EXHIBIT 10.2
Polaris Industries Inc.
2007 Omnibus Incentive Plan
Article 1. Establishment,
Purpose, and Duration
1.1
Establishment. Polaris Industries Inc., a
Minnesota corporation (hereinafter referred to as the
“Company”), establishes an incentive compensation plan
to be known as the Polaris Industries Inc. 2007 Omnibus Incentive
Plan (hereinafter referred to as the “Plan”), as set
forth in this document.
This Plan permits the
grant of Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units,
Performance Shares, Performance Units, Cash-Based Awards, and Other
Stock-Based Awards.
The Plan was originally
effective as of February 20, 2007 (the “Effective
Date”), which is the date on which the Plan was approved by
the Board of Directors of the Company. The plan was amended and
restated by the Board of Directors of the Company as of
January 22, 2009. The Plan shall remain in effect as provided
in Section 1.3 hereof.
1.2 Purpose of
This Plan. The purpose of this Plan is to provide a
means through which the Company may provide Employees ,
Directors, and Third-Party Service Providers of the Company and its
Affiliates and Subsidiaries the opportunity to receive compensation
consistent with the Company’s compensation goals.
1.3 Duration of
This Plan. Unless sooner terminated as provided
herein, this Plan shall terminate on the tenth (10th) anniversary
of the Effective Date. After this Plan is terminated, no Awards may
be granted but Awards previously granted shall remain outstanding
in accordance with their applicable terms and conditions and this
Plan’s terms and conditions.
Article 2. Definitions
Whenever used in this
Plan, the following terms shall have the meanings set forth below,
and when the meaning is intended, the initial letter of the word
shall be capitalized.
2.1
“Affiliate” shall mean any corporation or other
entity (including, but not limited to, a partnership or a limited
liability company), that is affiliated with the Company through
stock or equity ownership or otherwise, and is designated as an
Affiliate for purposes of this Plan by the Committee.
2.2
“Annual Award Limit” or “Annual Award
Limits” have the meaning set forth in
Section 4.3.
2.3
“Award” means, individually or collectively, a
grant under this Plan of Nonqualified Stock Options, Incentive
Stock Options, Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units, Performance Shares, Performance Units,
Cash-Based Awards, or Other Stock-Based Awards, in each case
subject to the terms of this Plan.
2.4
“Award Agreement” means either: (a) a
written agreement entered into by the Company and a Participant
setting forth the terms and provisions applicable to an Award
granted under this Plan, or (b) a written or electronic
statement issued by the Company to a Participant describing the
terms and provisions of such Award, including, in each case, any
amendment or modification thereof. The Committee may provide for
the use of electronic, internet or other nonpaper Award Agreements,
and the use of electronic, internet or other nonpaper means for the
acceptance thereof and actions thereunder by a
Participant.
2.5
“Board” or “Board of
Directors” means the Board of Directors of the
Company.
2.6
“Cash-Based Award” means an Award, denominated
in cash, as described in Article 10.
2.7
“Change of Control” means any of the
following:
(a) Any election
has occurred of persons to the Board that causes at least one-half
of the Board to consist of persons other than (i) persons who
were members of the Board on the Effective Date and
(ii) persons who were nominated for election by the Board as
members of the Board at a time when more than one-half of
the
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members of the Board consisted of
persons who were members of the Board on the Effective Date;
provided, however, that any person nominated for election by the
Board at a time when at least one-half of the members of the Board
were persons described in clauses (i) and/or (ii) or by
persons who were themselves nominated by such Board shall, for this
purpose, be deemed to have been nominated by a Board composed of
persons described in clause (i) (persons described or deemed
described in clauses (i) and/or (ii) are referred to
herein as “Incumbent Directors”); or
(b) The acquisition
in one or more transactions, other than from the Company, by any
individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of a number of Company Voting Securities (as
defined below) equal to or greater than 35% of the Company Voting
Securities unless such acquisition has been designated by the
Incumbent Directors as an acquisition not constituting a Change in
Control for purposes hereof; or
(c) Any of the
following: (i) a liquidation or dissolution of the Company;
(ii) a reorganization, merger or consolidation of the Company
unless, following such reorganization, merger or consolidation,
(A) the Company is the surviving entity resulting from such
reorganization, merger or consolidation or (B) at least
one-half of the board of directors of the entity resulting from
such reorganization, merger or consolidation consists of Incumbent
Directors; or (iii) a sale or other disposition of all or
substantially all of the assets of the Company unless, following
such sale or disposition, at least one-half of the board of
directors of the transferee consists of Incumbent
Directors.
