-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H+k3laOkQRpD47qdCOrog/JIDrZJjG3XNv6bZDvrlThAy66pZ77nMYq4MWMmYogu Sktfy2vJqXxXgTtDbmd0wQ== 0000950131-02-001094.txt : 20020415 0000950131-02-001094.hdr.sgml : 20020415 ACCESSION NUMBER: 0000950131-02-001094 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020504 FILED AS OF DATE: 20020325 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARLEY DAVIDSON INC CENTRAL INDEX KEY: 0000793952 STANDARD INDUSTRIAL CLASSIFICATION: MOTORCYCLES, BICYCLES & PARTS [3751] IRS NUMBER: 391382325 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-09183 FILM NUMBER: 02584862 BUSINESS ADDRESS: STREET 1: 3700 W JUNEAU AVE CITY: MILWAUKEE STATE: WI ZIP: 53208 BUSINESS PHONE: 4143424680 DEF 14A 1 ddef14a.txt NOTICE & PROXY STATEMENT 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 (Amendment No. ) Filed by the Registrant [_] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2)) [X] Definitive Proxy Statement [_] Definitive Additional Materials [_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12 Harley-Davidson, Inc. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------- (5) Total fee paid: ------------------------------------------------------------------------- [_] Fee paid previously with preliminary materials. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------- (3) Filing Party: ------------------------------------------------------------------------- (4) Date Filed: ------------------------------------------------------------------------- Notes: Reg. (S) 240.14a-101. SEC 1913 (3-99) [LOGO] Harley-Davidson, Inc. NOTICE OF ANNUAL MEETING AND PROXY STATEMENT Harley-Davidson, Inc. 3700 West Juneau Avenue Milwaukee, Wisconsin 53208 (414) 343-4680 March 25, 2002 Dear Fellow Shareholder: On behalf of the Board of Directors and management of our Company, I cordially invite you to attend the 2002 Annual Meeting of the Shareholders of Harley-Davidson, Inc. to be held at 10:30 a.m., Central Time, on Saturday, May 4, 2002, at The Pfister Hotel, 424 East Wisconsin Avenue, Milwaukee, Wisconsin. The attached Notice of Annual Meeting and Proxy Statement describe the formal business to be transacted at the Annual Meeting. During the Annual Meeting, there will be brief reports on the operations of the Company. Once the business of the Meeting has been concluded, Shareholders will be given the opportunity to ask questions. We sincerely hope you will be able to attend our 2002 Annual Meeting. However, whether or not you are personally present, it is important that your shares be represented. YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY SHARES YOU OWN. PLEASE SUBMIT A PROXY AS SOON AS POSSIBLE SO THAT YOUR SHARES WILL BE REPRESENTED AT THE ANNUAL MEETING. YOU MAY SUBMIT YOUR PROXY (1) OVER THE INTERNET, (2) BY TELEPHONE, OR (3) BY MAIL. FOR SPECIFIC INSTRUCTIONS, PLEASE REFER TO THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD. Sincerely yours, /s/ Jeffrey L. Bleustein Jeffrey L. Bleustein Chairman of the Board and Chief Executive Officer [LOGO] Harley-Davidson, Inc. Notice of Annual Meeting of Shareholders May 4, 2002 The 2002 Annual Meeting of the Shareholders (the ''Annual Meeting'') of Harley-Davidson, Inc. (the ''Company'') will be held at The Pfister Hotel, 424 East Wisconsin Avenue, Milwaukee, Wisconsin on Saturday, May 4, 2002 at 10:30 a.m., Central Time, for the following purposes: 1. To elect two directors for a three-year term to expire at the Company's 2005 Annual Meeting of Shareholders; 2. To ratify the selection of Ernst & Young LLP, independent public accountants, to be the auditors of the annual financial statements of the Company for the year ending December 31, 2002; and 3. To take action upon any other business as may properly come before the Annual Meeting and any adjournments or postponements thereof. The Board of Directors of the Company has fixed the close of business on March 13, 2002 as the record date for determining shareholders entitled to notice of and to vote at the Annual Meeting and any adjournments or postponements thereof. By Order of the Board of Directors, Harley-Davidson, Inc. /s/ Gail A. Lione Gail A. Lione Secretary Milwaukee, Wisconsin March 25, 2002 WE URGE YOU TO VOTE AS SOON AS POSSIBLE. YOU CAN VOTE YOUR SHARES BY MARKING YOUR VOTES ON THE ENCLOSED PROXY CARD, SIGNING AND DATING IT AND MAILING IT IN THE POSTAGE-PAID ENVELOPE. IF YOU OWN SHARES REGISTERED DIRECTLY WITH THE COMPANY'S TRANSFER AGENT, COMPUTERSHARE INVESTOR SERVICES LLC, OR YOU OWN SHARES IN THE COMPANY'S DIVIDEND REINVESTMENT PLAN, THEN YOU CAN VOTE THOSE SHARES BY USING A TOLL FREE TELEPHONE NUMBER OR THE INTERNET. INSTRUCTIONS FOR USING THESE CONVENIENT SERVICES ARE SET FORTH ON THE ENCLOSED PROXY CARD. STREET NAME HOLDERS MAY ALSO VOTE BY TELEPHONE OR THE INTERNET IF THEIR BANK OR BROKER MAKES THOSE METHODS AVAILABLE, IN WHICH CASE THE BANK OR BROKER WILL ENCLOSE THE INSTRUCTIONS WITH THE PROXY STATEMENT. [LOGO] Harley-Davidson, Inc. 3700 West Juneau Avenue Milwaukee, Wisconsin 53208 March 25, 2002 ----------------- PROXY STATEMENT ----------------- The proxy accompanying this Proxy Statement is solicited by the Board of Directors (the "Board") of Harley-Davidson, Inc. (the "Company") for use at the 2002 Annual Meeting of Shareholders of the Company to be held on May 4, 2002 and at any adjournment or postponement thereof (the "Annual Meeting"). This Proxy Statement and the accompanying proxy were first sent to Shareholders on or about March 25, 2002. The only outstanding class of voting securities of the Company is its common stock (the "Common Stock"). At the close of business on March 13, 2002, the record date for the determining shareholders entitled to notice of and to vote at the Annual Meeting ("Shareholders"), 302,766,939 shares of Common Stock were outstanding. Holders of the Common Stock are entitled to one vote per share on all matters. Shareholders who own shares registered directly with the Company's transfer agent, Computershare Investor Services LLC ("Computershare") or who own shares through the Company's Dividend Reinvestment Plan ("DRIP") on the close of business on March 13, 2002 can appoint a proxy by telephone by calling toll free (within the U.S. or Canada) (877) 482-6150, by using the Internet at www.computershare.com/us/proxy or by mailing their signed proxy card in the enclosed envelope. Street name holders may vote by telephone or the Internet if their bank or broker makes those methods available, in which case the bank or broker will enclose the instructions with the proxy statement. The telephone and Internet voting procedures are designed to authenticate Shareholders' identities, to allow Shareholders to give their voting instructions and to confirm that the Shareholders' instructions have been properly recorded. Shareholders voting via the Internet should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies, that the Shareholders must bear. Appointing a proxy in response to this solicitation will not affect a Shareholder's right to attend the Annual Meeting and to vote in person. Presence at the Annual Meeting of a Shareholder who has appointed a proxy does not in itself revoke a proxy. Shareholders who execute proxies may revoke them at any time prior to the voting thereof by appointing a new proxy or by providing written notice to the Secretary of the Company and voting in person at the Annual Meeting. Unless so revoked, the shares represented by proxies received by the Board will be voted at the Annual Meeting. Where a Shareholder specifies a choice by means of the proxy, then the shares will be voted in accordance with such specification. As used in this Proxy Statement, "Motor Company" refers collectively to the Company's principal subsidiaries, Harley-Davidson Motor Company Operations, Inc., Harley-Davidson Motor Company Group, Inc. and Harley-Davidson Motor Company, Inc., which collectively do business as "Harley-Davidson Motor Company" and "HDFS" refers to Harley-Davidson Financial Services, Inc. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information as of March 13, 2002 (except as noted) with respect to the Common Stock ownership of each director, the Chief Executive Officer, the four other executive officers of the Company identified in the Summary Compensation Table below (collectively with the Chief Executive Officer, the "named executive officers"), all directors and executive officers as a group and each person or group of persons known by the Company to own beneficially more than 5% of the Common Stock.
