UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant  x                             Filed by a Party other than the Registrant  ¨

Check the appropriate box:

ARCTIC CAT INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

ARCTIC CAT INC.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held August 8, 2012

Notice is hereby given that the Annual Meeting of Shareholders of Arctic Cat Inc. will be held at 601 Brooks Avenue South, Thief River Falls, Minnesota 56701, on Wednesday, August 8, 2012, at 4:00 p.m., Central Time, for the following purposes:

The Board of Directors has fixed the close of business on June 11, 2012, as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting. Since it is important that your shares be represented at the Annual Meeting, whether or not you personally plan to attend, you are requested to sign, date and promptly return your proxy card in the enclosed envelope. If you are a record holder, you may also submit your proxy by telephone or through the Internet by following the instructions on the proxy card. If you own shares in “street name” (i.e., through a broker), you should follow the instructions provided by the broker. Returning your signed proxy or submitting your proxy by telephone or through the Internet will not prevent you from voting in person at the Annual Meeting, should you desire to do so.

By Order of the Board of Directors,

TIMOTHY C. DELMORE,

Secretary

Plymouth, Minnesota

June 22, 2012

TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND RETURN YOUR PROXY ON THE ENCLOSED PROXY CARD OR VOTE ELECTRONICALLY THROUGH THE INTERNET OR BY TELEPHONE WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON. SHAREHOLDERS WHO ATTEND THE ANNUAL MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON IF THEY SO DESIRE.

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ARCTIC CAT INC.

505 Highway 169 North, Suite 1000

Plymouth, MN 55441

PROXY STATEMENT

Annual Meeting of Shareholders

August 8, 2012

This proxy statement (the “Proxy Statement”) is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Arctic Cat Inc., a Minnesota corporation (the “Company,” “we,” “us” or “our”), to be voted at our 2012 Annual Meeting of Shareholders that will be held at our main manufacturing facility located at 601 Brooks Avenue South, Thief River Falls, Minnesota 56701, on Wednesday, August 8, 2012, at 4:00 p.m., Central Time, or any adjournment or adjournments thereof (the “Annual Meeting”). If you need directions to the Annual Meeting, please call (763) 354-1800. This Proxy Statement and the enclosed proxy card are being mailed to shareholders on or about June 22, 2012.

Our Annual Report for the fiscal year ended March 31, 2012 (“fiscal 2012”), including audited financial statements, is being mailed to shareholders concurrently with this Proxy Statement.

ABOUT THE ANNUAL MEETING

What is the Purpose of the Annual Meeting?

At our Annual Meeting, shareholders will act upon the matters described in the accompanying Notice of Annual Meeting of Shareholders. This includes (1) the election of one director to serve a three-year term or until his successor is elected, (2) the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the current fiscal year and (3) the transaction of any other business properly brought before the Annual Meeting or any adjournment or postponement of the Annual Meeting. In addition, management will report on our performance and respond to questions from shareholders.

Who is Entitled to Vote?

Only shareholders of record of our outstanding common stock (the “Common Stock”) at the close of business on the record date, June 11, 2012, are entitled to receive notice of and to vote at the Annual Meeting, or any postponement or adjournment of the Annual Meeting. Each outstanding share of Common Stock entitles its holder to cast one vote on each matter to be voted upon and there is no cumulative voting.

Who May Attend the Annual Meeting?

All shareholders as of the record date, or their duly appointed proxies, may attend the Annual Meeting.

What Constitutes a Quorum?

The presence at the Annual Meeting, in person or by proxy, of a majority of the voting power of shares entitled to vote at the Annual Meeting will constitute a quorum for the transaction of business. A quorum is required for business to be conducted at the Annual Meeting. As of the record date, 13,074,176 shares of our

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Common Stock were outstanding. If you submit a properly executed proxy card or vote your proxy electronically through the Internet or by telephone as described on the proxy card, even if you abstain from voting, then you will be considered part of the quorum. Abstentions and broker non-votes will be treated as shares present for purposes of determining the existence of a quorum.

How Do I Vote?

Sign and date each proxy card you receive and return it in the prepaid envelope or vote electronically through the Internet or by telephone by following the instructions on the proxy card. If you return a properly executed proxy card without specific voting instructions, your shares will be voted in accordance with the Board’s recommendations, as FOR the nominee for director in Proposal 1 and FOR Proposal 2 ratifying the selection of Grant Thornton LLP, and at the discretion of the Proxy Agents (as hereafter defined) as to any other matters which may properly come before the Annual Meeting.

If you wish to vote by Internet or telephone, you must do so before 12:00 p.m. Central Time on Tuesday, August 7, 2012. After that time, Internet and telephone voting will not be permitted and a shareholder wishing to vote, or revoke an earlier proxy, must submit a signed proxy card or vote in person.

Can I Change My Vote After I Return My Proxy Card or Vote Electronically?

Yes. Even after you have submitted your proxy card or voted electronically through the Internet or by telephone, you may change your vote at any time before the proxy is exercised at the Annual Meeting. You may change it by:

What are the Board’s Recommendations?

The Board’s recommendation is set forth after the description of each proposal in this Proxy Statement. In summary, the Board recommends a vote:

With respect to any other matter that properly comes before the Annual Meeting, Christopher A. Twomey and Claude J. Jordan (the “Proxy Agents”) will vote as recommended by the Board or, if no recommendation is given, in their own discretion.

If you return a properly executed proxy card without specific voting instructions, the Proxy Agents will vote in accordance with the recommendations of the Board.

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What Vote is Required to Approve Each Proposal?

For Proposal 1, the election of directors, each shareholder of Common Stock will be entitled to vote for one nominee and the nominee with a “plurality,” or the greatest number of FOR votes, will be elected. See “Proposal 1—Election of Directors” in this Proxy Statement.

For Proposal 2, the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the current fiscal year, the affirmative vote of the holders of a majority of the shares of Common Stock represented in person or by proxy and entitled to vote on the proposal will be required for approval.

With respect to any other matter that properly comes before the Annual Meeting, the affirmative vote of the holders of a majority of the shares of Common Stock represented in person or by proxy and entitled to vote on the proposal will be required for approval.

Under the New York Stock Exchange, or NYSE, rules, if your shares are held in “street name” and you do not indicate how you wish to vote, your broker is permitted to exercise its discretion to vote your shares only on certain “routine” matters. The NYSE rules apply to us notwithstanding the fact that shares of our Common Stock are traded on The NASDAQ Stock Market. Proposal 1—Election of Directors is not a “routine” matter. Accordingly, if you do not direct your broker how to vote, your broker may not exercise discretionary voting authority and may not vote your shares. This is called a “broker non-vote,” and although your shares will be considered to be represented by proxy at the Annual Meeting, as previously discussed above under “What constitutes a quorum?,” they are not considered to be shares “entitled to vote” on Proposal 1—Election of Directors at the Annual Meeting and will not be counted as having been voted on the applicable proposal. Proposal 2—Ratification of Appointment of Independent Registered Public Accounting Firm is a “routine” matter and, as such, your broker is permitted to exercise discretionary voting authority to vote your shares “For” or “Against” the proposal in the absence of your instruction.