As used herein,
“Company Voting Securities” means the combined voting
power of all outstanding voting securities of the Company entitled
to vote generally in the election of the Board.
2.8
“Code” means the U.S. Internal Revenue Code
of 1986, as amended from time to time. For purposes of this Plan,
references to sections of the Code shall be deemed to include
references to any applicable regulations thereunder and any
successor or similar provision.
2.9
“Committee” means the Compensation Committee of
the Board or a subcommittee thereof, or any other committee
designated by the Board to administer this Plan. The members of the
Committee shall be appointed from time to time by and shall serve
at the discretion of the Board.
2.10
“Company” means Polaris Industries Inc., a
Minnesota corporation, and any successor thereto as provided in
Article 19 herein.
2.11
“Covered Employee” means any Employee who is or
may (as determined by the Committee in its sole discretion) become
a “Covered Employee,” as defined in Code
Section 162(m).
2.12
“Director” means any individual who is a member
of the Board.
2.13
“Effective Date” has the meaning set forth in
Section 1.1.
2.14
“Employee” means any individual designated as an
employee of the Company, its Affiliates, and/or its Subsidiaries on
the payroll records thereof. An Employee shall not include any
individual during any period he or she is classified or treated by
the Company, Affiliate, and/or Subsidiary as an independent
contractor, a consultant, or any employee of an employment,
consulting, or temporary agency or any other entity other than the
Company, Affiliate, and/or Subsidiary, without regard to whether
such individual is subsequently determined to have been, or is
subsequently retroactively reclassified as, a common-law employee
of the Company, Affiliate, and/or Subsidiary during such
period.
2.15
“Exchange Act” means the Securities Exchange Act
of 1934, as amended from time to time, or any successor act
thereto.
2.16
“Fair Market Value” or “FMV”
means as of any applicable date: (i) if the Shares are listed
on a national securities exchange or is authorized for quotation on
the National Association of Securities Dealers Inc.’s NASDAQ
National Market System (“NASDAQ/NMS”), the closing
price, regular way, of the Shares on such exchange or NASDAQ/NMS,
as the case may be, or if no such reported sale of the Shares shall
have occurred on such date, on the next preceding date on which
there was such a reported sale; or (ii) if the Shares are not
listed for trading on a
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national securities exchange or
authorized for quotation on NASDAQ/NMS, the closing bid price as
reported by the National Association of Securities Dealers
Automated Quotation System (“NASDAQ”), or if no such
prices shall have been so reported for such date, on the next
preceding date for which such prices were so reported; or
(iii) if the Shares are not listed for trading on a national
securities exchange or authorized for quotation on NASDAQ, the last
reported bid price published in the “pink sheets” or
displayed on the NASD Electronic Bulletin Board, as the case
may be; or (iv) if the Shares are not listed for trading on a
national securities exchange, or are not authorized for quotation
on NASDAQ/NMS or NASDAQ, or are not published in the “pink
sheets” or displayed on the NASD Electronic
Bulletin Board, the Fair Market Value of the Shares as
determined in good faith by the Committee.
2.17
“Full-Value Award” means an Award other than in
the form of an ISO, NQSO, or SAR, and which is settled by the
issuance of Shares.
2.18
“Grant Price” means the price established at the
time of grant of an SAR that is used to determine the amount of any
payment due upon exercise of the SAR.
2.19
“Incentive Stock Option” or
“ISO” means an Option that is designated as an
Incentive Stock Option and that meets the requirements of Code
Section 422, or any successor provision.
2.20
“Insider” shall mean an individual who is, on
the relevant date, an officer or Director of the Company, or a more
than ten percent (10%) beneficial owner (within the meaning of
Rule 16a-1(a) promulgated under the Exchange Act) of any class
of the Company’s equity securities that is registered
pursuant to Section 12 of the Exchange Act, as determined by
the Board in accordance with Section 16 of the Exchange
Act.
2.21
“Nonemployee Director” means a Director who is
not an Employee.
2.22
“Nonemployee Director Award” means any NQSO,
SAR, or Full-Value Award granted, whether singly, in combination,
or in tandem, to a Participant who is a Nonemployee Director
pursuant to such applicable terms, conditions, and limitations as
the Board or Committee may establish in accordance with this
Plan.
2.23
“Nonqualified Stock Option” or
“NQSO” means an Option that is not an Incentive
Stock Option.
