
|
*
|
|
|
|
|
|
|
|
|
Stephen
L. Eastman
(7)(9)
President – Parts, Garments and Accessories
|
|
|
57,984
|
|
|
*
|
|
|
|
|
|
|
|
|
Annette K.
Clayton
Director
|
|
|
0
|
|
|
*
|
|
|
|
32,621
|
|
|
22,368
|
|
Kevin M.
Farr
Director
|
|
|
2,100
|
|
|
*
|
|
|
|
3,508
|
|
|
3,334
|
|
Gary E. Hendrickson
Director
|
|
|
0
|
|
|
*
|
|
|
|
6,127
|
|
|
8,055
|
|
Gwenne A.
Henricks
Director
|
|
|
0
|
|
|
*
|
|
|
|
1,780
|
|
|
1,347
|
|
Bernd F.
Kessler
Director
|
|
|
0
|
|
|
*
|
|
|
|
9,197
|
|
|
10,904
|
|
Lawrence
D. Kingsley
Director
|
|
|
6,925
|
|
|
*
|
|
|
|
1,404
|
|
|
1,347
|
|
John P. Wiehoff
Director
|
|
|
0
|
|
|
*
|
|
|
|
21,869
|
|
|
19,276
|
|
|
All
directors and current executive officers as a group (16 persons)
(7)-(10)
|
|
|
1,408,658
|
|
|
2.2
|
%
|
|
|
76,506
|
|
|
66,631
|
|
|
*
|
Indicates
ownership of less than 1%.
|
|
(1)
|
The
address for BlackRock, Inc. and its affiliates (collectively, “BlackRock”) is 55 East 52
nd
Street,
New York, NY 10055. BlackRock, an investment advisor, has sole voting power with respect to 4,728,275 shares, shared voting
and shared dispositive power with respect to 9,821 shares, and sole dispositive power with respect to 5,136,462 shares. This
information was reported on a Schedule 13G/A filed by BlackRock with the SEC on January 25, 2017, and is as of
December 31, 2016.
|
|
(2)
|
The
address for The Vanguard Group and its subsidiaries (collectively, “Vanguard”) is 100 Vanguard Boulevard,
Malvern, PA 19355. Vanguard has sole voting power with respect to 47,187 shares, shared voting power with respect to 11,114
shares, sole dispositive power with respect to 5,061,203 shares and shared dispositive power with respect to 57,822 shares.
This information was reported on a Schedule 13G/A filed by Vanguard with the SEC on February 13, 2017, and is as of December
31, 2016.
|
|
2017 Proxy Statement -
|
|
5
|
|
(3)
|
The
address for Manulife Financial Corporation and its subsidiaries (collectively, “Manulife”) is 200 Bloor Street
East, Toronto, Ontario, Canada, M4W 1E5. Manulife has sole voting and sole dispositive power with respect to 4,730,656 shares.
This information was reported on a Schedule 13G filed by Manulife with the SEC on February 14, 2017, and is as of December
31, 2016.
|
|
(4)
|
The
address for State Street Corporation and its subsidiaries (collectively, “State Street”) is State Street Financial
Center, 1 Lincoln Street, Boston, MA 02111. State Street has shared voting and shared dispositive power with respect to 4,361,394
shares. This information was reported on a Schedule 13G filed by State Street with the SEC on February 8, 2017, and is as
of December 31, 2016.
|
|
(5)
|
The
address for the ESOP is 2100 Highway 55, Medina, MN 55340. The ESOP has shared voting and shared dispositive power with respect
to 3,811,031 shares. This information was reported on a Schedule 13G/A filed by the ESOP with the SEC on February 14, 2017,
and is as of December 31, 2016.
|
|
(6)
|
The
address for Wells Fargo & Company and its subsidiaries (collectively, “Wells Fargo”) is 420 Montgomery Street,
San Francisco, CA, 94163. Wells Fargo has sole voting power with respect to 13,635 shares, shared voting power with respect
to 3,439,184 shares, sole dispositive power with respect to 13,635 shares, and shared dispositive power with respect to 3,468,215
shares. This information was reported on a Schedule 13G filed by Wells Fargo with the SEC on January 27, 2017, and is as of
December 31, 2016.
|
|
(7)
|
Includes
shares which could be purchased by the indicated person upon the exercise of vested options or restricted stock units within
60 days after February 17, 2017: Mr. Wine, 591,000 shares; Mr. Mack, 1,500 shares; Mr. Pucel, 35,500 shares; Mr. Eastman,
36,500 shares; and all executive officers combined, 916,500 shares.
|
|
(8)
|
Includes
20,000 restricted shares of common stock awarded to Mr. Pucel under the Omnibus Plan in December 2014. All of the 20,000 unvested
restricted shares granted to Mr. Pucel become freely tradable in December 2017, provided that he continues to be an employee.
|
|
(9)
|
Includes
10,000 performance restricted shares of common stock awarded to Mr. Eastman under the Omnibus Plan. All of the 10,000
restricted shares become freely tradable only if we achieve certain financial targets, provided Mr. Eastman continues to
be an employee. Also includes 138 shares held by Mr. Eastman in the 401(k) Plan, over which he holds shared voting power.
|
|
(10)
|
Includes
45,000 aggregate restricted shares of common stock awarded to current executive officers as a group under the Omnibus Plan.
All of the 45,000 restricted shares become freely tradable only if the holders continue to be employees for specified periods
of time and, in some cases, if specified performance goals are satisfied.
|
|
(11)
|
Represents
the number of common stock equivalents credited as of February 17, 2017 to the accounts of each non-employee director and
the accompanying dividend equivalent units, as maintained by us under the Polaris Industries Inc. Deferred Compensation Plan
for Directors. A director will receive one share of common stock for every common stock equivalent and dividend equivalent
unit held by that director upon his or her termination of service as a member of the Board or upon a change of control of
our Company.
|
|
(12)
|
Represents
the number of deferred stock units awarded to each of the non-employee directors under the Omnibus Plan and the accompanying
dividend equivalent units. A director will receive one share of common stock for every deferred stock unit and dividend equivalent
unit upon his or her termination of service as a director or upon a change in control of our Company.
|
|
2017 Proxy Statement -
|
|
6
|
Corporate Governance
Board Leadership
Structure
Mr. Wine currently holds the titles of Chairman
and Chief Executive Officer (“CEO”) of Polaris. The Board believes that the interests of having a unified leadership
structure with the positions of Chairman and CEO being held by the same person is currently appropriate for our Company. Our Corporate
Governance Guidelines provide that if the CEO is also the Chairman of the Board, the Chair of the Corporate Governance and Nominating
Committee, who is an independent director, will serve as the Lead Director. Mr. Wiehoff is currently our Lead Director, and his
responsibilities as Lead Director include, among others:
|
•
|
Preside over all meetings
of the Board at which the Chairman is not present, including executive sessions of the independent directors;
|
|
|
|
|
•
|
Serve as a liaison between the Chairman and the independent
directors;
|
|
|
|
|
•
|
In consultation with the Chairman, approve:
|
|
|
|
|
|
–
|
Key information sent to the Board;
|
|
|
|
|
|
|
–
|
Meeting agendas for the Board; and
|
|
|
|
|
|
|
–
|
Meeting schedules to assure that there is sufficient time for discussion
of all agenda items;
|
|
|
|
|
|
•
|
Have the authority to call meetings of the independent directors;
|
|
|
|
|
•
|
If requested by major shareholders, ensure his/her availability
for consultation and direct communication;
|
|
|
|
|
•
|
Conduct and facilitate an annual Board self-evaluation;
|
|
|
|
|
•
|
Communicate with the CEO about strategic business issues, governance
processes, and board relationships; and
|
|
|
|
|
•
|
Coordinate with the Compensation Committee on CEO evaluation.
|
|
|
|
The Board believes that its independent Board
committees and Lead Director provide appropriate independent Board leadership and oversight.
Risk
Oversight
Our Audit Committee is primarily responsible
for regularly reviewing and discussing with management our major financial risk exposures and the steps management has taken to
monitor and control such exposures, including management’s guidelines and policies with respect to risk assessment and risk
management. When the Board deems it appropriate, responsibility of oversight of a specific risk is assigned to another one of the
Board’s committees.
We engage in an Enterprise
Risk Management (“ERM”) process. The ERM process consists of periodic risk assessments performed by various
functional management groups during the year. At least twice a year, executive management presents these assessments to the
Audit Committee to ensure that the process is sound and complete, oversight is appropriate, and the risks and risk
assessments are thoroughly reviewed. In addition, the Audit Committee reports regularly to the full Board, which also
considers our risk profile. While our management is responsible for day-to-day risk management identification and mitigation,
the Board, directly and through its committees, oversees the execution of the ERM process. We believe this division of
responsibilities is the most effective approach for addressing the risks facing our Company and that our Board leadership
structure supports this approach.
Board Diversity
The Corporate Governance and Nominating
Committee is responsible for identifying individuals who it considers qualified to become Board members. In furtherance of this
duty, the Corporate Governance and Nominating Committee considers, as required by its charter, the Board’s overall balance
of diversity of perspectives, backgrounds and experiences, although it does not have a formal policy regarding the consideration
of diversity of Board members. The Corporate Governance and Nominating Committee views diversity broadly and evaluates a wide
range of criteria as it makes its selections, including, among others, functional areas of experience, educational background,
employment experience, and leadership performance. The Corporate Governance and Nominating Committee also assesses those intangible
factors it deems necessary to develop a heterogeneous and cohesive Board such as integrity, judgment, intelligence, and the willingness
and ability of the candidate to devote adequate time to Board duties for a sustained period.
Our Board and each of its committees engage
in an annual self-evaluation process. As part of that process, directors provide feedback on whether the Board is meeting its diversity
objectives and how the composition of the Board should be altered in order to enhance its value to our Company and shareholders.
|
2017 Proxy Statement -
|
|
7
|
Corporate Governance
Guidelines and Independence
Our Board has adopted Corporate
Governance Guidelines, which may be viewed online on our website at
www.polaris.com
. Under our Corporate Governance
Guidelines, which adopt the current standards for “independence” established by the New York Stock Exchange (the
“NYSE”), a majority of the members of the Board must be independent as determined by the Board. In making its
determination of independence, among other things, the Board must have determined that the director has no material
relationship with the Company either directly or indirectly as a partner, shareholder or officer of an organization that has
a relationship with us. The Board of Directors has determined that Ms. Clayton and Ms. Henricks, and Messrs. Farr,
Hendrickson, Kessler, Kingsley, and Wiehoff are independent. Mr. Schreck, who retired as a member of the Board in April, was
also determined to be independent. Mr. Wine, our Chairman and CEO, is the only director who is not independent.
The Board based its independence determinations,
in part, upon a review by the Corporate Governance and Nominating Committee and the Board of certain transactions between the Company
and companies with which certain of our directors have relationships, each of which was made in the ordinary course of business,
at arm’s length, at prices and on terms customarily available to unrelated third party vendors or customers generally, in
amounts that are not material to our business or the business of such unaffiliated corporation, and in which the director had no
direct or indirect personal interest, nor received any personal benefit. Specifically, the Corporate Governance and Nominating
Committee and the Board reviewed ordinary course of business purchases by us from C. H. Robinson Worldwide, where Mr. Wiehoff is,
and during fiscal 2016 was, the CEO. The payments were less than the greater of $1,000,000 or 2.0% of the recipient’s gross
revenues in fiscal 2016. Accordingly, a majority of our Board is considered to be independent. Additionally, all current members
of our Audit, Compensation, and Corporate Governance and Nominating Committees are considered to be independent.
Code
of Business Conduct and Ethics
We have adopted a Code of Business Conduct
and Ethics applicable to all employees, including our CEO, our Chief Financial Officer (“CFO”) and all other executive
officers, and the Board. A copy of the Polaris Code of Business Conduct and Ethics is available on our website at
www.polaris.com
.
In the event we waive any of the provisions of the Polaris Code of Business Conduct and Ethics with respect to the CEO, CFO, any
executive officer or member of the Board that relates to any element of the definition of “code of ethics” enumerated
in Item 406(b) of Regulation S-K under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), we
intend to disclose such actions on our website at the same location.
Hedging
and Pledging Policy
We adopted a policy that prohibits
Directors and executive officers from engaging in hedging transactions with respect to our common stock. We also adopted a
policy that permits Directors and executive officers to pledge our common stock as collateral for a loan only if it is
pre-approved by the Company’s General Counsel or CFO. The Director or executive officer must clearly demonstrate the
financial capacity to repay the loan without resorting to the pledged securities.
Communications
with the Board
Under our Corporate Governance Guidelines,
a process has been established by which shareholders and other interested parties may communicate with members of the Board. Any
shareholder or other interested party who desires to communicate with the Board, individually or as a group, may do so by writing
to the intended member or members of the Board, c/o Corporate Secretary, Polaris Industries Inc., 2100 Highway 55, Medina, Minnesota
55340.
All communications received in accordance
with these procedures will be reviewed initially by the office of our Corporate Secretary to determine whether the communication
is a message to one or more of our directors and then will be relayed to the appropriate director or directors unless the Corporate
Secretary determines that the communication is an advertisement or other promotional material. The director or directors who receive
any such communication will have discretion to determine whether the subject matter of the communication should be brought to
the attention of the full Board or one or more of its committees and whether any response to the person sending the communication
is appropriate.
|
2017 Proxy Statement -
|
|
8
|
Board Meetings
During 2016, the full Board met seven
times. Each of the meetings was preceded and/or followed by an executive session of the Board without management in
attendance, chaired by Mr. Wiehoff. Each of our directors attended at least 75 percent of the meetings of the Board and any
committee on which that director served in 2016. The Board also took action in writing four times in 2016. We do not maintain
a formal policy regarding the Board’s attendance at annual shareholder meetings; however, Board members are expected to
regularly attend all Board meetings and meetings of the committees on which they serve as well as the annual shareholder
meetings. All then-current members of the Board attended our 2016 Annual Meeting.
Committees of
the Board and Meetings
The Board has designated four standing committees.
The Audit Committee, the Compensation Committee, the Corporate Governance and Nominating Committee, and the Technology Committee
each operate under a written charter, which is available on our website at
www.polaris.com.
The current membership of each
committee and its principal functions, as well as the number of times it met during 2016, are described below.
|
Audit Committee
Members:
Kevin M. Farr, Chair Gwenne A. Henricks Bernd F. Kessler Lawrence
D. Kingsley
|
|
All members of the Audit Committee have been determined to be
“independent” and “financially literate” by the Board in accordance with our Corporate Governance Guidelines,
SEC rules and the applicable listing requirements of the NYSE. Additionally, Messrs. Farr, Kessler, and Kingsley have each been
determined by the Board to be an “Audit Committee Financial Expert” as that term has been defined by the SEC. None
of the members of the Audit Committee currently serve on the audit committees of more than three public companies.
Functions:
The Audit Committee assists the Board in fulfilling its fiduciary
responsibilities by overseeing our financial reporting and public disclosure activities. The Audit Committee’s primary purposes
and responsibilities are to:
|
|
|
|
|
|
|
|
|
•
|
Assist the Board of Directors in its oversight of (a) the integrity of our financial statements, (b) the effectiveness of our internal control over financial reporting, (c) our compliance with legal and regulatory requirements, (d) the independent auditor’s performance, qualifications and independence, and (e) the responsibilities, performance, budget and staffing of our internal audit function;
|
|
|
|
|
|
|
|
|
•
|
Prepare the Audit Committee Report that appears later in this Proxy Statement;
|
|
|
|
|
|
|
|
|
•
|
Serve as an independent and objective party to oversee our financial reporting process and internal control system; and
|
|
|
|
|
|
|
|
|
•
|
Provide an open avenue of communication among the independent auditor, financial and senior management, the internal auditors and the Board.
|
|
|
|
|
|
|
|
|
The Audit Committee, in its capacity as a committee of the Board, is directly responsible for the appointment, compensation and oversight of the work of any independent registered public accounting firm employed by us (including resolution of any disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work or performing other audit, review or attestation services for us, and each such independent registered public accounting firm reports directly to the Audit Committee. This committee met nine times during 2016.
|
|
2017 Proxy Statement -
|
|
9
|
|
Compensation Committee
Members:
Gary E. Hendrickson, Chair
Annette K. Clayton
John P. Wiehoff
|
|
All members of the Compensation Committee have been determined
to be “independent” by the Board in accordance with our Corporate Governance Guidelines and the applicable listing
requirements of the NYSE.
Functions:
The Compensation Committee’s duties and responsibilities
include, among other things, the responsibility to:
|
|
|
•
|
Assist the Board in establishing a philosophy and policies regarding executive and director compensation;
|
|
|
|
|
|
|
•
|
Provide oversight to the administration of our director and executive compensation programs;
|
|
|
|
|
|
|
|
|
•
|
Administer our stock option, restricted stock and other equity-based and cash incentive plans;
|
|
|
|
|
|
|
|
|
•
|
Review and approve the compensation of directors, executive officers and senior management;
|
|
|
|
|
|
|
|
|
•
|
Review and discuss the Compensation Discussion and Analysis that appears later in this Proxy Statement and prepare any report on executive compensation required by the rules and regulations of the SEC or other regulatory body, including the Compensation Committee Report that appears later in this Proxy Statement; and
|
|
|
|
|
|
|
|
|
•
|
Review the process for managing executive development and succession, assist the Board in management development and succession planning and review with the CEO the confidential written procedure for the timely and efficient transfer of his or her responsibilities in the event of his or her sudden incapacitation or departure.
|
|
|
|
|
|
|
|
|
The Compensation Committee has the resources and appropriate authority to discharge its duties and responsibilities, including the authority to retain independent counsel and other independent experts or consultants. The committee has the sole authority to select, retain and terminate a compensation consultant and to approve the compensation consultant’s fees and other retention terms. The committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the committee. In particular, the committee may delegate the approval of certain transactions to a subcommittee consisting solely of members of the committee who are (i) “Non-Employee Directors” for the purposes of Rule 16b-3 of the Securities Exchange Act, as in effect from time to time, and/or (ii) “outside directors” for the purposes of Section 162(m) of the Internal Revenue Code (“Section 162(m)”), as in effect from time to time.
|
|
|
|
|
|
|
|
|
The Compensation
Committee engaged Willis Towers Watson to act as its compensation consultant again in 2016. The Compensation Committee uses
its compensation consultant in an advisory role for various technical, analytical, and plan design issues related to our compensation
and benefit programs. The compensation consultant does not recommend or determine compensation for any of our executives,
which role is reserved to the Compensation Committee. The Compensation Committee provides the material elements of the instructions
to the compensation consultant with respect to the performance of its duties under the engagement. For 2016, the Compensation
Committee instructed Willis Towers Watson to (a) collect market information on a variety of executive pay and design issues,
including the types and amounts of compensation paid to executives at similarly situated companies; (b) assist in the design
and review of programs such as our long-term incentive program and annual cash incentive plan that affect the compensation
of executives and other employees; (c) consult on various technical issues related to compensation and benefits; and (d) review
and assist the Compensation Committee and our CEO in the development of offer letters to newly hired senior executives from
time to time. When necessary, the compensation consultant works with management to fully understand the details of various
compensation programs and the underlying business and human resources issues they address. The Compensation Committee has
assessed the independence of Willis Towers Watson pursuant to the rules of the SEC and concluded no conflict of interest exists
that would prevent the independent representation of the Compensation Committee. We used Willis Towers Watson for non-executive
compensation surveys in 2016 for which it was paid $24,000.
|
|
|
|
|
|
|
|
The Compensation Committee works with our CEO and our Senior Vice President – Chief Human Resources Officer in determining the base salary and annual and long-term incentive targets and opportunities for our executive officers, but in each case not including that officer’s own compensation arrangements. The Compensation Committee also has the power to delegate the approval of grants of certain equity awards. The Compensation Committee has delegated to our CEO the authority to approve the issuance of a limited number of equity awards in connection with the employment of new non-executive employees and the promotion, retention or outstanding achievements of current non-executive employees. The Compensation Committee met six times during 2016 and took action in writing four times.
|
|
2017 Proxy Statement -
|
|
10
|
|
Corporate Governance and Nominating Committee
Members:
John P. Wiehoff, Chair Gary E. Hendrickson Bernd F. Kessler
|
|
All members of the Corporate Governance and Nominating Committee
have been determined to be “independent” by the Board in accordance with our Corporate Governance Guidelines and the
applicable listing requirements of the NYSE.
Functions:
The Corporate Governance and Nominating Committee provides oversight
and guidance to the Board to ensure that the membership, structure, policies and processes of the Board and its committees facilitate
the effective exercise of the Board’s role in the governance of our Company. The Corporate Governance and Nominating Committee
reviews and evaluates the policies and practices with respect to the size, composition and functions of the Board, evaluates the
qualifications of possible candidates for the Board and recommends the nominees for directors to the Board for approval. The committee
will consider individuals recommended by shareholders for nomination as a director, applying the standards described in the Corporate
Governance and Nominating Committee Charter. The committee also is responsible for recommending to the Board any revisions to our
Corporate Governance Guidelines. This committee met two times during 2016 and took action in writing once.
|
|
Technology Committee
Members:
Annette K. Clayton, Chair
Kevin M. Farr
Gwenne A. Henricks
Bernd
F. Kessler
Lawrence D. Kingsley
Scott W. Wine
|
|
Functions:
The Technology Committee provides oversight of our product plans,
technology development and related business processes. The committee reviews (a) product and technology development plans to ensure
the continuous flow of innovative, differentiated, leadership products in the markets we currently serve; (b) plans for growth
through new products serving adjacent markets; (c) new technology development and plans for insertion of new technology into the
long-range product plan; (d) major competitive moves and our response plan; (e) the adequacy of the processes, tools, facilities
and technology leadership of our product and technology development; (f) the costs, benefits and risks associated with major product
development programs and related facility investments; (g) plans to address changing regulatory requirements; (h) strategic sourcing
plans for products and technology; and (i) quality initiatives to ensure that the quality of our products meets or exceeds customer
expectations. This committee met three times during 2016.
|
Certain Relationships
and Related Transactions
During 2016, we did not engage in any transactions
with related persons that are required to be described in this Proxy Statement pursuant to applicable SEC regulations.