Amount and Nature of Beneficial Ownership(1)(2) --------------------------------------- Percent Shares Issuable Number of of Upon Exercise of Name of Beneficial Owner Shares Class Stock Options (3) - ------------------------ ---------- ------- ----------------- Barry K. Allen.................................................. 22,566 * 3,700 Richard I. Beattie.............................................. 11,731 * 3,700 Jeffrey L. Bleustein............................................ 1,785,993 * 1,040,500 Richard J. Hermon-Taylor........................................ 22,566 * 3,700 Donald A. James................................................. 220,744(4) * 3,700 Richard G. LeFauve.............................................. 15,236 * 3,700 Gail A. Lione................................................... 103,241 * 101,300 Sara L. Levinson................................................ 10,239 * 3,700 James A. McCaslin............................................... 358,852 * 192,150 James A. Norling................................................ 15,099(5) * 3,700 Richard F. Teerlink............................................. 274,542 * 2,300 Donna F. Zarcone................................................ 63,868 * 63,468 James L. Ziemer................................................. 499,113(7) * 390,792 All Directors and Executive Officers as a Group (19 Individuals) 4,311,178 1.4% 2,343,966 AXA Assurances I.A.R.D. Mutuelle................................ 22,324,662(8) 7.4% 0
- -------- *The amount shown is less than 1% of the outstanding shares of Common Stock. (1) Except as otherwise noted, all persons have sole voting and investment power over the shares listed. (2) Includes shares of Common Stock issuable upon the exercise of stock options exercisable within 60 days of March 13, 2002. Includes shares of Common Stock held in the Company's 401(k) plan and the Company's Dividend Reinvestment Plan, as of December 31, 2001. (3) Includes only stock options exercisable within 60 days of March 13, 2002. (4) 213,675 of such shares of Common Stock are held by Fred Deeley Imports Ltd. Mr. James has sole voting power and shared investment power over such shares. (5) 8,000 of such shares of Common Stock are held by Heritage Venture, Ltd., a limited partnership for which he has sole voting and dispositive power. (6) 40,000 shares are held by the Teerlink Family Foundation Inc. for which Mr. Teerlink has shared voting and dispositive power. (7) 4,100 shares are held by the Ziemer Family Foundation for which Mr. Ziemer has share voting and dispositive power over the shares. 27,800 shares are held by the Ziemer Family Limited Partnership. Mr. Ziemer is a general and limited partner in the partnership and has shared voting and dispositive power over the shares. (8) Information derived from the Schedule 13G filed with AXA Assurances I.A.R.D. Mutuelle. As of December 31, 2001, AXA Assurances I.A.R.D. Mutuelle had sole voting power over 13,771,173 shares, sole dispositive power over 22,254,771 shares and shared dispositive power over 69,891 shares. 2 1--ELECTION OF DIRECTORS The Restated Articles of Incorporation of the Company provide for a Board of not less than six (6) nor more than fifteen (15) members, as determined from time to time by the affirmative vote of a majority of the directors then in office. The Board is divided into three classes, with one class of directors elected each year for a term of three years subject to the mandatory retirement provisions of the Company's bylaws. The Board currently consists of nine members, three of whom have terms that expire at the Annual Meeting (Class II Directors), three of whom have terms that expire at the 2003 annual meeting of Shareholders (Class III Directors) and three of whom have terms that expire at the 2004 annual meeting of Shareholders (Class I Directors). In accordance with the Company's bylaws, two of the directors whose terms expire at the Annual Meeting, Richard J. Hermon-Taylor and Richard F. Teerlink, are not eligible to continue to serve as directors of the Company following the Annual Meeting. Accordingly, they are not standing for reelection. The remaining director whose term expires at the Annual Meeting, Sara L. Levinson, is standing for reelection at the Annual Meeting as a member of the class having terms that expire at the 2005 annual meeting of Shareholders (Class II Directors). The Board has also nominated George Conrades for election at the Annual Meeting as a member of that class to fill one of the seats that the retiring directors held. The Board has also reduced the size of the Board from nine members to eight members effective at the Annual Meeting. Accordingly, following the election at the Annual Meeting, there will be two members in Class II and three members in each of Class I and Class III. Therefore, the two nominees for director set forth below are proposed to be elected at the Annual Meeting to serve until the 2005 annual meeting of Shareholders. Ms. Levinson is currently a director of the Company and has served since 1996. Mr. Conrades has not previously served as a director of the Company. The remaining six directors will continue to serve as members of the Board for terms as set forth below. The nominees have advised the Company that they will serve if elected. Directors are elected by a plurality of the votes cast (assuming a quorum is present at the Annual Meeting). Thus, any shares not voted, whether due to abstentions or broker nonvotes, will not have an impact on the election of directors. A quorum consists of a majority of the shares entitled to vote represented at the Annual Meeting in person or by proxy, including proxies reflecting abstentions or broker nonvotes. Broker nonvotes arise from proxies delivered by brokers and others where the record holder has not received authority to vote on one or more matters and has no discretion to vote on such matters. Once a share is represented at the Annual Meeting, it will be deemed present for quorum purposes throughout the Annual Meeting (including any adjournment thereof unless a new record date is or must be set for such adjournment). Proxies solicited by the Board will be voted "FOR" the following nominees unless a Shareholder specifies otherwise. Should any such nominee become unable to serve, proxies may be voted for another person designated by the Board. THE BOARD RECOMMENDS A VOTE ''FOR'' THE FOLLOWING NOMINEES. The names, ages as of March 13, 2002, and principal occupations for the past five years of each of the directors and nominees and the names of any other public companies of which each is presently serving as a director are set forth below: Nominees For Class II Directors--Terms Expiring at 2005 Annual Meeting George H. Conrades, 63, has not previously served as a director of the Company. Mr. Conrades was named Chairman and Chief Executive Officer of Akamai Technologies, Inc. in April 1999. Since August 1998, Mr. Conrades has also served as a Partner with Polaris Venture Partners, an early stage investment company. Mr. Conrades previously served as Executive Vice President of GTE and President of GTE Internetworking from 3 May 1997 to August 1998 following the firm's acquisition of BBN Corporation. From January 1994 to May 1997, Mr. Conrades served as President and Chief Executive Officer of BBN. He is also a director of Cardinal Health, Inc. and Viacom, Inc. Sara L. Levinson, 51, has been a director of the Company since 1996. Ms. Levinson is the ChairMom and Chief Executive Officer of ClubMom, Inc., a consumer relationship management company, a position she has held since May 2000. Ms Levinson previously served as President of NFL Properties, Inc. from September 1994 to April 2000. She is also a director of Federated Department Stores Inc. Class III Directors--Terms Expiring at 2003 Annual Meeting Jeffrey L. Bleustein, 62, has been a director of the Company since 1996. In December 1998, Mr. Bleustein was elected Chairman of the Board of the Company. He has served as President and Chief Executive Officer of the Company and Chief Executive Officer of the Motor Company since June 1997. Mr. Bleustein, served as President and Chief Operating Officer of the Motor Company from 1993 to May, 2001. He was Executive Vice President of the Company from 1991 to June 1997. He is also a director of Brunswick Corporation. Donald A. James, 58, has been a director of the Company since 1991. Mr. James is a co-founder and, since 1989, has been the Vice Chairman and Chief Executive Officer of Fred Deeley Imports Ltd., the largest independent motorcycle distributorship in Canada and the exclusive distributor of the Company's motorcycles in that country. James A. Norling, 60, has been a director of the Company since 1993. In August 2000, Mr. Norling retired as the Executive Vice President of Motorola, Inc., a manufacturer of electronics, and