EX-10.1








    EXHIBIT 10.1



 




    POLARIS
    INDUSTRIES INC.

    DEFERRED COMPENSATION PLAN FOR DIRECTORS



 



    Section 1.  
    INTRODUCTION



 



    1.1 ESTABLISHMENT.  Polaris Industries
    Inc., a Minnesota corporation (the “Company”), hereby
    establishes the Polaris Industries Inc. Deferred Compensation
    Plan for Directors (the “Plan”) for those directors of
    the Company who are neither officers nor employees of the
    Company. The Plan provides (i) for the grant of awards in
    the form of Common Stock Equivalents to Directors and
    (ii) the opportunity for Directors to defer receipt of all
    or a part of their cash compensation and thereby be credited
    with additional Common Stock Equivalents.



 



    1.2 PURPOSES.  The purposes of the Plan
    are to align the interests of Directors more closely with the
    interests of other shareholders of the Company, to encourage the
    highest level of Director performance by providing the Directors
    with a direct interest in the Company’s attainment of its
    financial goals, and to provide a financial incentive that will
    help attract and retain the most qualified Directors.



 



    1.3 EFFECTIVE DATE.  This Plan was
    originally effective as of January 26, 1995, the date of
    its initial approval by the Board of Directors and amended and
    restated effective as of January 1, 2008. The Plan was
    further amended and restated by the Board of Directors as of
    January 22, 2009.



 



    Section 2.  
    DEFINITIONS



 



    2.1 DEFINITIONS.  The following terms
    shall have the meanings set forth below:



 



    (a) “Board” means the Board of Directors
    of the Company.



 



    (b) “Change in Control” means any of the
    events set forth below:



 



    (i) The acquisition in one or more transactions, other than
    from the Company, by any individual, entity or group (within the
    meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act
    of beneficial ownership (within the meaning of
    Rule 13d-3
    promulgated under the Exchange Act) of a number of voting
    securities of the Company in excess of 30% of the voting
    securities of the Company unless such acquisition has been
    approved by the Board; or



 



    (ii) Any election has occurred of persons to the Board that
    causes two-thirds of the Board to consist of persons other than
    (A) persons who were members of the Board on the effective
    date of the Plan and (B) persons who were nominated for
    elections as members of the Board at a time when two-thirds of
    the Board consisted of persons who were members of the Board on
    the effective date of the Plan; provided, however, that any
    person nominated for election by a Board at least two-thirds of
    whom constituted persons described in clauses (A)
    and/or
    (B) or by persons who were themselves nominated by such
    Board shall, for this purpose, be deemed to have been nominated
    by a Board composed of persons described in clause (A); or



 



    (iii) Approval by the shareholders of the Company of a
    reorganization, merger or consolidation, unless, following such
    reorganization, merger or consolidation, all or substantially
    all of the individuals and entities who were the respective
    beneficial owners of the voting securities of the Company
    immediately prior to such reorganization, merger or
    consolidation, following such reorganization, merger or
    consolidation beneficially own, directly or indirectly, more
    than 60% of the combined voting power of the then outstanding
    voting securities entitled to vote generally in the election of
    directors of the entity resulting from such reorganization,
    merger or consolidation in substantially the same proportion as
    their ownership of the voting securities of the Company
    immediately prior to such reorganization, merger or
    consolidation, as the case may be; or



 



    (iv) A sale or other disposition of all or substantially
    all the assets of the Company.



 



    Notwithstanding the foregoing, no event will constitute a Change
    in Control unless such event is a change in the ownership or
    effective control of the corporation, or in the ownership of a
    substantial




    

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    portion of the assets of the Corporation within the meaning of
    Section 409A(2)(A)(v) of the Code and the regulations
    thereunder.



 



    (c) “Committee” means the Compensation
    Committee of the Board of Directors of the Company or such other
    committee of the Board as the Board may designate.



 



    (d) “Common Stock Equivalent” means a
    hypothetical share of Stock which shall have a value on any date
    equal to the Fair Market Value of one share of Stock on that
    date.



 



    (e) “Common Stock Equivalent Award” means
    an award of Common Stock Equivalents granted to a Director
    pursuant to Section 5.1 of the Plan.



 



    (f) “Deferred Stock Account” means the
    bookkeeping account established by the Company in respect to
    each Director pursuant to Section 5.4 hereof and to which
    shall be credited Common Stock Equivalents pursuant to the Plan.