Our written Related-Person Transactions Policy,
which is applicable to all of our directors, nominees for directors, executive officers and 5% shareholders and their respective
immediate family members, prohibits “related-person transactions” unless approved or ratified by the Corporate Governance
and Nominating Committee.
Matters considered to be a related-person
transaction subject to the policy include any transaction in which we are directly or indirectly a participant and the amount involved
exceeds or reasonably can be expected to exceed $120,000, and in which a director, nominee for director, executive officer or 5%
shareholder, or any of their respective family members, has or will have a direct or indirect material interest.
Any potential related-person transaction
that is raised will be analyzed by the General Counsel, in consultation with management and with outside counsel, as appropriate,
to determine whether the transaction or relationship constitutes a related-person transaction requiring compliance with the policy.
The potential related-person transaction and the General Counsel’s conclusion and the analysis thereof are also to be reported
to the chair of the Corporate Governance and Nominating Committee.
The Corporate Governance and Nominating Committee
shall review the material facts of all related-person transactions that require the committee’s approval and either approve
or disapprove of the related person transaction. If advance committee approval of a related-person transaction is not feasible,
then the related-person transaction shall be considered and, if the committee determines it to be appropriate, ratified at the
committee’s next regularly scheduled meeting. Any related-person transaction that is not approved or ratified, as the case
may be, shall be voided, terminated or amended, or such other actions shall be taken, in each case as determined by the committee,
so as to avoid or otherwise address any resulting conflict of interest.
|
2017 Proxy Statement -
|
|
11
|
Compensation Committee
Interlocks and Insider Participation
All current members of the Compensation Committee
are considered independent under our Corporate Governance Guidelines. During fiscal year 2016, none of our executive officers served
on the compensation committee (or its equivalent) or board of directors of another entity whose executive officers served on our
Compensation Committee or Board.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act
requires our directors and executive officers to file initial reports of ownership and reports of changes of ownership of our
common stock with the SEC. Executive officers and directors are required to furnish us with copies of all Section 16(a)
reports that they file. To our knowledge, based solely upon a review of the reports filed by the executive officers and
directors during 2016 and written representations that no other reports were required, we believe that, during the year ended
December 31, 2016, all filing requirements applicable to our directors, executive officers and 10% beneficial owners, if any,
were complied with on a timely basis, except that due to an administrative oversight, the Company inadvertently failed to
timely report credits of an aggregate of 2,483.87 common stock equivalents to Ms. Clayton, Mr. Farr, Mr. Hendrickson, Ms.
Henricks, Mr. Kessler, Mr. Kingsley, and Mr. Wiehoff that were made on October 1, 2016, which reports were filed on October
12, 2016. In addition, due to an administrative oversight, the Company failed to timely report the disposition of 4,667
shares of common stock withheld to satisfy Mr. Speetzen’s tax withholding obligation upon the vesting and settlement of
a restricted stock award on August 3, 2016, which report was filed on September 1, 2016.
|
2017 Proxy Statement -
|
|
12
|
Proposal 1 — Election of Directors
General Information
The Board is divided into three classes.
The members of one class are elected at each annual meeting of shareholders to serve three-year terms. The Class II directors currently
serving on the Board, whose terms expire at the 2017 Annual Meeting, are Gary E. Hendrickson and Gwenne A. Henricks.
Upon the recommendation of the Corporate
Governance and Nominating Committee of the Board, the Board proposes that Gary E. Hendrickson and Gwenne A. Henricks be elected
as Class II directors for three-year terms expiring in 2020.
Each of the nominees currently serves
as a member of the Board. The persons named in the proxy intend to vote your proxy for the election of each of the two
nominees, unless you indicate on the proxy that your vote should be withheld from any or all of the nominees. If you are
voting by telephone or on the Internet, you will be told how to withhold your vote from some or all of the nominees. Each
nominee elected as a director will continue in office until his or her successor has been elected, or until his or her death,
resignation or retirement.
We expect each nominee standing for election
as a director to be able to serve if elected. If any nominee is not able to serve, proxies will be voted in favor of the remainder
of those nominated and may be voted for substitute nominees designated by the Board, unless an instruction to the contrary is indicated
on the proxy. There are no family relationships between or among any of our executive officers, directors or director nominees.
The Board, upon recommendation of the
Corporate Governance and Nominating Committee, unanimously recommends a vote
FOR
the election of these nominees as directors.
Information Concerning
Nominees and Directors
Our directors bring a broad range of leadership
and experience to the boardroom and regularly contribute to the dialogue involved in effectively overseeing and guiding our business
and affairs. Other than our CEO, all of the members of the Board are independent. Though the members of the Board have been selected
to provide a wide range of viewpoints, the atmosphere of our Board is collegial. Preparation, engagement and participation are
expected from our directors. We insist on high personal and professional ethics, integrity and values. All of our current directors
and the director nominees satisfy such requirements. The Board has adopted Corporate Governance Guidelines, which are observed
by all directors. With a diverse mix of experience, backgrounds and skill sets, the Board believes it is well positioned to represent
the best interests of the Company’s shareholders. The principal occupation, specific experience, qualifications, attributes
or skills and certain other information about the nominees and other directors whose terms of office continue after the Annual
Meeting are set forth on the following pages.
If a shareholder wishes to have the Corporate
Governance and Nominating Committee consider a candidate for nomination as a director, the shareholder’s notice must include
the information specified in our bylaws, including the shareholder’s name and address, the information required to be disclosed
by the SEC’s proxy rules, a written consent of the candidate to be named in the proxy statement and to serve as a director
if elected, specified information regarding the shareholder’s interests in our capital stock, and the representations specified
in our bylaws. The Corporate Governance and Nominating Committee will evaluate recommended nominees based on the factors identified
in the Corporate Governance and Nominating Committee Charter, a copy of which is available on our website at
www.polaris.com
.
Alternatively, shareholders may directly nominate a person for election to our Board by complying with the procedures set forth
in our bylaws, any applicable rules and regulations of the SEC and any applicable laws.
|
2017 Proxy Statement -
|
|
13
|
Director
Nominees — Class II (Term Ending 2017)
|
|
Gary E. Hendrickson
Age 60
Director since 2011
Independent
Committees
•
Compensation,
Chair
•
Corporate
Governance and Nominating
Experience
Mr. Hendrickson has been the President and
Chief Executive Officer of The Valspar Corporation, a global paint and coatings manufacturer, since June 2011 and was its President
and Chief Operating Officer from February 2008 until June 2011. He held various executive leadership roles with The Valspar Corporation
since 2001 including positions with responsibility for the Asia Pacific operations.
Key Skills and Qualifications
Mr. Hendrickson’s experience as President
and Chief Executive Officer of a global company provides expertise in corporate leadership and development, and execution of business
growth strategy. He also brings to the Board significant global experience and knowledge of competitive strategy including international
competition.
Other Public Company Boards
|
|
|
|
Current
|
Past 5 Years
|
|
|
|
The
Valspar Corporation, Chairman
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
Gwenne A. Henricks
Age 60
Director since 2015
Independent
Committees
•
Audit
•
Technology
Experience
Ms. Henricks served as Vice President, Product
Development & Global Technology, and Chief Technology Officer of Caterpillar Inc., a world leading manufacturer of construction
and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives, from 2012 to 2016.
She joined Caterpillar in 1981 in an engineering role and held numerous engineering and executive roles progressing in scope and
complexity. Ms. Henricks serves on the Bradley University Engineering Advisory Committee.
Key Skills and Qualifications
Ms. Henricks brings to the Board executive
leadership, as well as valuable knowledge and experience in technology and global research and development organization.
Other Public Company Boards
|
|
|
|
Current
|
Past 5 Years
|
|
|
|
None
|
None
|
|
2017 Proxy Statement -
|
|
14
|
Directors Continuing in Office — Class
I (Term Ending 2019)
|
|
Bernd F. Kessler
Age 58
Director since 2010
Independent
Committees
•
Audit
•
Corporate Governance
and Nominating
•
Technology
Experience
Mr. Kessler was the Chief Executive Officer
of SRTechnics AG, a privately-held aircraft component and engine service provider with facilities throughout Europe and in China,
from January 2008 through January 2010. He was the President and Chief Executive Officer of MTU Maintenance, a subsidiary of Aero
Engines AG from September 2004 through October 2007 where he was an integral part of the successful initial public offering of
the Company on the Frankfort Stock Exchange. Prior to September 2004, Mr. Kessler held management and executive positions for 20
years at Honeywell International, Inc. and its preceding company AlliedSignal Corp. Mr. Kessler also serves on the boards of Flowcastings
GmbH, Zitec GmbH, and serves as Chairman of RENA Technologies GmbH.
Key Skills and Qualifications
A recognized industry leader in the global
aerospace and defense markets, Mr. Kessler is based in Europe. His experience in operations, service and global business are key
assets as we continue to expand our international footprint and strive to increase operational efficiency.
Other Public Company Boards
|
|
|
|
Current
|
Past 5 Years
|
|
|
|
None
|
None
|
|
|
|
|
|
|
|
Lawrence D. Kingsley
Age 54
Director since 2016
Independent
Committees
•
Audit
•
Technology
Experience
Mr. Kingsley served as the Chairman and Chief
Executive Officer of the Pall Corporation, a global supplier of filtration, separations and purification products, from October
2013 to October 2015 and previously served as its CEO and President starting in October 2011. Prior to his election, he served
as Chairman, President and CEO of IDEX Corporation, a developer, designer and manufacturer of fluid and metering technologies and
health and science technologies, from March 2005 to August 2011. Before joining IDEX, Mr. Kingsley held management positions of
increasing responsibility with Danaher Corporation, Kollmorgen Corporation and Weidmuller Incorporated.
Key Skills and Qualifications
Mr. Kingsley brings strong executive leadership
and business management skills to our Board, as well as valuable experience in strategic planning, corporate development and operations
analysis. He also brings significant expertise in financial reporting and corporate finance.
Other Public Company Boards
|
|
|
|
Current
|
Last 5 Years
|
|
|
|
IDEXX Laboratories
|
Cooper Industries Ltd.
|
|
|
|
Rockwell Automation Corporation
|
Cooper Wiring Devices, Inc.
|
|
2017 Proxy Statement -
|
|
15
|
|
|
Scott W. Wine
Age 49
Director since 2008
Committee
•
Technology
Experience
Mr. Wine has served as Chief Executive Officer
of Polaris since September 2008 and was elected to the Board in October 2008. He has been the Chairman of the Board since January
2013. Prior to joining Polaris, Mr. Wine held executive positions with United Technologies Corporation, Danaher Corp. and Allied
Signal Corp. (now Honeywell International Inc.), and served as a United States naval officer. Mr. Wine serves on the board of the
Greater Twin Cities United Way.
Key Skills and Qualifications
Mr. Wine’s knowledge of the all aspects
of the Company’s business as its CEO, combined with his drive for innovation and excellence, position him well to serve as
Chairman of the Board. In his position as a director and CEO, he plays a key role in facilitating communication and information
flow between management and the Board on a regular basis.
Other Public Company Boards
|
|
|
|
Current
|
Past
5 Years
|
|
|
|
US Bancorp
|
None
|
|
|
|
Terex Corporation
|
|
Directors Continuing in Office — Class
III (Term Ending 2018)
|
|
Annette K. Clayton
Age 53
Director since 2003
Independent
Committee
•
Compensation
•
Technology, Chair
Experience
Ms. Clayton has been the Chief Executive
Officer and President of Schneider Electric North America, a French multinational firm specializing in energy management and automation
solutions, since June 2016 and is a member of the Executive Committee. In her prior position with Schneider, she was Chief Supply
Officer from May 2011 to June 2016. From 2006 to 2011, Ms. Clayton led Dell Inc.’s supply chain transformation and oversaw
the global manufacturing and fulfillment operations. Prior to that, she worked for General Motors Corporation in senior management
positions in engineering and production, including President, Saturn Corporation.
Key Skills and Qualifications
With experience in leading a large corporation
including overseeing strategic direction and financial accountability and running large scale supply chain manufacturing companies
with global presence, Ms. Clayton brings to the Board expertise in supply chain management and strategy, and global and channel
expansions.
Other Public Company Boards
|
|
|
|
Current
|
Past 5 Years
|
|
|
|
None
|
None
|
|
2017 Proxy Statement -
|
|
16
|
|
|
Kevin M. Farr
Age 59
Director since 2013
Independent
Committees
•
Audit, Chair
•
Technology
Experience
Mr. Farr has been the Executive Vice President
and Chief Financial Officer of Mattel, Inc., a worldwide leader in the design, manufacture and marketing of toys and family products,
since February 2000. Prior to becoming CFO, he served in multiple leadership roles at Mattel, Inc. since 1991. Before joining Mattel,
Inc., Mr. Farr spent 10 years at Pricewaterhouse Coopers. He serves on the Corporate Advisory Board of the Marshall School of Business
at the University of Southern California.
Key Skills and Qualifications
With his many years of experience in executive
leadership roles and his financial background with a Fortune 500 company, Mr. Farr provides the Board expertise in financial operations,
business development and corporate strategy and complex financial issues. As a past director for a public company, he also provides
significant board experience.
Other Public Company Boards
|
|
|
|
Current
|
Past 5 Years
|
|
|
|
None
|
Beckman Coulter, Inc.
|
|
|
|
|
|
|
|
John P. Wiehoff
Age 55
Director since 2007
Lead Director
Independent
Committees
•
Compensation
•
Corporate Governance and Nominating, Chair
Experience
Mr. Wiehoff has been Chief Executive
Officer and Chairman of the Board of C.H. Robinson Worldwide, a transportation, logistics and sourcing company since 2007 and
previously was Chief Executive Officer of the company beginning in May 2002 and President in 1999. He has held multiple
leadership roles including Chief Financial Officer since joining C.H. Robinson in 1992. Prior to that, Mr. Wiehoff was with
Arthur Andersen LLP.
Key Skills and Qualifications
Mr. Wiehoff provides the Board with valuable
insight in logistics and complex financial issues gained while serving as the chief executive officer and chief financial officer
of a Fortune 500 company. As a director for public companies, he also has significant board experience.
Other Public Company Boards
|
|
|
|
Current
|
Past 5 Years
|
|
|
|
C.H. Robinson Worldwide
|
None
|
|
|
|
Donaldson Company, Inc.
|
|
|
2017 Proxy Statement -
|
|
17
|
Compensation Discussion and Analysis
The Compensation Discussion and Analysis
(the “CD&A”) describes our compensation objectives and policies and the compensation awarded to our Named Executive
Officers during 2016. Our Named Executive Officers during 2016 were:
|
Name
|
Title
|
|
Scott
W. Wine
|
Chairman of the Board and Chief Executive Officer (“CEO”)
|
|
Michael
T. Speetzen
|
Executive Vice President – Finance and Chief Financial Officer (“CFO”)
|
|
Robert
P. Mack
|
Senior Vice President – Corporate Development and Strategy, and President – Adjacent Markets (“Pres-AM”)
|
|
Kenneth
J. Pucel
|
Executive Vice President – Global Operations, Engineering and Lean (“EVP”)
|
|
Stephen
L. Eastman
|
President – Parts, Garments and Accessories (“Pres-PGA”)
|
Mr. Mack joined the Company on March 31, 2016.
Executive Summary
Key 2016 Company Financial
Performance
2016 Compensation Decisions
During 2015 and 2016, we experienced
several headwinds that impacted our key financial measures, particularly during 2016. Sales declined in the second half of
2016 as we delayed shipments of our model year 2017 ORV products to review for thermal related issues. We also incurred
higher promotional and customer appreciation costs and experienced unfavorable foreign currency exchange rate movements. We
saw several successes in 2016, including growth in Indian Motorcycle retail sales and a reduction in dealer inventories
year-over-year. We completed the Taylor-Dunn Manufacturing Company and TAP Automotive Holdings, LLC (“TAP”)
acquisitions, enhancing our position in the work and accessories markets. Our new state of the art manufacturing plant in
Huntsville, Alabama began production on time and the Spirit Lake paint system completed its final upgrade.
Consistent with our compensation philosophy
of paying for performance, our compensation programs closely link pay and performance. Our performance during 2015 and 2016 resulted
in the following compensation actions:
|
•
|
No base salary increases were made to Named Executive Officers for 2016 except for Mr. Eastman upon his promotion.
|
|
|
|
|
•
|
The adjusted earnings per share threshold of $5.48 was not achieved during 2016 under the Senior Executive Incentive Plan, resulting in no annual incentive payouts for 2016 to our Named Executive Officers.
|
|
|
|
|
•
|
For the second year in row, Mr. Wine
did not receive a payout under the annual incentive award plan. (Mr. Wine and the Compensation Committee mutually agreed
to forego payment of his 2015 annual incentive.)
|
|
|
|
|
•
|
The aggregate grant date fair value of the annual long-term incentive awards granted in early 2016 to our Named Executive Officers who were with us for the entire year was below 2015 levels in response to the Company’s 2015 performance.
|
|
|
|
|
•
|
Long-term incentive awards in the form
of Performance Restricted Stock Units (PRSUs) granted in 2014 to the Named Executive Officers for the 2014-2016 performance
period were paid out at 13% of target, the first time since 2012 that above target performance was not achieved. The value of
the payouts was further diminished by 34% based on the decline in our stock price from $125.67 on the grant date to $83.55 on
the vest date.
|
|
2017 Proxy Statement -
|
|
18
|
Return to Shareholders
Because significant portions of our executive
compensation program are equity-based, the amount of compensation ultimately realized by our Named Executive Officers is closely
linked to the performance of our common stock, which is reflected in the following chart which compares our annualized total shareholder
return to that of the members of our 2016 Peer Group listed on page 24:
|
|
Annualized
Total Shareholder Return
(1)
|
|
Percentile
|
1-Year
|
3-Year
|
5-Year
|
|
25
th
Percentile
(2)
|
16%
|
(8)%
|
9%
|
|
Median
(2)
|
20%
|
1%
|
13%
|
|
75
th
Percentile
(2)
|
50%
|
15%
|
21%
|
|
Polaris Industries
|
(2)%
|
(16)%
|
10%
|
|
Polaris
Percentile
|
3%
|
Minimum
|
31%
|
|
(1)
|
1-Year,
3-Year and 5-Year Total Shareholder Return are annualized total shareholder rates of return reflecting the stock price appreciation
plus reinvestment of dividends, as of December 31, 2016.
|
|
(2)
|
These
percentiles represent Total Shareholder Return of the members of our 2016 Peer Group listed on page 24.
|
Year-End Stock Price
in Relation to CEO Pay
The chart below illustrates our pay for performance
philosophy and the directional relationship between our stock price as measured on the last day of the applicable fiscal year,
and Mr. Wine’s total direct compensation as disclosed in the Summary Compensation Table for the applicable year.
Our 2015 Say on Pay
Results and Shareholder Outreach
Shareholders approved on an advisory basis
the Company’s Say on Pay proposal at our 2016 Annual Meeting of Shareholders with 81.7% of the votes cast (excluding
abstentions) in favor of the compensation paid to our Named Executive Officers. As a result of this lower vote as compared to
prior years, the Compensation Committee began in late 2016 an annual shareholder outreach program to discuss our executive compensation
programs, policies and practices with some of our largest shareholders. The outreach program is designed to maintain an ongoing
relationship with investors to better understand their issues and perspectives on the Company, including executive compensation
practices. We plan to continue the outreach program in the years to come. To the extent the Compensation Committee receives specific
comments about executive compensation policies or practices, it will take them into consideration when making its decisions.
|
2017 Proxy Statement -
|
|
19
|
Objectives of
Our Compensation Program
Our executive compensation philosophy aligns
executive compensation decisions with our desired business direction, strategy and performance. The primary objectives and priorities
of the compensation program for our Named Executive Officers are the following:
|
•
|
Pay for Performance:
Emphasize variable compensation that is tied to our financial and stock price performance in an effort to generate and reward superior individual and collective performance;
|
|
|
|
|
•
|
Shareholder Alignment:
Link executives’ incentive goals with the interests of our shareholders by providing equity-based forms of compensation and establishing specific stock ownership guidelines for employees in key management positions throughout our Company;
|
|
|
|
|
•
|
Long-Term Success:
Support and reward executives for consistent performance over time and achievement of our long-term strategic goals; and
|
|
|
|
|
•
|
Retention:
Attract and retain highly qualified executives whose abilities are critical to our success and competitive advantage.
|
To achieve these objectives, we have designed
an executive compensation program that is significantly weighted towards long-term goals. This approach aids us in the retention
of executive officers and assures that the interests of our executive officers and shareholders are aligned. Although the program
emphasizes performance-based and equity-based compensation as a percentage of total direct compensation (base salary and annual
and long-term incentives), we do not, however, have specific policies governing the allocation of the total direct compensation
opportunity among its various components. The following charts illustrate the percentage of the 2016 target total direct compensation
opportunity for Mr. Wine and the other Named Executive Officers who were with us for all of 2016 as a group represented by each
compensation component:
|
|
|
|
*
|
Base salary, target
annual incentive and grant date fair value of long-term incentives.
|
|
**
|
Mr.