Proxies marked “Withheld” on Proposal 1—Election of Directors or “Abstain” on Proposal 2—Ratification of Appointment of Independent Registered Public Accounting Firm will be counted in determining the total number of shares “entitled to vote” on such proposal and will have the effect of a vote “Against” Proposal 2, but will have no effect on Proposal 1.

Who Will Count the Vote?

An Inspector of Elections will be appointed for the Annual Meeting and will work with a representative of Wells Fargo Shareowner Services, our independent stock transfer agent, to count the votes.

What Does it Mean if I Receive More Than One Proxy Card?

If your shares are registered differently and are in more than one account, you will receive more than one proxy card. To ensure that all your shares are voted, please sign and return all proxy cards or vote electronically through the Internet or by telephone for each proxy card. We encourage you to have all accounts registered in the same name and address (whenever possible). You can accomplish this by contacting our stock transfer agent, Wells Fargo Shareowner Services, at 1-800-468-9716.

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How Will Discretionary Voting on Any Other Business or Adjournment of the Annual Meeting be Conducted?

Although we do not know of any business to be considered at the Annual Meeting other than the matters described in this Proxy Statement, if any other business is presented at the Annual Meeting, your proxy gives authority to the Proxy Agents to vote on such matters at their discretion, including to adjourn the Annual Meeting.

Adjournment of the Annual Meeting may be made for the purpose of, among other things, soliciting additional proxies. Any adjournment may be made from time to time by approval of the holders of Common Stock representing a majority of the votes present in person or by proxy at the Annual Meeting, whether or not a quorum exists, without further notice other than by an announcement made at the Annual Meeting.

How are Proxies Solicited?

In addition to use of the mail, proxies may be solicited by our officers, directors, and other regular employees by telephone, through electronic transmission, facsimile transmission or personal solicitation, and no additional compensation will be paid to such individuals. We will request those banks, brokerage houses, other custodians, nominees and certain fiduciaries to forward proxy materials and annual reports to the beneficial owners of our Common Stock.

Who Pays for the Cost of this Proxy Solicitation?

We will bear the entire cost of preparing, assembling, printing and mailing the Notice of Annual Meeting of Shareholders, this Proxy Statement, the proxy itself, and the cost of soliciting proxies relating to the Annual Meeting. We will, if requested, reimburse banks, brokerage houses, and other custodians, nominees and certain fiduciaries for their reasonable expenses incurred in mailing proxy materials to their principals.

Procedures at the 2012 Annual Meeting

The presiding officer at the Annual Meeting will determine how business at the Annual Meeting will be conducted. Only nominations and other proposals brought before the Annual Meeting in accordance with the advance notice and information requirements of our Bylaws will be considered, and no such nominations or other proposals were received. Under our Bylaws, complete and timely written notice of a proposed nominee for election to our Board at the Annual Meeting or a proposal for any other business to be brought before the Annual Meeting must have been received by our Secretary not later than 60 days nor earlier than 90 days prior to the meeting date corresponding with the previous year’s annual meeting of shareholders, which for purposes of this Annual Meeting was no earlier than May 7, 2012 nor later than June 4, 2012. Additionally, such notice for any nomination or proposal must have contained the specific information required by our Bylaws, including, among other things, the name and address of the shareholder making the nomination; a representation that the shareholder will appear at the Annual Meeting; the name, age, business and residence, and occupation of the nominee; any arrangements or understandings between the shareholder and nominee relating to the nomination; and the consent of the nominee to serve if elected. This summary information regarding our Bylaws is qualified in its entirety by reference to the full text of the Bylaws, which can be found on our website at www.arcticcat.com (select the “Arctic Cat—Investors” link and then the “Corporate Governance” link).

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BENEFICIAL OWNERSHIP OF CAPITAL STOCK

The following table presents information as to the beneficial ownership of our Common Stock (the only class of capital stock outstanding) at June 11, 2012 (unless otherwise indicated) by (i) the only shareholders known to us to hold 5% or more of such stock, (ii) the director nominee, and each of our directors and named executive officers and (iii) all directors and executive officers as a group. Unless otherwise indicated, all shares represent sole voting and investment power.

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The rules of the SEC require us to disclose the identity of directors, executive officers and beneficial owners of more than 10% of our Common Stock who did not file on a timely basis reports required by Section 16 of the Securities Exchange Act of 1934. Based solely on review of copies of those reports, or written representations from reporting persons, we believe that all directors and executive officers complied with all filing requirements applicable to them during the fiscal year ended March 31, 2012, except that Mary Ellen Walker did not timely file two Form 4s to report certain transactions involving our Common Stock.

PROPOSAL 1

ELECTION OF DIRECTOR

Pursuant to our Restated Articles of Incorporation, the Board is divided into three classes of directors, with each director serving a three-year term. Generally, each year only one class of directors is subject to a shareholder vote. The term of Mr. Gregg A. Ostrander, a director since 1995, will end at the Annual Meeting and Mr. Ostrander will retire from the Board at that time. The Governance Committee has in place a search for a replacement.

This year, upon the recommendation of the Governance Committee, which is comprised of independent directors, the Board has nominated one director: Christopher A. Twomey, who is an incumbent director whose term expires this year. If elected, Mr. Twomey’s term will expire in 2015. It is intended that proxies will be voted for such nominee. We believe that the nominee will be able to serve, but should he be unable to serve as a director prior to the Annual Meeting, we will set the number of directors for the Company within the authorized range of three to nine directors at a lower number or leave the director seat open for future action by the Board.

The name and age of the nominee and the other directors and their principal occupations are set forth below, based upon information furnished to us by the nominee and the directors. Unless otherwise indicated, the nominee and the directors have held their respective identified positions for more than the past five years. Mr. Twomey has been determined by the Governance Committee not to qualify as an “independent director” as defined by the NASDAQ listing rules due his position as Chief Executive Officer of the Company within the past three years.

