HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED

---

 

---

Dear Harman International Stockholder:

      You are cordially invited to attend the 2006 Annual Meeting of Stockholders of Harman International Industries, Incorporated. The meeting will be held on Thursday, November 2, 2006, beginning at 11:00 a.m. at the JPMorgan Chase Building, 270 Park Avenue, New York, New York. Information about the meeting, the nominees for election as directors and other action to be taken is presented in the following Notice of Annual Meeting of Stockholders and Proxy Statement.

      This Annual Meeting will be an important occasion as we will recognize the contributions of two Board members who will retire following the meeting. Stanley Weiss has served ably as a director since 1997. Bernie Girod has served the Company superbly since 1986, and has held various senior management positions, including serving as the Company’s Chief Financial Officer, Chief Operating Officer, Chief Executive Officer and Vice Chairman. Although Bernie will retire as a director at the Annual Meeting so that we can maintain a majority of non-management directors on the Board, he will continue as Chief Executive Officer until the end of the calendar year. We wish to thank both Mr. Girod and Mr. Weiss for their years of outstanding service to our Company.

      At the meeting, management will also report on the Company’s operations during fiscal year 2006 and comment on the Company’s outlook for the current fiscal year. The report will be followed by a question and answer period.

      It is important that your shares be represented at the meeting. To ensure representation of your shares, please sign, date and promptly return the enclosed proxy card or use the telephone or Internet voting procedures described on the proxy card.

      We look forward to seeing you on November 2nd.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To be held on November 2, 2006

      The 2006 Annual Meeting of Stockholders of Harman International Industries, Incorporated (the “Company”) will be held at the JPMorgan Chase Building, 270 Park Avenue, New York, New York, on November 2, 2006, beginning at 11:00 a.m. The meeting will be held for the following purposes:

      Information concerning the matters to be acted upon at the meeting is set forth in the accompanying Proxy Statement. Stockholders of record as of the close of business on September 6, 2006 are entitled to notice of, and to vote at, the meeting.

      If you plan to attend the meeting and will need special assistance or accommodation due to a disability, please describe your needs on the enclosed proxy card. Also enclosed is the Company’s Annual Report for fiscal year 2006.

Washington, D.C.

September 8, 2006

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED

1101 Pennsylvania Avenue, N.W.

Suite 1010

Washington, D.C. 20004

PROXY STATEMENT

      This Proxy Statement provides information in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Harman International Industries, Incorporated (the “Company”) for use at the Company’s 2006 Annual Meeting of Stockholders or any postponement or adjournment thereof (the “Meeting”). This Proxy Statement also provides information you will need in order to consider and to act upon the matters specified in the accompanying Notice of Annual Meeting of Stockholders. This Proxy Statement and the enclosed proxy card are being mailed to stockholders on or about September 11, 2006.

      Holders of record of the Company’s common stock (“Common Stock”) as of the close of business on September 6, 2006 are entitled to vote at the Meeting. Each stockholder of record as of that date is entitled to one vote for each share of Common Stock held. On September 6, 2006, there were 65,198,877 shares of Common Stock outstanding.

      You cannot vote your shares of Common Stock unless you are present at the Meeting or you have previously given your proxy. You can vote by proxy in one of three convenient ways:

      You may revoke your proxy at any time prior to the vote at the Meeting by:

      All properly executed proxies, unless revoked as described above, will be voted at the Meeting in accordance with your directions on the proxy. With respect to the election of directors, you may vote for both nominees, withhold your vote for both nominees, or withhold your vote as to a specific nominee. If a properly executed proxy does not provide instructions, the shares of Common Stock represented by your proxy will be voted:

      A majority of the outstanding shares of Common Stock must be present, in person or by proxy, to constitute a quorum at the Meeting.

