Polaris 2008 Annual Report Download - page 65

been or will be made under such plans. A maximum of 1,750,000 shares of common stock are available for issuance
under the Omnibus Plan, together with additional shares cancelled or forfeited under the Prior Plans.
Stock option awards granted to date under the Omnibus Plan generally vest three years from the award date and
expire after ten years. In addition, the Company has granted a total of 20,000 deferred stock units to its non-
employee directors under the Omnibus Plan since 2007, which will be converted into common stock when the
director’s board service ends or upon a change in control. Restricted shares awarded under the Omnibus Plan to date
generally contain restrictions which lapse after a three year period if Polaris achieves certain performance measures.
Polaris maintains the Option Plan under which incentive and nonqualified stock options for a maximum of
8,200,000 shares of common stock could be issued to certain employees. Options granted to date generally vest
three years from the award date and expire after ten years. The Option plan was frozen upon adoption of the
Omnibus Plan in 2007.
Polaris maintains the Broad Based Plan under which incentive stock options for a maximum of 700,000 shares
of common stock could be issued to substantially all Polaris employees. Options with respect to 675,400 shares of
common stock were granted under this plan during 1999 at an exercise price of $15.78 and of the options initially
granted under the Broad Based Plan, an aggregate of 518,400 vested in March 2002. These options expire in 2009.
The Broad Based Plan was frozen upon adoption of the Omnibus Plan in 2007.
Polaris maintains the Restricted Plan under which a maximum of 2,350,000 shares of common stock could be
awarded as an incentive to certain employees with no cash payments required from the recipient. The majority of
the outstanding awards contain restrictions which lapse after a two to four year period if Polaris achieves certain
performance measures. The Restricted Plan was frozen upon adoption of the Omnibus Plan in 2007.
Polaris maintains a nonqualified deferred compensation plan (“Director Plan”) under which members of the
Board of Directors who are not Polaris officers or employees receive annual grants of common stock equivalents
and may also elect to receive additional common stock equivalents in lieu of director’s fees, which will be converted
into common stock when board service ends. A maximum of 200,000 shares of common stock has been authorized
under this plan of which 102,715 equivalents have been earned and an additional 69,015 shares have been issued to
retired directors as of December 31, 2008. As of December 31, 2008 and 2007, Polaris’ liability under the plan
totaled $2,943,000 and $4,002,000, respectively.
Polaris maintains the Director Stock Option Plan under which nonqualified stock options for a maximum of
200,000 shares of common stock could be issued to non-employee directors. Each non-employee director as of the
date of the annual shareholders meetings through 2006 was granted an option to purchase 4,000 shares of common
stock at a price per share equal to the fair market value as of the date of grant. Options become exercisable as of the
date of the next annual shareholders meeting following the date of grant and must be exercised no later than 10 years
from the date of grant. The Director Stock Option Plan was frozen upon adoption of the Omnibus Plan in 2007.
Polaris maintains a long term incentive plan (“LTIP”) under which awards are issued to provide incentives for
certain employees to attain and maintain the highest standards of performance and to attract and retain employees of
outstanding competence and ability with no cash payments required from the recipient. The awards are paid in cash
and are based on certain Company performance measures that are measured over a period of three consecutive
calendar years. At the beginning of the plan cycle participants have the option to receive a cash value at the time of
awards or a cash value tied to Polaris stock price movement over the three year plan cycle. At December 31, 2008
and 2007, Polaris’ liability under the plan totaled $1,268,000, and $2,722,000, respectively.
Share-Based Compensation Expense
The amount of compensation cost for share-based awards to be recognized during a period is based on the
portion of the awards that are ultimately expected to vest. The Company estimates option forfeitures at the time of
grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The
Company analyzes historical data to estimate pre-vesting forfeitures and records share compensation expense for
those awards expected to vest. During 2006 it was determined that the likelihood of the Company’s performance
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POLARIS INDUSTRIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)