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		Name, Age and Principal Occupation		Director Since
Nominated for a term expiring in 2015:
		Christopher A. Twomey, 64, Chairman of the Board since 2003; Chief Executive Officer of the Company from January 1986 to December 2010; director of The Toro Company. In his more than 25 years with the Company, Mr. Twomey has gained meaningful leadership experience and knowledge of the recreational vehicle industry. Mr. Twomey brings to the Board invaluable strategic, management, and operational experience. These skills, combined with his intimate knowledge of the Company’s challenges, opportunities and operations, are valuable assets to the Board.			1987
Other directors whose terms of office will continue after the Annual Meeting and whose terms expire in 2014:
		Kenneth J. Roering, 70, Currently a Professor Emeritus of Marketing at the Carlson School of Management at the University of Minnesota; served as Department Chair for ten years and occupied the Pillsbury Company Chair in Marketing for 20 years; has published more than 70 articles in professional journals, written two books, and edited three collections of scholarly writings in the areas of marketing strategy and new product development; has received various teaching and research awards for his work including AMA Distinguished Faculty and University of Minnesota Outstanding Graduate Teacher; has consulted with more than 50 companies including American Express, Motorola, Ecolab, 3M, Cargill, Carlson Companies, Pillsbury, and Medtronic; has directed and participated in management development programs throughout the world; and was within the past five years a director of Enable Holdings Inc. and Innovex, Inc. With his extensive academic work and broad experience as a consultant for many respected companies, Mr. Roering brings to the Board extensive marketing and brand management expertise and experience and significant corporate governance leadership.			1996
		Tony J. Christianson, 60, Founder and Chairman of Cherry Tree Companies (investment management and investment banking firm) since October 1980; Director of AmeriPride Services Inc., The Dolan Company, Peoples Educational Holdings, Titan Machinery Inc., Znomics, Inc. and Adam Smith Advisors; within the past five years a director of Fair Isaac Corporation. Mr. Christianson’s extensive knowledge of capital management and financial and accounting issues, as well as his deep knowledge of and experience with a variety of businesses, many of which face similar issues as the Company, adds valuable perspective to the Board.			2009

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		Name, Age and Principal Occupation		Director Since
		D. Christian Koch, 47, President of Carlisle Brake & Friction, Inc., a wholly-owned subsidiary of The Carlisle Companies, since January 2009 and Group President, Carlisle Diversified Products, since March 2012; President of Asia Pacific, Carlisle Companies Incorporated from February 2008 to December 2009; Vice President and General Manager, Asia Pacific, for Graco Inc. (manufacturer of fluid handling systems) from June 2003 to January 2008. Mr. Koch’s operations and senior leadership experience with large companies, as well as his global sales experience, mergers and acquisition experience and experience in managing companies involved with the powersports and motorsports markets provide the Board with senior operating leadership perspective and a global sales and marketing perspective.			2009
Other directors whose terms of office will continue after the Annual Meeting and whose terms expire in 2013:
		Claude J. Jordan, 56, President and Chief Executive Officer of the Company since January 2011; President and Chief Operating Officer of the Company from August 2008 to December 2010; director of the Company since August 2010; Vice President of The Home Depot (home improvement specialty retailer) from 2007 to 2008; General Manager at THD At-Home Services, Inc., a wholly-owned subsidiary of The Home Depot from 2003 to 2007; various management positions at General Electric Company (diversified technology, media and financial services) from 1998 to 2003. Mr. Jordan brings to the Board an extensive background in consumer-oriented businesses, significant operating expertise and international business and mergers and acquisition experience. Mr. Jordan also has significant experience with respect to the internal operations of the Company.			2010
		Susan E. Lester, 55, Private investor; Chief Financial Officer, Homeside Lending, Inc. (a mortgage bank) from October 2001 to May 2002; Chief Financial Officer, U.S. Bancorporation (a commercial bank) from February 1996 to May 2000; director of PacWest Bancorp and Lender Processing Services, Inc. Ms. Lester brings to the Board financial expertise, extensive knowledge of accounting issues and senior leadership. These skills provide a strong foundation for Ms. Lester’s service to the Board in her position as Chair of our Audit Committee and meets the SEC definition of “audit committee financial expert.”			2004

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Vote Required. Each shareholder of Common Stock will be entitled to vote for one nominee and the nominee with the greatest number of votes will be elected.

Board Recommendation

THE BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF THE NOMINEE.

CORPORATE GOVERNANCE

Governance Policies and Practices. The Board of Directors operates under a set of Corporate Governance Guidelines designed to ensure efficient, transparent and effective governance. Amongst other things, these guidelines address Board size and composition; director selection and independence; director stock ownership guidelines and compensation; Committees; Chairman and CEO role; Lead Director position and responsibility; and CEO annual evaluation.

Additional information about these guidelines may be found on our website at www.arcticcat.com (select the “Arctic Cat—Investors” link and then the “Corporate Governance” link). Our Corporate Governance Guidelines are reviewed annually by the Governance Committee and changes are recommended to the full Board when appropriate.

Board Leadership Structure. The Board as a whole determines whether the role of the Chairman and the Chief Executive Officer should be separated or combined based on its judgment as to the structure that best serves the interests of the Company and its shareholders. Currently, the Chairman of the Board is Christopher A. Twomey who, prior to December 31, 2010, was the Chief Executive Officer of the Company. At this time, the Board believes this leadership structure is appropriate for the Company given Mr. Twomey’s extensive knowledge of the Company and the recreational vehicle industry. In addition, the Chair of the Governance Committee of the Board, Kenneth J. Roering, serves as the Board’s Lead Director. The Board believes it is appropriate to have a non-CEO Chairman for the reasons noted above, and also to have a Lead Director to serve as a link between executive management and the independent directors. The Lead Director presides over an executive session of the independent directors following each Board meeting and discusses director concerns, if

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any, with the Chairman and the CEO. The Lead Director facilitates the annual performance reviews of the CEO and the Chairman, works with the Chairman to determine committee assignments, communicates with the Company’s major shareholders upon request of the Board or such major shareholders, and also provides direction on agendas, schedules and materials for Board meetings.

The Board’s Role in Risk Oversight. The Audit Committee is responsible for overseeing our risk management structure on behalf of the full Board. The Audit Committee and the full Board assess the primary risks facing the Company, the Company’s risk management strategy and management’s plan for addressing these risks. The Compensation and Human Resources Committee oversees the risks associated with the Company’s compensation structure, including assessing the Company’s compensation policies and practices for its employees.

Director Attendance; Executive Sessions. During fiscal 2012, the Board met seven times. Each director attended more than 75% of the meetings of the Board and any committee on which such director served. At each regular Board meeting, our non-employee directors met in executive session without management present and these sessions were presided over by our Lead Director.

Our policy is that all directors should attend the annual meeting of shareholders. Prior to the December 2011 repurchase of shares held by Suzuki Motor Corporation (“Suzuki”), our policy was that the director elected by Suzuki did not need to attend the annual meeting. All directors except the representative of Suzuki attended the 2011 annual meeting of shareholders.

Board Committees.