      In August 2006, the Board adopted a majority voting policy that requires any director nominee in an uncontested election who receives a greater number of votes “withheld” than votes “for” his or her election to tender his or her resignation promptly following the certification of the election results. The Nominating and Governance Committee of the Board will consider all of the relevant facts and circumstances and make a recommendation to the Board with respect to whether to accept the resignation. Within 90 days, the Board is required to take action with respect to the recommendation and to publicly disclose its decision by issuing a press release. The majority voting policy is attached as Appendix A to this Proxy Statement and is more fully described in “The Board, Its Committees and Its Compensation — Majority Voting Policy.”

      Those who fail to return a proxy or attend the meeting will not count towards determining any required vote or quorum. Stockholders and brokers returning proxies or attending the meeting who abstain from voting on the election of our directors will count towards determining a quorum. Brokers holding shares of record for customers generally are not entitled to vote on certain matters unless they receive voting instructions from their customers. In the event that a broker does not receive voting instructions for these matters from its customers, a broker may notify us that it lacks voting authority to vote those shares. These broker non-votes refer to votes that could have been cast on the matter in question by brokers with respect to uninstructed shares if the brokers had received their customers’ instructions. These broker non-votes will be included in determining whether a quorum exists, but will have no effect on the outcome of the election of our directors. To be sure your shares are voted in the manner you desire, you should instruct your broker how to vote your shares.

      The Company is soliciting your proxy and will pay the cost of preparing and mailing this Proxy Statement and the enclosed proxy card. Employees of the Company may solicit proxies personally and by telephone. The Company’s employees will receive no compensation for soliciting proxies other than their regular salaries. The Company may request banks, brokers and other custodians, nominees and fiduciaries to forward copies of these proxy materials to their principals and to request authority for the execution of proxies. The Company may reimburse such persons for their expenses in so doing.

PROPOSAL FOR

ELECTION OF DIRECTORS

      At the Meeting, two directors will be elected to serve three-year terms expiring at the 2009 Annual Meeting of Stockholders. This section contains information relating to the two director nominees and the directors whose terms of office extend beyond the Meeting. The nominees for election are Edward H. Meyer and Gina Harman, each of whom is currently a director. The Board expects that the nominees will be available for election at the time of the Meeting. If, for any reason, a nominee should become unavailable for election, the shares of Common Stock voted FOR that nominee by proxy will be voted for a substitute nominee designated by the Board, unless the Board reduces the number of directors or allows that nominee’s director position to remain vacant until a qualified nominee is identified.

      Stanley A. Weiss and Bernard A. Girod currently serve as directors of the Company. Mr. Weiss’ term expires at the Meeting and Mr. Girod’s term expires at the 2007 Annual Meeting of Stockholders. In order to meet the New York Stock Exchange requirement that the Board be composed of a majority of non-management directors, Mr. Girod has agreed to resign as a director immediately following the Meeting. As previously announced, Mr. Girod plans to retire as the Company’s Chief Executive Officer at the end of this calendar year. The Nominating and Governance Committee is currently conducting a search for qualified candidates to serve as a director of the Company. You may not vote for more than two nominees, either in person or by proxy.

      Under Delaware law and our Bylaws, a plurality of the votes cast is required for the election of Directors. This means that the Director nominee with the most votes for a particular Board position is elected for that position. You may vote “for” or “withheld” with respect to the election of directors. Only votes “for” or “withheld” are counted in determining whether a plurality has been cast in favor of a Director. Abstentions are not counted for purposes of the election of Directors.

      As discussed more fully below, the Board has adopted a majority voting policy that requires, in an uncontested election, any nominee for Director who receives a greater number of votes “withheld” from his or her election than votes “for” is required to promptly tender his or her resignation following certification of the election results. The Nominating and Corporate Governance Committee will promptly consider the resignation and a range of possible responses based on the circumstances that led stockholders to withhold votes, if known, and make a recommendation to the Board. The Board will act on the Committee’s recommendation within 90 days following certification of the results of the election.

The Board recommends a vote FOR election of each of the nominees.