President, Personal Communications Section of Motorola, a position which he held since June 1999. He served as Executive Vice President, Deputy to Chief Executive Officer and President of Europe, Middle East and Africa for Motorola, Inc., a manufacturer of electronics, from December 1998 to June 1999. Mr. Norling has served as President and General Manager, Messaging, Information and Media Sector, for Motorola from January 1997 to December 1998 and as an Executive Vice President of Motorola since 1990. He is also director of Chartered Semiconductor Manufacturing Ltd. Class I Directors--Terms Expiring at 2004 Annual Meeting Barry K. Allen, 53, has been a director of the Company since 1992. Mr. Allen has been the President of Allen Enterprises, LLC, a private equity investment and management company, since August 2000. Mr. Allen served as President of Ameritech Corporation from October 1999 until August 2000. Mr. Allen was Executive Vice President of Ameritech/SBC Communication (f/k/a Ameritech Corporation), a telecommunications company, from August 1995 to October 1999. From September 1993 to August 1995, he was President and Chief Operating Officer and a director of Marquette Electronics, Inc., a manufacturer of medical equipment and systems. He was also a director of United Wisconsin Services, Inc. Richard I. Beattie, 62, has been a director of the Company since 1996. He has been a partner of Simpson Thacher & Bartlett, a law firm, since 1977 and has served as Chairman of the Executive Committee of that firm since 1991. Richard G. LeFauve, 67, has been a director of the Company since 1993. In December 1998, Mr. LeFauve retired as President of General Motors University and a Senior Vice President of General Motors Corporation, an automobile manufacturer, a position which he held since April 1997. He was Group Executive, NAO Small Car Group of General Motors Corporation from 1994 to April 1997, Chairman of Saturn Corporation, an automobile manufacturer, from 1995 to April 1997, and a Vice President of General Motors Corporation from 1985 to April 1997. 4 Board of Directors--Committee and Other Information The Board has three committees: the Audit Committee, the Human Resources Committee and the Nominating and Director Affairs Committee. The Audit Committee is comprised of the following members: Richard I. Beattie, Sara L. Levinson and James A. Norling (Chairman). The Audit Committee met twice during 2001. The functions of the Audit Committee and its activities during fiscal year 2001 are described below under the heading "Audit Committee Report". The Human Resources Committee, the current members of which are Barry K. Allen, Richard J. Hermon-Taylor and Richard G. LeFauve (Chairman), met twice during 2001. The Human Resources Committee approves certain compensation and benefits actions, reviews performance of certain executives and advises management on matters of succession planning, career development and human resources strategies. The Nominating and Director Affairs Committee, the current members of which are Barry K. Allen (Chairman), Richard I. Beattie, Richard J. Hermon-Taylor, Donald A. James, Richard G. LeFauve, Sara L. Levinson and James A. Norling, met three (3) times during 2001. The Nominating and Director Affairs Committee identifies and recommends to the full Board candidates for service on the Board and reviews Board performance and Board committee composition. Shareholders may recommend candidates for consideration by the Nominating and Director Affairs Committee by writing to the Nominating and Director Affairs Committee in care of the Secretary of the Company. Such recommendations for the 2003 Annual Meeting of Shareholders must be received by the Company on or before November 26, 2002. Any Shareholder who desires to nominate a director candidate for consideration by the Shareholders must give written notice thereof to the Secretary of the Company in advance of the applicable meeting in compliance with the terms and within the time periods specified in the Company's Restated Articles of Incorporation. The Board has four regular quarterly meetings per year and met five (5) times during 2001. All directors attended at least 75% of the meetings of the Board and the Board committees on which they served during 2001, except for Mr. Teerlink who attended 60% of the meetings. Directors who are employees of the Company do not receive any special compensation for their services as directors. Directors who are not employees of the Company ("Non-employee Directors") receive an annual fee of $25,000 plus $1,500 for each regular meeting of the Board, $750 for each special meeting of the Board, $750 for each Board Committee meeting and a clothing allowance of $1,000 to purchase Harley-Davidson(R) MotorClothes(TM) apparel and accessories. Pursuant to the Company's 1998 Director Stock Plan (the "Director Plan"), a Non-employee Director may elect to receive 50% or 100% of the annual fee to be paid in each calendar year in the form of Common Stock based upon the fair market value of the Common Stock at the time of the annual meeting. In addition, on the first business day after the annual meeting of Shareholders of the Company, each Non-employee Director who serves as a member of the Board immediately following the annual meeting is automatically granted an immediately exercisable option for the purchase of such number of shares of Common Stock equal to the annual fee divided by the fair market value of a share of Common Stock on the day of grant (rounded up to the nearest multiple of 100). In 2001, each Non-employee Director received an option to purchase 600 shares of Common Stock. 5 EXECUTIVE COMPENSATION The following table shows the aggregate compensation, including incentive compensation, paid by the Company for 2001, 2000 and 1999 to the Chief Executive Officer and each of the four other most highly compensated executive officers of the Company for 2001: SUMMARY COMPENSATION TABLE
Long Term Annual Compensation Compensation Awards ------------------- Other --------------------- All Annual Restricted Securities Other Compen- Stock Underlying Compen- Salary Bonus(1) sation Awards(2) Options sation(3) Name and Principal Position Year ($) ($) ($) ($) (#) ($) - --------------------------- ---- ------- --------- ------- ---------- ---------- --------- Jeffrey L. Bleustein Chairman and CEO................. 2001 768,780 1,945,013 54,358(4) 0 110,000 88,179 Chairman and CEO................. 2000 717,526 1,750,760 52,496 0 165,000 76,713 Chairman and CEO................. 1999 653,750 1,307,500 40,661 0 110,000 68,431 James L. Ziemer Vice President and CFO........... 2001 319,748 566,274 21,645 0 31,331 26,484 Vice President and CFO........... 2000 292,635 499,820 21,539 0 39,446 20,647 Vice President and CFO........... 1999 241,939 338,715 21,310 0 40,998 16,935 Donna F. Zarcone President and COO--HDFS.......... 2001 321,379 532,042 10,914 0 31,118 6,000 President and COO--HDFS.......... 2000 306,075 362,100 12,785 0 39,178 6,000 President and COO--HDFS.......... 1999 285,313 378,000 23,705 0 48,130 33,885 James A. McCaslin President and COO Motor Company........................ 2001 337,200 510,605 29,214 0 33,889 20,018 Vice President, Dealer Services-- Motor Company.................. 2000 269,265 274,650 21,502 0 34,960 6,712 Vice President, Dealer Services-- Motor Company.................. 1999 254,014 254,014 31,223 0 42,948 18,709 Gail A. Lione Vice President, General Counsel and Secretary.................. 2001 280,194 315,218 21,488 0 27,518 17,945 Vice President, General Counsel and Secretary.................. 2000 256,218 261,342 21,423 0 34,320 15,771 Vice President, General Counsel and Secretary.................. 1999 217,360 217,360 21,606 0 56,752 13,746
- -------- (1) The bonuses listed on this table reflect performance of the Chief Executive Officer and each of the named executive officers in the year shown. However, bonuses are actually paid in the following calendar year. (2) As of December 31, 2001, the only named executive officer of the Company holding unvested restricted stock was Mr. McCaslin who held 160,000 shares, valued at $8,689,600 as of that date. Dividends are paid on shares of unvested restricted stock. (3) The 2001 amounts for Messrs. Bleustein, Ziemer and McCaslin and Ms. Lione include the value of life insurance provided by the Company, a 401(k) matching contribution of $5,250 for each, a $200 health care spending account credit (Messrs. Bleustein and Ziemer and Ms. Lione only) and a non-qualified deferred compensation plan matching contribution of $70,336, $19,337, $12,500, and $10,996, respectively. The 2001 amount for Ms. Zarcone represents a 401(k) matching contribution of $6,000. (4) The 2001 amounts for Mr. Bleustein include a $9,819 tax gross up for Mr. Bleustein's life insurance. 6 Stock Options During 2001, the Human Resources Committee granted options to purchase shares of Common Stock under the Company's 1995 Stock Option Plan to the Chief Executive Officer and the other named executive officers as follows: OPTION GRANTS IN 2001