The Board has established a Compensation and Human Resources Committee, an Audit Committee and a Governance Committee. The composition of each committee is as follows:

Compensation and Human Resources Committee. The Compensation and Human Resources Committee (the “Compensation Committee”), which currently consists of Messrs. Ostrander (Chair), Christianson, Koch and Roering, met five times during fiscal 2012. All members are independent directors as defined under the rules of The NASDAQ Stock Market. The Compensation Committee: (i) assists in defining our executive compensation philosophy and administering our compensation plans; (ii) reviews management’s recommendations with respect to the salaries and bonuses paid and stock option grants awarded to all executives; (iii) reviews our retirement plans and employee benefits; (iv) oversees and evaluates compensation-related risks; and (v) reviews and recommends to the Board approval of the “Compensation Discussion and Analysis” that appears in our annual proxy statement. The Compensation Committee, following receipt of a recommendation by the Chief Executive Officer, determines compensation of all executive officers except the Chief Executive Officer, which is determined by the independent directors of the full Board following receipt of a recommendation by the Compensation Committee. In the performance of its duties, the Compensation Committee may select

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independent compensation consultants to advise the Compensation Committee when appropriate. In addition, the Compensation Committee may delegate authority to subcommittees where appropriate. The Compensation Committee Charter is available to shareholders on our website located at www.arcticcat.com (select the “Arctic Cat—Investors” link and then the “Corporate Governance” link).

Compensation and Human Resources Committee Interlocks and Insider Participation. The members of the Compensation and Human Resources Committee are Messrs. Ostrander (Chair), Christianson, Koch and Roering. No members of the Compensation and Human Resources Committee were officers or employees of the Company or any of its subsidiaries during the year, were formerly officers of the Company, or had any relationship otherwise requiring disclosure.

Audit Committee. The Audit Committee, which currently consists of Ms. Lester (Chair) and Messrs. Ostrander and Christianson, met six times during fiscal 2012. All members of our Audit Committee are independent directors as defined under the rules of The NASDAQ Stock Market. The Board has determined that Susan E. Lester is an “audit committee financial expert” as that term is defined in rules and regulations promulgated by the SEC. Other members of the Audit Committee may be considered financial experts based on past experience and positions held but the Board has not designated them as such. The Audit Committee: (i) has sole authority and direct responsibility for the appointment, compensation, retention and oversight of the independent registered public accounting firm; (ii) meets with our independent registered public accounting firm and representatives of management to review our internal and external financial reporting, including periodically without management present; (iii) reviews the scope of the independent registered public accounting firm’s examination and audit procedures to be utilized; (iv) considers comments by the registered public accounting firm regarding internal controls and accounting procedures and management’s response to those comments; (v) pre-approves any audit and non-audit services to be provided by our independent registered public accounting firm; and (vi) reviews the role of the Board in its oversight of the Company’s risk management. The Audit Committee operates under a written charter adopted by the Board, which is available to shareholders on our website located at www.arcticcat.com (select the “Arctic Cat—Investors” link and then the “Corporate Governance” link).

Governance Committee. The Governance Committee, which currently consists of Messrs. Roering (Chair) and Koch and Ms. Lester, met five times during fiscal 2012. All members are independent directors as defined under the rules of The NASDAQ Stock Market, and the Chair of the Governance Committee also serves as the Board’s Lead Director. The primary purpose of the Governance Committee is to ensure an appropriate and effective role for the Board in the governance of the Company. The primary recurring duties and responsibilities of the Governance Committee include: (i) reviewing and recommending to the Board corporate governance policies and procedures; (ii) reviewing our Arctic Cat Code of Conduct and compliance therewith; (iii) identifying director candidates, including recommendation to the full Board of the slate of nominees; (iv) educating our directors; (v) evaluating the Board; and (vi) recommending to the Board compensation policies, practices and levels of compensation for the Board. The independent directors of the full Board vote to approve the slate of director nominees identified by the Governance Committee. The Governance Committee Charter is available to shareholders on our website located at www.arcticcat.com (select the “Arctic Cat—Investors” link and then the “Corporate Governance” link).

Identifying New Director Nominees. In identifying prospective director candidates, the Governance Committee considers its personal contacts, recommendations from shareholders and recommendations from business and professional sources, including executive search firms. An executive search firm has been used in the past to identify director candidates. The Governance Committee’s policy is to consider qualified candidates for positions on the Board recommended in writing by shareholders. Shareholders wishing to recommend

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candidates for Board membership, rather than directly nominate an individual, should submit the recommendations in writing to our Secretary at least 90 days prior to the meeting date corresponding to the previous year’s annual meeting of shareholders, with the submitting shareholder’s name and address and pertinent information about the proposed nominee similar to that set forth for the nominees named in this Proxy Statement. When evaluating the qualifications of potential new director candidates, or the continued service of existing directors, the Governance Committee considers a variety of criteria, including the individual’s integrity, inquisitiveness, experience dealing with complex problems, specialized skills or expertise, independence, financial expertise, freedom from conflicts of interest, ability to understand the role of a director and ability to fully perform the duties of a director. Additionally, while the Governance Committee does not have a formal policy with respect to diversity, it seeks to have a Board that is diverse in terms of its background, skills, perspectives and experiences, and gives due consideration to contributions to diversity on the Board when evaluating the qualifications of any potential director candidate. While candidates recommended by shareholders will generally be considered in the same manner as any other candidate, special consideration will be given to existing directors desiring to stand for re-election given their history of service and their knowledge of the Company, as well as the Board’s knowledge of their level of contribution resulting from such service.

A shareholder intending to independently nominate an individual as a director at an annual meeting of shareholders, rather than recommend the individual to the Governance Committee for consideration as a nominee, must comply with the advance notice requirements set forth in our Bylaws. These are described below under “Other Matters—Shareholder Proposals.” Shareholders wishing to recommend for nomination or to nominate a director should contact our Secretary for a copy of the relevant procedure for submitting recommendations and nominations and a full delineation of the criteria considered by the Governance Committee when evaluating potential new directors or the continued service of existing directors.

Communications with the Board. Our Board provides a process for shareholders to send communications to the Board. The manner in which shareholders can send communications to the Board is set forth under “Corporate Governance Guidelines” on our website located at www.arcticcat.com (select the “Arctic Cat—Investors” link and then the “Corporate Governance” link).

Director Independence. There are no family relationships between our director nominee, directors or executive officers. In addition, Messrs. Christianson, Koch, Ostrander and Roering and Ms. Lester, the non-employee directors on the Board, are “independent” directors as defined under the rules of The NASDAQ Stock Market. Mr. Twomey is not an independent director due to his former position as CEO of the Company and Mr. Jordan is not an independent director due to his current position as CEO of the Company.

Code of Conduct. Our Board has adopted a code of ethics known as the “Arctic Cat Code of Conduct,” which applies to the Chief Executive Officer, Chief Financial Officer, Controller and persons performing similar functions, as well as our other officers, directors, employees, consultants, agents and representatives. We believe that the Arctic Cat Code of Conduct not only documents our good business practices, but sets forth guidelines for ensuring that all our personnel act with the highest standards of integrity. The Arctic Cat Code of Conduct is available on our website located at www.arcticcat.com (select the “Arctic Cat—Investors” link and then the “Corporate Governance” link). We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the Arctic Cat Code of Conduct by posting such information on our website at the website location specified above.