Mack was excluded from the chart because he commenced employment on March 31, 2016 and does not have a full year of compensation
data.
|
We believe that our compensation policies
and practices are designed to mitigate compensation-related risks to the Company’s long-term performance, ethical standards
and reputation. The table below illustrates some of those policies and practices.
|
What We Do
|
|
What We Don’t Do
|
|
Majority of pay is performance-based and not guaranteed
|
|
|
Generally do not have employment contracts
|
|
Appropriate balance between short-term and long-term compensation to discourage short-term risk taking
|
|
|
No repricing or back dating of stock options
|
|
|
Require “double trigger” change in control and termination of employment provisions in equity awards granted after May 1, 2015
|
|
|
No hedging and short sales by executive officers and Directors
|
|
|
Clawback policy allows recovery of cash- or equity-based incentive compensation payments when warranted
|
|
|
No dividends or dividend equivalents on unearned restricted stock or restricted stock units
|
|
|
Utilize an independent compensation consultant
|
|
|
No excise tax gross-ups upon a change in control
|
|
|
Mitigate undue risk in compensation programs
|
|
|
No excessive perquisites for executives
|
|
2017 Proxy Statement -
|
|
20
|
Tracking of Long-Term
Incentives
The following table summarizes equity
awards granted during the past three years to our Named Executive Officers, and is provided to assist in distinguishing the
grant date fair value of these awards as reported in the Summary Compensation Table on page 32 from the intrinsic value of
those awards at the most recent year-end. Mr. Mack joined the Company in 2016 and Mr. Speetzen joined in 2015. Mr. Eastman
was not a Named Executive Officer in 2014. As evidenced in this table, our compensation design rewards executives when
performance warrants it, and provides below market value when performance does not meet expectations.
|
|
|
|
|
2014 Awards
|
|
2015 Awards
|
|
2016 Awards
|
|
Total
|
|
|
|
|
|
Grant
Date Fair
Value
($)
|
|
Vested &
“In the
Money”
($)
|
|
Unvested
or “At
Risk”
($)
|
|
Grant
Date Fair
Value
($)
|
|
Vested &
“In the
Money”
($)
|
|
Unvested
or “At
Risk”
($)
|
|
Grant
Date Fair
Value
($)
|
|
Vested
&
“In the
Money”
($)
|
|
Unvested
or “At
Risk”
($)
|
|
Aggregate
Grant
Date Fair
Value
($)
|
|
Aggregate
Vested &
“In the
Money”
($)
|
|
Aggregate
Unvested
or “At
Risk”
($)
|
|
Mr. Wine
|
|
PRSU
|
|
2,387,730
|
|
206,369
|
|
—
|
|
2,900,048
|
|
—
|
|
1,629,509
|
|
1,307,032
|
|
—
|
|
1,534,431
|
|
6,594,810
|
|
206,369
|
|
3,163,940
|
|
|
|
Stock Options
|
|
3,999,085
|
|
—
|
|
—
|
|
3,094,026
|
|
—
|
|
—
|
|
3,089,501
|
|
—
|
|
2,600,730
|
|
10,182,612
|
|
—
|
|
2,600,730
|
|
Mr. Speetzen
|
|
PRSU
|
|
|
|
|
|
|
|
515,577
|
|
—
|
|
318,190
|
|
300,020
|
|
—
|
|
352,217
|
|
815,597
|
|
—
|
|
670,407
|
|
|
|
Stock Options
|
|
|
|
|
|
|
|
380,021
|
|
—
|
|
—
|
|
1,421,461
|
|
—
|
|
1,196,580
|
|
1,801,482
|
|
—
|
|
1,196,580
|
|
Mr. Mack
|
|
PRSU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
149,985
|
|
—
|
|
125,480
|
|
149,985
|
|
—
|
|
125,480
|
|
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
597,214
|
|
—
|
|
—
|
|
597,214
|
|
—
|
|
—
|
|
Mr. Pucel
|
|
PRSU
|
|
437,469
|
|
30,830
|
|
—
|
|
880,073
|
|
—
|
|
494,505
|
|
442,836
|
|
—
|
|
519,881
|
|
1,760,378
|
|
30,830
|
|
1,014,386
|
|
|
|
Stock Options
|
|
1,767,258
|
|
—
|
|
—
|
|
946,408
|
|
—
|
|
—
|
|
2,088,677
|
|
—
|
|
1,758,240
|
|
4,802,342
|
|
—
|
|
1,758,240
|
|
Mr. Eastman
|
|
PRSU
|
|
|
|
|
|
|
|
1,786,247
|
|
—
|
|
1,003,675
|
|
1,772,711
|
|
—
|
|
1,812,992
|
|
3,558,958
|
|
—
|
|
2,816,667
|
|
|
|
Stock Options
|
|
|
|
|
|
|
|
327,603
|
|
—
|
|
—
|
|
333,608
|
|
—
|
|
280,830
|
|
661,211
|
|
—
|
|
280,830
|
The values in the table above represent the
intrinsic value of vested and unvested awards granted each year. The intrinsic value of a stock option award equals the number
of vested or unvested shares, as the case may be, multiplied by the difference between the exercise price of the stock option and
the closing price of a share of our common stock on December 30, 2016, the last business day of the year, which was $82.39. For
stock options whose exercise price is higher than the closing price of $82.39, there is no intrinsic value. No PRSUs granted in
2015 and 2016 were vested as of December 31, 2016. The intrinsic value of a PRSU award granted in 2015 and 2016 is equal to the
target number of PRSUs multiplied by the December 30, 2016 closing price of $82.39. The value of the vested PRSU award granted
in 2014 equals the number of units earned by the Named Executive Officer as certified by the Compensation Committee multiplied
by the stock closing of price of $83.55 on January 30, 2017, the vesting date.
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2017 Proxy Statement -
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|
21
|
Executive Compensation
Program Components
Compensation
Type
|
|
Compensation
Component
|
|
Purpose
|
|
Key Features
|
|
Fixed
|
|
Base Salary
|
|
•
Provide a fixed level of compensation on which executive officers can rely
|
|
•
Salary levels set based on an assessment of:
|
|
|
|
|
|
–
Level of responsibility
|
|
|
|
|
|
–
Experience and time in position
|
|
|
|
|
|
|
–
Individual performance
|
|
|
|
|
|
|
–
Future potential
|
|
|
|
|
|
|
–
Salary level relative to market median
|
|
|
|
|
|
|
–
Internal pay equity considerations
|
|
|
|
|
|
|
•
Salary levels are reviewed annually by the Compensation Committee and adjusted as appropriate
|
|
Variable
|
|
Annual Cash
Incentive
(Senior
Executive Plan)
|
|
•
Provide explicit incentives to achieve or exceed annual budgeted earnings per share or other desired performance objectives
•
Link pay to performance
•
Align performance objectives with interests of our shareholders
|
|
•
Target incentive opportunity expressed as a percentage of executive officer’s base salary, based on responsibilities
of position, expected level of contribution and consideration of market data
•
Maximum potential payouts established for purposes of Section 162(m) based on attainment of specified levels of financial
performance
•
Actual payouts may be less than or equal to maximum potential payouts based on degree to which financial performance objectives
are achieved and on consideration of other Company, business unit and individual performance factors, and are determined by the
Compensation Committee
|
|
|
Long-Term
Incentives
(Stock Options,
Restricted Stock
Units, Restricted
Stock, and
Performance
Restricted Stock
Units)
|
|
•
Provide executive officers with incentives to achieve multi-year financial and operational objectives
•
Link pay to financial, operational and stock price performance
•
Align
executive officers’ interests with the interests of our shareholders
|
|
•
Equity based performance awards (PRSUs) are earned based on the degree to which specified financial objectives are attained
over a three-year performance period
•
Target incentive opportunity based on responsibilities of position, expected level of contribution and consideration of
market data
•
Stock options provide value to executive officers only if stock price increases over the stock option term, generally ten
years
•
Restricted stock vests upon attainment of specified multi-year financial objectives and/or completion of a specified period
of employment
•
All grants are approved by the Compensation Committee
•
Actual earned shares are determined by the Compensation Committee
|
|
Other
|
|
Benefits and
Perquisites
|
|
•
Provide an overall compensation package that is competitive with those offered by companies with whom we compete for executive
talent
•
Provide a level of retirement income and promote retirement savings in a tax-efficient manner
|
|
•
Participation in 401(k) plan and health and welfare plans on same terms as employees generally
•
Executive officers may participate in a non-qualified supplemental retirement savings plan and will receive an employer
match up to 5% on base salary and Senior Executive Plan deferral contributions when their 401(k) participation has been limited
by IRS annual contribution rules
•
Perquisites described on page 29
|
|
|
Post-Employment
Compensation
(Severance and Change
in Control
Arrangements)
|
|
•
Enable executive officers to evaluate potential transactions focused on shareholder interests
•
Provide continuity of management
•
Provide a bridge to next professional opportunity in the event of an involuntary termination
|
|
•
Double-trigger change in control severance arrangements
•
Double-trigger accelerated vesting of equity awards upon change in control for awards granted after May 2015
•
Severance for termination by the Company without cause (or for good reason resignation by the CEO)
•
Non-compete and non-solicitation restrictions following termination of employment
|
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|
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22
|
Determining
Executive Compensation
Compensation Committee
Process
The Compensation Committee is responsible for the review and approval
of all aspects of our executive compensation program. The Compensation Committee meets in January or February of each year to:
(i) establish the annual base salary and annual incentive compensation opportunity for each of the executive officers for the current
year; (ii) determine the actual annual incentive compensation to be paid to each executive officer for services provided during
the prior year; (iii) establish plan targets and performance measures for the three-year performance period beginning on January
1 of the current year for long-term incentive awards; (iv) determine the number of PRSUs earned, if any, under the long-term incentive
program for the three-year performance period ended on the immediately preceding December 31
st
; and (v) determine stock
option awards and any other equity-based awards to be granted to executive officers.
When making individual compensation decisions for the executive
officers, the Compensation Committee takes many factors into account. These factors include subjective and objective considerations
of each individual’s skills, performance and level of contribution towards desired business objectives, our overall performance,
retention concerns, the individual’s tenure and experience with our Company and in his or her current position, the recommendations
of management, the individual’s current and historical compensation, the Compensation Committee’s compensation philosophy,
and comparisons to other comparably situated executive officers (both those of the Company and those of the peer group companies).
The Compensation Committee’s process utilizes input, analysis and review from a number of sources, including our management,
other independent directors of the Board, the Compensation Committee’s independent compensation consultant, and market studies
and other comparative compensation information as discussed below.
The Compensation Committee uses this information in conjunction
with its own review of the various components of our executive compensation program to determine the base salary and annual and
long-term incentive targets and opportunities of the executive officers as a group and individually.
Role of Executive Officers
in Determining Compensation
The Compensation Committee meets with our CEO annually to review
the performance of our other executive officers. The meeting includes an in-depth review of each executive officer, achievement
of individual performance objectives established at the beginning of the year and individual contributions towards achievement
of our business goals. A summary of the performance review is presented to the full Board each year.
The Compensation Committee considers input from our CEO, EVP,
CFO, and Senior VP–Chief Human Resources Officer (“SVP–CHRO”) when developing and selecting metrics and
performance objectives for our Senior Executive Plan and long-term incentive program, and evaluating performance against such pre-established
metrics and objectives. The Compensation Committee also receives recommendations from our CEO, with the assistance of our SVP–CHRO
(for executive officers other than himself), regarding base salary amounts, annual incentive award amounts and equity-based
incentive awards for our other executive officers. In determining the CEO’s compensation, the Compensation Committee considers
comparative compensation information and input from its independent compensation consultant.
Role of the Compensation
Consultant
Willis Towers Watson provides the Compensation Committee with
an annual compensation market analysis for the executive officers and directors; makes recommendations on the executive pay programs;
reviews, participates and comments on executive and board compensation matters; and provides updates on regulatory changes in compensation
related issues and other developments and trends in executive compensation.
Market Competitiveness
Review
The compensation consultant and the Compensation Committee periodically
review the composition of the peer group of companies about which competitive compensation data is obtained. For purposes of setting
2016 compensation, we used the same peer group as was used in 2015 with the exception of the removal of Pall Corporation which
was acquired by Danaher Corporation in May 2015. Both management and the Compensation Committee believe that this peer group of
22 companies (the “Peer Group”) provided a robust statistical set of compensation data to serve as a basis for 2016
compensation decisions. In connection with compensation decisions made for 2016, Willis Towers Watson utilized compensation data
from the Willis Towers Watson 2015 General Industry Executive Compensation Database and our Peer Group companies in the market
review.
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2017 Proxy Statement -
|
|
23
|
The companies comprising the Peer Group used to establish the
2016 compensation opportunities of the executive officers are listed below:
|
2016 Peer Group
|
|
|
|
|
|
|
|
Terex Corporation
|
|
The Timken Company
|
|
Thor Industries, Inc
|
|
Donaldson Company, Inc.
|
|
Borg Warner, Inc.
|
|
Flowserve Corporation
|
|
Regal Beloit Corporation
|
|
The Toro Company
|
|
Jarden Corporation
|
|
Pentair, Ltd.
|
|
Snap-On, Inc.
|
|
IDEX Corporation
|
|
Mattel, Inc.
|
|
Hasbro Inc.
|
|
Leggett & Platt, Incorporated
|
|
H.B. Fuller Company
|
|
Harley-Davidson, Inc.
|
|
The Valspar Corporation
|
|
Kennametal Inc.
|
|
Arctic Cat, Inc.
|
|
SPX Corporation
|
|
Brunswick Corporation
|
|
|
|
|
The following table summarizes our scale relative to our 2016
industry peer group as of December 31, 2016.
|
2016
Peer Group Comparison
|
|
|
|
|
|
|
|
|
Revenue
($)
|
|
Market Cap
($)
|
|
Employees
(#)
|
|
|
25th Percentile
|
2,670
|
|
4,890
|
|
11,180
|
|
|
Median
|
4,560
|
|
6,535
|
|
14,900
|
|
|
75th Percentile
|
5,995
|
|
9,940
|
|
26,200
|
|
|
Polaris
|
4,595
|
|
5,278
|
|
10,586
|
|
|
Polaris Percentile
|
55
|
%
|
30
|
%
|
24
|
%
|
The reports furnished by compensation consultants provide the
Compensation Committee with market information at the median and 75
th
percentiles for each executive officer position
and pay component, and for total direct compensation, and compare the actual and target compensation provided and intended to be
provided to each executive officer to the market amounts, which consider both the peer group data and the data contained in the
surveys. This market information is an important element reviewed by the Compensation Committee, which generally intends to target
base salaries for our executive officers at the market median for comparable positions as set forth in the report. However, for
an executive officer who is new in his or her position and job-level, the Compensation Committee’s philosophy is to set a
base salary below the market median, and to move it toward the median over an appropriate period of time, assuming performance
warrants such increases. The elements of annual and long-term incentive opportunities of total direct compensation are based on
responsibilities of position, expected level of contribution and consideration of market data. The Compensation Committee can and
does, however, use discretion to adjust a component of pay, or total direct compensation generally, above or below these ranges
to recognize the specific circumstances of individual executive officers.
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24
|
2016 Compensation
Decisions
2016 Base Salaries
The Summary Compensation Table on page 32 sets forth the actual base salary earned by each of our Named Executive Officers during 2016. There were no base salary
increases for the Named Executive Officers in 2016 except for Mr. Eastman who received one upon his promotion in April 2016.
The following table reflects the
annualized base salaries as established by the Compensation Committee for Messrs. Wine, Speetzen, Mack, Pucel and
Eastman for 2016.
|
Name
|
Annualized
Base Salary
in 2016
|
Percentage
Increase
(%)
|
|
|
Scott
W. Wine
|
985,000
|
0
|
|
|
Michael
T. Speetzen
|
550,000
|
0
|
|
|
Robert
P. Mack
|
400,000
|
N/A
|
|
|
Kenneth
J. Pucel
|
600,000
|
0
|
|
|
Stephen
L. Eastman
|
400,000
|
6.7
|
|
The base salary for Mr. Mack was established in negotiations in
connection with the commencement of his employment with us.
2016 Annual Incentive
Compensation
Overview
Our Named Executive Officers and other
members of senior management selected by the Compensation Committee are eligible to earn annual cash incentive compensation
under our Senior Executive Plan (“SEP”), rather than under our broad-based annual profit sharing plan. Cash
incentives to participants in the SEP are payable only if and to the degree we achieve annual financial performance
objectives determined by the Compensation Committee. In order to qualify compensation paid under the SEP as deductible
performance-based compensation under Section 162(m) of the Internal Revenue Code, SEP participants are entitled to receive a
maximum payout amount upon achievement of a minimum performance condition approved by the Committee, which then uses its
negative discretion to determine the actual payout amounts. For 2016, the maximum payouts as a percentage of base salary were
set by the Committee at 250% for Mr. Wine and at 200% for Messrs. Speetzen, Pucel, and Eastman, and the minimum performance
condition was set at $5.48 of adjusted earnings per diluted share. Performance below that level would result in no payout to
our Named Executive Officers, which is what occurred during 2016.
In determining whether and to what degree
to exercise its discretion to approve payments that are less than the maximum, the Compensation Committee gives primary consideration
to the level of achievement of performance metrics it selects for inclusion in a performance matrix. For 2016, the Compensation
Committee selected adjusted earnings per diluted share (“Adjusted EPS”) and our inventory level at year-end as the
performance metrics for this purpose. The Adjusted EPS metric had a 75% weighting and was chosen because it is a well-understood
financial measure communicated in the public disclosure of our financial results, is used in determining payouts under our broad-based
annual profit sharing plan, and is believed to significantly influence our stock price performance. The 2016 adjustments reflected
in this metric as compared to the most directly comparable GAAP financial measure consisted of acquisition costs, integration
expenses and an inventory step-up related to our acquisition of TAP . The inventory metric had a 25% weighting and was chosen
because of the importance of managing inventory levels.
The resulting performance matrix specified
recommended annual incentive payouts as a percentage of base salary for each Named Executive Officer, depending upon the level
of achievement on each of the performance metrics. The percentage utilized for each Named Executive Officer for these purposes
was based on the respective Named Executive Officer’s level of responsibility, expected level of contribution and the Compensation
Committee’s general intention to target annual incentive compensation between the market median and the 75
th
percentile
levels for comparable positions when financial targets are achieved. The following chart summarizes these percentages for each
Named Executive Officer employed by us for all of 2016 :
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2017 Proxy Statement -
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25
|
As disclosed in the above chart, the incremental changes in pay
for performance above and below target level on each metric disproportionately penalize the failure to achieve target level performance.
Consistent with our pay-for-performance philosophy, the Compensation
Committee sets challenging objectives for each of the metrics incorporated in the matrix, with the target Adjusted EPS performance
goal 1.5% greater than the amount achieved in 2015, and the target inventory goal 12.9% less than our 2015 year-end inventory level.
The 2016 performance goals that were incorporated into the matrix are summarized in the following table:
|
|
Adjusted EPS
|
Gross
Inventory Level
|
|
|
Threshold
|
$5.48
|
$680 million
|
|
|
Target
|
$6.85
|
$650 million
|
|
|
Maximum
|
$8.29
|
$600 million
|
|
As noted previously, because the threshold Adjusted EPS of $5.48
was not achieved, no payouts were made under the SEP to the Named Executive Officer for 2016.
Additional Incentive and Bonus Arrangements
As part of the negotiated compensation arrangements when Mr. Mack
commenced employment with us, and in light of his foregoing an annual bonus for 2016 from his former employer and the desire to
maintain a similar bonus structure as other executives, the Committee agreed to pay him a guaranteed minimum bonus of $320,000
for 2016.
2016 Long-Term Compensation
Overview
Long-term compensation annually awarded by the Compensation Committee
in recent years has emphasized performance-based equity vehicles, consisting of annual awards of stock options and performance-based
restricted stock units (PRSUs). From time to time, supplemental equity awards are granted on a selective and limited basis, generally
in connection with promotions, individual outstanding performance and ability to effect desired performance results, hiring of
new executives and retention situations. These supplemental awards are discussed in the applicable section based on award type.
All equity-based awards are granted under our Amended and Restated 2007 Omnibus Incentive Plan (the “Omnibus Plan”).
The Compensation Committee has chosen to provide a mix of stock
options and PRSUs for its annual long-term incentive equity awards because it believes such a combination effectively aligns the
financial interest of our executive officers with those of our shareholders. Stock options provide value only to the extent that
the price of our common stock has appreciated over the option term, and PRSUs may be earned and settled in shares of our common
stock or, if elected by the executive officer, deferred into the Supplemental Retirement/Savings Plan (“SERP”), but
only if and to the extent that we achieve over a three-year performance period financial performance objectives that are believed
to correlate well with stock price performance.
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|
26
|
The Compensation Committee provides a variable blended ratio between
the types of awards depending on the desired performance outcome, which for 2016 shifted more towards options to place a greater
emphasis on stock price performance and alignment with shareholders. The grant date fair value of annual 2016 long-term incentive
awards granted to our Named Executive Officers (excluding the impact of supplemental awards) was allocated 70% to stock options
and 30% to PRSUs with the exception of Mr. Mack, whose allocation was 80% stock options and 20% PRSUs. The grant date fair value
of target incentive opportunities varies based on responsibilities of position, expected level of contribution, company performance
and consideration of market data.