Potential Realizable Value at Assumed Annual Rates of Stock Individual Grants (1) Appreciation for Option Term (2) -------------------------------------------- --------------------------------- Number of Securities Percent of Underlying Total Options Exercise Options Granted to Price Expiration Name Granted Employees ($/Sh) Date 0% 5% 10% ---- ---------- ------------- -------- ---------- -- -------------- --------------- Jeffrey L. Bleustein 110,000 7.3 44.41 2/8/11 0 $ 3,072,213 $ 7,785,591 James L. Ziemer..... 31,331 2.1 44.41 2/8/11 0 875,050 2,217,549 Donna F. Zarcone.... 31,118 2.1 44.41 2/8/11 0 869,101 2,202,473 James A. McCaslin... 33,889 2.3 44.41 2/8/11 0 946,493 2,398,599 Gail A. Lione....... 27,518 1.8 44.41 2/8/11 0 768,556 1,947,672 All Optionees(3).... 1,511,131 100 (3) (3) 0 41,199,722 104,393,142 All Shareholders(4). N/A N/A N/A N/A 0 8,431,918,042 21,368,135,822
- -------- (1) The options granted under the 1995 Stock Option Plan are non-qualified stock options. The exercise price per share is 100% of the fair market value of a share of Common Stock on the date of the grant. The options may be exercised one year after the date of grant, not to exceed 25% of the shares in the first year, with an additional 25% to be exercisable in each of the following three years. Options expire ten years from the date of grant. Each option granted under the 1995 Stock Option Plan has a limited right which permits the holder to surrender the option within 30 days after a change of control of the Company and receive the difference between the exercise price of the option and the highest closing price of the Common Stock during the 60-day period preceding the change of control of the Company. (2) The dollar amounts under these columns are the results of calculations at 0% and at the 5% and 10% rates set by the Securities and Exchange Commission. The potential realizable values are not intended to forecast possible future appreciation, if any, in the market price of the Common Stock. (3) Includes 1,237,131 options granted to salaried employees on February 8, 2001 at an exercise price of $44.41 per share, 269,200 options granted to York hourly employees on January 3, 2001 at an exercise price of $38.88 per share, and 4,800 options granted to Directors on May 7, 2001 at an exercise price of $46.95 per share. (4) Represents corresponding gain to all Shareholders on 301,903,202 shares of Common Stock outstanding on February 8, 2001, the date on which substantially all of the options included in the table were granted, calculated based on the fair market value of such Common Stock on such date. 7 Shown below is information relating to the exercise of options by the Chief Executive Officer and the other named executive officers during 2001 and the value of unexercised options held by such persons as of December 31, 2001. AGGREGATED OPTION EXERCISES IN 2001 AND OPTION VALUES AT DECEMBER 31, 2001
Number of Securities Underlying Unexercised Value of Unexercised Options At In-the-Money Options Shares Value December 31, 2001 (#) At December 31, 2001 ($)(2) Acquired on Realized ------------------------- --------------------------- Name Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable - ---- ------------ ----------- ----------- ------------- ----------- ------------- Jeffrey L. Bleustein 240,888 $10,309,462 879,250 353,750 $36,968,915 $7,814,591 James L. Ziemer..... -- -- 346,512 97,749 14,959,009 2,159,373 Donna F. Zarcone.... -- -- 33,861 84,565 889,111 1,602,912 James A. McCaslin... -- -- 146,926 98,857 5,731,483 2,180,267 Gail A. Lione....... 50,000 1,804,769 61,728 96,558 1,958,218 2,184,024
- -------- (1) Value based on the fair market value of Common Stock on the date of exercise less the option exercise price. (2) Value based on a fair market value of Common Stock of $54.31 on December 31, 2001, less the option exercise price. Retirement Benefits The following table shows at different levels of remuneration and years of credited service the estimated net annual benefits payable as a straight life annuity to each of the named executive officers under the Salaried Pension Plan, the Restoration Plan and the Supplemental Agreements (all as defined below), assuming retirement at age 62: PENSION PLAN TABLE
Years of Service -------------------------------------------------------------------------------- Covered Total Pay 5 10 15 20 25 30 35 15+(1) Comp - --------- ------- ------- ------- ------- ------- --------- --------- --------- ---------- 200,000 15,269 30,539 45,808 61,078 76,347 91,617 106,886 100,000 $ 163,472 300,000 23,269 46,539 69,808 93,078 116,347 139,617 162,886 150,000 $ 263,472 400,000 31,269 62,539 93,808 125,078 156,347 187,617 218,886 200,000 $ 363,472 500,000 39,269 78,539 117,808 157,078 196,347 235,617 274,886 250,000 $ 463,472 600,000 47,269 94,539 141,808 189,078 236,347 283,617 330,886 300,000 $ 563,472 800,000 63,269 126,539 189,808 253,078 316,347 379,617 442,886 400,000 $ 763,472 1,000,000 79,269 158,539 237,808 317,078 396,347 475,617 554,886 500,000 $ 963,472 1,250,000 99,269 198,539 297,808 397,078 496,347 595,617 694,886 625,000 $1,213,472 1,500,000 119,269 238,539 357,808 477,078 596,347 715,617 834,886 750,000 $1,463,472 1,750,000 139,269 278,539 417,808 557,078 696,347 835,617 974,886 875,000 $1,713,472 2,000,000 159,269 318,539 477,808 637,078 796,347 955,617 1,114,886 1,000,000 $1,963,472 2,250,000 179,269 358,539 537,808 717,078 896,347 1,075,617 1,254,886 1,125,000 $2,213,472 2,500,000 199,269 398,539 597,808 797,078 996,347 1,195,617 1,394,886 1,250,000 $2,463,472
- -------- (1) This column applies only to Messrs. Bleustein, McCaslin and Ziemer who are entitled to supplemental benefits under their Supplemental Agreements upon retirement at age 62. The Company maintains the Retirement Annuity Plan for Salaried Employees of Harley-Davidson, a noncontributory defined benefit pension plan ("Salaried Pension Plan"). Under the Salaried Pension Plan, salaried employees of the Company (excluding HDFS and certain other subsidiaries), including Messrs. Bleustein, Ziemer and McCaslin and Ms. Lione are generally eligible to retire with unreduced benefits at 8 age 62 or later. Benefits are based upon monthly "final average earnings" as defined in the Salaried Pension Plan. Prior to December 31, 1994, the monthly benefit is the difference between 1.6% of the final average earnings and .9% of the primary monthly social security benefit multiplied by years of service. On and after December 31, 1994, the revised benefit is 1.2% of the final average earnings plus .4% of the final average earnings in excess of Social Security covered compensation multiplied by years of service. The benefit of a person with service on or after December 31, 1994, is the greater of his or her benefit determined using the revised formula for all service or the sum of his or her benefit under the former formula for service through December 31, 1993, and his or her benefit under the revised formula for service after that date. For the named executive officers (other than Ms. Zarcone), final average earnings equal one-twelfth of the highest average annual total compensation (consisting of base salary and bonus as shown in the Summary Compensation Table) paid over five consecutive calendar years within the last ten years of service prior to the participant's retirement or other date of termination. Vesting under the Salaried Pension Plan occurs upon the earlier of five years of service or age 65. An employee who retires after age 55 and before age 62 with a minimum of 5 years of service will receive an actuarially reduced benefit under the Salaried Pension Plan. The surviving spouse of an employee who is eligible for early retirement or who is vested at death is also entitled to certain benefits under the Salaried Pension Plan. HDFS does not provide a non-contributory defined benefit pension plan to any of its employees. The Company has adopted the Pension Benefit Restoration Plan (the "Restoration Plan") pursuant to which the Company will pay participants amounts that exceed certain limitations the Internal Revenue Code imposes on benefits payable under the Salaried Pension Plan. Calculated as of December 31, 2001, annualized final average earnings and years of credited service under the Salaried Pension Plan and the Restoration Plan were as follows: $1,691,882 and 30.9 years, respectively, for Mr. Bleustein; $563,966 and 26.2 years, respectively, for Mr. Ziemer; and $498,504 and 9.3 years, respectively, for Mr. McCaslin. As of December 31, 2001, Ms. Lione had not completed 5 years of service. The Company has Supplemental Executive Retirement Plan Agreements (the "Supplemental Agreements") with Messrs. Bleustein, Ziemer and McCaslin. Under the Supplemental Agreements, a participant who retires at or after age 55 with 15 years of service is entitled to a yearly retirement benefit payment equal to 35% of the executive's annualized final average earnings at age 55 increasing in equal increments to 50% of annualized final average earnings at age 62, reduced by the amount of any pension payable by the Company under the Salaried Pension Plan, by any other defined benefit retirement programs of the Company and by the amount of benefits under the Restoration Plan. Agreements The Company has entered into an employment agreement with Mr. Bleustein which provides that, upon termination of employment for reasons other than cause, the Company will pay Mr. Bleustein certain amounts, including his base compensation in effect on the date of such termination (which currently would approximate the amount of cash compensation set forth in the Summary Compensation Table) for a period not exceeding one year, and the Company will continue other benefits to which he was entitled prior to termination. HDFS has entered into an employment agreement with Ms. Zarcone which provides that, upon termination of employment for reasons other than cause, HDFS will pay Ms. Zarcone certain amounts, including her base compensation in effect on the date of such termination (which currently would approximate the amount of cash compensation set forth in the Summary Compensation Table) for a period not exceeding one year, and the Company will continue other benefits to which she was entitled prior to termination. Such employment agreements do not establish minimum base salary levels for Mr. Bleustein or Ms. Zarcone. The Company offers a standard form of Severance Benefits Agreement which has been executed by certain executives including Messrs. Bleustein, Ziemer and McCaslin, and Ms. Lione. The Severance Benefits Agreement provides for up to one year's salary and up to one year of certain employee benefits in the event of a termination of employment by the Company other than for cause. 9 The Company has entered into Transition Agreements with the named executive officers and certain other key executives which become effective upon a change of control of the Company as defined therein. The Transition Agreements provide that, in the event of termination of such individual's employment with the Company for any reason (other than death) within two years (three years in the case of Mr. Bleustein) after a change of control of the Company, such individual will receive a cash payment in an amount equal to the product of three multiplied by the sum of (i) the individual's highest annual base salary during the five-year period preceding termination, (ii) the highest annual bonus paid during the five-year period preceding termination and (iii) the individual's annual perquisite payment. Such individuals will also receive immediate vesting in any retirement, incentive, stock option and other deferred compensation plans. In addition, the covered individuals will receive three years of continued medical benefits and outplacement services. The contracts state that if any of the payments to the employees are considered ''excess parachute payments'' as defined in Section 280G of the Internal Revenue Code, then the Company will pay the penalty imposed upon the employee plus a tax gross-up. A "change of control" for purposes of the Transition Agreements includes the following events: (i) continuing directors no longer constitute at least two-thirds of the directors serving on the Board, (ii) any person or group becomes a beneficial owner of 20% or more of the Common Stock, (iii) the Company's Shareholders approve a merger involving the Company, the sale of substantially all of the Company's assets or the liquidation or dissolution of the Company, unless in the case of a merger continuing directors constitute at least two-thirds of the directors serving on the board of directors of the survivor of such merger, or (iv) at least two-thirds of the continuing directors in office immediately prior to a proposed action determine that the proposed action, if taken, would constitute a change of control of the Company and such action is taken. A continuing director is a director of the Company who was a director on a specified date (generally on or shortly prior to the date of the applicable transition agreement) or who was nominated or elected by two-thirds of the continuing directors (except in the case of an actual or threatened proxy or control contest). Certain executives, including Messrs. Bleustein, Ziemer and McCaslin and Ms. Lione, are entitled to receive a lump sum payment equal to one year's salary plus applicable taxes upon retirement at or after age 55. This benefit has been adopted by the Company in lieu of providing post-retirement life insurance. The Company has entered into a Supplemental Executive Retirement Plan Agreement with certain executives as described above under "Retirement Benefits." BOARD OF DIRECTORS HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Human Resources Committee is responsible for establishing, reviewing and revising the compensation policies for the Company's executive officers. The Human Resources Committee is composed entirely of directors who are not employees or former employees of the Company and who do not have a business relationship with the Company other than in their capacity as directors. This report is being included pursuant to Securities and Exchange Commission ("SEC") rules designed to enhance disclosure of public companies' executive compensation policies. This report addresses the Company's compensation policies for 2001 as they affected the Chief Executive Officer and the Company's other executive officers, including the other named executive officers. General Under the supervision of the Human Resources Committee, the Company has developed and implemented compensation policies, plans and programs that seek to attract and retain qualified and talented employees and enhance the profitability of the Company. In furtherance of these goals and in addition to benefit plans available to salaried employees generally, the Company's executive compensation policies, plans and programs consist of base salary, annual incentive compensation, annual stock option grants, annual perquisite payments, the Restoration Plan, the Supplemental Agreements, a non-qualified deferred compensation plan and life insurance benefits. 10 In addition to the experience and knowledge of the Human Resources Committee and the Company's Human Resources staff, the Human Resources Committee utilizes the services of independent human resources consultants in making its executive compensation decisions. Each year the Company's Human Resources staff selects several executive or other officer positions for benchmarking against comparable companies. The Human Resources staff and the independent human resources consultant(s) retained by the Company jointly select the comparable companies. The independent human resources consultant analyzes compensation summary data for the specified types of executive or officer positions at comparable companies and prepares a written analysis (collectively, the "Independent Compensation Analysis"). The Independent Compensation Analysis includes base salary (including the percentage increase over the prior year), annual bonus percentage and stock option information for the comparable companies by position. The Independent Compensation Analysis also recommends ranges for base salary, annual bonus and stock option compensation for the selected Company executive or officer positions. The comparable companies used to benchmark executive compensation are not included on the Performance Graph below because they change from year to year depending on both the Company's and other companies' performance. The purpose of the Performance Graph is to compare the performance of Common Stock over a five-year period against a stock index or a fixed group of companies. In contrast, the Company generally utilizes compensation surveys to compare its executive compensation policies against companies that have performance and other characteristics similar to those of the Company during a limited period of time. The Company believes that including such companies as a separate group on the Performance Graph would be confusing and potentially misleading. In general, it is the policy of the Human Resources Committee to fix executive base salary range midpoints at levels at or below the median amounts paid to executives with similar qualifications, experience and responsibilities at other comparable businesses. Executives' base salaries are determined by individual performance evaluations and potential future contributions to the Company. It is also the policy of the Human Resources Committee generally to establish maximum incentive cash compensation and stock option grants at levels above the median amounts paid or granted to executives with similar qualifications, experience and responsibilities at other comparable businesses. The Company intends to provide a total compensation opportunity for Company executives that is above average, but with an above average amount of the total compensation opportunity at risk and dependent upon continuously improving Company performance. In all cases, the Human Resources Committee considers the total potential compensation payable to each of the named executive officers and other executives when establishing or adjusting any element of their compensation package. 