Director Compensation. The Governance Committee has the responsibility of, from time to time, reviewing the director compensation and recommending changes, if any, to the full Board for approval. As a part of its review, the Governance Committee receives information and analysis from Towers Watson, an independent compensation consultant, regarding director compensation practices and amounts for other publicly traded

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companies similar in revenue size. Compensation of non-employee directors is designed to attract and retain highly qualified individuals that can best represent the interests of our shareholders. To further align the interests of directors and shareholders, a large portion of director compensation is comprised of automatic grants of stock options and restricted stock units. Management directors do not receive any compensation for their service as directors.

All non-employee directors currently receive $40,000 per year, $1,000 per Board and committee meeting attended, $7,500 additional compensation per year if they serve as Chair of the Governance Committee or the Compensation and Human Resources Committee and $10,000 if they serve as Chair of the Audit Committee. In addition, non-employee directors receive reimbursement of out-of-pocket expenses incurred on our behalf. For fiscal 2012, each non-employee director received on April 1, 2011 an option to purchase 6,000 shares of our Common Stock at the fair market value the date of grant ($15.77) and restricted stock units with a grant date value of $24,995. For fiscal 2013, each non-employee director received on April 2, 2012 an option to purchase 1,903 shares of our Common Stock at an option price equal to the fair market value of our Common Stock on the date of grant ($43.79) and restricted stock units with a grant date value of $34,988. The options have terms expiring ten years following the date of grant, are subject to forfeiture in full if the director ceases to be a director within one year of the grant date and are subject to a three-year vesting requirement, and the restricted stock units have a three-year vesting requirement; all were granted pursuant to the 2007 Omnibus Stock and Incentive Plan (the “2007 Stock Plan”).

Stock Ownership Guidelines. To further align the interests of our directors with those of our shareholders, the Board established stock ownership guidelines for non-employee directors. Within five years of the establishment of the ownership guidelines or, for new directors, within five years of joining the Board after the establishment of the ownership guidelines, each non-employee director is expected to own a dollar value of our Common Stock equal to at least four times the director’s then current annual cash retainer. Shares subject to unexercised options, whether vested or unvested and whether in-the-money or out-of-the-money, do not qualify for credit under the guidelines. As of the record date, all directors either owned, or were on track to own within the permitted time after joining the Board, the requisite amount of stock.

In addition, non-employee directors are provided annual use of an ATV or ROV, a snowmobile and a trailer. These products are for personal use and are returned to us each year except in the year of a director’s retirement, in which case the director is permitted to keep the vehicles (provided such director has served at least four full terms). We sell the returned products to dealers and employees for an amount greater than our cost. We provide these products to our non-employee directors because we believe it is important for our directors to be familiar with our products.

The following table summarizes the compensation paid to non-employee directors during fiscal 2012:

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The following table provides supplementary information regarding non-employee director option awards during fiscal 2012:

The following table provides supplementary information regarding non-employee director restricted stock unit awards during fiscal 2012.

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Policies and Procedures Regarding Related Person Transactions. The Audit Committee, currently comprised of Ms. Lester (Chair) and Messrs. Ostrander and Christianson, is responsible for the review and approval of all related-party transactions between us and any of our executive officers, directors or director nominees, or any immediate family member of any such person. In addition, all related-party transactions that come within the disclosures required by Item 404 of the SEC’s Regulation S-K must also be approved by the Audit Committee. The policies and procedures regarding the approval of all such related-party transactions have been approved at a meeting of the Audit Committee and are evidenced in our corporate records.

During the last fiscal year, we purchased certain components for our products from Carlisle Companies Inc. and its subsidiaries, a company of which Mr. Koch, one of our directors, is an executive officer. During the fiscal year, we paid Carlisle Companies Inc. and its subsidiaries $949,775 for such components. The prices we paid were, and will continue to be, the subject of arms-length negotiation on terms no less favorable to us than we could otherwise obtain.

Suzuki Motor Corporation was a related party during the fiscal year by virtue of Suzuki owning approximately 33.7% of our capital stock immediately prior to our December 22, 2011 repurchase of all of the Class B Common Stock owned by Suzuki. On December 22, 2011, we entered into a Stock Redemption Agreement with Suzuki pursuant to which we purchased from Suzuki 6,102,000 shares of our Class B Common Stock, which constituted all of the outstanding shares of our Class B Common Stock, for an aggregate purchase price of $79.3 million. As of such date, Suzuki ceased being a shareholder of the Company.

Since we first began production in August 1983, we have purchased engines for our products from Suzuki pursuant to contracts which are renewed annually and which stipulate price and general terms of delivery of engines. In June 2010, we entered into an agreement with Suzuki under which we will no longer purchase snowmobile engines from Suzuki after December 2013. Through December 2020, Suzuki will continue to supply replacement parts for engines which it supplied to us prior to December 2013. We plan to build some of our engines at our engine assembly plant where we have built ATV engines since 2007. We may also purchase certain engines from other engine suppliers as appropriate. During fiscal 2012, we paid Suzuki $51,874,663 for engines, service parts and engine drawings. The terms of the agreement and all renewals were the subject of arms-length negotiation on terms no less favorable to us than we could otherwise obtain.

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COMPENSATION DISCUSSION AND ANALYSIS

The following discussion and analysis describes our compensation objectives and policies as well as the compensation awarded to the following named executive officers (“NEOs”) during fiscal year 2012 (“FY2012”):

Throughout FY2012, Mr. Twomey served as our Chairman in an executive officer capacity and qualified as a NEO due to his receipt of severance payments pursuant to his prior employment agreement while he served as our Chief Executive Officer. During FY2012, Mr. Twomey did not participate in our annual incentive program and participated in our long-term incentive plan as though he were a non-employee member of our Board of Directors.

Executive Summary

Our overall performance during FY2012 was outstanding, exceeding the targets that were set prior to the beginning of the year.

In spite of a weakened economy and poor snow conditions throughout several geographical areas of North America, we were successful in achieving the following in FY2012:

The Compensation and Human Resources Committee’s decisions regarding performance goals and compensation opportunities for our senior management were shaped by the economic outlook at the beginning of FY2012, as well as the committee’s underlying philosophy of paying for superior performance and aligning the interests of our executives with the interests of our shareholders. Consistent with that philosophy, our FY2012 executive compensation program included financial performance targets that were considered challenging.

In addition, we receive direct feedback from shareholders on our compensation programs through the advisory vote on the compensation paid to our NEOs (commonly known as a “say-on-pay” vote), which we held for the first time at the 2011 Annual Meeting of Shareholders and will hold every three years. At the 2011 Annual Meeting of Shareholders, the say-on-pay proposal received over 97% approval, indicating strong shareholder support for our approach to executive compensation. The Compensation and Human Resources Committee will continue to monitor shareholder views with respect to our executive compensation practices and take those views into account when making decisions regarding executive compensation.