Nominees to be Elected at the Meeting

      Edward H. Meyer, age 79, has been a director of the Company since 1990. Mr. Meyer has been Chairman, Chief Executive Officer and President of Grey Global Group, Inc., a global advertising and marketing services company, since 1970. Mr. Meyer also serves as a director of Grey Global Group, Inc. and Ethan Allen Interiors Inc.

      Gina Harman, age 57, has been a director of the Company since November 2005. Ms. Harman is the President of the Company’s Consumer Group, a position she has held since 2002. Ms. Harman also served as President of the North America operations of the Company’s Consumer Group from 1998 to 2002 and has been with the Company since 1985. Ms. Harman is the daughter of Sidney Harman, the Executive Chairman of the Board.

Directors Whose Terms Extend Beyond the Meeting

      Sidney Harman, age 88, has been Executive Chairman of the Board since July 2000 and has served as Chairman of the Board and as a director of the Company since the Company’s founding in 1980. Dr. Harman also served as Chief Executive Officer of the Company from 1980 to 1998. Dr. Harman served as Deputy Secretary of Commerce of the United States from 1977 through 1978. His current term as a director expires at the 2008 Annual Meeting of Stockholders.

      Shirley Mount Hufstedler, age 81, has been a director of the Company since September 1986. Ms. Hufstedler has been in private law practice for more than 25 years. Since 1995, she has been with the law firm of Morrison & Foerster LLP. From 1981 to 1995, Ms. Hufstedler was with the firm of Hufstedler & Kaus. She served as Secretary of Education of the United States from 1979 to 1981 and as a judge on the United States Court of Appeals for the Ninth Circuit from 1968 to 1979. Ms. Hufstedler is Director Emeritus of Hewlett-Packard Company. Her current term as a director expires at the 2008 Annual Meeting of Stockholders.

      Ann McLaughlin Korologos, age 64, has been a director of the Company since 1995. She served as Secretary of Labor of the United States from 1987 until 1989. Ms. Korologos is a director of AMR Corporation (and its subsidiary, American Airlines, Inc.), Host Hotels & Resorts, Inc., Kellogg Company and Microsoft Corporation. In April 2004, Ms. Korologos was elected Chairman of the RAND Corporation Board of Trustees. She is also a Chairman Emeritus of the Aspen Institute and previously served as a Senior Advisor to Benedetto, Gartland & Company, Inc. from 1996 to 2005. Her current term as a director expires at the 2007 Annual Meeting of Stockholders.

THE BOARD, ITS COMMITTEES AND ITS COMPENSATION

The Board of Directors

      The Board currently consists of seven directors. Four of the directors are independent directors and three directors are members of the Company’s senior management. Each of the Company’s non-management directors meets the qualifications for independence under the listing standards of the New York Stock Exchange. Following the Meeting, the Board will consist of five members, three of whom are independent directors.

Corporate Governance

      The Board and senior management believe that one of their primary responsibilities is to promote a culture of ethical behavior throughout the Company by setting examples and by displaying a sustained commitment to instilling and maintaining deeply ingrained principles of honesty and decency. Consistent with these principles the Company has, among other things, adopted:

      The committee charters, corporate governance guidelines, ethics codes and majority voting policy are available on the Company’s website (www.harman.com) in the Corporate Governance section of the Investor Information page. Copies of these documents are also available upon written request to the Company’s Secretary. The Company will post information regarding any amendment to, or waiver from, its Code of Ethics for Senior Executive and Financial Officers and Directors on its website under the Corporate Governance section of the Investor Information page.

      The Board periodically reviews its corporate governance policies and practices. Based on these reviews, the Board expects to adopt changes to policies and practices that are in the best interests of the Company and as appropriate to comply with any new requirements of the Securities and Exchange Commission (the “Commission”) or the New York Stock Exchange.

