Polaris 2005 Annual Report Download - page 8

POLARIS INDUSTRIES INC.4
A LETTER FROM THE CHAIRMAN
Gregory R. Palen – Chairman
During the past year, Polaris management implemented a number
of major initiatives that will have lasting impact on the Company. The
Board was fully supportive of these efforts geared toward achieving
the vision to be a $3 billion company and expand the net margins to
9 percent:
Leadership development and succession. As Polaris grows and becomes
more global, it’s essential to ensure the Company is developing a
strong team of leaders. The Board and Compensation Committee
periodically review management depth, the leadership development
process and compensation with the Chief Executive Officer, and
make recommendations for longer-term succession planning.
In 2005, we restored the office of President and Chief Operating
Officer, appointing Bennett Morgan, an 18-year Polaris veteran
who had been vice president and general manager of the ATV division.
This move enabled Tom Tiller to focus on the KTM partnership
implementation and other strategic initiatives, without losing sight
of operational performance. Just as important, we backfilled the
key openings this change created by promoting internal talent.
Seizing growth opportunities. Our five-year plan calls for carefully
selecting big ideas that create or transform a market and expand our
international presence. In 2005, we made great strides in both areas
with the completion of the first phase of the KTM partnership. Although
Company management recommends and carries out acquisitions and
partnerships, the entire Board plays an active role in reviewing such
strategic opportunities. We have the utmost respect for the brand
equity KTM has built, in terms of performance, durability and racing
prowess in the motorcycle industry. We feel the partnership is a very
solid first step in helping Polaris become more global and seizing
international opportunities for both companies.
Reducing cost while improving quality and productivity. This is an
ongoing effort at Polaris that has resulted in several noteworthy
achievements in 2005. ATV quality improved 23 percent over 2004
and Victory was named number one in quality among worldwide
motorcycle manufacturers by an independent ranking organization.
Management, along with the Board’s support, will continue to
focus aggressively on these areas in the coming years.
Strategic investment. Management and the Board recognized that
product innovation and technology are the heart of the company.
To ensure they remain competitive advantages, Polaris opened a
dedicated Product Development Center in April 2005. This represents
the largest single capital investment in company history and lays the
groundwork for us to control our destiny by developing innovative
power train and emission systems. Through its Technology Committee,
the Board provides oversight of product and technology investment
plans — including major product and facility changes — to ensure
that we bring our customers products they love and address regulatory
and competitive challenges across all our product lines.
In addition, the Board provided oversight in two important areas:
Board governance. The Corporate Governance and Nominating
Committee ensures that the Board and its committees effectively
exercise our role in the governance of the Company. In 2005, we
expanded our Board membership in size, powersports experience and
global perspective with the appointment of Stefan Pierer, managing
director of KTM Power Sports AG. Stefan brings extraordinary talent
and is a passionate leader who has guided KTM for over 14 successful
years. He will serve as a member on the Technology Committee and
will stand for re-election to the Polaris Board of Directors at the
2006 Annual Meeting of Shareholders.
Compliance and business integrity. Business integrity is fundamental
to preserving any company’s value. Polaris has a strong tradition of
ethical business conduct and financial transparency. The Board pays
close attention to ensuring that we fulfill our fiduciary responsibilities
to Polaris and it shareholders and, in doing so, provide the oversight
necessary to be confident that Polaris continues to act as a responsible
corporate citizen in compliance with applicable regulatory standards.
We are particularly proud of the efforts of the entire Polaris team
in creating the type of environment that permits me to report that,
once again, we have satisfied the requirements of Section 404 of
Sarbannes-Oxley Act as evidenced by the unqualified opinions of both
management and the independent registered public accounting firm
relating to the assessment of the effectiveness of internal controls
over financial reporting. Polaris has in the past, and will continue in
the future, to emphasize complete, accurate and transparent financial
statements and disclosures so that investors can understand the
Company’s operations and have confidence in the direction of the
Board and management.
Overall, the Board met eight times in 2005, with the Audit
Committee and Compensation Committee each meeting eight times;
the Corporate Governance and Nominating Committee, once; and
the Technology Committee, three times. Each of our Directors
attended over 75 percent of Board meetings and any committees
on which they served in 2005.
On behalf of the entire Board, we thank all Polaris employees for
their commitment to integrity and excellence, and all shareholders for
their continued confidence.
Gregory R. Palen – Chairman