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The Compensation and Human Resources Committee intends that our executive compensation program be market competitive, and align the interests of our executive officers with the interests of our shareholders. Consistent with these principles, the Compensation and Human Resources Committee targets Total Targeted Direct Compensation (base salary, annual incentive, and long-term incentive pay) between the 85^th and 115^th percentiles of the market median (50^th percentile). The amount actually paid upon the completion of the performance period may be higher or lower based on actual results over that period.

During FY2012, NEO base salary was adjusted based on a variety of factors. These factors include subjective and objective considerations of each individual’s skills, performance and level of contribution towards desired business objectives, our overall performance, retention concerns, the individual’s tenure and experience with us generally and in his or her current position specifically, the recommendations of management, the individual’s current and historical compensation, the Compensation and Human Resources Committee’s compensation philosophy, and comparisons to other comparably situated executive officers.

During FY2012, the structure and metrics of our compensation plans were changed and are detailed in “FY2012 Executive Compensation Programs” below. Notable changes include the addition of sales growth as a metric for the annual incentive plan; movement away from the SSAR plan utilized the past three years and returning to a “cash only” annual incentive plan; a move towards granting a mix of 75% stock options and 25% restricted stock awards for the long-term incentive plan rather than granting solely stock options; as well as introducing a guideline that executive officers meet established share ownership requirements over the next five years.

The discussion that follows should be read in conjunction with the information provided in the “Executive Compensation and Other Information” section immediately following this Compensation Discussion and Analysis.

Objectives of Our Program

Our executive compensation philosophy is to attract and retain top talent and reward business results and individual performance in order to maximize shareholder returns. Specifically, our compensation program is designed to achieve the following objectives in a cost efficient manner:

To achieve these objectives, we have designed an executive compensation program that continues to emphasize more shareholder-aligned compensation as a percentage of total targeted direct compensation as the level of authority of the executive officer’s position increases. The Compensation and Human Resources Committee believes that the compensation of those with the greatest overall responsibility for our performance should be subject to greater variability in compensation based on that performance. We do not, however, have specific policies governing the allocation of the total targeted direct compensation opportunity among its various components.

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Summary of Compensation Program Components

The components of our NEO compensation are summarized in the following table. All of the components, individually and collectively, are structured for the general purpose of providing a competitive compensation program that will enable us to meet our objective of attracting and retaining highly qualified executives critical to our success.

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Determining Executive Compensation

The Process Followed by the Compensation and Human Resources Committee. The practice of the Compensation and Human Resources Committee is to meet in December and March of each year to: (i) establish the annual base salary and the annual incentive compensation target opportunity for each of the executive officers for the upcoming year; (ii) determine long-term incentive awards and any other equity-based awards to be granted to executive officers for the upcoming fiscal year; and (iii) consider any plan changes for the upcoming year. During May and early June of each year, after audited financial results are available, the Compensation and Human Resources Committee meets to certify the annual incentive compensation to be paid to each executive officer based on the predetermined compensation plan and the actual financial results for the prior year.

When making individual compensation decisions for the executive officers, the Compensation and Human Resources Committee takes many factors into account. These factors include subjective and objective considerations of each individual’s skills, performance and level of contribution towards desired business objectives, our overall performance, retention concerns, the individual’s tenure and experience with us generally

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and in his or her current position, the recommendations of management, the individual’s current and historical compensation, the Compensation and Human Resources Committee’s compensation philosophy, and comparisons to other comparably situated executive officers. The Compensation and Human Resources Committee’s process utilizes input and analysis from a number of sources, including management, independent directors of the Board, the Compensation and Human Resources Committee’s independent compensation consultant, Towers Watson, and market studies and other comparative compensation information.

The Compensation and Human Resources Committee uses this information in conjunction with its own review of the various components of our executive compensation program to determine the base salary, annual incentive target and percentage of base salary, and long-term incentive awards for our executive officers.

Role of Executive Officers in Determining Compensation. The Compensation and Human Resources Committee meets annually with our CEO to review the performance of our other executive officers. The Compensation and Human Resources Committee also receives recommendations from our CEO, with the assistance of our Vice President, Human Resources (for executive officers other than himself), regarding base salary, annual incentive award targets and long-term incentive award amounts for all executive officers, excluding the CEO.

In determining the CEO’s compensation, the Compensation and Human Resources Committee considers comparative compensation information and input from Towers Watson and our Vice President, Human Resources and makes a recommendation to the Board of Directors for consideration and approval.

The Compensation and Human Resources Committee considers input from our CEO and the Vice President, Human Resources when developing and selecting metrics and performance objectives for our annual incentive plan.

Role of the Compensation Consultant. Towers Watson, a nationally recognized compensation consulting firm, provides the Compensation and Human Resources Committee with an annual compensation market analysis for our executive officers; makes recommendations on the executive pay programs; reviews, participates and comments on executive compensation matters; and provides updates on legal and other developments and trends in executive compensation.

Each year, Towers Watson is engaged to provide market data for all of our executives, including our named executive officers. This market data is derived from the executive database within the Towers Watson Data Bank, which is a published compensation survey. The data in the compensation survey (there were 431 participating companies in the 2011 survey) is size adjusted, using a regression analysis, for our revenue size. The market data provided by Towers Watson is in aggregate form for each position in which our executives serve. Individual data for participating companies in the survey is not provided and, therefore, not considered when determining executive compensation in total or for any individual component.

FY2012 Executive Compensation Programs

The elements of our executive compensation program include: base salary, annual incentive awards, long-term incentive awards, broad-based employee benefits, perquisites and severance and change-in-control arrangements. Each compensation component for the executive officers (excluding the CEO) is subject to the discretion of the Compensation and Human Resources Committee and is determined on an individual basis. The

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CEO’s compensation is reviewed by the Compensation and Human Resources Committee but subject to the discretion of the full Board of Directors. We believe that the total targeted compensation package provides a compensation package that is equivalent to that provided by comparable companies.

The Compensation and Human Resources Committee annually reviews competitive executive compensation data based upon a report compiled by Towers Watson. The Towers Watson report provides the Compensation and Human Resources Committee with market information at the 25^th, 50^th, and 75^th percentiles for each executive officer position and pay component, and for total targeted direct compensation, and compares the actual and target compensation provided and intended to be provided to each executive officer to the market amounts. This market information is an important element reviewed by the Compensation and Human Resources Committee, which generally intends to target total compensation for our executive officers between the 85^th percentile and 115^th percentiles of the market median (50^th percentile) for comparable positions as set forth in the report. The Compensation and Human Resources Committee can and does, however, use discretion to adjust a component of pay, or total direct compensation generally, above or below these ranges to recognize the specific circumstances of individual executive officers.

Base Salary. In order to ensure our ability to attract and retain qualified executives, the Compensation and Human Resources Committee believes that base salary should generally be in the 85^th percentile to 115^th percentile of the market median (50^th percentile). Other factors considered by the Compensation and Human Resources Committee in setting annual base salary for each of our executive officers include the individual’s level of responsibility, experience and time in the position, performance in the prior year, future potential and internal equity considerations. The Compensation and Human Resources Committee reviews these factors each year and adjusts them accordingly to assure that we are appropriately rewarding performance.