 



    (g) “Director” means a member of the Board
    who is neither an officer nor an employee of the Company. For
    purposes of the Plan, an employee is an individual whose wages
    are subject to the withholding of federal income tax under
    section 3401 of the Internal Revenue Code, and an officer
    is an individual elected or appointed by the Board or chosen in
    such other manner as may be prescribed in the Bylaws of the
    Company to serve as such.



 



    (h) “Exchange Act” means the Securities
    Exchange Act of 1934, as amended from time to time.



 



    (i) “Fair Market Value” means as of any
    applicable date: (i) if the Stock is listed on a national
    securities exchange or is authorized for quotation on the
    National Association of Securities Dealers Inc.’s NASDAQ
    National Market System (“NASDAQ/NMS”), the closing
    price, regular way, of the Stock on such exchange or NASDAQ/NMS,
    as the case may be, or if no such reported sale of the Stock
    shall have occurred on such date, on the next preceding date on
    which there was such a reported sale; or (ii) if the Stock
    is not listed for trading on a national securities exchange or
    authorized for quotation on NASDAQ/NMS, the closing bid price as
    reported by the National Association of Securities Dealers
    Automated Quotation System (“NASDAQ”), or if no such
    prices shall have been so reported for such date, on the next
    preceding date for which such prices were so reported; or
    (iii) if the Stock is not listed for trading on a national
    securities exchange or authorized for quotation on NASDAQ, the
    last reported bid price published in the “pink sheets”
    or displayed on the NASD Electronic Bulletin Board, as the
    case may be; or (iv) if the Stock is not listed for trading
    on a national securities exchange, or is not authorized for
    quotation on the NASD Electronic Bulletin Board, the Fair
    Market Value of the Stock as determined in good faith by the
    Committee.



 



    (j) “Internal Revenue Code” means the
    Internal Revenue Code of 1986, as amended from time to time.



 



    (k) “Stock” means the $.01 par value
    common stock of the Company.



 



    (l) “Quarterly Payment Date” means each of
    the four dates each year on which the Company pays retainer fees
    to Directors.



 



    2.2 GENDER AND NUMBER.  Except when
    otherwise indicated by the context, the masculine gender shall
    also include the feminine gender, and the definitions of any
    term herein in the singular shall also include the plural.



 



    Section 3.  PLAN
    ADMINISTRATION



 



    The Plan shall be administered by the Committee. Subject to the
    limitations of the Plan, the Committee shall have the sole and
    complete authority: (i) to impose such limitations,
    restrictions and conditions upon such awards as it shall deem
    appropriate, (ii) to interpret the Plan and to adopt, amend
    and rescind administrative guidelines and other rules and
    regulations relating to the Plan and (iii) to make all
    other determinations and to take all other actions necessary or
    advisable for the implementation and administration of the Plan.
    Notwithstanding the foregoing, the Committee shall have no
    authority, discretion or power to select the Directors who will
    receive awards pursuant to the Plan, determine the awards to be
    granted pursuant to the Plan, the number of shares of Stock to
    be issued thereunder or the time at which such awards are to be
    granted, established the duration and nature of awards or alter
    any other terms or conditions specified in the Plan, except in
    the sense of administering the Plan subject to the




    

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    provisions of the Plan. The determinations of the Committee on
    matters within its authority shall be conclusive and binding
    upon the Company and other persons. The Committee may delegate
    such of its powers and authority under the Plan as it deems
    appropriate to designated officers or employees of the Company.
    The Plan shall be interpreted and implemented in a manner so
    that Directors will not fail, by reason of the Plan or its
    implementation, to be “disinterested persons” within
    the meaning of
    Rule 16b-3
    under Section 16 of the Exchange Act, as such rule may be
    amended.



 



    SECTION 4.  STOCK
    SUBJECT TO THE PLAN



 



    4.1 NUMBER OF SHARES.  There shall be
    authorized for issuance under the Plan in accordance with the
    provisions of the Plan 250,000 shares of Stock. This
    authorization may be increased from time to time by approval of
    the Board and by the shareholders of the Company if such
    shareholder approval is required. The Company shall at all times
    during the term of the Plan retain as authorized and unissued
    Stock at least the number of shares from time to time required
    under the provisions of the Plan, or otherwise assure itself of
    its ability to perform its obligations hereunder. The shares of
    Stock issuable hereunder shall be authorized and unissued shares
    or previously issued and outstanding shares of Common Stock
    reacquired by the Company.



 



    4.2 OTHER SHARES OF STOCK.  Any shares of
    Stock that are subject to a Common Stock Equivalent and for any
    reason are not issued to a Director shall automatically become
    available again for use under the Plan.