Performance Restricted Stock Unit Awards
(PRSUs)
PRSUs granted in 2016 may be earned during the course of the 2016-2018
performance period based on level of achievement against the performance objectives specified at the beginning of the performance
period. In determining the performance objectives for the 2016 PRSU awards, the Compensation Committee evaluated the external economic
environment, the anticipated demand for the products we sell and our long-term business plan. All earned PRSUs will either vest
and be paid out in the form of one share for each earned and vested PRSU or, if elected by the executive officer, the receipt of
the shares may be deferred such that each resulting deferred stock unit represents the right to receive one share of common stock
upon the settlement date elected by the Named Executive Officer under the SERP. Amounts deemed invested in deferred stock units
in the SERP may be transferred into an alternative investment account in the SERP after a period of six months and one day.
In order to qualify the compensation associated with PRSU awards
as deductible performance-based compensation under Section 162(m), Named Executive Officers that receive PRSU awards may earn a
maximum number of PRSUs upon achievement of a minimum performance condition approved by the Compensation Committee, which then
uses its negative discretion to determine the lesser number of PRSUs that will actually vest and be paid out. For the 2016-2018
performance period, the maximum number of PRSUs that each Named Executive Officer may earn was set by the Compensation Committee
at 200% of the target level, and the minimum performance condition established as a 12% return on invested capital (“ROIC”)
for the last year of that performance period. For 2016 PRSU awards, ROIC is calculated by dividing the Company’s net income
from continuing operations by the Company’s average total assets minus current liabilities. Performance below that level
would result in no PRSUs vesting and being paid out.
In determining whether and to what degree to exercise its discretion
to approve the vesting and payout of a number of PRSUs that is less than the maximum, the Compensation Committee bases it determination
on the degree to which performance goals involving our sales, operating income as a percentage of sales, and net income from continuing
operations for the last year of the 2016-2018 performance period are achieved. The target performance levels for these performance
goals reflect a six percent annual compounded growth in sales and eight percent annual compounded growth in net income as compared
to 2015 sales of $4,719.3 million and net income from continuing operations of $455.4 million, as well as a 30 basis point expansion
of operating income as a percentage of sales as compared to 15.2% for 2015. The threshold, target and maximum performance levels
and the relative weightings of the performance goals to be used for purposes of calculating recommended payout amounts are summarized
in the following charts:
|
(1)
|
Percentage earned for performance between any of the specified levels
will be determined on a pro rata basis.
|
|
2017 Proxy Statement -
|
|
27
|
For the PRSU awards made during 2016, the following table summarizes
the recommended PRSU threshold, target and maximum payouts for each Named Executive Officer:
PRSU PERFORMANCE PERIOD 2016-2018
|
Name
|
Threshold
Stock Units
(#)
|
Target
Stock Units
(#)
|
Maximum
Stock Units
(#)
|
|
|
Scott
W. Wine
|
2,328
|
18,624
|
37,248
|
|
|
Michael
T. Speetzen
|
534
|
4,275
|
8,550
|
|
|
Robert
P. Mack
|
190
|
1,523
|
3,046
|
|
|
Kenneth
J. Pucel
|
789
|
6,310
|
12,620
|
|
|
Stephen
L. Eastman
|
251
|
2,005
|
4,010
|
|
As an example of how Mr. Wine’s PRSUs will be determined
to be earned and vested, assume that the 2018 return on invested capital is greater than 12%, meaning that the maximum number of
earned PRSUs would be 37,248. The Compensation Committee would then expect to exercise its discretion to adjust that number downward
based on the Company’s performance against the additional financial goals. If net income from continuing operations in 2018
is $565 million, operating income as a percentage of sales in 2018 is 15.0% and sales in 2018 is $5,620 million, then the adjusted
number of earned PRSUs that would be eligible to vest and be settled in an equal number of shares (or, if elected, deferred into
the SERP) would be determined as follows:
18,624 (# of target stock units) x (50% + 12.5% + 25%) = 16,296 units
PRSUs earned and vested or deferred by the
Named Executive Officers for the 2014-2016 performance period are summarized in the Option Exercises and Stock Vested in 2016
table on page 39.
In addition to the annual equity awards, Mr. Eastman was also
granted 20,000 performance-based restricted stock units on December 17, 2016 in connection with his responsibilities related to
the integration of TAP. Assuming continuous employment, the award will vest on February
1, 2020 if TAP achieves specified levels of revenue and earnings before interest, taxes, depreciation and amortization (“EBITDA”)
as a percentage of revenue for year ending December 31, 2019. The award is split into four equal tranches and the number of units
that will actually vest (if any) is dependent on the level of revenue and EBITDA achieved. If the performance goals are not achieved,
the units are forfeited.
2016 Stock Option Awards
When determining the number of shares
subject to a stock option award, the Compensation Committee has elected, since 2013, to use a per share value that was
determined by multiplying the then-current fair market value of a share of the Company’s common stock by the same
Black-Scholes percentage factor that was first calculated and used by the Company in 2013. This approach was intended to
lessen the volatility in the share size of annual option awards that would result from recalculating a Black-Scholes value
each year, enabling the Company to better manage its burn rate and increase predictability. However, this method of
calculation, which was utilized for years 2013-2016, also caused the intended grant values of the stock option awards to vary
substantially from the grant date fair values of those same awards that were based on the Black-Scholes calculations utilized
for accounting purposes and disclosure in the Summary Compensation Table. For future years, the Compensation Committee
intends to utilize the same Black-Scholes methodology used for accounting purposes in determining the number of
shares subject to stock option awards.
The awards for Messrs. Wine, Speetzen, Pucel, and Eastman vest
in two equal installments on the second and fourth anniversaries of the January 27, 2016 grant date and have an exercise price
of $70.18, which is the fair market value of a share of our common stock on the date of the grant. Mr. Mack’s award also
vests in two equal installments on the second and fourth anniversaries of the March 31, 2016 grant date and has an exercise price
of $98.48, which is the fair market value of a share of our common stock on the date of the grant. The number of shares subject
to each Named Executive Officer’s 2016 stock option award is as follows:
|
Named
Executive Officer
|
Number of Shares
Subject to Stock Option
|
|
|
Scott
W. Wine
|
213,000
|
|
|
Michael
T. Speetzen
|
49,000
|
|
|
Robert
P. Mack
|
26,490
|
|
|
Kenneth
J. Pucel
|
72,000
|
|
|
Stephen
L. Eastman
|
23,000
|
|
|
2017 Proxy Statement -
|
|
28
|
Our stock option grant practices are designed to ensure that stock
option awards approved by the Compensation Committee at its January meeting will have an effective grant date occurring after our
release of year-end financial results. We do not engage in the backdating, cancellation or re-pricing of stock options and have
not engaged in such practices in the past.
Due to their unique roles in the
Company and their ability to effect change through managing inventory levels and production costs, Messrs. Speetzen and Pucel
were each granted a stock option award on January 27, 2016 in addition to the annual awards reflected in the table above. The
supplemental awards to Messrs. Speetzen and Pucel involved 49,000 and 72,000 shares, respectively. The options granted have a
ten-year life, vest in full on the third anniversary of the grant date and have an exercise price of $70.18, the fair market
value of a share of our common stock on the date of grant.
2016 Restricted Stock Unit Awards
Mr. Mack was awarded 23,000 time-vested
restricted stock units on March 31, 2016 as an incentive to join the company and in consideration of his forfeiting unvested
restricted stock awards granted by his prior employer. Assuming continuous employment, 1,500, 1,500 and 20,000 units will
vest on March 31, 2017, 2018 and 2019, respectively. As a recruitment incentive and as a replacement to Mr. Mack’s
retirement plan with his former employer, we entered into a share value guarantee agreement with him. The agreement provides
that on the date that Mr. Mack attains age 55, and assuming continuous employment with us, if the value of 20,000 shares of
Polaris common stock is less than $3.5 million, the Company will pay him in cash the difference between $3.5 million and the
value of the 20,000 shares. If the value of the award equals or exceeds $3.5 million, no cash payment will be made and the
terms of the share value guarantee agreement will terminate. The stock value will be calculated using the closing price on
the NYSE on Mr. Mack’s 55
th
birthday which will be in the year 2024.
Other Executive
Compensation Arrangements, Policies and Practices
Health, Welfare and
Retirement Benefits
We provide a full range of benefits to our Named Executive Officers,
including the standard medical, dental and disability benefits generally available to our employees. We also sponsor a qualified
401(k) Plan in which our Named Executive Officers may participate on the same general basis as our employees, and which allows
participants to make plan contributions on a pre-tax basis and to which we make Company-matching contributions dollar-for-dollar
with employee contributions up to 5% of covered compensation.
Because the application of the annual compensation limit under
Section 401(a)(17) of the Internal Revenue Code (“Code”) prevents our senior executives from fully contributing to
the 401(k) Plan and receiving the full Company match, we have adopted a SERP intended to restore contributions lost because of
the application of this annual compensation limit. The SERP provides executives who participate in the 401(k) Plan, including the
Named Executive Officers, with the opportunity to defer up to 100% of their base salary and up to 100% of amounts payable under
the Senior Executive Plan and PRSU awards by making contributions to the SERP. Typically, base salary and Senior Executive Plan
deferral contributions are matched by the Company as if they had been made under the 401(k) Plan on a dollar-for-dollar basis up
to 5% of covered compensation. The SERP is provided to assist executives in accumulating funds on a tax-advantaged basis for retirement
and is consistent with observed competitive practices of similarly situated companies.
We do not maintain a defined benefit pension plan or a defined
benefit supplemental pension plan for our executive officers.
Perquisites
We provide a limited number of perquisites and personal benefits
to our executive officers, generally in an effort to remain competitive with similarly situated companies. These perquisites and
personal benefits consist of:
|
•
|
Reimbursement of club entrance/initiation fees and monthly club dues;
|
|
|
|
|
•
|
Reimbursement of tax, estate and financial planning fees;
|
|
|
|
|
•
|
Supplemental family medical and dental coverage up to $100,000 a year through Ultimate Health, which covers annual expenses not covered under the basic medical and dental benefit plans that are available to Company employees generally, and reimbursement of the cost of annual physicals at the Mayo Clinic for each executive officer and spouse; and
|
|
|
|
|
•
|
Temporary use of Polaris products to encourage a first-hand understanding of the riding experience of our customers and to provide executive officers with an opportunity to evaluate product design and efficiency, along with related parts, garments and accessories. This perquisite is offered to various employees throughout the Company and the only variable is the number of products made available. The value of the temporary use of the products to each employee participating in the program is included as part of the employee’s total compensation, and the Company grosses up the amount so there is no tax impact to any of the participants.
|
|
2017 Proxy Statement -
|
|
29
|
Severance Arrangements
We have entered into severance arrangements with the executive
officers, which provide for certain benefits in the event an executive officer is involuntarily terminated without cause, terminated
in connection with a change in control or, in the case of our CEO, if he terminates his employment for good reason. The severance
arrangements with Messrs. Wine, Pucel, Speetzen, Mack, and Eastman were established as part of the negotiations of their initial
employment terms. The severance arrangements are intended to:
|
•
|
Allow executive officers to weigh potential transactions focused on shareholder interests and not personal interests;
|
|
|
|
|
•
|
Provide executive officers with a measure of security in the event of an actual or potential change in corporate ownership or control; and
|
|
|
|
|
•
|
Provide executive officers with a bridge to their next professional opportunity.
|
The severance arrangements are
described in more detail beginning on page 42 under the caption entitled “
Potential Payments Upon Termination or
Change-in-Control.
”
Clawback Policy
Under our “clawback” policy, the Company may require
reimbursement or cancellation of cash-based or equity-based incentive compensation awarded to any of our executive officers subject
to Section 16 of the Securities Exchange Act if we are required to prepare an accounting restatement due to material noncompliance
with any financial reporting requirement, and if the award or payout was predicated upon the achievement of financial results that
were restated. The policy applies to awards granted after November 1, 2010 and calls for the reimbursement or cancellation of the
amount of the award or payout, net of taxes, in excess of what would have been granted or paid based on the actual results unless
the Compensation Committee determines in its discretion that a lesser amount to be reimbursed or canceled is appropriate under
the circumstances.
Deductibility of Compensation
Section 162(m) generally does not allow a publicly held company
to take a tax deduction for compensation of more than $1 million paid in any taxable year to certain “covered employees”
unless such compensation qualifies as “performance-based.” For purposes of Section 162(m), the group of “covered
employees” consists of a company’s chief executive officer and its three other most highly compensated executive officers,
other than the chief financial officer. The Compensation Committee generally intends to comply with the requirements of Section
162(m) with respect to compensation in excess of $1 million paid under the Senior Executive Plan, the Omnibus Plan and any other
incentive arrangement in order to qualify such compensation as “performance-based” and therefore deductible under Section
162(m). However, the Compensation Committee has and may elect to provide compensation that is not deductible under Section 162(m)
when that is deemed necessary or advisable in order to achieve its compensation objectives.
Stock Ownership Guidelines
The Compensation Committee believes that
an important means of aligning the interests of our executive officers, including our Named Executive Officers, with the interests
of our shareholders is to ensure that they own significant amounts of our common stock. The Compensation Committee adopted stock
ownership guidelines which require executive officers to hold shares with a value equal to or exceeding a multiple of annual base
salary as set forth in the table below. Each executive officer is expected to satisfy the stock ownership guidelines within four
years following the date he or she becomes an executive officer. Executive officers are prohibited from entering into hedging
transactions and are subject to restrictions on pledging Company stock as discussed on page 8.
The following chart sets forth the stock ownership of each of
our Named Executive Officers relative to the stock ownership guidelines:
|
Name
|
Stock Ownership Guidelines
(as a multiple of base salary)
|
Stock Ownership
Guideline Met?
|
|
|
Scott
W. Wine
|
7x
|
Yes
|
|
|
Michael
T. Speetzen
|
4x
|
Yes
|
|
|
Kenneth
J. Pucel
|
4x
|
Yes
|
|
|
Robert
P. Mack
|
2x
|
Yes
|
|
|
Stephen
L. Eastman
|
2x
|
Yes
|
|
|
2017 Proxy Statement -
|
|
30
|
Compensation Committee Report
The Compensation Committee assists the Board in establishing a
philosophy and policies regarding executive and director compensation, provides oversight of the administration of our director
and executive compensation programs and administers our equity-based compensation plans, reviews the compensation of directors,
Named Executive Officers and senior management, and prepares any report on executive compensation required by the rules and regulations
of the SEC or other regulatory body, including this Compensation Committee Report.
In performing its oversight responsibilities, the Compensation
Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on the review and discussions,
we have recommended to the Board that the Compensation Discussion and Analysis be included in the Proxy Statement for the 2017
Annual Meeting of Shareholders.
COMPENSATION COMMITTEE
Gary E. Hendrickson, Chair
Annette K. Clayton
John P. Wiehoff
Compensation
Risk Assessment
Management conducted a risk assessment of our employee compensation
policies and practices, including those that apply to our executive officers. Management reviewed our compensation plans, program
design and existing practices as well as global and local compensation policies, programs and practices applicable to all employees.
Management then analyzed the likelihood and magnitude of potential risks, focusing on whether any of our compensation policies
and practices varied significantly from our overall risk and reward structure, whether any such policies and practices incentivized
individuals to take risks that were inconsistent with our goals, and whether any such policies and practices have resulted in establishing
an inappropriate balance between short-term and long-term incentive arrangements.
Management discussed the findings of the risk assessment with
the Compensation Committee. Based on the assessment, we have concluded that our compensation policies and practices are aligned
with the interests of shareholders, appropriately reward pay for performance and do not create risks that are reasonably likely
to have a material adverse effect on the Company.
|
2017 Proxy Statement -
|
|
31
|
Executive Compensation
Summary
Compensation Table
The following table shows, for the fiscal
years ended December 31, 2014, 2015, and 2016, the annual compensation paid to or earned by our Named Executive Officers.
|
Name
and Principal Position
|
|
|
Year
|
|
|
Salary
($)
(1)
|
|
|
Bonus
($)
(2)
|
|
|
Stock
Awards
($)
(3)
|
|
|
Option
Awards
($)
(4)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
(5)
|
|
|
All
Other
Compensation
($)
(6)
|
|
|
Total
($)
|
|
|
Scott W. Wine
|
|
|
2016
|
|
|
|
985,000
|
|
|
|
0
|
|
|
|
1,307,032
|
|
|
|
3,089,501
|
|
|
|
0
|
|
|
|
76,544
|
|
|
|
5,458,077
|
|
|
Chairman and Chief Executive
|
|
|
2015
|
|
|
|
982,423
|
|
|
|
0
|
|
|
|
2,900,048
|
|
|
|
3,094,026
|
|
|
|
0
|
|
|
|
137,860
|
|
|
|
7,114,357
|
|
|
Officer (Principal Executive Officer)
|
|
|
2014
|
|
|
|
968,654
|
|
|
|
0
|
|
|
|
2,387,730
|
|
|
|
3,999,085
|
|
|
|
1,326,000
|
|
|
|
132,235
|
|
|
|
8,813,704
|
|
|
Michael
T. Speetzen
(7)
|
|
|
2016
|
|
|
|
550,000
|
|
|
|
0
|
|
|
|
300,020
|
|
|
|
1,421,461
|
|
|
|
0
|
|
|
|
63,303
|
|
|
|
2,334,784
|
|
|
Executive Vice President–Finance and Chief Financial Officer (Principal Financial Officer)
|
|
|
2015
|
|
|
|
224,231
|
|
|
|
750,000
|
|
|
|
3,185,577
|
|
|
|
380,021
|
|
|
|
0
|
|
|
|
379,450
|
|
|
|
4,919,279
|
|
|
Robert
P. Mack
(7)
|
|
|
2016
|
|
|
|
295,385
|
|
|
|
420,000
|
|
|
|
2,415,025
|
|
|
|
597,214
|
|
|
|
0
|
|
|
|
30,703
|
|
|
|
3,758,327
|
|
|
Senior Vice President–Corporate Development and Strategy, and President of Adjacent Markets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth
J. Pucel
|
|
|
2016
|
|
|
|
600,000
|
|
|
|
0
|
|
|
|
442,836
|
|
|
|
2,088,677
|
|
|
|
0
|
|
|
|
80,570
|
|
|
|
3,212,083
|
|
|
Executive Vice President–
|
|
|
2015
|
|
|
|
592,269
|
|
|
|
0
|
|
|
|
880,073
|
|
|
|
946,408
|
|
|
|
372,000
|
|
|
|
80,171
|
|
|
|
2,870,921
|
|
|
Global Operations,
|
|
|
2014
|
|
|
|
43,846
|
|
|
|
820,000
|
|
|
|
8,152,969
|
|
|
|
1,767,258
|
|
|
|
0
|
|
|
|
2,379
|
|
|
|
10,786,452
|
|
|
Engineering and Lean
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen L. Eastman
(7)
|
|
|
2016
|
|
|
|
391,635
|
|
|
|
0
|
|
|
|
1,772,711
|
|
|
|
333,608
|
|
|
|
0
|
|
|
|
64,721
|
|
|
|
2,562,675
|
|
|
President–Parts, Garments and
|
|
|
2015
|
|
|
|
363,404
|
|
|
|
0
|
|
|
|
1,786,247
|
|
|
|
327,603
|
|
|
|
136,000
|
|
|
|
73,471
|
|
|
|
2,686,725
|
|
|
Accessories
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts
shown in this column include elective contributions under the 401(k) Plan and SERP for Messrs. Wine, Speetzen, Mack, Pucel,
and Eastman in the amounts of $313,500, $34,904, $12,308, $35,769, and $37,582, respectively.
|
|
(2)
|
The
amount shown in this column for Mr. Speetzen represents a signing bonus of $200,000 paid upon commencement of his employment
in 2015, and a guaranteed annual incentive for 2015 of $550,000 paid in early 2016. The amount shown in this column for Mr.
Mack represents a signing bonus of $100,000 paid upon commencement of his employment on March 31, 2016, and a guaranteed annual
incentive for 2016 of $320,000 paid in early 2017. The amount shown in this column for Mr. Pucel represents a signing bonus
of $250,000 paid upon commencement of his employment on December 1, 2014, and a guaranteed annual incentive for 2014 of $570,000
paid in early 2015.
|
|
(3)
|
Amounts
shown in this column represent the aggregate grant date fair value of PRSUs granted to each of our Named Executive Officers,
and the grant date fair value of restricted stock awards and restricted stock unit awards granted to certain Named Executive
Officers, in the fiscal years indicated. The calculation of the grant date fair value amounts for PRSU awards assumes target-level
performance against the specified PRSU financial goals and is calculated in accordance with FASB ASC Topic 718 based on the
closing market price of our common stock on the applicable measurement date for the award. If instead the amounts were calculated
assuming maximum-level performance, the grant date fair value of the 2016 PRSU awards would have been as follows: for Mr.
Wine, $2,614,065; for Mr. Speetzen, $600,039; for Mr. Mack; $299,970; for Mr. Pucel; $885,672; and for Mr. Eastman; $281,422.