The base salary of NEOs is reviewed and any increases are typically made effective in June of the current fiscal year. Mr. Jordan’s base salary for FY2012 was increased from $500,000 to $550,000, a 10% increase. Effective April 1, 2011 his annual incentive award at target increased from 55% to 60%. Mr. Delmore’s base salary for FY2012 was increased from $265,000 to $275,000, a 3.8% increase. His annual incentive award at target remained at 50%. Ms. Walker’s base salary remained unchanged at $225,000. Her annual incentive award at target remained at 45%. Mr. Darling’s base salary for FY2012 was increased from $205,000 to $220,000, a 7.3% increase. His annual incentive award at target remained at 35%. During FY2012, Mr. Twomey received $667,430 in severance payments pursuant to his prior employment agreement, received $121,295 in base pay in his role as executive Chairman, and was not eligible for any annual incentive compensation.

Annual Incentive Awards. The Compensation and Human Resources Committee believes that placing a meaningful portion of an executive’s overall compensation at total risk, based on our net earnings and net sales, is the best way to focus attention on our short and intermediate-term goals and encourage high levels of performance from each executive. The Compensation and Human Resources Committee also believes that a greater percentage of total compensation should be at risk as an executive’s responsibility increases.

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Method of Calculating FY2012 Annual Incentive Pay. Each NEO has a total annual incentive payout expressed as a percentage of base salary. In FY2012, 70% of the annual incentive award was based on performance on net income and 30% was based on performance on net sales. Payouts can range from 0% to 200% based on net income and net sales performance versus their respective targets. Payout below threshold performance is at 0%. To receive any payout for net sales performance, a minimum net income performance level must be attained. Performance above threshold is payable according to the chart below:

Below is a chart that shows annual incentive payout at key net income and net sales performance levels versus FY2012 Actual performance:

Discussion on Results and FY2012 Payout of the Annual Incentive: In FY2012, on the net income target of $15.1 million, we delivered $29.9 million in net income. On the net sales target of $502.2 million, we delivered $585.3 million in net sales. Both the performance level on net income and net sales delivered the maximum payout of 200% of the target award on the annual incentive plan.

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Long-term Incentive Awards. In FY2012, we granted long-term incentive (“LTI”) awards in a value mix of 75% stock options and 25% restricted stock units (“RSUs”). Prior to FY2012, NEO LTI compensation had been primarily stock options.

Effective April 1, 2011, NEOs received stock options exercisable at the Fair Market Value of the Company’s Common Stock on April 1, 2011 and RSUs, with each option and RSU vesting over three years, for the number of shares indicated: Mr. Jordan, 83,228 options and 9,987 RSUs; Mr. Delmore, 33,291 options and 3,995 RSUs; Ms. Walker, 17,570 options and 2,108 RSUs; Mr. Darling, 23,647 options and 2,838 RSUs; and Mr. Twomey, 6,000 options and 1,585 RSUs.

In April, 2012, we implemented stock ownership guidelines for all officers. The guidelines are driven by the following objectives:

Executive officers now have a guideline for obtaining the following fixed number of shares by April 2016:

NEO Stock Ownership Guideline

Shares counted toward the guideline for executive officers include shares owned (including in a 401(k), unvested restricted or deferred stock and vested in-the-money stock options (less exercise costs)). Unvested stock options and out-of-the-money stock options do not count toward the guideline. Mr. Delmore and Mr. Jordan have met the stock ownership guidelines as NEOs and Mr. Twomey, who is subject to the non-employee director guideline, meets the ownership guideline. It is anticipated that all NEOs will meet stock ownership guidelines within the required time.

Long-Term Incentives. Aligning the interests of management with those of shareholders is accomplished through longer term incentives directly related to the improvement of long-term shareholder value. The Compensation and Human Resources Committee believes this is accomplished with the award of stock options and restricted stock units. For the NEOs, a combination of stock options and RSUs valued at amounts designed to bring total executive compensation generally in line with median market levels are awarded annually and vest over three years. In determining the size of LTI grants to the NEOs, the Compensation and Human Resources Committee considers similar awards to individuals holding comparable positions in the market. In FY2012, we granted LTIs in a value mix of 75% stock options and 25% RSUs.

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Stock Option Awards. We do not backdate stock options or grant options retroactively. In addition, we do not plan to coordinate grants of options so that they are made before announcement of favorable information, or after announcement of unfavorable information. Our stock options are granted at fair market value at the beginning of the fiscal year, with all required approvals obtained in advance or on the actual grant date. Executive officers are awarded stock options with an exercise price equal to the fair market value of our Common Stock on the date of grant. Our general practice is to grant options only on the annual grant date. In some cases, newly hired or promoted executives that are eligible to receive options receive their award of stock options on the date of their hire or promotion. Stock options granted to executive officers, including the named executive officers, vest in equal installments on the first, second and third anniversaries of the grant date and expire ten years from the grant date.

In FY2012, the Compensation and Human Resources Committee made the annual grants of stock options described in the Summary Compensation Table to the named executive officers. The Compensation and Human Resources Committee was comprised of members who were all outside directors under applicable rules of the Internal Revenue Code of 1986, as amended (the “Code”).

Stock options have value for the executive officers only if the price of our stock appreciates in value from the date of grant. Shareholders also benefit from such stock price appreciation. The Compensation and Human Resources Committee believes that stock options encourage and reward effective management which, in turn, results in the long-term financial success as measured by stock price appreciation. In addition, the Compensation and Human Resources Committee believes that equity-based compensation ensures that our executive officers have a continuing stake in our long-term success.

The Compensation and Human Resources Committee believes that significant long-term incentives are critical to assuring that executive and shareholder interests are aligned and expects executives to acquire ownership over time. The Compensation and Human Resources Committee also believes that stock ownership should increase as responsibility level increases within the Company. For FY2012, we have established stock ownership guidelines for our executive officers.

Broad-Based Employee Benefit Plans. We maintain certain broad-based employee benefit plans in which our executive officers, including the NEOs, have been permitted to participate, including retirement, life, and health insurance plans. Our retirement plan is a 401(k) plan which allows all eligible employees to make pre-tax contributions. Although there was no Company match in FY2012, we paid a discretionary 1.5% contribution to the 401(k) for eligible employees, excluding executive officers.

Perquisites. Executive officers are provided annual use of one ATV, one ROV, and two snowmobiles. These products are for business and personal use and are returned to us each year. We provide executive officers with the use of the ATV, ROV, and snowmobiles because the Compensation and Human Resources Committee believes that knowledge of and familiarity with our products is an important aspect of the executive officers’ jobs. We sell the returned products to dealers and employees for an amount greater than our cost. Income for the executive officers is not grossed up to pay for the associated taxes on the value of the products.