2001 Base Salary Executive base salaries are reviewed annually. In February 2001, the Human Resources Committee, in consultation with the Vice President, Human Resources, increased Mr. Bleustein's base salary by approximately 6%. Mr. Bleustein's salary was increased to be competitive with the median salary levels of chief executive officers as stated in the Independent Compensation Analysis and was based upon the Human Resources Committee's subjective assessment of Mr. Bleustein's past performance (including his leadership and his role in the financial performance of the Company) and its expectations for his future contribution in leading the Company. Also in February 2001, the Human Resources Committee reviewed, with the Chief Executive Officer and the Vice President, Human Resources, and approved the annual salary plan for the Company's other executive officers. The annual salary plan was developed by the Company's Human Resources staff under the direction of the Chief Executive Officer based primarily upon each executive's individual performance evaluation for the prior year, the anticipated future contribution of each executive and the Independent Compensation Analysis. 2001 base salaries for the named executive officers are set forth in the Summary Compensation Table. Based on the Independent Compensation Analysis, the Human Resources Committee believes that the base salaries paid to the Company's executive officers are generally at or below the median of base salaries paid to comparable executive officers of comparable companies. 11 2001 Incentive Cash Compensation The Company and its affiliates have four separate short term incentive plans in which executive officers participated for 2001: Messrs. Bleustein and Ziemer participated in the Company's Corporate Short Term Incentive Plan (the "Corporate STIP"); the other named executive officers, excluding Ms. Zarcone, and certain other executive officers participated in the Motor Company 2001 Short Term Incentive Plan (the "Motor Company STIP"); and Ms. Zarcone participated in the HDFS 2001 Short Term Incentive Compensation Plan ("HDFS STIP"). In December 2000, the Human Resources Committee reviewed and approved the Motor Company STIP for 2001 and target awards for participants in the Motor Company STIP. Also in December 2000, the Human Resources Committee established the performance target and target awards under the Corporate STIP for 2001 for participating executives. In December 2000, the Board of Directors of HDFS established performance targets and target awards under the HDFS STIP, and in February 2001, the Human Resources Committee reviewed and confirmed those performance targets and target awards. Award payouts under the Motor Company STIP were based upon Motor Company financial targets related to earnings before interest and taxes and Motor Company objectively measured strategic targets related to product quality and customer satisfaction. The resulting performance payout for 2001 under the Motor Company STIP was 225% of target award. Award payouts under the HDFS STIP were based on the percentage increase in net income and rate of return on equity. The mathematical formula would have provided a bonus of 355% of target award. However, the terms of the 2001 HDFS STIP limit the target award to a maximum of 200%. The However, the Human Resources Committee approved funding a one time discretionary bonus pool in the aggregate amount of $223,000 to certain HDFS executives based on the exemplary performance of HDFS in 2001. The target awards for the five named executive officers ranged from 50% to 100% of their respective 2001 base salaries (the "Individual Target Award"). Mr. Bleustein's Individual Target Award for 2001 was 100% of his base annual salary. The amount of each executive's Individual Target Award is reviewed annually based upon the Independent Compensation Analysis, the executive's individual performance evaluation for the prior year and the Human Resources Committee's appraisal of the executive's anticipated future contribution to the Company. The Human Resources Committee selected consolidated net income as the sole performance criterion for the 2001 Corporate STIP formula. This mathematical formula would have provided a bonus of 253% of the individual target award. The terms of the Corporate STIP, as modified by the Shareholders in May 1999, limit the total dollar payment to any one individual to $2 million per year. Under the terms of the Corporate STIP, the Human Resources Committee also has the discretion to reduce awards determined by the formula by up to 50%. Given these terms and limitations, the Human Resources Committee decided not to exercise its discretion and determined that Mr. Bleustein's actual 2001 Corporate STIP award would be $1,945,013. The awards for the other executive officers were determined mathematically, subject to certain maximum limitations, under the respective plans applicable to each of them, except for the additional discretionary bonuses paid to certain HDFS executives as described above. All short term incentive plan awards paid or payable for 2001 by the Company with respect to the CEO and the named executive officers are set forth in the Summary Compensation Table. 2001 Stock Option Grants While the short term incentive plans provide Company executives with short term incentives to maximize Company performance, the Human Resources Committee believes that it is also important to provide incentives that more directly tie executives' long term compensation to long term returns to the Company's Shareholders. This long term incentive compensation opportunity is provided through the Company's stock option plans. Annually, the Human Resources Committee reviews, with the Vice President, Human Resources and, except in the case of his own stock option grant, the Chief Executive Officer, and approves individual stock option grants for each of the Company's executive officers, including the named executive officers. The amount of each executive's stock option grant, including the grant to the Chief Executive Officer, is subjectively determined by the Human Resources Committee based upon the annual Independent Compensation Analysis, the executive's individual performance evaluation for the prior year, the executive's base salary and the Human Resources Committee's appraisal of the executive's anticipated long term future contribution to the Company. The stock options granted to the named executive officers in 2001 are set forth in the Summary Compensation and Option Grants Tables. 12 Other Compensation The Human Resources Committee believes that the compensation paid or payable pursuant to the Company's annual perquisite payments, Pension Benefit Restoration plan, supplemental agreements, non-qualified deferred compensation plan, life insurance benefits and the benefit plans available to salaried employees generally is competitive with the benefit packages offered by comparable employers. From time to time, the Company obtains data to ensure that such benefit plans and programs remain competitive and reviews that data with the Human Resources Committee. Internal Revenue Code Section 162(m) Section 162(m) of the Internal Revenue Code provides that a publicly held corporation will not be entitled to deduct for federal income tax purposes compensation paid to a named executive officer in excess of $1 million in any year. Incentive compensation based on company performance, provided it is paid pursuant to a plan which has been approved by Shareholders and meets certain other criteria, is not subject to Section 162(m). Compensation paid under the Company's stock option plans and the Corporate STIP qualifies as incentive compensation under Section 162(m). It is the Human Resources Committee's intention to utilize incentive compensation as a substantial component of the Company's executive compensation program and to attempt to structure the payment of compensation so that the Company will not lose deductions under Section 162(m). There is a substantial likelihood, however, that the Company will not be entitled to deduct a substantial portion