The actual value ultimately realized by our Named Executive Officers with respect to these PRSU awards will depend on our
actual performance against the specified financial goals and the market value of our common stock on the vesting date ,
and may differ substantially from the grant date fair values shown. Mr. Eastman received an additional performance based restricted
stock unit award during 2016 which either vests in full or is forfeited depending on whether or not the performance goal is
achieved. The grant date fair value for this award is $1,632,000, reflecting the assumption that the performance goal will
be achieved. The time-based restricted stock unit awards reported in this column for 2016 reflect the $2,265,040 grant date
fair value of the restricted stock units granted in 2016 to Mr. Mack. The grant date fair value of these awards was computed
in accordance with FASB ASC Topic 718, based on the closing market price of our common stock on the grant date. Additional
information regarding the 2016 stock unit awards is set forth below under the caption “Grants of Plan-Based Awards in
2016” on page
34
.
|
|
(4)
|
Amounts
shown in this column represent the grant date fair value of stock option awards granted to each of our Named Executive Officers
in the fiscal years indicated. Grant date fair value is calculated in accordance with the requirements of FASB ASC Topic 718
using the Black-Scholes method. The assumptions used in determining the grant date fair value of the awards are set forth
in Note 2 to the financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.
|
|
(5)
|
Amounts
shown in this column represent payments under the Senior Executive Plan, and are reported for the year in which the related services
were performed and the incentive amounts earned. Mr. Wine and the Compensation Committee mutually agreed to forego payment of
his 2015 annual incentive. The Compensation Committee had not determined the amount of Mr. Wine’s annual incentive, but
the suggested payout based on the achievement level of the applicable performance matrix was approximately $723,000. Additional
information about these payments is set forth under the caption “2016 Annual Incentive Compensation” on page
25
.
|
|
(6)
|
Amounts
shown in this column include Company matching contributions to the 401(k) Plan and SERP, life insurance premiums and the aggregate
incremental cost to us of the following perquisites: club dues, financial planning and tax preparation services, Ultimate Health
supplemental health and dental coverage, annual physicals, the use of Company products and the receipt of related parts, garments
and accessories. These perquisites are described in further detail under the caption “Perquisites” on page 29.
Additional detail regarding the components of the amounts shown for 2016 for each of our Named Executive Officers is provided
below in the “All Other Compensation Table.”
|
|
(7)
|
Mr.
Mack became a Named Executive Officer in 2016. Messrs. Speetzen and Eastman first became Named Executive Officers in 2015.
|
|
2017 Proxy Statement -
|
|
32
|
All
Other Compensation Table
The following table provides additional information on the amounts
reported in the All Other Compensation column of the Summary Compensation Table for 2016.
|
|
|
2016 Amount of All Other Compensation ($)
|
|
|
|
S.
Wine
|
|
|
M.
Speetzen
|
|
|
R.
Mack
|
|
|
K.
Pucel
|
|
|
M. Eastman
|
|
|
Financial Planning (Reimbursement)
|
|
$
|
0
|
|
|
$
|
1,700
|
|
|
$
|
2,400
|
|
|
$
|
4,065
|
|
|
$
|
10,000
|
|
|
Club Initiation Fees and Monthly Dues (Reimbursement)
|
|
|
1,250
|
|
|
|
5,895
|
|
|
|
5,850
|
|
|
|
0
|
|
|
|
6,580
|
|
|
Life Insurance Policy Premiums
|
|
|
546
|
|
|
|
546
|
|
|
|
546
|
|
|
|
546
|
|
|
|
546
|
|
|
Ultimate Health Premiums
|
|
|
10,692
|
|
|
|
10,692
|
|
|
|
5,364
|
|
|
|
10,692
|
|
|
|
10,692
|
|
|
Annual Physicals (Executive and Spouse)
|
|
|
500
|
|
|
|
0
|
|
|
|
0
|
|
|
|
9,214
|
|
|
|
3,201
|
|
|
401(k) Plan Matching Contributions by Company
|
|
|
13,250
|
|
|
|
13,250
|
|
|
|
12,308
|
|
|
|
13,250
|
|
|
|
13,250
|
|
|
SERP Matching Contributions by Company
|
|
|
36,000
|
|
|
|
22,212
|
|
|
|
0
|
|
|
|
35,350
|
|
|
|
13,132
|
|
|
Use of Polaris Products
(1)
|
|
|
6,814
|
|
|
|
6,749
|
|
|
|
2,279
|
|
|
|
4,491
|
|
|
|
5,310
|
|
|
Polaris Parts, Garments and Accessories
(2)
|
|
|
7,492
|
|
|
|
2,259
|
|
|
|
1,956
|
|
|
|
2,962
|
|
|
|
2,010
|
|
|
Total
|
|
$
|
76,544
|
|
|
$
|
63,303
|
|
|
$
|
30,703
|
|
|
$
|
80,570
|
|
|
$
|
64,721
|
|
|
(1)
|
Each
year, the CEO is provided the use of up to16 Polaris products, the EVPs are provided the use of up to 12 Polaris products
and other executive officers are provided the use of up to 10 Polaris products. The products used by our executives are either
returned to the Company or purchased at a price greater than cost at the end of the defined usage period. We sell the returned
products to dealers at an amount greater than cost of such products to the Company. The amount shown is the imputed value
based on the estimated fair market value of the unit (or units) for the period of time that the unit was in the executive’s
possession, plus the gross-up on such value.
|
|
(2)
|
The
value shown is the cost to the Company for parts, garments, and accessories provided to each of the Named Executive Officers.
|
|
2017 Proxy Statement -
|
|
33
|
Grants
of Plan-Based Awards in 2016
The following table summarizes each grant of an equity or non-equity
incentive award during 2016 to each of our Named Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other
|
|
All
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Exercise
|
|
Date
Fair
|
|
|
|
|
|
|
|
Estimated
Potential Payouts
|
|
Estimated Future Payouts
|
|
Number
|
|
Number
of
|
|
or
Base
|
|
Value
of
|
|
|
|
|
|
|
|
Under
Non-Equity Incentive
|
|
Under
Equity Incentive
|
|
of Shares
|
|
Securities
|
|
Price
of
|
|
Stock and
|
|
|
|
|
|
|
|
Plan
Awards
(1)
|
|
Plan
Awards
(2)
|
|
of Stock
|
|
Underlying
|
|
Option
|
|
Option
|
|
Name
|
|
Grant
Date
|
|
Approve
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Max
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Max
(#)
|
|
or
Units
(#)
(3)
|
|
Options
(#)
|
|
Awards
($/Sh)
|
|
Awards
($)
(4)
|
|
Scott
W.
|
|
1/27/16
|
|
1/27/16
|
|
197,000
|
|
1,231,250
|
|
2,462,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wine
|
|
1/27/16
|
|
1/27/16
|
|
|
|
|
|
|
|
2,328
|
|
18,624
|
|
37,248
|
|
|
|
|
|
|
|
1,307,032
|
|
|
|
1/27/16
|
|
1/27/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
213,000
|
|
70.18
|
|
3,089,501
|
|
Michael T.
|
|
1/27/16
|
|
1/27/16
|
|
110,000
|
|
550,000
|
|
1,100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Speetzen
|
|
1/27/16
|
|
1/27/16
|
|
|
|
|
|
|
|
534
|
|
4,275
|
|
8,550
|
|
|
|
|
|
|
|
300,020
|
|
|
|
1/27/16
|
|
1/27/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,000
|
|
70.18
|
|
710,730
|
|
|
|
1/27/16
|
|
1/27/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,000
|
|
70.18
|
|
710,730
|
|
Robert
P.
|
|
3/31/16
|
|
3/14/16
|
|
|
|
|
|
|
|
190
|
|
1,523
|
|
3,046
|
|
|
|
|
|
|
|
149,985
|
|
Mack
|
|
3/31/16
|
|
3/14/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,490
|
|
98.48
|
|
597,214
|
|
|
|
3/31/16
|
|
3/14/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
|
|
295,440
|
|
|
|
3/31/16
|
|
3/14/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
1,969,600
|
|
Kenneth
J.
|
|
1/27/16
|
|
1/27/16
|
|
120,000
|
|
600,000
|
|
1,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pucel
|
|
1/27/16
|
|
1/27/16
|
|
|
|
|
|
|
|
789
|
|
6,310
|
|
12,620
|
|
|
|
|
|
|
|
442,836
|
|
|
|
1/27/16
|
|
1/27/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,000
|
|
70.18
|
|
1,044,338
|
|
|
|
1/27/16
|
|
1/27/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,000
|
|
70.18
|
|
1,044,338
|
|
Stephen
L.
|
|
1/27/16
|
|
1/27/16
|
|
78,327
|
|
293,726
|
|
783,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eastman
(5)
|
|
1/27/16
|
|
1/27/16
|
|
|
|
|
|
|
|
251
|
|
2,005
|
|
4,010
|
|
|
|
|
|
|
|
140,711
|
|
|
|
12/17/16
|
|
12/17/16
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
1,632,000
|
|
|
|
1/27/16
|
|
1/27/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,000
|
|
70.18
|
|
333,608
|
|
(1)
|
Amounts
in these columns represent potential payouts under the Senior Executive Plan, which is our annual cash incentive plan, based on
the achievement of specified financial and other goals. The threshold payouts are 20% of base salary and the target payouts range
from 75% to 125% of base salary among our Named Executive Officers. The maximum payouts represent the maximum Section 162(m) payout
amounts, which for Mr. Wine is 250% of base salary, and for Messrs. Speetzen, Pucel, and Eastman is 200% of base salary. See “2016
Annual Incentive Compensation” on page 25. These estimated payout amounts are based on each Named Executive Officer’s
salary for the year in which performance occurs. No amounts were earned by or payable to any Named Executive Officer under the
Senior Executive Plan for 2016. Mr. Mack did not participate in the Senior Executive Plan in 2016.
|
|
(2)
|
Amounts
in these columns for each Named Executive Officer represent the number of PRSUs that may be earned and vested based on the
degree to which the financial goals are attained. The threshold number of units that may be earned is 12.5% of target, and
the maximum Section 162(m) number of units that may be earned is 200% of target. The target number of units for each individual
is based on a specified dollar amount for that Named Executive Officer that was converted into stock units at a per unit price
of $70.18 (Mr. Mack’s award was converted at a price of $98.48), the closing market price of a share of common stock
at the applicable measurement date for the award. The additional amount in the “Target” column for Mr. Eastman
represents the number of performance restricted stock units that may be earned under the supplemental PRSU award provided
to him if the applicable financial goals are achieved.
|
|
(3)
|
Amounts
in this column represent the number of restricted stock units awarded to Mr. Mack. These awards are discussed under the caption
“2016 Restricted Stock Unit Awards” on page 29.
|
|
(4)
|
Each
amount reported in this column represents the grant date fair value of the applicable award which was determined pursuant
to FASB ASC Topic 718. The calculation of the grant date fair value of the PRSU awards discussed in note (2) is based upon
our assessment of the most probable outcome of the respective performance conditions. The actual amounts that will be received
by our Named Executive Officers with respect to these performance-based awards will be determined at the end of the performance
period based upon our actual performance, which may differ from the performance that was deemed probable at the date of grant.
|
|
(5)
|
Mr.
Eastman received a performance based restricted stock unit award of 20,000 PRSUs in connection with the integration of TAP.
The award will vest if TAP achieves specified revenue and EBITDA as a percentage of revenue goals for the year ending December
31, 2019. The award is split into four equal tranches and the number of shares that will actually vest, if any, is dependent
on the level of revenue and EBITDA achieved. If the performance goals are not meet, the units are forfeited.
|
|
2017 Proxy Statement -
|
|
34
|
Additional Information
About Plans and Agreements Affecting Reported Compensation
The following additional information is provided
regarding various plans and agreements that affect the compensation information disclosed in the Summary Compensation Table and
the Grants of Plan-Based Awards in 2016 table above.
Offer Letters
We entered into an offer letter agreement
with Mr. Mack in connection with his hiring that provides for an annual base salary, subject to annual review, and generally provides
for ongoing participation in incentive compensation, equity-based compensation and benefit plans. Mr. Mack’s letter agreement
also provided for payment of a signing bonus that would be repayable on pro rata basis if he were to resign within twenty-four
months.
Incentive Plan Awards
Senior Executive Plan
Annual cash incentive compensation
awards are made to each of our Named Executive Officers and other eligible employees pursuant to the shareholder-approved
Senior Executive Plan. The Senior Executive Plan provides for the payment of awards to participants selected by the
Compensation Committee to the degree we, or any subsidiary, business unit or geographic region thereof, achieves performance
objectives specified by the Compensation Committee at the beginning of a calendar year performance period. The performance
objectives are to be based on one or more shareholder-approved business criteria specified in the Senior Executive Plan. In
establishing our performance goals, the Compensation Committee provides that adjustments will be made for specified unusual
events such as acquisitions, dispositions, restructurings and legal settlements. Although all awards are payable in cash,
they may be denominated in cash and/or in units with a value equivalent to a share of our common stock. The maximum amount
payable to any participant under the Senior Executive Plan for any one-year performance period is $2,500,000. The Senior
Executive Plan is to be administered by the Compensation Committee in a manner intended to qualify awards as
“performance-based compensation” for purposes of Section 162(m).
Additional information about Senior Incentive
Plan awards made in 2016 to our Named Executive Officers, including the performance objectives established by the Compensation
Committee and the determination of amounts to be paid, is provided under the caption “
2016 Annual Incentive Compensation
”
on page 25. The estimated threshold, target and maximum payments under the Senior Executive
Plan for 2016 are reflected in the “Estimated Potential Payouts Under Non-Equity Incentive Plan Awards” columns in
the Grants of Plan-Based Awards in 2016 table above. The amounts actually paid in connection with Senior Executive Plan awards
during each of the years 2014-2016 are set forth in the “Non-Equity Incentive Plan Compensation” column of the Summary
Compensation Table on page 32.
Equity-Based Awards
Performance Restricted Stock Units
PRSU awards are made to each of our Named
Executive Officers and other eligible employees pursuant to the shareholder-approved Omnibus Plan. Performance-based awards under
the Omnibus Plan are to be administered by the Compensation Committee in a manner intended to qualify awards as “performance-based
compensation” for purposes of Section 162(m). The PRSU awards to participants selected by the Compensation Committee will
be earned to the degree that we, or any subsidiary, business unit or geographic region thereof, achieve performance objectives
specified by the Compensation Committee at the beginning of a three consecutive calendar year performance period. The performance
objectives are to be based on one or more shareholder-approved business criteria specified in the Omnibus Plan. In establishing
our performance goals, the Compensation Committee provides that adjustments will be made for specified unusual events such as acquisitions,
dispositions, restructurings and legal settlements.
Each PRSU will be paid out in the form of
one share for each PRSU determined by the Compensation Committee to have been earned and vested over the applicable performance
period. If elected by the Named Executive Officer, the receipt of a share in payment of each earned unit may be deferred into the
SERP such that each resulting deferred stock unit represents the right to receive one share of common stock upon the settlement
date elected by the Named Executive Officer under the SERP. Amounts deemed invested in deferred stock units in the SERP may be
transferred into an alternative investment account in the SERP after a period of six months and one day. Additional information
about PRSU awards made in 2016 to our Named
|
2017 Proxy Statement -
|
|
35
|
Executive Officers, including the performance
periods and performance objectives established by the Compensation Committee, is provided under the caption
“2016 Long-Term
Compensation”
on page 26. The estimated threshold, target and maximum awards
for the 2016-2018 performance period and the grant date fair value of such awards are shown in the “Estimated Future Payouts
Under Equity Incentive Plan Awards” columns in the Grants of Plan-Based Awards in 2016 table above.
PRSU awards granted in 2015 for the 2015-2017 performance period,
were structured in the same manner as PRSU awards granted in 2016, with the maximum number of PRSUs subject to each award capable
of being earned if we achieve a 12% return on invested capital for the last year of that performance period. The Compensation Committee
does, however, have the discretion to determine that a lesser number of PRSUs shall be earned, and expects to exercise that discretion
based on the degree to which goals involving our sales, operating income as a percentage of sales, and net income from continuing
operations for the last year of the 2015-2017 performance period are achieved, as summarized in the following table:
|
|
2017
Net
Income from
Continuing
Operations
($ millions)
|
Percent
of
Target
Earned
(%)
|
2017
Operating Profit
as a Percent
of Sales
(%)
|
Percent
of
Target
Earned
(%)
|
2017
Revenue
($ millions)
|
Percent
of
Target
Earned
(%)
|
|
Threshold
(1)
|
526
|
25.0
|
16.0
|
12.5
|
5,186
|
12.5
|
|
Target
(1)
|
638
|
50.0
|
17.0
|
25.0
|
5,962
|
25.0
|
|
Maximum
(1)
|
727
|
100.0
|
18.0
|
50.0
|
6,813
|
50.0
|
|
(1)
|
Percentage
earned for performance between any of the specified levels will be determined on a pro rata basis.
|
For PRSU awards granted in 2014 for the 2014-2016 performance
period, we achieved a 14.9% return on invested capital, above the 12% goal required to earn the maximum number of PRSUs subject
to the awards. However, for purposes of the additional goals that had been established to guide the Committee’s discretion
in potentially paying out less than the maximum number of PRSUs, we achieved performance that was slightly above the threshold
level for sales, and both net income from continuing operations and operating income as a percentage of sales were below the
threshold, as shown in the table below. As a result of this performance, the Compensation Committee determined that the PRSU awards
would be paid out at 13% of target for the 2014-2016 performance period, and the amounts received by the Named Executive Officers
are summarized in the “Option Exercises and Stock Vested in 2016” table on page 39.
|
|
2016
Net
Income from
Continuing
Operations
($ millions)
|
Percent
of
Target
Earned
(%)
|
2016
Operating
Profit as
a Percent
of Sales
(%)
|
Percent
of Target
Earned
(%)
|
2016
Revenue
($ millions)
|
Percent
of
Target
Earned
(%)
|
|
Threshold
(1)
|
440
|
25.0
|
15.3
|
12.5
|
4,350
|
12.5
|
|
Target
(1)
|
534
|
50.0
|
16.3
|
25.0
|
5,000
|
25.0
|
|
Maximum
(1)
|
656
|
100.0
|
17.3
|
50.0
|
5,725
|
50.0
|
|
Actual
|
213
|
0.0
|
7.8
|
0.0
|
4,517
|
13.0
|
|
(1)
|
Percentage
earned for performance between any of the specified levels will be determined on a pro rata basis.
|
Stock Options
Stock option awards granted under the Omnibus Plan during 2016
to employees of our Company, including our Named Executive Officers, have an exercise price equal to 100% of the fair market value
of a share of our common stock on the date of grant. Each stock option granted to Messrs. Wine, Mack and Eastman and one of the
stock options granted to Messrs. Speetzen and Pucel in 2016 vests and becomes exercisable as to 50% of the shares subject to the
option on each of the second and fourth anniversaries of the date of grant and has a 10-year term. The second stock option granted
to each of Messrs. Speetzen and Pucel vests and becomes exercisable on the third anniversary of the date of grant and has a 10-year
term. If employment terminates for any reason other than disability, death or retirement, then any vested portion of the option
will be exercisable for 30 days after employment ends unless terminated for cause. If employment terminates due to disability or
death, then any unvested portion of the option will vest immediately and all exercisable options will remain exercisable for one
year following termination of employment. If employment terminates by reason of retirement, the vested option will be exercisable
for the full term of the option and the unvested portion of the option will vest immediately and remain exercisable for the full
term of the option provided that the grant occurred at least 12 months prior to the retirement date and notice of retirement was
given to the Company at least one-year in advance. In no event will an option be exercisable beyond the end of its original term.
