Harley Davidson 2012 Annual Report Download - page 95

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connection with the vesting of restricted stock awards. The remaining repurchases were made pursuant to the following
authorizations (in millions of shares):
Shares Repurchased Authorization Remaining
at December 31, 2012
Board of Directors’ Authorization 2012 2011 2010
1997 Authorization 4.3 6.2 0.1 —
2007 Authorization 2.2 — — 14.5
Total 6.5 6.2 0.1 14.5
1997 Authorization – The Company has an authorization from its Board of Directors (originally adopted December 1997)
to repurchase shares of its outstanding common stock under which the cumulative number of shares repurchased, at the time of
any repurchase, shall not exceed the sum of (1) the number of shares issued in connection with the exercise of stock options
occurring on or after January 1, 2004, plus (2) 1% of the issued and outstanding common stock of the Company on January 1 of
the current year, adjusted for any stock split. There were no shares available under this authorization at December 31, 2012.
2007 Authorization – In December 2007, the Company’s Board of Directors separately authorized the Company to buy
back up to 20.0 million shares of its common stock with no dollar limit or expiration date. There are 14.5 million shares
remaining under this authorization at December 31, 2012.
Preferred Stock:
The Company is authorized to issue 2,000,000 shares of preferred stock of $1.00 par value, none of which is outstanding.
18. Share-Based Awards
The Company has a share-based compensation plan which was approved by its Shareholders in April 2009 (Plan) under
which the Board of Directors may grant to employees share-based awards including nonqualified stock options, stock
appreciation rights (SARs), shares of restricted stock and restricted stock units (RSUs). The options and SARs granted under
the Plan have an exercise price equal to the fair market value of the underlying stock at the date of grant and, prior to 2010,
generally vested ratably over a four-year period with the first 25% becoming exercisable one year after the date of grant.
Beginning with awards granted in 2010, options and SARs granted under the Plan will vest ratably over a three-year period
with the first one-third of the grant becoming exercisable one year after the date of grant. The options and SARs expire 10
years from the date of grant. Shares of restricted stock and RSUs that were issued under the Plan prior to 2010 generally vested
over periods ranging from 2 to 5 years with certain of the shares and RSUs subject to accelerated vesting should the Company
meet certain performance conditions. Beginning with awards granted in 2010, shares of restricted stock and RSUs granted
under the Plan vest ratably over a three-year period with the first one-third of the grant vesting one year after the date of grant.
Dividends are paid on shares of restricted stock and dividend equivalents are paid on RSUs. At December 31, 2012, there were
12.1 million shares of common stock available for future awards under the Plan.
Stock Options:
The Company estimates the grant date fair value of its option awards granted using a lattice-based option valuation
model. The Company believes that the lattice-based option valuation model provides a more precise estimate of fair value than
the Black-Scholes option pricing model. Lattice-based option valuation models utilize ranges of assumptions over the expected
term of the options. The Company uses a weighted-average of implied and historical volatility to determine the expected
volatility of its stock. The Company uses historical data to estimate option exercise and employee termination within the
valuation model. The expected term of options granted is derived from the output of the option valuation model and represents
the average period of time that options granted are expected to be outstanding. The risk-free rate for periods within the
contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.