Director Independence

      As part of the Company’s Corporate Governance Guidelines, the Board has established a policy requiring a majority of the members of the Board to be independent. The Board has also adopted a policy establishing independence standards to assist the Board in determining the independence of the non-management directors. Those standards reflect, among other things, the requirements under the listing standards of the New York Stock Exchange. The independence standards for non-management directors are attached to this proxy statement as Appendix B.

      The Board has determined that each of the current non-management directors, Ms. Hufstedler, Ms. Korologos, Mr. Meyer and Mr. Weiss, is independent of the Company and its management within the meaning of the New York Stock Exchange listing standards and satisfies the Company’s independence standards.

Majority Voting Policy

      In August 2006, we adopted a majority voting policy, a copy of which is attached as Appendix A to this Proxy Statement. Pursuant to this policy, in an uncontested election of directors, any nominee who receives a greater number of votes “withheld” than votes “for” his or her election will, promptly following the certification of the stockholder vote, tender his or her written resignation to the Board for consideration by the Nominating and Governance Committee. The Nominating and Governance Committee will consider the resignation and will make a recommendation to the Board concerning whether to accept or reject it.

      In determining its recommendation to the Board, the Nominating and Governance Committee will consider all factors it considers relevant, which may include:

      The Nominating and Governance Committee also will consider a range of possible alternatives concerning the director’s tendered resignation as it deems appropriate, which may include:

      Under our majority voting policy, the Board will take formal action on the recommendation no later than 90 days following the certification of the results of the stockholders’ meeting. In considering the recommendation, the Board will consider the information, factors and alternatives considered by the Nominating and Governance Committee and any additional information that the Board considers relevant. The Company will publicly disclose the Board’s decision promptly after the decision is made in a press release. If applicable, the Board will also disclose the reason or reasons for rejecting the tendered resignation.

Communications with the Board

      Stockholders and other interested parties may communicate with the Board, the non-management directors or specific directors by mail addressed to: Board of Directors, c/o Harman International Industries, Incorporated, 8500 Balboa Boulevard, Northridge, California 91329, Attn: General Counsel. The mailing envelope should also clearly indicate whether the communication is intended for the Board, the non-management directors or a specific director. The General Counsel or the Internal Auditor will review all these communications and will, within a reasonable period of time after receiving the communications, forward all communications to the appropriate director or directors, other than those communications that are merely solicitations for products or services or relate to matters that are of a type that are clearly improper or irrelevant to the functioning of the Board or the business and affairs of the Company.

Board Meetings

      The Board held four meetings during fiscal year 2006. Each director attended at least 75% of the Board meetings held during the period he or she was a director in fiscal year 2006. Each director attended at least 75% of the meetings of the committees on which he or she served held during the period he or she was a director in fiscal year 2006, other than Mr. Weiss who attended two of three meetings held by the Nominating and Governance Committee.

      The Board has established a policy that the non-management directors meet in executive session, without members of the Company’s management present, at each regularly scheduled meeting of the full Board. These executive sessions are chaired by the non-management directors on a rotating basis.

Annual Meetings of Stockholders

      As part of the Company’s Corporate Governance Guidelines, the Board has adopted a policy that each director is expected to make reasonable efforts to attend stockholders meetings. All Board members attended the Company’s 2005 Annual Meeting of Stockholders.

Audit Committee

      The Audit Committee currently consists of Ms. Hufstedler (Chairwoman), Ms. Korologos, Mr. Meyer and Mr. Weiss. During fiscal year 2006, the Audit Committee held five meetings. The Board has determined that each of the members of the Audit Committee is independent under the New York Stock Exchange listing standards and each is financially literate and experienced in financial matters. The Board has also determined that Ms. Hufstedler is an “audit committee financial expert” within the meaning of applicable Commission regulations. In making its determination, the Board considered Ms. Hufstedler’s knowledge of, and experience with, financial and accounting matters gained through serving as Chair of the Company’s Audit Committee and as a member of boards and audit committees of other public companies, as well as her experience in such matters as a practicing attorney, as a judge in both California state courts and the U.S. Court of Appeals, and as Secretary of Education.