of the compensation arising out of the vesting of the restricted stock granted to Mr. McCaslin prior to 2001. This grant of restricted stock was not structured as incentive compensation under Section 162(m). Conclusion Over the last five calendar years, Shareholders of the Company have enjoyed a total return of approximately 370%. During that same period of time the Standard & Poor's 500 and MidCap 400 Indexes had total returns of 66% and 110%, respectively, as illustrated in the performance graph below. The Human Resources Committee believes that the compensation policies and practices of the Company described in this report have supported this performance. In addition, the Human Resources Committee believes that these compensation policies and practices are in the best interests of the Company and consistent with the Company's commitment to balance the interests of all of the Company's stakeholders (customers, dealers, suppliers, employees, investors, government and society). Richard G. LeFauve, Chairman Barry K. Allen Richard J. Hermon-Taylor 13 Performance Graph The SEC requires the Company to include in this Proxy Statement a line graph presentation comparing cumulative five year Common Stock returns with a broad-based stock index and either a nationally recognized industry index or an index of peer companies selected by the Company. The Company has chosen to use the Standard & Poor's 500 Index as the broad-based index and the Standard & Poor's MidCap 400 Index as a more specific comparison. The Standard & Poor's MidCap 400 Index was chosen because the Company does not believe that any other published industry or line-of-business index adequately represents the current operations of the Company or that it can identify a peer group that provides a useful comparison. PERFORMANCE GRAPH Comparison of Five Year Cumulative Total Return* [CHART] Harley Davidson, Inc. S&P MidCap 400 S&P 500 1996 100 100 100 1997 117 132 133 1998 204 157 171 1999 276 181 208 2000 344 212 189 2001 470 209 164
1996 1997 1998 1999 2000 2001 --------------------------------------------------- Harley-Davidson, Inc. $100 $117 $204 $276 $343 $470 --------------------------------------------------- S&P MidCap 400 $100 $132 $157 $181 $212 $210 --------------------------------------------------- S&P 500 $100 $133 $171 $208 $189 $166 ---------------------------------------------------
- -------- * Assumes $100 invested on December 31, 1996. 14 CERTAIN TRANSACTIONS Mr. James, a director of the Company, is Vice Chairman, Chief Executive Officer and an equity owner of Fred Deeley Imports Ltd. (''Deeley Imports''), the exclusive distributor of the Company's motorcycles in Canada. In 2001, Deeley Imports paid the Company approximately $96.9 million for motorcycles, parts and accessories and related products and services. All such products and services were provided in the ordinary course of business at prices and on terms and conditions determined through arm's-length negotiation. The Company anticipates that it will do a similar amount of business with Deeley Imports in 2002. Ms. Lione is married to a partner in the law firm of Foley & Lardner. That firm has performed legal services for the Company for many years predating Ms. Lione's employment at the Company and her spouse's election to partnership in 2000. In 2001, the Company paid Foley & Lardner approximately $2 million for legal services. Such services are principally in areas other than the spouse's area of specialty. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Under Section 16(a) of the Securities Exchange Act of 1934, the Company's directors and executive officers are required to disclose their holdings of and transactions in the Common Stock on forms prescribed by the Securities and Exchange Commission. Based on forms such persons filed with the Securities and Exchange Commission, the Company believes that all of the Company's directors and executive officers complied with their obligations under Section 16(a) during 2001. 2--RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS Ernst & Young LLP, independent public accountants, audited the Company's consolidated financial statements for the fiscal year ended December 31, 2001. Ernst & Young LLP has been recommended by the Audit Committee and selected by the Board to serve as the Company's independent auditors for the current fiscal year, and in accordance with a resolution of the Board, this selection is being presented to Shareholders for ratification. The Audit Committee has considered whether the provision of nonaudit services is compatible with maintaining Ernst & Young LLP's independence. Representatives of Ernst & Young LLP will be present at the Annual Meeting to respond to appropriate questions and to make a statement, if they so desire. If prior to the Annual Meeting Ernst & Young LLP shall decline to act or its engagement shall be otherwise discontinued by the Board, then the Board will appoint other independent auditors whose engagement for any period subsequent to the Annual Meeting will be subject to ratification by the Shareholders at the Annual Meeting. If the Shareholders fail to ratify the engagement of Ernst & Young LLP at the Annual Meeting, then the Board will reconsider its selection of independent auditors. Proxies solicited by the Board will be voted ''FOR'' ratification of the selection of Ernst & Young LLP as the independent auditors of the Company for the fiscal year ending December 31, 2002, unless the Shareholder specifies otherwise. Fees Audit Fees: Fees for the last annual audit and reviews of financial statements included in the Company's Form 10-K and Forms 10-Q were $680,000. All Other Fees: The aggregate fees for other services that Ernst & Young LLP rendered in 2001 were $1,497,000, including audit related services of $821,000 and nonaudit services of $676,000. Audit related services generally include fees for pension and statutory audits, accounting consultations, business risk services and Securities and Exchange Commission registration statements. There were no fees for financial information systems design and implementation. THE BOARD RECOMMENDS A VOTE ''FOR'' RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS. 15 3--OTHER MATTERS Neither the Board of Directors nor management intends to bring before the Annual Meeting any matters other than those referred to in the Notice of Annual Meeting and this Proxy Statement. If any other matters shall properly come before the Annual Meeting, it is the intention of the persons named in the proxy forms to vote the shares represented by each such proxy in accordance with their judgment on such matters. Among other things, to bring business before an annual meeting, a Shareholder must give written notice thereof to the Secretary of the Company in advance of the meeting in compliance with the terms and within the time periods specified in the Company's Restated Articles of Incorporation (See ''Shareholder Proposals''). The cost of soliciting proxies will be borne by the Company, except for some costs associated with individual shareholder use of the Internet and telephone. Proxies may be solicited by personal interview, Internet, telephone, telegraph and facsimile machine, as well as by use of the mails. It is anticipated that banks, brokerage houses and other custodians, nominees or fiduciaries will be requested to forward soliciting materials to their principals and to obtain authorization for the execution of proxies and that they will be reimbursed for their out-of-pocket expenses incurred in that connection. Employees of the Company participating in the solicitation of proxies will not receive any additional remuneration. The Company has retained D. F. King & Co., Inc. to aid in the solicitation at an estimated cost of approximately $6,000 plus out-of-pocket expenses. AUDIT COMMITTEE REPORT The Audit Committee of the Board of Directors reviews the Company's financial reporting process, the system of internal control, the audit process and the process for monitoring compliance with laws and regulations. All of the Audit Committee members are independent as defined in the New York Stock Exchange's listing standard. The Board of Directors approved and adopted a revised written charter for the Company's Audit Committee on February 17, 2000. The Audit Committee of the Board has reviewed and discussed with management the audited financial statements of the Company for the 2001 fiscal year and has discussed with representatives of Ernst & Young LLP, the Company's independent auditors for the 2001 fiscal year, the matters required to be discussed by Statement on Auditing Standards No. 61, as currently in effect. The Audit Committee has received the written disclosures and the letter from the independent auditors required by Independence Standards Board Standard No. 1, as currently in effect, and has discussed with representatives of Ernst & Young LLP the independence of Ernst & Young LLP. Based on the review and discussions referred to above, the Audit Committee has recommended to the Board of Directors that the audited financial statements for the 2001 fiscal year be included in the Company's Annual Report on Form 10-K for the 2001 fiscal year for filing with the Securities and Exchange Commission. Audit Committee of the Board of Directors Richard I. Beattie Sara L. Levinson James A. Norling, Chairman SHAREHOLDER PROPOSALS If a shareholder intends to present a proposal at the 2003 Annual Meeting of Shareholders and desires to seek to have the Company include that proposal in the Company's proxy materials for that meeting pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 (''Rule 14a-8''), then the shareholder must ensure that the Company receives the proposal no later than November 26, 2002. 