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<strong>Harman</strong> International Industries, Incorporated and Subsidiaries<br />
(Dollars in thousands, except per-share data and unless otherwise indicated)<br />
June 30, 2009, 2008 and 2007, respectively. The total income tax benefit recognized in the Consolidated Income<br />
Statement for share-based compensation arrangements was $1.2 million, $5.6 million and $4.5 million for the<br />
years ended June 30, 2009, 2008 and 2007, respectively.<br />
2002 Plan<br />
The 2002 Plan permits the grant of stock options, stock appreciation rights, restricted stock and restricted<br />
stock units for up to 6,760,000 shares of our common stock. Shares may be issued as original issuances, treasury<br />
shares or a combination of both. We believe that such awards better align the interests of our employees with<br />
those of our stockholders. Option awards are granted with an exercise price equal to the market price of our stock<br />
on the date of the grant. The option awards generally vest over three to five years of continuous service<br />
commencing one year from the date of the grant and expire after ten years. At June 30, 2009, a total of 3,231,699<br />
shares of common stock were available for grant under the 2002 Plan.<br />
Restricted Stock Awards<br />
A grant of restricted stock involves the immediate transfer of ownership of a specified number of shares of<br />
common stock with a “substantial risk of forfeiture” for a period of at least three years. A participant who<br />
receives a restricted stock grant is entitled immediately to voting, dividend and other share ownership rights<br />
associated with the underlying shares of common stock. At June 30, 2009, a total of 86,992 shares of restricted<br />
stock were outstanding, of which 51,000 shares were granted under the 2002 Plan and 35,992 shares were<br />
granted outside of the 2002 Plan.<br />
Restricted Stock Units<br />
A grant of restricted stock units involves an agreement by our Company to deliver a specified number of<br />
shares of common stock or cash to the participant when the award vests. A participant has no ownership or<br />
voting rights associated with the underlying shares of common stock. The Board of Directors may, at its<br />
discretion, authorize the payment of dividend equivalents on the restricted stock units. During the third quarter of<br />
2009, the Board of Directors suspended the dividend on our common stock. At June 30, 2009, a total of 539,440<br />
restricted stock units were outstanding, of which 507,364 share units were granted under the 2002 Plan and<br />
32,076 share units were granted outside of the 2002 Plan.<br />
Stock Appreciation Rights<br />
Stock appreciation rights allow the holders to receive a predetermined percentage of the spread, not to<br />
exceed <strong>10</strong>0 percent, between the option price and the fair market value of the shares on the date of exercise. A<br />
performance unit is the equivalent of $<strong>10</strong>0 and is awarded for the achievement of specified management<br />
objectives as a condition to the payment of the award. The performance period will not be less than three years.<br />
No stock appreciation right or performance unit grants have been made under the 2002 Plan.<br />
1992 Incentive Plan<br />
We also have options outstanding under our 1992 Incentive Plan. Shares under the 1992 Incentive Plan can<br />
be issued as original issuances or treasury shares or a combination of both. Options to purchase 224,824 shares<br />
with expiration dates ranging from November <strong>10</strong>, 2008 to November 8, 2012 are outstanding under our 1992<br />
Incentive Plan. The 1992 Incentive Plan was approved by our stockholders and had no shares available for grant<br />
on June 30, 2009.<br />
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