2.24
“Option” means an Award, as described in
Article 6.
2.25
“Option Price” means the price at which a Share
may be purchased by a Participant pursuant to an Option.
2.26
“Other Stock-Based Award” means an Award,
denominated in Shares, as described in Article 10.
2.27
“Participant” means any eligible individual as
set forth in Article 5 to whom an Award is granted.
2.28
“Performance-Based Compensation” means
compensation under an Award that is intended to satisfy the
requirements of Code Section 162(m) for certain
performance-based compensation paid to Covered Employees.
Notwithstanding the foregoing, nothing in this Plan shall be
construed to mean that an Award which does not satisfy the
requirements for performance-based compensation under Code Section
162(m) does not constitute performance-based compensation for other
purposes, including Code Section 409A.
2.29
“Performance Measures” means measures as
described in Article 12 on which the performance goals are
based in order to qualify Awards as Performance-Based
Compensation.
2.30
“Performance Period” means the period of time
during which the performance goals must be met in order to
determine the amount payable to, and/or the vested interest of a
Participant, with respect to an Award.
2.31
“Performance Share” means an Award, as described
in Article 9, denominated in Shares, the value of which at the
time it is payable is determined as a function of the extent to
which corresponding performance criteria have been
achieved.
2.32
“Performance Unit” means an Award under
Article 9 herein, denominated in units, the value of which at
the time it is payable is determined as a function of the extent to
which corresponding performance criteria have been
achieved.
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2.33
“Period of Restriction” means the period when
Restricted Stock or Restricted Stock Units are subject to a
substantial risk of forfeiture (based on the passage of time, the
achievement of performance goals, or upon the occurrence of other
events as determined by the Committee, in its discretion), as
provided in Article 8.
2.34
“Plan” means this Polaris Industries Inc. 2007
Omnibus Incentive Plan.
2.35
“Plan Year” means the calendar year.
2.36
“Prior Plans” mean the Polaris Industries Inc.
1995 Stock Option Plan, 1999 Broad-Based Stock Option Plan,
Restricted Stock Plan, and 2003 Nonemployee Director Stock Option
Plan.
2.37
“Restricted Stock” means an Award, as described
in Article 8, with respect to which Shares are awarded on the
date of grant of Award.
2.38
“Restricted Stock Unit” means an Award, as
described in Article 8, with respect to which Shares are
awarded upon the satisfaction or lapse of the restrictions
applicable thereto.
2.39
“Share” means a share of common stock of the
Company, par value $.01 per share.
2.40
“Stock Appreciation Right” or
“SAR” means an Award, as described in
Article 7.
2.41
“Subsidiary” means any corporation or other
entity, whether domestic or foreign, in which the Company has or
obtains, directly or indirectly, a proprietary interest of more
than fifty percent (50%) by reason of stock ownership or
otherwise.
2.42
“Third-Party Service Provider” means any
consultant, agent, advisor, independent contractor, or other
service provider who renders services to the Company, a Subsidiary,
or an Affiliate that: (a) are not in connection with the offer
and sale of the Company’s securities in a capital raising
transaction, and (b) do not directly or indirectly promote or
maintain a market for the Company’s securities.
Article 3. Administration
3.1
General. The Committee shall be responsible for
administering this Plan, subject to this Article 3 and the
other provisions of this Plan. All actions taken and all
interpretations and determinations made by the Committee shall be
final and binding upon the Participants, the Company, and all other
interested individuals.
3.2 Authority
of the Committee. The Committee shall have full and
exclusive discretionary power to interpret the terms and the intent
of this Plan and any Award Agreement or other agreement or document
ancillary to or in connection with this Plan, to determine
eligibility for Awards and to adopt such rules, regulations, forms,
instruments, and guidelines for administering this Plan as the
Committee may deem necessary or proper. Such authority shall
include, but not be limited to, selecting Award recipients,
establishing all Award terms and conditions, including the terms
and conditions set forth in Award Agreements, granting Awards as an
alternative to or as the form of payment for grants or rights
earned or due under compensation plans or arrangements of the
Company, construing any ambiguous provision of the Plan or any
Award Agreement, and, subject to Article 17, adopting
modifications and amendments to this Plan or any Award Agreement,
including without limitation, any that are necessary to comply with
the laws of the countries and other jurisdictions in which the
Company, its Affiliates, and/or its Subsidiaries
operate.