Upon a change in control of our Company, each outstanding option will become immediately vested and exercisable in full only if
the option is not continued, assumed or replaced or if the Named Executive Officer is terminated without cause or terminates his
employment for good reason within one year of the event.
|
2017 Proxy Statement -
|
|
36
|
Outstanding
Equity Awards at 2016 Fiscal Year-End
The following table sets forth information concerning unexercised
stock option awards, unvested restricted stock awards, and unvested PRSU awards for each of the Named Executive Officers as of
December 31, 2016.
|
|
Option
Awards
|
|
Stock
Awards
|
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
|
Number
of
Shares or
Stock That
Have Not
Vested
(#)
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
|
Equity
Incentive
Plan Awards:
Number
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
|
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(19)
($)
|
|
Scott W. Wine
|
25,000
|
|
|
10.03
|
02/10/2019
|
|
|
|
|
|
|
|
|
|
130,000
|
|
|
38.46
|
01/31/2021
|
|
|
|
|
|
|
|
|
|
180,000
|
|
|
65.57
|
02/01/2022
|
|
|
|
|
|
|
|
|
|
81,500
|
81,500
|
(1)
|
86.45
|
01/30/2023
|
|
|
|
|
|
|
|
|
|
50,500
|
50,500
|
(2)
|
125.67
|
01/29/2024
|
|
|
|
|
|
|
|
|
|
|
85,000
|
(3)
|
146.63
|
01/28/2025
|
|
|
|
|
|
|
|
|
|
|
213,000
|
(4)
|
70.18
|
01/27/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,472
|
(5)
|
203,668
|
|
|
|
|
|
|
|
|
|
|
|
2,328
|
(6)
|
191,804
|
|
Michael T. Speetzen
|
|
12,000
|
(7)
|
133.50
|
08/03/2025
|
|
|
|
|
|
|
|
|
|
|
49,000
|
(4)
|
70.18
|
01/27/2026
|
|
|
|
|
|
|
|
|
|
|
49,000
|
(8)
|
70.18
|
01/27/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(9)
|
823,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
483
|
(10)
|
39,794
|
|
|
|
|
|
|
|
|
|
|
|
534
|
(6)
|
43,996
|
|
Robert P. Mack
|
|
26,490
|
(11)
|
98.48
|
03/31/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
(12)
|
247,170
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(13)
|
1,647,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
190
|
(14)
|
15,654
|
|
Kenneth J. Pucel
|
22,500
|
22,500
|
(15)
|
154.31
|
12/01/2024
|
|
|
|
|
|
|
|
|
|
|
26,000
|
(3)
|
146.63
|
01/28/2025
|
|
|
|
|
|
|
|
|
|
|
72,000
|
(4)
|
70.18
|
01/27/2026
|
|
|
|
|
|
|
|
|
|
|
72,000
|
(8)
|
70.18
|
01/27/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(16)
|
1,647,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
750
|
(5)
|
61,793
|
|
|
|
|
|
|
|
|
|
|
|
789
|
(6)
|
65,006
|
|
Stephen L. Eastman
|
15,000
|
|
|
68.20
|
02/06/2022
|
|
|
|
|
|
|
|
|
|
6,000
|
6,000
|
(1)
|
86.45
|
01/30/2023
|
|
|
|
|
|
|
|
|
|
5,000
|
5,000
|
(2)
|
125.67
|
01/29/2024
|
|
|
|
|
|
|
|
|
|
|
9,000
|
(3)
|
146.63
|
01/28/2025
|
|
|
|
|
|
|
|
|
|
|
23,000
|
(4)
|
70.18
|
01/27/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(17)
|
823,900
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(18)
|
1,647,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
273
|
(5)
|
22,492
|
|
|
|
|
|
|
|
|
|
|
|
251
|
(6)
|
20,680
|
|
2017 Proxy Statement -
|
|
37
|
|
(1)
|
Represents
a stock option granted on January 30, 2013 under the Omnibus Plan, which will vest as to the remaining shares on the fourth
anniversary of the date of grant.
|
|
(2)
|
Represents
a stock option granted on January 29, 2014 under the Omnibus Plan, which will vest as to the remaining shares on the fourth
anniversary of the date of grant.
|
|
(3)
|
Represents
a stock option granted on January 28, 2015 under the Omnibus Plan, which will vest with respect to 50% of the shares on each
of the second and fourth anniversaries of the date of grant.
|
|
(4)
|
Represents
a stock option granted on January 27, 2016 under the Omnibus Plan, which will vest with respect to 50% of the shares on each
of the second and fourth anniversaries of the date of grant.
|
|
(5)
|
Represents
PRSU awards made on January 28, 2015 under the Omnibus Plan for the three-year performance period beginning January 1, 2015
and ending December 31, 2017 (“the 2015 PRSU Grant”). Units subject to the 2015 PRSU Grant may be earned and vested
after the end of the three-year performance period and prior to March 15, 2018. The amount shown is the threshold number of
units that could be earned and paid out in shares. There is no assurance that the threshold amount will be the actual amount
ultimately paid.
|
|
(6)
|
Represents
PRSU awards made on January 27, 2016 under the Omnibus Plan for the three-year performance period beginning January 1, 2016
and ending December 31, 2018 (“the 2016 PRSU Grant”). Units subject to the 2016 PRSU Grant may be earned and vested
after the end of the three-year performance period and prior to March 15, 2019. The amount shown is the threshold number of
units that could be earned and paid out in shares. There is no assurance that the threshold amount will be the actual amount
ultimately paid.
|
|
(7)
|
Represents
a stock option granted on August 3, 2015 under the Omnibus Plan, which will vest with respect to 50% of the shares on each
of the second and fourth anniversaries of the date of grant.
|
|
(8)
|
Represents
a stock option granted on January 27, 2016 under the Omnibus Plan, which will vest with respect to 100% of the shares on the
third anniversary of the date of grant.
|
|
(9)
|
Represents
a time-based restricted stock unit award granted on August 3, 2015 under the Omnibus Plan that will vest as to the remaining
units, 50% on the second anniversary, and 50% on the third anniversary of the grant date.
|
|
(10)
|
Represents
a PRSU award made on August 3, 2015 under the Omnibus Plan for the performance period beginning on August 3, 2015 and ending
December 31, 2017. Units subject to this award may be earned and vested after the end of the performance period and prior
to March 15, 2018. The amount shown is the threshold number of units that could be earned and paid out in shares. There is
no assurance that the threshold amount will be the actual amount ultimately paid.
|
|
(11)
|
Represents
a stock option granted on March 31, 2016 under the Omnibus Plan, which will vest with respect to 50% of the shares on each
of the second and fourth anniversaries of the date of grant.
|
|
(12)
|
Represents
a time-based restricted stock unit award granted on March 31, 2016 under the Omnibus Plan that will vest as to 1,500 units
on the first anniversary of the grant date, and 1,500 units on the second anniversary of the grant date.
|
|
(13)
|
Represents
a time-based restricted stock unit award granted on March 31, 2016 under the Omnibus Plan that will vest on the third anniversary
of the grant date.
|
|
(14)
|
Represents
a PRSU award made on March 31, 2016 under the Omnibus Plan for the performance period beginning March 31, 2016 and ending
December 31, 2018. Units subject to this award may be earned and vested after the end of the performance period and prior
to March 15, 2019. The amount shown is the threshold number of units that could be earned and paid out in shares. There is
no assurance that the threshold amount will be the actual amount ultimately paid.
|
|
(15)
|
Represents
a stock option granted on December 1, 2014 under the Omnibus Plan, which will vest as to the remaining shares on the fourth
anniversary of the date of grant.
|
|
(16)
|
Represents
a time-based restricted stock award granted on December 1, 2014 under the Omnibus Plan which will vest as to the remaining
shares on the third anniversary of the grant date.
|
|
(17)
|
Represents
a performance based restricted share award made on January 28, 2015 under the Omnibus Plan for the fiscal year 2017 performance
period. The amount shown is the number of shares that will vest upon achievement of the performance goal on the third anniversary
of the date of grant. If the performance goal is not achieved, the shares are forfeited.
|
|
(18)
|
Represents
a performance based restricted stock unit award made on December 17, 2016 under the Omnibus Plan for the fiscal year 2019
performance period. Units subject to this award may be earned and will vest in four equal tranches if specific performance
goals are satisfied. If the performance goals are not achieved, the units are forfeited.
|
|
(19)
|
These
amounts are based upon our stock price of $82.39 on December 30, 2016, the last business day of the year. The actual value
realized by our Named Executive Officers could be different based upon the eventual stock prices at the time of vesting.
|
|
2017 Proxy Statement -
|
|
38
|
Option Exercises
and Stock Vested in 2016
The following table provides information concerning the aggregate
number of stock options exercised and shares of stock or stock units that vested for each of our Named Executive Officers during
2016, and the aggregate dollar values realized by each of our Named Executive Officers upon such event.
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
Name
|
|
Number of
Shares
Acquired
on Exercise
(#)
|
|
|
Value
Realized
on Exercise
($)
(1)
|
|
|
Number
of
Shares
Acquired
on Vesting
(#)
(2)
|
|
|
Value
Realized
on Vesting
($)
(3)
|
|
|
Scott
W. Wine
|
|
|
50,000
|
|
|
|
3,449,500
|
|
|
|
14,470
|
(4)
|
|
|
1,092,449
|
|
|
Michael
T. Speetzen
|
|
|
0
|
|
|
|
0
|
|
|
|
10,000
|
(5)
|
|
|
940,700
|
|
|
Robert
P. Mack
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Kenneth
J. Pucel
|
|
|
0
|
|
|
|
0
|
|
|
|
10,369
|
(6)
|
|
|
938,030
|
|
|
Stephen
L. Eastman
|
|
|
0
|
|
|
|
0
|
|
|
|
236
|
(7)
|
|
|
19,718
|
|
|
(1)
|
Amounts
shown in this column are based on the difference between the fair market value of a share of our common stock on the date
of exercise and the exercise price.
|
|
(2)
|
Amounts
shown in this column include shares subject to restricted stock awards granted to Messrs. Wine, Speetzen, and Pucel that vested
during 2016, and shares that were issuable to Messrs. Wine, Pucel, and Eastman in settlement of PRSUs that were earned as
of December 31, 2016 for the 2014-2016 performance period. As indicated in subsequent footnotes, two of these individuals
elected to defer receipt of some or all of the settlement shares, with an equivalent number of deferred stock units then credited
to the company stock fund in his SERP account. The terms of the deferrals are as described below under the caption “Nonqualified
Deferred Compensation in 2016.”
|
|
(3)
|
Amounts
shown in this column are based on fair market value of a share of our common stock on the applicable vesting date. The PRSUs
that were earned as of December 31, 2016 vested on January 30, 2017, upon the Compensation Committee’s certification
that the applicable performance goals had been satisfied.
|
|
(4)
|
This
amount represents 12,000 shares of restricted stock that vested on January 31, 2016 valued at $73.84 per share, and 2,470
PRSUs that vested on January 30, 2017 valued at $83.55 per share. Mr. Wine elected to defer receipt of 2,470 of the settlement
shares.
|
|
(5)
|
This
amount represents 10,000 restricted stock units that vested on August 3, 2016 valued at $94.07 per share.
|
|
(6)
|
This
amount represents 10,000 shares of restricted stock that vested on December 1, 2016 valued at $90.72 per share, and 369 PRSUs
that vested on January 30, 2017 valued at $83.55 per share.
|
|
(7)
|
This
amount represents 236 PRSUs that vested on January 30, 2017 valued at $83.55 per share. Mr. Eastman elected to defer receipt
of 118 of the settlement shares.
|
|
2017 Proxy Statement -
|
|
39
|
Nonqualified Deferred
Compensation in 2016
The following table sets forth information
regarding the contributions by each Named Executive Officer and the Company to the SERP, as well as information regarding earnings,
aggregate withdrawals and distributions and balances under the SERP, for each Named Executive Officer as of and for the fiscal
year ended December 31, 2016.
|
Name
|
Executive
Contributions
in Last FY
($)
(1)
|
Registrant
Contributions
in Last FY
($)
(2)
|
Aggregate
Earnings
in Last FY
($)
(3)
|
Aggregate
Withdrawals/
Distributions
($)
|
Aggregate
Balance
at Last FYE
($)
(4)
|
|
Scott
W. Wine
|
295,500
|
36,000
|
(25,306)
|
0
|
15,611,544
|
|
Michael
T. Speetzen
|
27,500
|
22,212
|
2,048
|
0
|
51,760
|
|
Robert
P. Mack
|
0
|
0
|
0
|
0
|
0
|
|
Kenneth
J. Pucel
|
48,600
|
35,350
|
10,527
|
0
|
145,885
|
|
Stephen
L. Eastman
|
182,597
|
13,132
|
54,760
|
0
|
676,608
|
|
(1)
|
These
amounts represent elective contributions into the SERP during 2016 of a portion of base salary earned during 2016 and a portion
of the incentive compensation payable during 2016 under the Senior Executive Plan and/or pursuant to the PRSU awards by or
to each of the Named Executive Officers. The amount of any base salary deferred is included in the amount reported in the
2016 salary column of the Summary Compensation Table and the amount of any annual incentive deferred is included in the amount
reported in the 2015 non-equity incentive plan compensation column of the Summary Compensation Table. The amount of any PRSU
settlement that is deferred does not necessarily correspond to the grant date fair value of that PRSU award reported in the
Summary Compensation Table in the year the award was granted. Deferrals related to amounts otherwise payable in 2017 (even
if considered earned in 2016) will be shown as executive contributions for 2017.
|
|
(2)
|
These
amounts represent Company matching contributions to the SERP during 2016. The amount in this column for each Named Executive
Officer is included in the “All Other Compensation” column of the Summary Compensation Table for 2016.
|
|
(3)
|
These
amounts represent earnings (losses) during 2016 credited to (deducted from) the respective Named Executive Officers’
SERP accounts. None of these amounts are included in compensation reported in the Summary Compensation Table because none
of the earnings are considered to be “above market.”
|
|
(4)
|
Of
the aggregate balances shown, the following amounts were previously reported as salary, annual incentive compensation, LTIP
award compensation or all other compensation in Summary Compensation Tables covering fiscal years 2008–2015: Mr. Wine,
$12,145,156 ; Mr. Pucel, $52,535 ; and Mr. Eastman, $266,344 . Mr. Speetzen was not eligible to participate
in the SERP in 2015. Mr. Mack first became a Named Executive Officer in 2016 and Mr. Eastman in 2015.
|
We sponsor a 401(k) Plan that allows employees
to make plan contributions on a pre-tax basis. Employees are automatically enrolled at 5% of covered compensation and can affirmatively
elect to contribute 0-50% of covered compensation into the 401(k) Plan. We match employee contributions dollar-for-dollar up to
5% of base salary and Senior Executive Plan deferrals. Although Named Executive Officers are eligible to participate in the 401(k)
Plan, the application of the annual compensation limit under Section 401(a)(17) of the Code prevents Named Executive Officers from
fully contributing to the 401(k) Plan and receiving the full Company match. The SERP provides executives who participate in the
401(k) Plan with the opportunity to defer up to net 100% of their base salary and up to 100% of amounts payable under the Senior
Executive Plan and PRSUs into the SERP. Typically, base salary and Senior Executive Plan deferral contributions are matched by
the Company as if they had been made under the 401(k) Plan on a dollar-for-dollar basis up to 5% of covered compensation. The SERP
is intended solely to restore contributions lost because of the application of the annual compensation limit under Section 401(a)(17)
of the Code to the 401(k) Plan.
The SERP account of each Named Executive
Officer is deemed to be invested in the fund(s) designated by the Named Executive Officer. For this purpose, the Named Executive
Officers may choose among the same funds that are available to our employees generally under the 401(k) Plan. Deemed investment
earnings and losses are applied to each Named Executive Officer’s SERP account based upon the performance of the applicable
investment fund. At December 31, 2016, accounts of the Named Executive Officers were deemed to be invested in the following funds:
|
American Funds® EuroPacific Growth Fund® Class R-6
|
Vanguard Institutional Index Fund Institutional Shares
|
|
Fidelity Investments Money Market Treasury Only – Institutional Class
|
Vanguard Mid-Cap Index Fund Institutional Shares
|
|
Metropolitan West Total Return Bond Fund Plan Class
|
Vanguard Small-Cap Index Fund Institutional Shares
|
|
Polaris Stock Fund
|
Vanguard Target Retirement 2030 Trust II
|
|
T. Rowe Price International Discovery Fund I Class
|
Vanguard Total Bond Market Index Fund
|
|
2017 Proxy Statement -
|
|
40
|
The Named Executive Officers may elect a
distribution option annually prior to the beginning of the applicable earnings period under the SERP. The Named Executive Officers
may elect to receive distributions (i) six months following separation of service or one year after separation of service; (ii)
upon the attainment of a certain age, designated by the Named Executive Officer, between 59 ½ and 70 ½, provided
that the Named Executive Officer will not attain the designated age for at least three years after his election; or (iii) the earlier
or later of (i) or (ii). Named Executive Officers may elect to receive the distribution in a lump sum or in monthly, quarterly
or annual installments over a period not to exceed 10 years. If the installment method is elected, the Named Executive Officer’s
account will continue to be credited with a prorated amount of deemed investment earnings and losses during the installment period.
|
2017 Proxy Statement -
|
|
41
|
Potential Payments Upon Termination or
Change-In-Control
Our Named Executive Officers are eligible
to receive certain payments and benefits in the event of termination of their employment, including following a change in control,
and upon a change in control pursuant to severance arrangements and equity award agreements with the Company.
Severance Arrangements
with Named Executive Officers
We have entered into severance arrangements
with our Named Executive Officers, which provide certain benefits to the Named Executive Officers upon their termination of employment
under certain circumstances, including following a “change in control.” For this purpose, a “change in control”
is deemed to occur if:
|
•
|
There is a substantial change in the composition of the Board which causes at least one-half of the Board to consist of new directors that were not nominated by the Company; or
|
|
|
|
|
•
|
A third party acquires ownership of 35% or more of our common stock, unless such acquisition is approved by the Company; or
|
|
|
|
|
•
|
We engage in certain extraordinary corporate events (such as a liquidation, dissolution, reorganization, merger or sale of all or substantially all of our assets), unless we are the surviving entity after such transaction or at least one-half of our Board continue to serve as directors of the surviving entity after such transaction, as applicable.
|
Under the severance arrangements, a Named
Executive Officer will be considered to have been terminated without cause if he or she is terminated other than for willful and
continued nonperformance, conviction of a felony or other misconduct or detrimental actions as specified in the applicable agreement.
A Named Executive Officer will be considered to have terminated his or her employment for good reason if he or she terminates employment
due to a material reduction in title, authority, responsibilities or base compensation, a material change in the location of his
or her principal place of employment or nonperformance by the Company of any material obligations owed to him or her, all as specified
in the applicable agreement.
Severance, Proprietary
Information and Noncompetition Agreement with Mr. Wine
At December 31, 2016, we were a party to
a severance, proprietary information and noncompetition agreement with Mr. Wine, our Chairman and CEO, dated September 1, 2008
(“Wine Severance Agreement”). The terms of the Wine Severance Agreement were established during the negotiations leading
to his employment by the Company as our CEO. Mr. Wine is entitled to certain payments and benefits under the Wine Severance Agreement
if his employment is terminated without cause or if he terminates his employment with good reason. The magnitude of the payments
and benefits is dependent upon whether or not the termination was upon or within 24 months following a change in control (referred
to as a “change in control termination” if occurring within that 24 month period).
Change in Control Related Payments
In the event of a change in control termination, Mr. Wine is entitled
to receive:
|
•
|
A lump sum payment equal to two times his average annual cash compensation (including base salary and cash incentives under the Senior Executive Plan) for the three fiscal years preceding the change in control termination;
|
|
|
|
|
•
|
Any earned but unpaid cash incentive award under the Senior Executive Plan;
|
|
|
|
|
•
|
If the termination occurs during the fiscal year after June 30, a payment of the amount of the average cash incentive award under the Senior Executive Plan paid to him for the three fiscal years immediately preceding the change in control, prorated for the full number of months actually worked in the current fiscal year prior to the termination.
|
Non-Change in Control Termination Related
Payments
In the case of a termination not in connection with a change in
control, Mr. Wine is entitled to receive:
|
•
|
The sum of (i) 100% of his annual base salary as of the termination date plus (ii) the amount of the cash incentive award paid to him under the Senior Executive Plan for the fiscal year immediately preceding the fiscal year in which the termination takes place payable over a period of one year;
|
|
|
|
|
•
|
Any earned but unpaid cash incentive award under the Senior Executive Plan;
|
|
|
|
|
•
|
If the termination occurs during the fiscal year after June 30, payment of an amount equal to the cash incentive award under the Senior Executive Plan paid to him for the fiscal year immediately preceding the fiscal year in which the termination takes place, prorated for the full number of months actually worked in the current fiscal year prior to the termination;
|
|
2017 Proxy Statement -
|
|
42
|
|
•
|
If he elects to receive benefits under the Consolidated Omnibus Reconciliation Act (“COBRA”), payment for the premiums for coverage of Mr. Wine, his spouse and/or dependents under our group health plans pursuant to COBRA for a one-year period;
|
|
|
|
|
•
|
Pursuant to the PRSU award agreements,
Mr. Wine is entitled to an amount equal to what he would otherwise be eligible to receive pursuant to any outstanding PRSU
award had he remained continuously employed through the end of the applicable performance period under the PRSU, prorated
based on the percentage of the performance period that has elapsed as of the date of termination; and
|
|
|
|
|
•
|
Reasonable executive outplacement services.
|
The amount of payments and benefits under
the Wine Severance Agreement and the PRSU awards are detailed in the table appearing under the caption
“Potential Payments
to Mr. Wine”
on page 46. As a condition to receiving payments and benefits under the
severance agreement, Mr. Wine must execute a general waiver and release of any claims against the Company. The Wine Severance
Agreement also provides that during and for a period of (i) 60 months following termination, Mr. Wine is prohibited from using
or disclosing our proprietary information, except as required by his duties to Polaris and (ii) two years following termination,
Mr. Wine must refrain from working for or acquiring an ownership interest (other than an interest of up to 1% of publicly held
securities) in our competitors, or soliciting our employees.
Severance Agreements
with Messrs. Speetzen, Mack, Pucel, and Eastman
Change in Control Related Payments
We have entered into severance agreements
with Messrs. Speetzen, Mack, Pucel, and Eastman, which provide that if upon or within 24 months after a change in control, any
of such Named Executive Officers terminates employment for good reason or if his employment is terminated by the Company without
cause, then the Named Executive Officer will be entitled to:
|
•
|
A lump sum cash payment equal to two times average annual cash compensation (including base salary and cash incentives under the Senior Executive Plan) for our three fiscal years (or lesser number of fiscal years if employed for a shorter duration) immediately preceding such termination; and
|
|
|
|
|
•
|
Any earned but unpaid cash incentive awards under the Senior Executive Plan.
|
No cash incentive award will be paid for any part of the fiscal
year in which the termination occurs.
Non-Change in Control Termination Related
Payments
Under the severance agreements, a non-change in control termination
is deemed to occur if the Named Executive Officer is terminated by the Company without cause other than in connection with a change
in control. In the event of a non-change in control termination, the Named Executive Officer will be entitled to:
|
•
|
The sum of (i) 100% of his or her annual base salary as of the termination date plus (ii) the amount of the cash incentive award under the Senior Executive Plan that was paid to the Named Executive Officer for the fiscal year immediately preceding the fiscal year in which the termination takes place;
|
|
|
|
|
•
|
Any earned but unpaid cash incentive award under the Senior Executive Plan;
|
|
|
|
|
•
|
Eligibility for retirement benefits for Officers upon attainment of age and service criteria, which are discussed under the caption
“Payments Made Upon Retirement”
below;
|
|
|
|
|
•
|
If the Named Executive Officer elects to receive benefits under COBRA, payment for the premiums for coverage of the Named Executive Officer, his or her spouse and/or dependents under our group health plans pursuant to COBRA for a one-year period;
|
|
|
|
|
•
|
Pursuant to the PRSU award agreements, the Named Executive Officers are entitled to an amount equal to what the Named Executive Officer would otherwise be eligible to receive pursuant to any outstanding PRSU award had he or she remained continuously employed through the end of the applicable performance period under the PRSU, prorated based on the percentage of the performance period that has elapsed as of the date of termination;
|
|
|
|
|
•
|
Reasonable executive outplacement services; and
|
|
|
|
|
•
|
The release of restrictions on all outstanding restricted share awards for which the performance goal has been met and the performance period has expired.
|
The amounts payable to each Named Executive Officer under the
severance agreements and PRSU awards are quantified in the tables appearing under the caption “
Potential Payments to Messrs.