 



    4.3 ADJUSTMENTS UPON CHANGES IN STOCK.  If
    there shall be any change in the Stock of the Company, through
    merger, consolidation, reorganization, recapitalization, stock
    dividend, stock split, spinoff, split up, dividend in kind or
    other change in the corporate structure or distribution to the
    shareholders, appropriate adjustments shall be made by the
    Committee (or if the Company is not the surviving corporation in
    any such transaction, the board of directors of the surviving
    corporation) in the aggregate number and kind of shares subject
    to the Plan, and the number and kind of shares which may be
    issued under the Plan. Appropriate adjustments may also be made
    by the Committee in the terms of Common Stock Equivalents under
    the Plan to reflect such changes and to modify any other terms
    of outstanding awards on an equitable basis as the Committee in
    its discretion determines.



 



    Section 5.  COMMON
    STOCK EQUIVALENT AWARDS



 



    5.1 GRANTS OF COMMON STOCK EQUIVALENT
    AWARDS.  Common Stock Equivalents having a Fair
    Market Value on the date of grant equal to $1,250 shall be
    granted automatically, as of each Quarterly Payment Date, to
    each Director who is entitled to receive a retainer fee on such
    date; provided, however, that in the case of the first Quarterly
    Payment Date applicable to any person who is a Director on the
    date the Plan becomes effective, $3,750 shall be substituted for
    $1,250 in the foregoing provision. If a person becomes a member
    of the Board between Quarterly Payment Dates, whether by action
    of the shareholders of the Company or the Board, such person
    shall be granted automatically, as of the date his or her Board
    service commences, a pro rata Common Stock Equivalent Award
    equal to a full Award (determined pursuant to the immediately
    preceding sentence as if the date such Director began serving on
    the Board was a Quarterly Payment Date) multiplied by a fraction
    (not in excess of 1.0), the numerator of which is the number of
    days during the period beginning with the date upon which such
    Director commences Board service and ending with the next
    following Quarterly Payment Date, and the denominator of which
    is the total number of days during the period beginning on the
    Quarterly Payment Date immediately preceding the commencement of
    Board service by the Director and ending on the next following
    Quarterly Payment Date.



 



    5.2 DEFERRAL ELECTIONS.  A Director may
    elect to defer receipt of all or a specified portion of the
    annual retainer, chair
    and/or
    meeting fees otherwise payable in cash to the Director for
    serving on the Board or any committee thereof. A Director may
    make the elections permitted hereunder by giving written notice
    to the Company in a form approved by the Committee. The notice
    shall include: (i) the percentage of chair
    and/or
    meeting fees or annual retainer to be deferred, and
    (ii) the time as of which deferral is to commence. Amounts
    deferred by a Director pursuant to this Section 5.2 shall
    be converted into Common Stock Equivalents in accordance with
    Section 5.4.



 



    5.3 TIME FOR ELECTING DEFERRAL.  Any
    election to defer annual retainer, chair
    and/or
    meeting fees shall be made prior to the first day of the
    calendar year in which such fees are earned by the Director. Any




    

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    subsequent election to (i) alter the portion of such
    amounts deferred or (ii) revoke an election to defer such
    amounts will become effective on the first day of the calendar
    year following the date on which such election is filed.
    Notwithstanding the foregoing, when a Director first becomes
    eligible to participate in the Plan, a Director may file an
    initial election to defer annual retainer, chair
    and/or
    meeting fees at any time during the
    30-day
    period beginning on the date of such Directors date of initial
    participation. Such election shall apply to fees earned after
    the date such election is filed.



 



    5.4 DEFERRED STOCK ACCOUNTS.  A Deferred
    Stock Account shall be established for each Director. Fees
    deferred by a Director shall be credited to such Account as of
    the date such amounts would have otherwise been paid in cash to
    the Director, and shall be converted, based on Fair Market Value
    as of the date such amounts would have otherwise been paid in
    cash to the Director, into additional Common Stock Equivalents.
    A Director’s Deferred Stock Account shall also be credited
    with dividends and other distributions pursuant to
    Section 5.5.