      The Audit Committee assists the Board in its oversight of the Company’s financial reporting, focusing on the integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the qualifications and independence of the Company’s independent auditor and the performance of the Company’s internal audit function and independent auditor. The Audit Committee’s primary responsibilities include:

      The Audit Committee’s responsibilities and key practices are more fully described in its written charter. A report of the Audit Committee appears on page 25 of this Proxy Statement.

Compensation and Option Committee

      The Compensation and Option Committee currently consists of Ms. Hufstedler (Chairwoman) and Mr. Weiss. During fiscal year 2006, the Compensation and Option Committee held three meetings. Each of the members of the Compensation and Option Committee is independent under the New York Stock Exchange listing standards.

      The Compensation and Option Committee assists the Board in overseeing executive compensation and administers the Company’s executive bonus, option and incentive, deferred compensation and retirement plans. The Compensation and Option Committee’s primary responsibilities include:

      The Compensation and Option Committee’s responsibilities and key practices are discussed more fully in its charter. A report of the Compensation and Option Committee appears on page 12 of this Proxy Statement.

Nominating and Governance Committee

      The Nominating and Governance Committee currently consists of Ms. Korologos (Chairwoman), Ms. Hufstedler, Mr. Meyer and Mr. Weiss. During fiscal year 2006, the Nominating and Governance Committee held three meetings. Each of the members of the Nominating and Governance Committee is independent under the New York Stock Exchange listing standards.

      The Nominating and Governance Committee assists the Board in carrying out its oversight responsibilities relating to the composition of the Board and certain corporate governance matters. The Nominating and Governance Committee’s primary responsibilities include considering and making recommendations to the Board with respect to:

      The Nominating and Governance Committee’s responsibilities and key practices are more fully described in its charter.

      Director Nominees. The Nominating and Governance Committee utilizes a variety of methods for identifying and evaluating director nominees. The Committee may consider candidates recommended by the Company’s directors, members of management, professional search firms or stockholders. These candidates may be considered at any point during the year.

      Qualifications. In evaluating nominees for election as a director, the Nominating and Governance Committee considers a number of factors, including the following:

      The Nominating and Governance Committee will also consider other criteria for director candidates included in the Company’s Corporate Governance Guidelines or as may be established from time to time by the Board.

      Stockholder Recommendations. The Nominating and Governance Committee will evaluate director candidates recommended by a stockholder in the same manner as candidates otherwise identified by the Nominating and Governance Committee. The Company has never received any recommendations for director candidates from stockholders. In considering director candidates recommended by stockholders, the Nominating and Governance Committee will also take into account such factors as it considers relevant, including the length of time that the submitting stockholder has been a stockholder of the Company and the aggregate amount of the submitting stockholder’s investment in the Company.

      Stockholders may recommend candidates at any time, but to be considered by the Nominating and Governance Committee for inclusion in the Company’s proxy statement for the next annual meeting of stockholders, recommendations must be submitted in writing no later than 120 days before the first anniversary of the date of the proxy statement mailed to stockholders in connection with the previous year’s annual meeting. A stockholder’s notice must contain the following:

      The stockholder’s notice must be signed by the stockholder recommending the director candidate for consideration and sent to the following address: Harman International Industries, Incorporated, 8500 Balboa Boulevard, Northridge, California 91329, Attn: Corporate Secretary (Nominating and Governance Committee Communication/ Director Candidate Recommendation).

Director Compensation

      Cash Compensation. For services rendered during fiscal year 2006, non-management directors received an annual fee of $40,000, plus $1,500 for each committee meeting attended on a day other than the day of a Board meeting. The Company does not pay fees to directors who are officers of the Company or its subsidiaries. The Company reimburses all directors for expenses incurred in attending Board and committee meetings.