Speetzen, Mack, Pucel, and Eastman
” on page 47.
|
2017 Proxy Statement -
|
|
43
|
Equity Award Agreements
Mr. Wine’s stock option award agreements
provide for full, accelerated vesting of all unvested options if employment is terminated due to death or disability or after
normal retirement age. For those stock options granted to him prior to May 2015, the award agreements provide for full, accelerated
vesting of all unvested options upon a change in control, and for the stock options granted to him after May 2015 vesting will
accelerate in full upon a change a control only if the options are not continued, assumed or replaced or if Mr. Wine experiences
a termination of employment within one year for reasons other than cause or for good reason. Under Mr. Wine’s PRSU award
agreements made prior to May 2015, upon a change in control one-sixth of the target number of units subject to an award will be
subject to accelerated vesting if the change in control occurs during the second year of the performance period, and one-third
of the target number of units will be subject to accelerated vesting if the change in control occurs during the third year of
the performance period; for PRSU awards granted after May 2015, vesting will accelerate as to the same percentages of units in
connection with a change in control only if the PRSU awards are not continued, assumed or replaced or if Mr. Wine experiences
a termination of employment within one year without cause or for good reason. In addition, if Mr. Wine is terminated by the Company
without cause or he terminates his employment for good reason other than in connection with a change in control, he will be entitled
to have vest, at the end of the performance period, a pro rata portion of the units that would otherwise be deemed to have been
earned during the performance period. The prorated portion of the earned payout is based on the amount of the performance
period that has elapsed as of the date of termination following the change in control. The balance of the award is forfeited.
The stock option award agreements for Messrs.
Speetzen, Mack, Pucel, and Eastman provide for full, accelerated vesting of options if employment is terminated due to death or
disability or after retirement age. In the event of a change in control, the stock option award agreements granted prior to May
2015 for Messrs. Speetzen, Pucel, and Eastman provide for full, accelerated vesting of all unvested options. Stock options granted
after May 2015 to Messrs. Speetzen, Mack, Pucel, and Eastman provide for full, accelerated vesting in the event of a change in
control only if the options are not continued, assumed or replaced or if they experience a termination of employment without cause
or for good reason within one year. The PRSU award agreements for these individuals provide for accelerated vesting of the awards
under the same circumstances and to the same degree as described above for Mr. Wine. Time-based restricted stock awards are subject
to accelerated vesting in the event of a change in control only if the awards are not continued or if the Named Executive Officer
is terminated within one year without cause or for good reason.
Under the equity award agreements, a Named
Executive Officer will be considered to have been terminated without cause or to have terminated his employment for good reason
under the same circumstances as described above in connection with the Named Executive Officers’ severance arrangements.
The amounts payable to Mr. Wine under the
equity award agreements are quantified in the table appearing under the caption “
Potential Payments to Mr. Wine
”
on page 46, and the amounts payable to the other Named Executive Officers are quantified
in the table appearing under the caption “
Potential Payments to Messrs. Speetzen, Mack, Pucel, and Eastman
”
on page 47.
Payments Made Upon Retirement
We maintain the 401(k) Plan and the restorative
SERP, as explained in the section entitled “
Nonqualified Deferred Compensation in 2016
” on page 40.
We do not maintain a defined benefit pension plan or a defined benefit supplemental pension plan for our Named Executive Officers.
We do, however, provide certain benefits
and perquisites to Named Executive Officers that are retirement-eligible. These benefits and perquisites include:
|
•
|
Medical insurance coverage or cash equivalent for retirees and their spouses from age 55 to 64 with coverage coinciding with Medicare Part B on and after age 65;
|
|
|
|
|
•
|
Dental insurance coverage for retirees and their spouses at the same coverage level with the same provider as an active employee;
|
|
|
|
|
•
|
Continued annual physical exams at the Mayo Clinic for retirees and their spouses in accordance with the active officer benefit;
|
|
|
|
|
•
|
Continued use of Polaris products in accordance with the active Named Executive Officer benefits, including related parts, garments and accessories;
|
|
|
|
|
•
|
For Senior Executive Plan participants,
a possible prorated payout under the plan based on the time worked during the incentive compensation award period payable
in accordance with the normal payment schedule; and
|
|
|
|
|
•
|
For vested stock options, an exercise
period of 36 months or the full term of the option for options issued after May 2015; for outstanding stock options that have
not vested as of the retirement date, the option will immediately vest and remain exercisable for 36 months or the full term of
the option for all options issued after May 2015, provided the grant occurred at least 12 months prior to the retirement date
and notice of retirement was given to the Company at least one-year in advance .
|
To be eligible for full retirement-age benefits,
the Named Executive Officer must have attained the age of at least 65. None of our Named Executive Officers were retirement-eligible
as of December 31, 2016.
|
2017 Proxy Statement -
|
|
44
|
We also provide certain retirement
benefits to Named Executive Officers who have attained the age of at least 55 and have a minimum of 10 years of service to our
Company. These benefits include the same benefits available at full retirement age described above, except that for Named Executive
Officers other than Messrs. Speetzen and Pucel, all outstanding stock options granted prior to 2016 that have not yet vested are
forfeited.
Mr. Pucel is also eligible for an additional
payment equal to three times his annual base salary upon retirement on or after age 55 plus five years of service. Mr. Pucel received
this benefit as part of an inducement to join Polaris and as a substitute to a comparable benefit he received from his prior employer.
Non-Compete and Non-Solicitation Agreements
As described in “
Severance, Proprietary
Information and Noncompetition Agreement with Mr. Wine
” on page 42, Mr. Wine
has agreed not to engage in competitive activities or solicit employees for a period of two years following his termination of
employment. The other Named Executive Officers were required to enter into non-competition agreements as a condition to the receipt
of certain equity grants, under which they agree to not engage in competitive activities or soliciting employees for a period
of one year following their termination of employment.
Potential Payments to Named Executive Officers Upon Termination
The following tables quantify the
amounts and benefits payable to the Named Executive Officers upon termination under various scenarios. In calculating the
payments set forth in such tables, we have assumed that (i) the date of termination was December 30, 2016, the last business
day of fiscal year 2016, and (ii) the stock price was $82.39 per share, the closing market price of our common stock on such
date. The tables do not reflect payments and benefits that are provided on a non-discriminatory basis to salaried employees
generally upon termination, including:
|
•
|
Earned but unpaid base salary through the date of termination;
|
|
|
|
|
•
|
Accrued but unused vacation pay through the date of termination;
|
|
|
|
|
•
|
Company matching contributions to the 401(k) Plan in an amount which takes into account the final payouts for base salary, incentive awards under the Senior Executive Plan, if any, and accrued vacation;
|
|
|
|
|
•
|
Distributions of plan balances under the Polaris 401(k) Plan; and
|
|
|
|
|
•
|
A life insurance benefit equal to two times base salary up to a maximum of $650,000, payable in the event of termination upon death.
|
The tables also do not reflect amounts attributable
to vested, non-forfeitable equity-based awards (see “
Outstanding Equity Awards at 2016 Fiscal Year-End
” on
page 37), or distributions of plan balances under the SERP (see “
Nonqualified
Deferred Compensation in 2016
” on page 40). In addition, the tables do not
reflect any applicable tax withholdings or other deductions by the Company from the amounts otherwise payable to the Named Executive
Officers upon termination of employment. To the extent applicable, the present value of the payments presented in the tables below
was calculated using a discount rate of 5%.
We provide a number of lifetime benefits
and perquisites to our Named Executive Officers upon retirement or receipt of early retirement benefits. For purposes of quantifying
the value of such benefits and perquisites in the tables below, we have used an average life expectancy age of 78 for such individuals.
The costs of medical and dental coverage are based on current annual premiums times the number of years between officer age and
78 for those that receive it until then using a discount rate of 5%. Company parts, garments and accessories coverage is based
on the average spent for the Named Executive Officers in 2016 multiplied by the number of years between the executive officer’s
age and 78 (for those who receive it), using a discount rate of 5%.
|
2017 Proxy Statement -
|
|
45
|
Potential Payments to Mr. Wine
|
|
|
Without
Cause or With
Good
Reason
Termination (not
in connection
with a Change
in Control
|
|
|
Without
Cause or With
Good Reason
Termination
(Change in
Control)
|
|
|
Change
in Control
(awards
continued or
assumed, no
Termination)
|
|
|
Death or
Disability
|
|
|
Retirement
|
(4)
|
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
Scott W. Wine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Compensation
|
|
|
1,029,867
|
|
|
|
7,198,955
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Annual Cash Incentives (Senior Executive Plan)
(1)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
PRSUs
(2)
|
|
|
1,892,515
|
|
|
|
1,892,515
|
|
|
|
1,892,515
|
|
|
|
0
|
|
|
|
0
|
|
|
Stock Options (Unvested and Accelerated)
(3)
|
|
|
0
|
|
|
|
2,600,730
|
|
|
|
0
|
|
|
|
2,600,730
|
|
|
|
0
|
|
|
Restricted Stock (Unvested and Accelerated)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Benefits and Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical and Dental
|
|
|
19,211
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Use of Polaris Products
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Polaris Parts, Garments and Accessories
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Physical Exams
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Total
|
|
|
2,941,593
|
|
|
|
11,692,200
|
|
|
|
1,892,515
|
|
|
|
2,600,730
|
|
|
|
0
|
|
|
(1)
|
Estimated
payment based on achievement level of performance matrix.
|
|
(2)
|
The
amount reflected for Mr. Wine represents his pro rata target payout for the 2014 and 2015 PRSU awards and assumes the payment
would be made by March 2017 and March 2018, respectively.
|
|
(3)
|
Represents
the market value of unvested stock options less the option exercise price.
|
|
(4)
|
Mr.
Wine is not retirement eligible.
|
|
2017 Proxy Statement -
|
|
46
|
Potential Payments to Messrs. Speetzen, Mack, Pucel, and Eastman
|
|
|
Without
Cause
Termination
(not in connection
with a Change in
Control)
|
|
|
Without
Cause or With
Good Reason
Termination
(in connection
with a Change
in Control)
|
|
|
Change
in
Control
(awards
continued or
assumed, no
Termination)
|
|
|
Death
or
Disability
|
|
|
Retirement
|
(4)
|
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
Mr. Speetzen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Compensation
|
|
|
1,070,779
|
|
|
|
1,324,231
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Annual Cash Incentives (Senior Executive Plan)
(1)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
PRSUs
(2)
|
|
|
95,195
|
|
|
|
95,195
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Stock Options (Unvested and Accelerated)
(3)
|
|
|
0
|
|
|
|
1,196,580
|
|
|
|
0
|
|
|
|
1,196,580
|
|
|
|
0
|
|
|
Restricted Stock (Unvested and Accelerated)
|
|
|
0
|
|
|
|
823,900
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Benefits and Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical and Dental Insurance
|
|
|
19,211
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Use of Polaris Products
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Polaris Parts, Garments and Accessories
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Physical Exams
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Total
|
|
|
1,185,185
|
|
|
|
3,439,906
|
|
|
|
0
|
|
|
|
1,196,580
|
|
|
|
0
|
|
|
Mr. Mack
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Compensation
|
|
|
729,719
|
|
|
|
939,616
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Annual Cash Incentives (Senior Executive Plan)
(1)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
PRSUs
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Stock Options (Unvested and Accelerated)
(3)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
Restricted Stock (Unvested and Accelerated)
|
|
|
0
|
|
|
|
1,894,970
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Benefits and Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical and Dental Insurance
|
|
|
14,354
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Use of Polaris Products
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Polaris Parts, Garments and Accessories
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Physical Exams
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Total
|
|
|
744,073
|
|
|
|
2,834,586
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Mr. Pucel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Compensation
|
|
|
966,083
|
|
|
|
1,471,981
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Annual Cash Incentives (Senior Executive Plan)
(1)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
PRSUs
(2)
|
|
|
357,586
|
|
|
|
357,586
|
|
|
|
357,586
|
|
|
|
0
|
|
|
|
0
|
|
|
Stock Options (Unvested and Accelerated)
(3)
|
|
|
0
|
|
|
|
1,758,240
|
|
|
|
0
|
|
|
|
1,758,240
|
|
|
|
0
|
|
|
Restricted Stock (Unvested and Accelerated)
|
|
|
0
|
|
|
|
1,647,800
|
|
|
|
1,647,800
|
|
|
|
0
|
|
|
|
0
|
|
|
Benefits and Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical and Dental Insurance
|
|
|
19,211
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Use of Polaris Products
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Polaris Parts, Garments and Accessories
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Physical Exams
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Total
|
|
|
1,342,880
|
|
|
|
5,235,607
|
|
|
|
2,005,386
|
|
|
|
1,758,240
|
|
|
|
0
|
|
|
Mr. Eastman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Compensation
|
|
|
550,607
|
|
|
|
1,159,029
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Annual Cash Incentives (Senior Executive Plan)
(1)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
PRSUs
(2)
|
|
|
187,667
|
|
|
|
187,667
|
|
|
|
187,667
|
|
|
|
0
|
|
|
|
0
|
|
|
Stock Options (Unvested and Accelerated)
(3)
|
|
|
0
|
|
|
|
280,830
|
|
|
|
0
|
|
|
|
280,830
|
|
|
|
0
|
|
|
Restricted Stock (Unvested and Accelerated)
|
|
|
0
|
|
|
|
2,471,700
|
|
|
|
823,900
|
|
|
|
0
|
|
|
|
0
|
|
|
Benefits and Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical and Dental Insurance
|
|
|
19,211
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Use of Polaris Products
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Polaris Parts, Garments and Accessories
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Physical Exams
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Total
|
|
|
757,485
|
|
|
|
4,099,226
|
|
|
|
1,011,567
|
|
|
|
280,830
|
|
|
|
0
|
|
|
(1)
|
Estimated payment
based on achievement level of performance matrix. Mr. Mack was not a participant in the Senior Executive Plan in 2016.
|
|
(2)
|
The
amount reflected for Mr. Speetzen represents the pro rata target payout for the 2015 PRSU award and assumes the payout would
be made by March 2018. The amounts reflected for Messrs. Pucel and Eastman represent the pro rata target payout for the 2014
and 2015 PRSU awards and assumes the payments would be made by March 2017 and March 2018, respectively.
|
|
(3)
|
Represents
the market value of unvested stock options less the option exercise price.
|
|
(4)
|
None
of the individuals named in this table is retirement eligible.
|
|
2017 Proxy Statement -
|
|
47
|
Director Compensation
The following table sets forth the compensation
earned by each of the non-employee directors for the year ended December 31, 2016.
|
|
|
Fees
Earned or
Paid in Cash
|
|
|
Stock
Awards
|
|
|
Total
|
|
|
Name
|
|
|
($)
(1)
|
|
|
|
($)
(2)
|
|
|
|
($)
|
|
|
Annette K. Clayton
|
|
|
110,000
|
|
|
|
130,014
|
|
|
|
240,014
|
|
|
Kevin M. Farr
|
|
|
117,500
|
|
|
|
130,014
|
|
|
|
247,514
|
|
|
Gary E. Hendrickson
|
|
|
112,500
|
|
|
|
130,014
|
|
|
|
242,514
|
|
|
Gwenne A. Henricks
|
|
|
97,500
|
|
|
|
130,014
|
|
|
|
227,514
|
|
|
Bernd F. Kessler
|
|
|
102,500
|
|
|
|
130,014
|
|
|
|
232,514
|
|
|
Lawrence
D. Kingsley
(3)
|
|
|
90,268
|
|
|
|
130,014
|
|
|
|
220,282
|
|
|
R.
M. (Mark) Schreck
(4)
|
|
|
51,250
|
|
|
|
0
|
|
|
|
51,250
|
|
|
John P. Wiehoff
|
|
|
135,000
|
|
|
|
130,014
|
|
|
|
265,014
|
|
|
(1)
|
As described in
more detail in the accompanying narrative, directors may defer all or a portion of the fees otherwise payable to them in accordance
with our Deferred Compensation Plan for Directors (the “Deferred Compensation Plan”). Each of the current directors
deferred all fees otherwise payable to him or her in 2016 in accordance with the Deferred Compensation Plan. The deferred
amounts were converted into common stock equivalents at the then current market price per share of our common stock. The aggregate
number of common stock equivalents held by each non-employee director as of December 31, 2016 is reflected in the “Stock
Awards” column of the “Non-Employee Directors - Outstanding Equity Awards at Fiscal Year-End” table appearing
below.
|
|
(2)
|
On
April 28, 2016, the continuing non-employee directors were each awarded under the Omnibus Plan 1,319 deferred stock units,
each with a value equal to one share of our common stock. The grant date fair value for these deferred stock units was $98.57
per unit and is calculated in accordance with FASB ASC Topic 718 based on the closing market price of our common stock on
the award date. The aggregate number of deferred stock units and common stock equivalents held by each non-employee director
as of December 31, 2016 is reflected in the “Stock Awards” column of the “Non-Employee Directors - Outstanding
Equity Awards at Fiscal Year-End” table appearing below.
|
|
(3)
|
Mr.
Kingsley was elected to the Board on January 28, 2016.
|
|
(4)
|
Mr.
Schreck served on the Board until his retirement effective April 28, 2016.
|
Non-Employee
Directors — Outstanding Equity Awards at Fiscal Year-End
The following table sets forth the number
of shares of common stock underlying outstanding stock awards for each of the non-employee directors as of December 31, 2016.
|
Name
|
|
Stock
Awards
(1)
|
|
|
Annette K. Clayton
|
|
|
54,656
|
|
|
Kevin M. Farr
|
|
|
6,486
|
|
|
Gary E. Hendrickson
|
|
|
13,841
|
|
|
Gwenne A. Henricks
|
|
|
2,832
|
|
|
Bernd F. Kessler
|
|
|
19,791
|
|
|
Lawrence D. Kingsley
|
|
|
2,457
|
|
|
John P. Wiehoff
|
|
|
40,743
|
|
|
(1)
|
Includes common
stock equivalents awarded to directors under the Deferred Compensation Plan and deferred stock units awarded under the Omnibus
Plan and the accompanying dividend equivalent units issued on each form of award.
|
|
2017 Proxy Statement -
|
|
48
|
Director Fees
Directors who are employees of our Company
receive no compensation for their services as directors or as members of committees. Compensation for non-employee directors is
divided into cash and stock components. We presently pay each non-employee director an annual director’s retainer of $85,000.
The Lead Director of the Board receives an annual Lead Director fee of $25,000. The Chair of the Corporate Governance and Nominating
Committee receives an annual committee chairman’s fee of $10,000, the Chairs of the Compensation Committee and Technology
Committee receive an annual committee chairman’s fee of $15,000, and the Chair of the Audit Committee receives an annual
committee chairman’s fee of $20,000. Non-employee directors also receive an annual fee for committee membership: $10,000
for Audit Committee members; $7,500 for Compensation Committee members; $5,000 for Corporate Governance and Nominating Committee
members; and $2,500 for Technology Committee members. Any non-employee director may elect to defer the receipt of all or a specified
portion of the retainer and fee payments specified in this paragraph under the Deferred Compensation Plan (as described below).
Deferred Compensation
Plan
We maintain the Deferred Compensation Plan
for non-employee directors. A non-employee director can defer all or a portion of the retainer and fee payments that would otherwise
be paid to him or her in cash. Such deferred amounts are converted into additional common stock equivalents based on the then fair
market value of the common stock. Each common stock equivalent represents the economic equivalent of one share of common stock.
Dividend equivalents are credited to non-employee directors as if the common stock equivalents are outstanding shares of common
stock. Such dividend equivalents are deemed invested in additional common stock equivalents.
As soon as practicable after a non-employee
director’s service on the Board terminates, he or she will receive a distribution of a number of shares of our 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 a non-employee director, the shares will be issued to his or her beneficiary. Upon a change in control of our Company (as defined
in the Deferred Compensation Plan), each non-employee director will receive a cash payment equal to the value of his or her accumulated
common stock equivalents.
A maximum of 500,000 shares of common stock
are reserved for issuance under the Deferred Compensation Plan. The Deferred Compensation Plan will remain effective until May
31, 2020, unless terminated earlier by the Board. The Deferred Compensation Plan may be terminated or amended at any time by the
Board.
Deferred Stock Units
Since 2007, we have granted our non-employee
directors an annual award of deferred stock units in an amount determined by the Board. The deferred stock units are fully vested
upon issuance. Upon termination of service as a director or upon an earlier change in control of our Company, each non-employee
director will receive one share of common stock for every deferred stock unit credited to the non-employee director’s account.
Dividend equivalents are credited to non-employee directors as if the deferred stock units are outstanding shares of common stock.
Such dividend equivalents are deemed invested in additional deferred stock units.