 



    5.5 HYPOTHETICAL DIVIDENDS ON COMMON STOCK
    EQUIVALENTS.  Dividends and other distributions on
    Common Stock Equivalents shall be deemed to have been paid as if
    such Common Stock Equivalents were actual shares of Stock issued
    and outstanding on the respective record or distribution dates.
    Common Stock Equivalents shall be credited to the Deferred Stock
    Account in respect of cash dividends and any other securities or
    property issued on the Stock in connection with
    reclassifications, spinoffs and the like on the basis of the
    value of the dividend or other asset distributed and the Fair
    Market Value of the Common Stock Equivalents on the date of the
    announcement of the dividend or asset distribution, all at the
    same time and in the same amount as dividends or other
    distributions are paid or issued on the Stock. Fractional shares
    shall be credited to a Director’s Deferred Stock Account
    cumulatively but the balance of shares of Common Stock
    Equivalents in a Director’s Deferred Stock Account shall be
    rounded to the next highest whole share for any payment to such
    Director pursuant to Section 5.7 hereof.



 



    5.6 STATEMENT OF ACCOUNTS.  A statement
    will be sent to each Director as to the balance of his or her
    Deferred Stock Account at least once each calendar year.



 



    5.7 PAYMENT OF ACCOUNTS.  A Director shall
    receive a distribution of his or her Deferred Stock Account as
    soon as practicable following his or her separation from service
    with the Company (as that term is defined in Section 409A
    of the Internal Revenue Code and the regulations thereunder).
    Such distribution shall consist of one share of Stock for each
    Common Stock Equivalent credited to such Director’s
    Deferred Stock Account as of the Quarterly Payment Date
    immediately preceding the date of distribution.



 



    5.8 PAYMENTS TO A DECEASED DIRECTOR’S
    ESTATE.  In the event of a Director’s death
    before the balance of his or her Deferred Stock Account is fully
    paid to him, payment of the balance of the Director’s
    Deferred Stock Account shall then be made to his estate in the
    time and manner selected by the Committee in the absence of a
    designation of a beneficiary pursuant to Section 5.9
    hereof. The Committee may take into account the application of
    any duly appointed administrator or executor of a
    Director’s estate and direct that the balance of the
    Director’s Deferred Stock Account be paid to his estate in
    the manner requested by such application.



 



    5.9 DESIGNATION OF BENEFICIARY.  A
    Director may designate a beneficiary on a form approved by the
    Committee.



 



    5.10 CHANGE IN CONTROL.  Notwithstanding
    any provision of this Plan to the contrary, in the event a
    Change in Control of the Company occurs, within ten
    (10) days of the date of such Change in Control, each
    Director shall receive a lump sum distribution in cash equal to
    the value of all Common Stock Equivalents credited to such
    Director’s Deferred Stock Account as of the Quarterly
    Payment Date immediately preceding the date of distribution
    (based upon the highest Fair Market Value during the
    30 days immediately preceding the Change in Control).



 



    Section 6.  ASSIGNABILITY



 



    The right to receive payments or distributions hereunder shall
    not be transferable or assignable by a Director other than by
    will or the laws of descent and distribution.




    

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    Section 7.  PLAN
    TERMINATION, AMENDMENT AND MODIFICATION



 



    The Plan shall automatically terminate at the close of business
    on May 31, 2020 unless sooner terminated by the Board and
    each Director shall receive a distribution of his or her
    Deferred Stock Account on such date in such form and in such
    amount as is set forth in Section 5.7. The Company, by
    proper action of its governing body, may, in its sole
    discretion, terminate this Plan at any time prior to
    May 31, 2020 (other than at a time proximate to a downturn
    in the financial health of the Company) provided that all
    deferred compensation plans that must be aggregated with this
    Plan for purposes of Section 409A of the Code, if any, are
    also terminated. In the event the Plan is terminated pursuant to
    the immediately preceding sentence, each Director shall receive
    a distribution of his or her Deferred Stock Account no earlier
    than 12 months nor later than 24 months following such
    termination. Such distribution shall be in such form and in such
    amount as is set forth in Section 5.7 as if the date of
    distribution were the date of the Director’s separation
    from service. Notwithstanding the foregoing, the Company may, in
    its sole discretion terminate this Plan at any time prior to
    May 31, 2020 within 12 months of a corporate
    dissolution taxed under Section 331 of the Code, or with
    the approval of a bankruptcy court pursuant to 11 U.S.C.
    Section 503(b)(1)(A). In the event the Plan is terminated
    pursuant to the immediately preceding sentence, each Director
    shall receive a distribution of his or her Deferred Stock
    Account in such form and in such amount as is set forth in
    Section 5.7 as soon as practicable thereafter.



 



    Section 8.  GOVERNING
    LAW



 



    The Plan and all agreements hereunder shall be construed in
    accordance with and governed by the laws of the State of
    Minnesota.




    

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