This excerpt taken from the HOG DEF 14A filed Mar 30, 2006.
2005 Stock Option and Restricted Stock Grants
While the short term incentive plans motivate Company employees, including executives, to maximize Company performance on an annual basis, the Human Resources Committee believes that it is also important to reward employees for shareholder value creation and to align the interests of shareholders and employees. In addition, the Human Resources Committee believes that stock-based incentives provide a valuable tool to retain and attract key employees. This long term incentive compensation opportunity has been provided through the Companys 2004 Incentive Stock Plan. This plan was approved by shareholders in 2004 and is designed with maximum flexibility to grant stock options, stock appreciation rights, performance-based equity awards, restricted stock or other equity vehicles, while maintaining limits that attempt to ensure shareholder dilution levels that continue to remain at or below those of comparable companies.
The Human Resources Committee reviews, with the Vice President, Human Resources and, except in the case of his own stock awards, the Chief Executive Officer, and has approved a combination of both stock options and restricted stock for individuals based on a formula calculation for each of the executives, including the named executive officers and approximately 480 other employees. The amount of each executives stock option and restricted stock grants is determined based upon the executives individual performance evaluation for the prior year, the executives base salary and an appraisal of the executives anticipated long term future contribution to the Company. The amount of the Chief Executive Officers stock option and restricted stock grant is subjectively determined by the Human Resources Committee based upon the same criteria as set forth in the preceding sentence with information provided in the Independent Compensation Analysis. The stock options and restricted stock granted to the Chief Executive Officer and named executive officers in 2005 are set forth in the Summary Compensation and Option Grants Tables.