      Equity-Based Compensation. Under the 2002 Stock Option and Incentive Plan, each non-management director received an option to purchase 6,000 shares of Common Stock on the date of our 2005 Annual Meeting of Stockholders. Each non-management director was also eligible for an additional option to purchase 1,500 shares of Common Stock if the Company achieved a return on consolidated equity for the prior fiscal year of at least 9% but less than 13%, or an additional option to purchase 3,000 shares of Common Stock if the Company achieved a return on consolidated equity of 13% or more. Each non-management director received an option to purchase 3,000 shares of Common Stock as a result of the Company achieving the required return on consolidated equity in fiscal year 2005. The exercise price of the options is the fair market value of the shares of Common Stock on the date of grant. Each option vests at a rate of 20% per year and expires 10 years after the date of grant.

      Changes in Director Compensation. The Board of Directors determined to reduce the total annual compensation for non-management directors to be provided following the Meeting and for the fiscal year beginning July 1, 2006. The annual grant of options to purchase shares has been decreased from 6,000 shares to 5,000 shares of Common Stock, with each non-management director receiving an option to purchase 5,000 shares of Common Stock immediately following the Meeting. Further, non-management directors will no longer be eligible for additional option grants as a result of the Company achieving the two levels of return on consolidated equity, described above. The annual fee for non-management directors will increase from $40,000 to $60,000. The fee for non-management directors attending each committee meeting on a day other than the day of a Board meeting remains at $1,500. These changes were approved by the Compensation and Option Committee at its August 2006 meeting.

REPORT OF THE COMPENSATION AND OPTION COMMITTEE

Executive Compensation Generally

      We oversee the Company’s executive compensation program. Our committee is comprised solely of independent directors, chaired by Ms. Hufstedler. Our committee’s charter authorizes us to retain outside advisors with respect to compensation matters and we consult with outside advisors from time to time in our decision-making.

      We think that the three key elements of the Company’s executive compensation program are:

      The Company also has in place retirement, welfare benefit and change-in-control arrangements for senior management that we believe are generally within the mainstream of similar benefits provided by comparable companies.

      Salary. We establish base salaries for senior management in light of historical practice, competitive pay data and performance reviews. We assess competitive pay rates by reference to market data, and review company and individual performance at the end of each fiscal year.

      We reviewed the Company’s results of operations for fiscal year 2005 and competitive pay practices data in setting base pay for senior management for fiscal year 2006. Some of the data was obtained from surveys furnished by outside compensation consulting firms concerning practices among comparable companies in the electrical and electronics industries. Consistent with the Company’s historical practice, we sought to establish base salaries for fiscal year 2006 at the 50th-75th percentile of base salaries for the survey group of companies. In the future, we may apply different parameters, generally, or in a particular case.

      Annual Incentive Compensation. The Company provides cash bonuses to executive officers, including executives in the summary compensation table appearing later in the this Proxy Statement. We believe that these bonuses qualify as “performance-based compensation” for tax purposes, and therefore are fully deductible. Under the Company’s bonus plan, we establish a return on stockholders’ equity target for each fiscal year and awards are payable if that target is reached. These targets for fiscal year 2006 were exceeded.

      Equity Based Compensation. The Company’s equity incentive plan authorizes the award of options, restricted Common Stock or other equity-linked awards to full-time employees we select. The Company has historically awarded stock options to senior managers, including the six executives included in the cash compensation table on page 14, but not substantial amounts of restricted Common Stock or other equity-linked awards. The Company records the cost of options as an expense in its financial statements. The level of awards for recent years has been based on our assessment of competitive practice, prior performance and overall cost to the Company, as well as our assessment of the value of potential awards under traditional option valuation techniques. The value of these awards has ultimately proven to be substantial as a result of the increase in market prices for the Company’s stock. While we expect to consider this in making future awards, our current thinking is that the Company and its stockholders have

benefited proportionately with management as a result of the increases in long-term stockholder value and that options continue to be an appropriate means to align stockholder and management interests. We are, of course, aware of the views expressed in some quarters that options may no longer be an appropriate type of management incentive. While we do not concur with that view, we will continue to monitor the evolution of approaches to long-term incentive compensation.