Use of Polaris Products
We provide each of the non-employee directors
with the use of up to eight Polaris products, of his or her choice, at no charge to encourage a first-hand understanding of the
riding experience of our customers and to provide the non-employee directors with an opportunity to evaluate product design and
efficiency. The products used by the non-employee directors can be returned to the Company or purchased at a price greater than
cost at the end of a defined usage period based upon months, miles or hours, depending upon the product line. We sell the returned
products to dealers at an amount greater than the cost of such products to the Company. All non-employee directors also receive
related parts, garments and accessories.
|
2017 Proxy Statement -
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|
49
|
Director Stock Ownership
Guidelines
The Board has adopted stock ownership guidelines,
which provide that each non-employee director is expected to own, directly or indirectly, shares of our common stock, common stock
equivalents and deferred stock units having a value of at least three times the amount of the annual retainer and, if applicable,
any committee chairman fee paid to such director. Compliance with the stock ownership guidelines is voluntary but is monitored
by our CFO. All non-employee directors are expected to satisfy the stock ownership guidelines within four years following the date
they are first elected to the Board. The following chart sets forth the stock ownership of each of the non-employee directors that
were in office as of December 31, 2016 relative to the stock ownership guidelines:
|
Name
|
|
Stock
Ownership
Guidelines
(as a Multiple of
Annual Director
Retainer Fee)
|
|
|
Shares of Common
Stock, Common
Stock Equivalents
and Deferred Stock
Units Held as of
December 31, 2016
|
|
|
Stock
Ownership
Guideline
Met?
|
|
|
Annette K. Clayton
|
|
|
3x
|
|
|
|
54,656
|
|
|
|
Yes
|
|
|
Kevin M. Farr
|
|
|
3x
|
|
|
|
8,586
|
|
|
|
Yes
|
|
|
Gary E. Hendrickson
|
|
|
3x
|
|
|
|
13,841
|
|
|
|
Yes
|
|
|
Gwenne
A. Henricks
(1)
|
|
|
3x
|
|
|
|
2,832
|
|
|
|
No
|
|
|
Bernd F. Kessler
|
|
|
3x
|
|
|
|
19,791
|
|
|
|
Yes
|
|
|
Lawrence D. Kingsley
|
|
|
3x
|
|
|
|
9,382
|
|
|
|
Yes
|
|
|
John P. Wiehoff
|
|
|
3x
|
|
|
|
40,743
|
|
|
|
Yes
|
|
|
(1)
|
Ms.
Henricks was first appointed to the Board on July 22, 2015. We expect that Ms. Henricks will satisfy the stock ownership guidelines
on or prior to the fourth anniversary of the date she was first appointed to the Board.
|
|
2017 Proxy Statement -
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50
|
Equity Compensation Plan Information
Our shareholders have approved our 1995 Stock
Option Plan, Employee Stock Purchase Plan, Deferred Compensation Plan for Directors, and Omnibus Plan. Awards may currently be
made only under the Omnibus Plan, the Deferred Compensation Plan for Directors, and the Employee Stock Purchase Plan.
We do not have any equity compensation plans
outstanding that have not been approved by shareholders.
Summary Table
The following table sets forth certain information
as of December 31, 2016, with respect to compensation plans under which shares of our common stock may be issued.
|
Plan category
|
|
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
|
|
|
Weighted-average
exercise price
of outstanding
options, warrants
and rights
|
|
|
Number of securities
remaining available
for issuance under
equity compensation
plans (excluding
securities reflected in
the first column)
|
|
|
Equity compensation plans approved by security holders
|
|
|
6,239,613
|
(1)(2)
|
|
|
$ 84.32
|
(3)
|
|
|
7,465,833
|
(4)
|
|
Equity compensation plans not approved by security holders
|
|
|
None
|
|
|
|
N/A
|
|
|
|
None
|
|
|
Total
|
|
|
6,239,613
|
|
|
|
$ 84.32
|
|
|
|
7,465,833
|
|
|
(1)
|
Includes
4,717,061 shares issuable upon exercise of outstanding stock options, 1,381,745 shares issuable upon settlement of outstanding
performance restricted stock units, 66,632 shares issuable upon settlement of deferred stock units and accompanying dividend
equivalent units issued under the Omnibus Plan to non-employee directors and 74,175 shares issuable upon settlement of common
stock equivalents awarded to non-employee directors under the Deferred Compensation Plan for Directors, but excludes 139,457
shares of restricted stock issued under the Omnibus Plan. The actual number of performance restricted stock unit shares to
be issued depends on our financial performance over a period of time.
|
|
(2)
|
The
weighted average remaining contractual life of outstanding options was 6.45 years as of December 31, 2016. Unvested stock
options, stock appreciation rights and performance restricted stock units do not receive dividend equivalents.
|
|
(3)
|
Reflects
the weighted-average exercise price of outstanding options. There is no exercise price for outstanding deferred stock units,
common stock equivalents or performance restricted stock units.
|
|
(4)
|
A
total of 5,789,470 shares were available under the Omnibus Plan (the Omnibus Plan pool is decreased by three shares for every
one share subject to a full-value award) and a total of 1,676,363 shares were available under the Employee Stock Purchase
Plan.
|
|
2017 Proxy Statement -
|
|
51
|
|
PROPOSAL 2 —
|
Approval of an Amendment to the Restated Articles
of Incorporation to Require Majority Voting for the Election of Directors in Uncontested Elections
|
The Board of Directors, upon recommendation
of the Corporate Governance and Nominating Committee, recommends that shareholders approve an amendment to the Company’s
Restated Articles of Incorporation to require a majority vote for the election of directors in uncontested elections.
Our directors are currently elected by
a plurality vote: that is, a director nominee who receives the highest number of affirmative votes cast is elected, whether
or not such votes constitute a majority of votes. Minnesota law requires that, unless otherwise specified in a
company’s articles of incorporation, a director is elected by a plurality of the votes cast. Our Articles of
Incorporation do not specify the voting standard required in director elections. However, we do have a director resignation
policy that requires a director nominee who fails to receive a majority vote in an uncontested election to tender his or her
resignation. This is sometimes referred to as “plurality plus.” When the Board adopted the director resignation
policy, the Board recognized that the majority voting standard was an evolving concept. The Board has continued to monitor
best practices in this area, and is aware that a number of public companies have amended their governing documents to provide
for a majority voting standard instead of a plurality voting standard. After consideration, the Board believes that it is in
the best interests of the Company and our shareholders to amend the Company’s Restated Articles of Incorporation to
provide for majority voting in uncontested director elections.
The amendment to the Restated Articles of
Incorporation would operate as follows:
|
•
|
Subject to the rights, if any, of holders of any preferred stock of the Company, each director shall be elected at a meeting of shareholders by the vote of a majority of the votes cast with respect to the director.
|
|
|
|
|
•
|
However, in a contested election of directors in which the number of nominees exceeds the number of directors to be elected, the directors will continue to be elected by a plurality of the votes cast.
|
|
|
|
|
•
|
For the purposes of majority voting standard, a majority of votes cast means that the votes entitled to be cast by the holders of all the then outstanding shares of voting stock of the Company that are voted “for” a director must exceed the number of shares voted “against” the director.
|
The amendment is effected by adding a new
Article XII to the Restated Articles of Incorporation. The full text of Article XII is attached to these materials as Annex A.
If the amendment is approved by shareholders at the meeting, the majority voting standard will be effective following the 2017
Annual Meeting upon filing the Articles of Amendment to the Company’s Restated Articles of Incorporation with the Minnesota
Secretary State, which filing will be made promptly upon shareholder approval of this proposal.
Under Minnesota law, an incumbent director
who does not receive the requisite vote continues to serve until his or her successor is elected. Accordingly, we will retain a
slightly modified version of our existing director resignation policy in our Corporate Governance Guidelines. That policy will
require an incumbent director who is not elected by shareholders to promptly tender his or her resignation to the Board. The Board,
taking into account the Corporate Governance and Nominating Committee recommendation, will then decide whether to accept the resignation.
The Board’s decision and the rationale behind it will be publicly disclosed within 90 days after the date of the election.
The Corporate Governance and Nominating Committee, in making its recommendation, and the Board, in making its decision, may each
consider any factors or other recommendations that it considers appropriate. The director who tenders his or her resignation will
not participate in the Corporate Governance and Nominating Committee’s or Board’s decision with respect to that director.
If the director’s resignation is not accepted by the Board, the director will continue to serve until the next election of
directors and until his successor is duly elected, or his or her earlier death, resignation, retirement, disqualification or removal.
The Board, upon recommendation of the
Corporate Governance and Nominating Committee, recommends a vote
FOR
the amendment to the Restated Articles of Incorporation
to require majority vote for the election of directors in uncontested elections.
|
2017 Proxy Statement -
|
|
52
|
|
PROPOSAL 3 —
|
Ratification of Selection of Independent Registered
Public Accounting Firm
|
The Audit Committee has selected Ernst & Young LLP (“EY”)
as our independent registered public accounting firm for fiscal 2017, and the Board is asking shareholders to ratify that selection.
Although current law, rules and regulations, as well as the Audit Committee Charter require our independent registered public accounting
firm to be engaged, retained, and supervised by the Audit Committee, the Board considers the selection of an independent registered
public accounting firm to be an important matter of shareholder concern and considers a proposal for shareholders to ratify such
selection to be an opportunity for shareholders to provide direct feedback to the Board on a significant issue of corporate governance.
If the selection of EY as our independent registered public accounting
firm for fiscal 2017 is not ratified by our shareholders, the Audit Committee will review its future selection of an independent
registered public accounting firm in the light of that vote result.
Representatives of EY 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.
The Board, upon recommendation of the
Audit Committee, unanimously recommends a vote
FOR
the ratification of Ernst & Young LLP as our independent registered
public accounting firm for fiscal 2017.
|
2017 Proxy Statement -
|
|
53
|
Audit Committee Report
The Audit Committee reports to and acts
on behalf of the Board by providing oversight of (1) the integrity of our financial statements, (2) the effectiveness of the
Company’s internal controls over financial reporting, (3) our compliance with legal and regulatory requirements, (4)
the independent registered public accounting firm’s performance, qualifications and independence and (5) the
responsibilities, performance, budget and staffing of our internal audit function. The Audit Committee is comprised of four
directors, all of whom meet the standards of independence adopted by the SEC and the NYSE.
In performing the Audit Committee oversight responsibilities,
we have reviewed and discussed our audited financial statements for the year ended December 31, 2016 with management and with representatives
of EY, our independent registered public accounting firm. The Audit Committee also reviewed, and discussed with management and
representatives of EY, management’s assessment and report and EY’s report and attestation on the effectiveness of internal
control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002.
The Audit Committee also discussed with
the independent registered public accounting firm matters required to be discussed by applicable Public Company Accounting
Oversight Board (“PCAOB”) standards. The Audit Committee has received from our independent registered public
accounting firm the written disclosures and the letter required by applicable requirements of the PCAOB regarding the
independent accountant’s communication with the audit committee concerning independence, and the Audit Committee has
discussed the independence of EY with representatives of such firm. The Audit Committee is satisfied that the non-audit
services provided to us by the independent registered public accounting firm are compatible with maintaining their
independence.
Management is responsible for our
system of internal controls and the financial reporting process. EY is responsible for performing an audit of the
consolidated financial statements in accordance with the standards of the PCAOB and issuing a report thereon. The Audit
Committee’s responsibility is to monitor and oversee these processes.
In reliance on the reviews and discussions referred to in this
Report, the Audit Committee recommends to the Board that the audited financial statements be included in our Annual Report on Form
10-K for the fiscal year ended December 31, 2016.
|
|
AUDIT COMMITTEE
|
|
|
|
|
|
Kevin M. Farr, Chair
|
|
|
Gwenne A. Henricks
|
|
|
Bernd F. Kessler
|
|
|
Lawrence D. Kingsley
|
|
2017 Proxy Statement -
|
|
54
|
Fees Paid to Independent Registered Public
Accounting Firm
Audit Fees
The aggregate audit fees paid to EY for the
fiscal years ended December 31, 2016 and December 31, 2015 were $2,213,000 and $1,845,000, respectively. These fees include amounts
for the annual audit of our consolidated financial statements and internal control over financial reporting, statutory audits at
certain foreign subsidiaries, the reviews of the consolidated financial statements included in our Quarterly Reports on Form 10-Q,
and certain accounting consultation services surrounding acquisition and joint venture activities.
Audit-Related Fees
The aggregate audit-related fees paid
to EY for the fiscal years 2016 and 2015 were $118,000 and $183,000, respectively. These fees represent amounts reasonably
related to the performance of the audit or review of the consolidated financial statements that are not reported under the
Audit Fees category such as the audit of Polaris Acceptance, the audit of employee benefit plans, the issuance of certain
industry reports, and assistance provided in connection with potential transactions.
Tax Fees
The aggregate fees billed by EY for tax services
rendered for the fiscal years 2016 and 2015 were $268,000 and $107,000, respectively. These fees were primarily related to tax
planning and compliance services, including assistance related to certain foreign subsidiaries, and potential transactions.
All Other Fees
No other fees were billed by EY for the fiscal
years 2016 and 2015.
Audit Committee
Pre-Approval Requirements
The Audit Committee’s charter provides
that it has the sole authority to review in advance and grant any pre-approvals of (i) all auditing services to be provided by
the independent registered public accounting firm, (ii) all significant non-audit services to be provided by the independent registered
public accounting firm as permitted by Section 10A of the Exchange Act and the PCAOB and (iii) all fees and the terms of engagement
with respect to such services. All audit and non-audit services performed by EY during fiscal 2016 were pre-approved pursuant to
the procedures outlined above.
|
2017 Proxy Statement -
|
|
55
|
|
PROPOSAL 4 —
|
Advisory Vote on Approval of the Compensation
of the Company’s Named Executive Officers
|
General Information
We are providing our shareholders with the
opportunity to vote to approve the compensation of our Named Executive Officers as disclosed in this Proxy Statement. As described
in the Compensation Discussion and Analysis (“CD&A”), our executive compensation philosophy and programs align
executive compensation decisions with our desired business direction, strategy and performance. The primary objectives and priorities
of the compensation program include:
|
•
|
Emphasizing variable compensation that is tied to our financial and stock price performance to generate and reward superior individual and collective performance,
|
|
|
|
|
•
|
Linking executives’ incentive goals with the interests of our shareholders, providing equity-based forms of compensation and establishing specific stock ownership guidelines for key management employees,
|
|
|
|
|
•
|
Supporting and rewarding executives for consistent performance over time and achievement of our long-term strategic goals, and
|
|
|
|
|
•
|
Attracting and retaining highly qualified executives whose abilities are critical to our success and competitive advantages.
|
Our shareholders have a right to cast an
advisory vote on our executive compensation program at the Annual Meeting. As a result, we are presenting this proposal, which
gives you, as a shareholder, the opportunity to vote on the following resolution:
“RESOLVED,
that the shareholders approve the compensation of Polaris Industries Inc. Named Executive Officers, as disclosed in the Compensation
Discussion and Analysis, the compensation tables, and the related disclosure contained in this Proxy Statement.”
The
Board urges shareholders to endorse the compensation programs for our Named Executive Officers by voting “FOR” the
resolution.
The 2016 compensation structure is similar
to the 2013, 2014 and 2015 design, which received favorable approvals by our shareholders each of those years. As discussed in
the CD&A contained in this Proxy Statement, the Compensation Committee of the Board believes that the executive compensation
provided for 2016 is reasonable and consistent with our pay for performance philosophy. Compensation for the year is established
in January and is guided by the prior year performance as well as projections for the forthcoming year. In deciding how to vote
on this proposal, the Board advises you to consider our pay for performance philosophy coupled with the following factors related
to the compensation of our Named Executive Officers in fiscal 2016, each of which is discussed in the CD&A:
|
•
|
No base salary increases were made to Named Executive Officers for 2016 with the exception of Mr. Eastman who received an increase as a result of his promotion.
|
|
|
|
|
•
|
No payments were made under the Senior Executive Incentive Plan to Named Executive Officers in 2016 as a result of Company performance.
|
|
|
|
|
•
|
For the second year in row, Mr. Wine did not receive a payout under the Senior Executive Incentive Plan even though he had earned an incentive based on 2015 results.
|
|
|
|
|
•
|
Aggregate grant date fair value of
the annual long-term incentives for 2016 awards were granted below 2015 levels in response to the Company’s 2015
performance.
|
|
|
|
|
•
|
(PRSUs) granted in
2014 to the Named Executive Officers for the 2014-2016 performance period were paid out at only 13% of target, reflecting the
first time since 2012 that above target performance was not achieved.
|
Because your vote is advisory, it will not
be binding on the Board and will not overrule any decision by the Board or require the Board to take any action. However, the Board
and the Compensation Committee will carefully review the voting results. To the extent there is any significant negative vote on
this proposal, we may consult directly with shareholders to better understand the concerns that influenced the vote. The Board
and the Compensation Committee would consider constructive feedback obtained through this process in making future decisions about
executive compensation programs
The Board, upon recommendation of the
Compensation Committee, unanimously recommends a vote
FOR
approval of the resolution to approve the compensation of our
Named Executive Officers.
|
2017 Proxy Statement -
|
|
56
|
|
PROPOSAL 5 —
|
Advisory Vote on Frequency of Future Votes to
Approve the Compensation of our Named Executive Officers
|
A separate proposal will be presented at
the Annual Meeting asking shareholders to approve on an advisory basis the frequency of the shareholder advisory vote on the compensation
of our Named Executive Officers.
Shareholders are being asked to vote on whether
the shareholder advisory vote on the compensation of our Named Executive Officers should occur every one, two or three years. You
will also have the choice to abstain from voting on this proposal.
At the 2011 Annual Meeting, the shareholders
selected one year as the frequency of the advisory vote on the compensation of our Named Executive Officers which the Board adopted.
The Board, upon recommendation of the
Compensation Committee, unanimously recommends a vote for the option of one year as the frequency for which shareholders are to
provide an advisory vote to approve the compensation of our Named Executive Officers.
Other Matters
The Board is not aware of any matters that
are expected to come before the Annual Meeting other than those referred to in this Proxy Statement. If any other matter should
come before the Annual Meeting, the persons named in the accompanying proxy intend to vote the proxies in accordance with their
best judgment.
Submission of Shareholder Proposals and
Nominations
Under the rules of the SEC, if a shareholder
wants the Company to include a proposal in our Proxy Statement and form of proxy for presentation at our 2018 Annual Meeting of
Shareholders, the proposal must be submitted in writing and received by our Corporate Secretary at our principal executive offices
by November 10, 2017. The proposal must comply with the rules of the SEC and our bylaws, which are described below. If a shareholder
intends to introduce an item of business or nominate a person as a director at the 2018 Annual Meeting, without including the proposal
or nomination in the Proxy Statement, we must receive notice of that intention no later than January 27, 2018.
A shareholder’s notice to the Company
must include the information required by our bylaws, including, if the item of business does not relate to the nomination of a
person to serve as a director, a brief description of the business desired to be brought before the meeting and the reasons for
conducting the business at the meeting, any material interest of the shareholder or any associated person of the shareholder in
the business desired to be brought before the meeting, the name and address of the shareholder and any associated person of the
shareholder as they appear on our books, and specified information regarding the shareholder’s interests in our capital stock.
A shareholder’s notice to the Company of the nomination of a person to serve as a director must include, as applicable, similar
information as required above, as well as the name of any director nominee, information about the nominee required by SEC rules
and the director nominee’s consent to be named and serve if elected.
|
2017 Proxy Statement -
|
|
57
|
Additional Information
Householding
We have adopted a procedure approved by
the SEC called householding, which allows us to deliver a single set of our Annual Report on Form 10-K, which includes the
Annual Report to Shareholders (together, the “Annual Report”), Proxy Statement or Notice to shareholders who do
not participate in electronic delivery and have the same last name and address. This process helps eliminate duplicate
mailings and reduces our printing and mailing costs.
If your household would like to receive
individual rather than multiple mailings in the future, please write to Broadridge Investor Communications Solutions,
Householding Department, 51 Mercedes Way, Englewood, New York 11717, or call 800-542-1061. If a broker or other nominee holds
your shares, you may continue to receive multiple mailings. Please contact your broker or other nominee directly to
discontinue multiple mailings from them.
Your household may have received a single
set of our Annual Report and Proxy Statement; if you would like another set, please write to Broadridge Investor Communications
Solutions at the address above.
Annual Reports
Our Annual Report is available on our
website at
www.polaris.com
in the “Investors” section. You may also request a free copy of our Annual
Report and Proxy Statement by writing to the Corporate Secretary, Polaris Industries Inc., 2100 Highway 55, Medina, MN 55340,
or by calling (763) 542-0500.
|
|
By Order of the Board of Directors
|
|
|
|
|
|
Stacy L. Bogart
|
|
|
Senior Vice President, General Counsel and Secretary
|
|
2017 Proxy Statement -
|
|
58
|
Annex A
Article XII
Election of Directors
Subject to the rights, if any, of the holders
of one or more classes or series of preferred or preference stock issued by the Corporation, voting separately by class or series
to elect directors in accordance with the terms of such preferred or preference stock, each director shall be elected at a meeting
of shareholders by the vote of the majority of the votes cast with respect to the director, provided that directors shall be elected
by a plurality of the votes present and entitled to vote on the election of directors if the number of nominees exceeds the number
of directors to be elected. For purposes of this Article XII, action at a meeting shall mean action at a meeting which satisfies
the notice and quorum requirements imposed by the bylaws of the Corporation, except as otherwise provided by law, and a majority
of the votes cast means that the votes entitled to be cast by the holders of all then outstanding shares of voting stock of the
Corporation that are voted “for” a director must exceed the votes entitled to be cast by the holders of all then outstanding
shares of voting stock of the Corporation that are voted “against” that director.
|
2017 Proxy Statement -
|
|
59
|
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