3.3
Delegation. The Committee may delegate to one or
more of its members or to one or more officers or employees of the
Company, and/or its Subsidiaries and Affiliates or to one or more
agents or advisors such administrative duties or powers as it may
deem advisable, and the Committee or any individuals to whom it has
delegated duties or powers as aforesaid may employ one or more
individuals to render advice with respect to any responsibility the
Committee or such individuals may have under this Plan. The
Committee may, by resolution, authorize one or more officers of the
Company to do one or both of the following on the same basis as can
the Committee: (a) designate Employees to be recipients of
Awards; and (b) determine the number of Shares or amount of
cash subject to any such Awards; provided, however, (i) the
Committee shall not delegate such responsibilities to any such
officer for Awards granted to an Employee who is an Insider;
(ii) the resolution providing such authorization sets forth
the total number of Shares and/or amount of cash subject to Awards
that such officer(s) may grant; and (iii) the officer(s) shall
report periodically to the Committee regarding the nature and scope
of the
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Awards granted pursuant to the
authority delegated. In addition, the Board may exercise any of the
powers and authority of the Committee under the Plan. In the event
of any delegation of authority under this Section 3.3, or
exercise of authority by the Board, references in the Plan to the
Committee shall be deemed to refer, as applicable, to the delegate
of the Committee or to the Board.
Article 4. Shares
Subject to This Plan and Maximum Awards
4.1 Number of
Shares Available for Awards .
(a) Subject to
adjustment as provided in Section 4.4 herein, the maximum
number of Shares available for issuance to Participants under this
Plan (the “Share Authorization”) shall be:
(i) Two million
seven hundred and fifty thousand (2,750,000) Shares,
plus
(ii) The number of
Shares subject to outstanding awards under the Company’s
Prior Plans as of the Effective Date to the extent that such Shares
cease for any reason to be subject to such awards (other than by
reason of exercise or settlement of the awards to the extent they
are exercised for or settled in vested and nonforfeitable Shares).
No further awards shall be made under the terms of the Prior Plans
on or after the Effective Date.
(b) No more than
one hundred fifty thousand (150,000) Shares of the Share
Authorization may be issued pursuant to Full-Value Awards;
provided, however, to the extent that any Shares subject to
outstanding Full-Value Awards under the Prior Plans as of the
Effective Date cease for any reason to be subject to such awards as
stipulated in Section 4.1(a)(ii) herein, shall also be
grantable as Full-Value Awards.
(c) The maximum
number of Shares of the Share Authorization that may be issued
pursuant to ISOs under this Plan shall be two million seven hundred
and fifty thousand (2,750,000) Shares.
4.2 Share
Usage. Shares covered by an Award shall only be
counted against the Share Authorization to the extent they are
issued; provided, however, the full number of Shares subject to a
Stock Appreciation Right granted that are settled by the issuance
of Shares shall be counted against the Share Authorization,
regardless of the number of Shares actually issued upon settlement
of such Stock Appreciation Right. Furthermore, any Shares withheld
to satisfy tax withholding obligations on Awards issued under the
Plan and Shares withheld to pay the exercise price of Awards under
the Plan shall be counted against the Share Authorization. Any
Shares related to Awards which terminate by expiration, forfeiture,
cancellation, or otherwise without the issuance of such Shares, are
settled in cash in lieu of Shares, or are exchanged with the
Committee’s permission, prior to the issuance of Shares, for
Awards not involving Shares, shall not reduce the Share
Authorization. The Shares available for issuance under this Plan
may be authorized and unissued Shares.
4.3 Annual
Award Limits. Unless and until the Committee
determines that an Award to a Covered Employee shall not be
intended to qualify as Performance-Based Compensation, subject to
the adjustment in accordance with Section 4.4, in any Plan
Year, no Participant shall be granted Options in respect of more
than 600,000 Shares, Full-Value Awards in respect of
125,000 Shares or Cash-Based Awards in respect of more than
$7,000,000.
4.4 Adjustments
in Authorized Shares. In the event of any corporate
event or transaction (including, but not limited to, a change in
the Shares of the Company or the capitalization of the Company)
such as a merger, consolidation, reorganization, recapitalization,
separation, partial or complete liquidation, stock dividend, stock
split, reverse stock split, split up, spin-off, or other
distribution of stock or property of the Company, combination of
Shares, exchange of Shares, dividend in kind, or other like change
in capital structure, number of outstanding Shares or distribution
(other than normal cash dividends) to shareholders of the Company,
or any similar corporate event or transaction, the Committee, in
order to prevent dilution or enlargement of Participants’
rights under this Plan, shall make equitable and appropriate
adjustments and substitutions, as applicable, to or of the number
and kind of Shares that may be issued under this Plan or under
particular forms of Awards, the number and kind of Shares subject
to outstanding Awards, the Option Price or Grant Price applicable
to outstanding Awards, the Annual Award Limits, and other value
determinations applicable to outstanding Awards.