      Although the Company has not established formal share ownership requirements, management is generally expected to retain a substantial equity stake in the Company, whether directly or through equity-linked awards. The Company’s historical practice has been based on the view that it is appropriate to permit equity appreciation to be used to satisfy tax and other obligations related to prior equity awards and recognizes the need for some flexibility in light of the very substantial increase in equity values over the past several years and, in certain instances, the substantial periods in which certain of our senior managers have worked at the Company.

Compensation of Executive Chairman and Chief Executive Officer

      During fiscal year 2006, Dr. Harman, the Company’s Executive Chairman, was paid a base salary of $1,050,000 and Mr. Girod, the Company’s Chief Executive Officer through May 1, 2006, was paid a base salary of $1,020,000. Mr. Girod served as Chief Executive Officer during fiscal 2006 until May 1, 2006 and was reappointed to that position effective August 21, 2006 at the same base salary. Their salaries were based mainly on their leadership in creating a corporate environment consistent with the Board’s governance objectives, the Company’s accelerated growth in sales, earnings and overall results during fiscal year 2005, the Company’s historical practices, and competitive pay data. Cash bonus awards were $1,050,000 for Dr. Harman and $1,020,000 for Mr. Girod as a result of the Company’s strong financial and operational performance.

      Douglas A. Pertz served as the Company’s Chief Executive Officer from May 1, 2006 through August 21, 2006. Mr. Pertz’s annual salary was set at $850,000. Mr. Pertz did not receive any cash bonus for fiscal year 2006. In connection with his hiring, Mr. Pertz was granted options to purchase 75,000 shares of Common Stock at an exercise price of $86.98 per share, the market value of the Common Stock on the date of grant, and 25,000 shares of restricted Common Stock. Mr. Pertz was to receive an additional 20,000 shares of restricted Common Stock on January 1, 2007. Pursuant to Mr. Pertz’s agreement with the Company, upon his resignation, Mr. Pertz received a severance payment equal to two times his annual salary and target bonus and the prorated value of the unvested shares of restricted Common Stock, including the 20,000 shares he was to receive on January 1, 2007. The total cash severance was $3,829,200. The shares of restricted Common Stock and options to purchase shares of Common Stock had not vested and were cancelled.

September 8, 2006

COMPENSATION OF EXECUTIVE OFFICERS

Summary Compensation Table

      The following table discloses compensation received by the Company’s Executive Chairman, the two individuals who served as Chief Executive Officer during fiscal year 2006 and the three other most highly paid executive officers for each of the last three fiscal years.

Option Grants in Last Fiscal Year

      The following table shows grants of stock options during fiscal year 2006 to each of the named executive officers.

Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

      For each of the named executive officers, the following table shows stock options exercised during fiscal year 2006 and the value of unexercised stock options as of June 30, 2006.

Deferred Compensation Plan

      The Company’s Deferred Compensation Plan provides supplemental retirement benefits for executive officers designated by the Deferred Compensation Plan’s administrative committee. The Compensation and Option Committee administers this Plan. Prior to the beginning of each fiscal year, each plan participant may elect to defer up to 100% of his or her annual base salary and bonus on a pre-tax basis to a deferral account. These amounts are always fully vested, subject to a 10% penalty on any unscheduled withdrawals. The Company may decide to make contributions on a pre-tax basis to a plan participant’s account, subject to a vesting schedule. In the event of a change in control of the Company, any unvested amounts vest immediately and the Company indemnifies the plan participant for any expense incurred in enforcing his or her rights under the Deferred Compensation Plan.

      Plan participants specify that portion of their accounts to be deemed invested in designated benchmark funds. The Company credits earnings to the accounts based on the rate of return of the designated funds. Upon retirement or termination of employment other than due to death, plan participants may receive their account balances in the form of a lump-sum payment or in annual installments. In the event of death prior to the commencement of benefits or during payment of installments, the balances in a plan participant’s vested accounts as of the date of death are payable to the plan participant’s beneficiaries.