Executive officers also receive supplemental life and disability insurance to provide a competitive death and disability benefit. Income for the executive officers is not grossed up to pay for the associated tax liability on the insurance. Additionally, executive officers are reimbursed by the Company for the costs of annual financial planning and an annual physical examination, up to a maximum of $2,500 and $1,000, respectively. The reimbursements are considered taxable income to the executive.

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Severance Arrangements. We have severance agreements in place with our executive officers that are designed to retain the executive officer and provide for continuity of management in the event of an actual or threatened change in control of the Company. The agreements provide that, in the event of a change in control, each executive officer would have specific rights and receive specified benefits if the executive officer is terminated without “cause” or voluntarily terminates his or her employment for “good reason.” In addition, upon certain types of employment terminations (other than a termination following a change in control of the Company), severance benefits may be paid to the executive officer. Additional information regarding the severance agreements is provided in the section of this Proxy Statement entitled, “Potential Payments Upon Termination or Change-in-Control.”

Clawback. It is the Board’s policy that the Compensation and Human Resources Committee will, to the extent permitted by governing law, have the sole and absolute authority to make retroactive adjustments to any cash incentive compensation paid to the NEOs and certain other officers where the payment was predicated upon the achievement of certain financial results that were subsequently the subject of a restatement of our financial statements. Where applicable, we will seek to recover any amount determined to have been inappropriately received by an executive officer. This situation has never occurred in our history.

Tax Deductibility of Pay. Section 162(m) of the Code imposes a $1 million limit on the amount that we may deduct for compensation paid to our Chief Executive Officer or any of our three other most highly compensated executive officers (other than the CEO and CFO) that are employed as of the end of the year. This limitation does not apply to compensation that meets the requirements under Section 162(m) for “qualifying performance-based” compensation. “Qualifying performance-based” compensation is compensation paid only if the individual’s performance meets pre-established objective goals based on performance criteria approved by the shareholders. We believe that all compensation paid under our executive compensation programs for FY2012 will be fully deductible for federal income tax purposes.

Consideration of Compensation-Related Risks. In connection with its oversight of compensation-related risks, the Compensation and Human Resources Committee annually evaluates whether our compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the Company. For FY2012, the Compensation and Human Resources Committee evaluated the current risk profile of our compensation policies and programs for all of our employees, with particular emphasis on annual and long-term incentive compensation. In its evaluation, the Compensation and Human Resources Committee reviewed our executive compensation structure, identified important business risks that could materially affect the Company, and assessed how we managed or mitigated these risks in the design of our compensation structure. The Compensation and Human Resources Committee also considered the ability of our executive officers and other employees to affect changes in their incentive compensation that could create risk for the Company. Based on this evaluation, the Compensation and Human Resources Committee determined that its compensation programs do not encourage risk-taking that is reasonably likely to have a material adverse effect on the Company.

FY2013 Executive Compensation Programs

Base Salary. The base salary of NEOs is reviewed and any increases are typically made effective in June of the current fiscal year. Effective June 2012, the base salary for Mr. Jordan is $625,000; Mr. Delmore, $305,000; Ms. Walker, $230,000; and Mr. Darling, $244,000.

Annual Incentive Plan. In FY2013, the annual incentive plan will contain two metrics: net sales and net income. As in FY2012, 30% of the executive’s annual incentive will be based on growing net sales and 70% will be based on growing net income. Annual incentive awards are established and expressed as a percentage of base

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salary. Mr. Jordan’s annual incentive award increased from 60% to 75% on April 1, 2012. All other NEO annual incentive opportunities remained the same as the prior year. To receive a target annual incentive payout, net income would need to increase 17.0% and net sales would need to increase 11.3% over FY2012 results.

Long-term Incentive Awards. Effective April 1, 2012, NEOs received stock options exercisable at the Fair Market Value of the Company’s Common Stock on April 1, 2012 and RSUs, with each option and RSU vesting over three years, for the number of shares indicated: Mr. Jordan, 26,761 options and 4,282 RSUs; Mr. Delmore, 10,704 options and 1,713 RSUs; Ms. Walker, 4,817 options and 771 RSUs; and Mr. Darling, 7,136 options and 1,142 RSUs.

COMPENSATION AND HUMAN RESOURCES COMMITTEE REPORT

The Compensation and Human Resources Committee of the Board has reviewed and discussed with management the Compensation Discussion and Analysis. Based on the review and discussions, the Compensation and Human Resources Committee recommended that the Board include the Compensation Discussion and Analysis in this Proxy Statement.

SUBMITTED BY THE

COMPENSATION AND HUMAN RESOURCES COMMITTEE

OF THE BOARD

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EXECUTIVE COMPENSATION AND OTHER INFORMATION

Summary of Cash and Certain Other Compensation

The following table summarizes the total compensation paid in fiscal 2012, 2011 and 2010 to or earned by our Chief Executive Officer, our Chief Financial Officer and our next three most highly compensated executive officers whose compensation exceeded $100,000 for fiscal 2012. These individuals are referred to throughout this Proxy Statement as the “NEOs” or “named executive officers.” For a discussion of the amount of base salary and annual incentives in proportion to total compensation, as well as other material factors related to summary compensation, please see the “Compensation Discussion and Analysis” section of this Proxy Statement.

2012 Summary Compensation Table

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Grants of Plan-Based Awards for Fiscal Year Ended March 31, 2012

All stock options and restricted stock unit awards granted to each of the named executive officers were made under the Company’s 2007 Stock Plan. The stock options have an exercise price equal to the closing market price of the underlying security on the date of grant. In addition, the grant date is the date the grant was approved by the Compensation and Human Resources Committee. The stock options granted to the named executive officers in fiscal 2012 vest in equal installments on the first, second and third anniversaries of the grant date and expire ten years from the grant date. There has been no repricing or other material modification of the stock options granted to the named executive officers during the last fiscal year. The restricted stock units vest in three equal annual installments beginning April 1, 2012. Delivery of the restricted stock units may be delayed at the election of the reporting person. Each restricted stock unit represents a contingent right to receive one share of the Company’s Common Stock.

For a discussion of the amount of base salary and incentive compensation in proportion to total compensation, as well as other material factors related to summary compensation, please see the “Compensation Discussion and Analysis” section of this Proxy Statement.

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The following table summarizes estimated future payouts under non-equity incentive plan awards and grants of equity awards to each of the named executive officers during fiscal 2012:

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Outstanding Equity Awards At March 31, 2012

The following table provides a summary of equity awards outstanding for each of the named executive officers as of the end of fiscal 2012:

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Option Exercises and Stock Vested for Fiscal Year Ended March 31, 2012

The following table provides information concerning the aggregate number of stock options and SSARs exercised and shares of stock or stock units that vested for each of our named executive officers during fiscal 2012, and the aggregate dollar value realized by each of our named executive officers upon such exercise or vesting.