The Committee may also
make appropriate adjustments in, or modify, the terms of any Awards
under this Plan in connection with, or in anticipation of, any of
the foregoing corporate events or transactions,
including
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adjustments and/or modifications of
performance goals, changes in the length of Performance Periods and
changes in the expiration dates of Options or SARs. The
determination of the Committee as to the foregoing adjustments, if
any, shall be conclusive and binding on Participants under this
Plan.
Subject to the
provisions of Article 17 and notwithstanding anything else
herein to the contrary, without affecting the Share Authorization,
the Committee may authorize the issuance or assumption of benefits
under this Plan in connection with any merger, consolidation,
acquisition of property or stock, or reorganization upon such terms
and conditions as it may deem appropriate (including, but not
limited to, a conversion of equity awards into Awards under this
Plan in a manner consistent with paragraph 53 of FASB
Interpretation No. 44), subject to compliance with the rules
under Code Sections 422 and 424, as and where
applicable.
Article 5. Eligibility
and Participation
5.1
Eligibility. Individuals eligible to participate
in this Plan include all Employees, Directors, including
Nonemployee Directors, and Third-Party Service
Providers.
5.2 Actual
Participation. Subject to the provisions of this
Plan, the Committee may, from time to time, select from all
eligible individuals, those individuals to whom Awards shall be
granted and shall determine, in its sole discretion, the nature of,
any and all terms permissible by law, and the amount of each
Award.
Article 6. Stock
Options
6.1 Grant of
Options. Subject to the terms and provisions of
this Plan, Options may be granted to Participants in such number,
and upon such terms, and at any time and from time to time as shall
be determined by the Committee, in its sole discretion, provided
that ISOs may be granted only to eligible Employees of the Company
or of any parent or subsidiary corporation (as permitted under Code
Sections 422 and 424).
6.2 Award
Agreement. Each Option grant shall be evidenced by
an Award Agreement that shall specify the Option Price, the maximum
duration of the Option, the number of Shares with respect to which
the Option is exercisable, the conditions upon which the Option
shall become vested and/or exercisable, and such other provisions
as the Committee shall determine which are not inconsistent with
the terms of this Plan. The Award Agreement also shall specify
whether the Option is intended to be an ISO or an NQSO.
6.3 Option
Price. The Option Price for each Option shall be
determined by the Committee in its sole discretion and shall be
specified in the Award Agreement; provided, however, the Option
Price on the date of grant must be at least equal to one hundred
percent (100%) of the FMV of the Shares with respect to which the
Option is exercisable, as determined on the date of grant. For this
purpose, the date of grant of an Option shall be the date on which
the Committee (or, if authorized pursuant to Section 3.3, an
authorized officer of the Company) approves such Option, or such
later date as the Committee (or such officer) may specify in such
authorization.
6.4 Term of
Options. Each Option granted to a Participant shall
expire at such time as the Committee shall determine, as specified
in the Award Agreement; provided, however, that no Option shall be
exercisable later than the tenth (10 th ) anniversary of the date of its
grant.
6.5 Exercise of
Options. Options granted under this Article 6
shall be exercisable at such times and be subject to such
restrictions and conditions as the Committee shall in each instance
approve, which terms and restrictions need not be the same for each
grant or for each Participant.
6.6
Payment. Options granted under this
Article 6 shall be exercised by the delivery of a notice of
exercise to the Company or an agent designated by the Company in a
form specified or accepted by the Committee, or by complying with
any alternative procedures which may be authorized by the
Committee, setting forth the number of Shares with respect to which
the Option is to be exercised, accompanied by full payment for the
Shares.
A condition of the
issuance of the Shares as to which an Option shall be exercised
shall be the payment of the Option Price. The Option Price of any
Option shall be payable to the Company, in full as determined by
the Committee in its discretion, in the manner set forth in the
Award Agreement, which shall be one or more of the following:
(a) in cash or its equivalent; (b) by tendering (either
by actual delivery or attestation) previously acquired Shares
having an aggregate Fair Market Value at the time of exercise equal
to the Option Price (provided that except
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as otherwise determined by the
Committee, the Shares that are tendered must
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