16 A Shareholder who otherwise intends to present business at the 2003 Annual Meeting must comply with the requirements set forth in the Company's Restated Articles of Incorporation (the ''Articles of Incorporation''). The Articles of Incorporation state, among other things, that to bring business before an annual meeting, a Shareholder must give written notice that complies with the Articles of Incorporation to the Secretary of the Company not less than 60 days in advance of the date in the current fiscal year of the Company corresponding to the date the Company released its proxy statement to Shareholders in connection with the annual meeting for the immediately preceding year. Thus, since the Company anticipates mailing its proxy statement on March 25, 2002, the Company must receive notice of a Shareholder proposal submitted other than pursuant to Rule 14a-8 by January 24, 2003. If the notice is received after January 24, 2003, then the notice will be considered untimely and the Company is not required to present such proposal at the 2003 Annual Meeting. If the Board chooses to present a proposal submitted other than pursuant to Rule 14a-8 at the 2003 Annual Meeting, then the persons named in the proxies solicited by the Board for the 2003 Annual Meeting may exercise discretionary voting power with respect to such proposal. DELIVERY OF PROXY MATERIALS TO HOUSEHOLDS The Securities and Exchange Commission recently implemented new rules regarding the delivery of annual reports and proxy statements to households. This new method of delivery, often referred to as "householding," permits the Company to mail a single set of proxy materials to any household in which two or more different shareholders reside and are members of the same household or in which one shareholder has multiple accounts. The Company did not household materials for the 2002 Annual Meeting. If the Company households materials for future meetings, then only one copy of the Company's annual report and proxy statement will be sent to multiple shareholders of the Company who share the same address and last name, unless the Company has received contrary instructions from one or more of those shareholders. In addition, the Company has been notified that certain intermediaries (i.e., brokers or banks) will household proxy materials for the 2002 Annual Meeting. For voting purposes, a separate proxy card will be included for each account at the shared address. The Company will deliver promptly, upon oral or written request, a separate copy of the annual report and proxy statement to any shareholder at the same address. If you wish to receive a separate copy of the annual report and proxy statement, then you may contact the Company's Investor Services (a) by mail at Harley-Davidson, Inc., 3700 West Juneau Avenue, Milwaukee, Wisconsin 53208, (b) by telephone at 877-HDSTOCK (toll-free) or (c) by e-mail at investor.relations@harley-davidson.com. You can also contact your broker or bank to make a similar request. Shareholders sharing an address who now receive multiple copies of the Company's annual report and proxy statement may request delivery of a single copy by contacting the Company as indicated above, or by contacting their broker or bank, provided they have determined to household proxy materials. By Order of the Board of Directors, Harley-Davidson, Inc. /s/ Gail A. Lione Gail A. Lione Secretary Milwaukee, Wisconsin March 25, 2002 17 + [LOGO] [BAR CODE] MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Use a black pen. Print in CAPITAL letters inside the grey areas as shown in this example. [A B C] [1 2 3] [X] CONTROL NUMBER 000000 0000000000 0 0000 000000000.000 ext 000000000.000 ext 000000000.000 ext 000000000.000 ext 000000000.000 ext 000000000.000 ext 000000000.000 ext Holder Account Number C 1234567890 J N T [BAR CODE] [_] Mark this box with an X if you have made changes to your name or address details above. ================================================================================ Annual Meeting Proxy Card ================================================================================ [A] Election of Directors PLEASE REFER TO THE REVERSE SIDE FOR INTERNET AND TELEPHONE VOTING INSTRUCTIONS. The Board of Directors recommends a vote FOR the listed nominees. For Withhold 01 - Sara L. Levinson [_] [_] 02 - George H. Conrades [_] [_] [B] Issues The Board of Directors recommends a vote FOR the following resolution. For Against Abstain 2. Ratification of Ernst & Young LLP as auditors. [_] [_] [_] C Authorized Signatures - Sign Here - This section must be completed for your instructions to be executed. IMPORTANT: Please sign your name exactly as it appears on this Proxy. Joint owners should each sign personally. A corporation should sign in full corporate name by duly authorized officers. When signing as attorney, executor, administrator, trustee or guardian please give your full title as such. Signature 1 Signature 2 Date (dd/mm/yyyy) [____________] [_______________] [______________] A5551 1 U P X + ================================================================================ Proxy - Harley-Davidson, Inc. ================================================================================ PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR MAY 4, 2002 ANNUAL MEETING OF SHAREHOLDERS The undersigned appoints Jeffrey L. Bleustein and James L. Ziemer and each of them as proxies for the undersigned, with full power of substitution and resubstitution, to act and vote all the shares of Common Stock of Harley-Davidson, Inc. held of record by the undersigned on March 13, 2002 at the Annual Meeting of Shareholders of HARLEY-DAVIDSON, INC. to be held on May 4, 2002 and at any adjournment or postponement thereof (the "Meeting"). Without limiting the generality of this proxy, Messrs. Bleustein and Ziemer are each authorized to vote: (a) as specified upon the proposals listed hereon and described in the Proxy Statement for the Meeting; and (b) in their discretion upon any other matter that may properly come before the Meeting. The Board of Directors recommends a vote FOR the nominees as directors (Item 1.) and ratification of Ernst & Young LLP as auditors (Item 2.). The shares represented by this Proxy shall be voted as specified. If no specification is made, the shares shall be voted as recommended by the Board of Directors. PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY USING THE ENVELOPE PROVIDED. NOW YOU CAN VOTE YOUR SHARES BY TELEPHONE OR INTERNET! QUICK * EASY * IMMEDIATE * AVAILABLE 24 HOURS A DAY * 7 DAYS A WEEK Harley-Davidson, Inc. encourages you to take advantage of the new and convenient ways to vote your shares. If voting by proxy, this year you may vote by mail, or choose one of the two methods described below. Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed, and returned your proxy card. To vote by telephone or Internet, read the accompanying proxy statement, then follow these easy steps: TO VOTE BY PHONE: . Call toll free 1-877-482-6150 any time on a touch tone telephone. There is NO CHARGE to you for the call. . Enter the 6-digit Control Number located on the other side of this card. Option #1: To vote as the Board of Directors recommends on ALL proposals: Press 1 Option #2: If you choose to vote on each proposal separately, press 0 and follow the simple recorded instructions. TO VOTE BY INTERNET: . Go to the following web site: www.computershare.com/us/proxy . Enter the information requested on your computer screen, including your 6-digit Control Number located on the other side of this card. . Follow the simple instructions on the screen. IF YOU VOTE BY TELEPHONE OR THE INTERNET, DO NOT MAIL BACK THE PROXY CARD. PROXIES SUBMITTED BY TELEPHONE OR THE INTERNET MUST BE RECEIVED BY 12:00 MIDNIGHT, CENTRAL DAYLIGHT TIME, ON MAY 2, 2002. IF YOU ELECT TO VOTE BY MAIL, PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. THANK YOU FOR VOTING! -----END PRIVACY-ENHANCED MESSAGE-----