Supplemental Executive Retirement Plan

      The Company’s Supplemental Executive Retirement Plan (“Supplemental Plan”) provides supplemental retirement, termination and death benefits to certain executive officers and key employees designated by the Board. The Compensation and Option Committee administers the Supplemental Plan. Each of the current named executive officers, other than Dr. Geiger, has been designated as a participant in the Supplemental Plan. Dr. Harman has 26 years, Mr. Girod 19 years, Mr. Palin 18 years and Mr. Brown 3 years of service credited under the Supplemental

Plan. All Supplemental Plan benefits are subject to deductions for Social Security and federal, state and local taxes.

      Retirement Benefit. Retirement benefits are based on the average of the participant’s highest cash compensation (base salary and bonus) during any five consecutive years of employment by the Company (“Average Cash Compensation”). Participants retiring at age 65 or older receive an annual retirement benefit equal to either (a) 3¹/3% of Average Cash Compensation per year of service up to a maximum of 50%, or (b) 2% of Average Cash Compensation per year of service up to a maximum of 30%, as designated by the Company. Dr. Harman and Mr. Girod have each been designated as a participant entitled to receive an annual retirement benefit of up to 50% of Average Cash Compensation, and each of Messrs. Brown and Palin has been designated as a participant entitled to receive an annual retirement benefit of up to 30% of Average Cash Compensation. If a participant’s employment is terminated for any reason other than death within three years after a change in control of the Company, the participant vests with the maximum designated retirement benefit regardless of age or years of service and the Company indemnifies the participant for any expense incurred in enforcing the participant’s rights in the retirement benefit under the Supplemental Plan. Unless another form of payment is approved by the administrative committee for the Supplemental Plan, benefits are payable monthly in the form of a life annuity. If the participant dies after benefits have commenced but prior to receiving 10 years of benefits, they are paid to the participant’s beneficiary for the remainder of that period.

      The following table sets forth the annual maximum retirement benefits that would be received under the Supplemental Plan at the specified Average Cash Compensation levels after the specified years of service:

      Termination Benefit. A participant who retires or whose employment is terminated prior to age 65 with at least 15 years of service, and who is not otherwise entitled to benefits under the Supplemental Plan, is entitled to an annual termination benefit equal to either (a) 30% of Average Cash Compensation, increased by 4% for each year of service over 15 years, up to a maximum of 50%, or (b) 15% of Average Cash Compensation, increased by 3% for each year of service over 15 years, up to a maximum of 30%, as designated by the Company. Dr. Harman and Mr. Girod have each been designated as a participant entitled to receive an annual termination benefit of up to 50% of Average Cash Compensation and each of Messrs. Brown and Palin has been designated as a participant entitled to receive an annual termination benefit of up to 30%. The termination benefit commences upon the later of termination of the participant’s employment, other than due to death, or the participant reaching age 55. Termination benefits are payable in the same manner as retirement benefits.

      The following table sets forth the annual maximum termination benefits that would be received under the Supplemental Plan at the specified Average Cash Compensation levels after the specified years of service:

      Death Benefit. A pre-retirement death benefit equal to two or three times the highest annual cash compensation achieved by a participant during his or her employment with the Company is paid to the beneficiaries of a participant who dies prior to the commencement of benefits under the Supplemental Plan. Dr. Harman and Messrs. Girod and Palin have each been designated as a participant entitled to receive a death benefit equal to three times his highest annual cash compensation, and Mr. Brown has been designated as a participant entitled to receive a death benefit equal to two times his highest annual cash compensation. The benefit is paid to the participant’s designated beneficiary in a single lump sum or, at the request of the beneficiary and with the consent of the administrative committee, the benefit may be paid in another form providing the actuarial equivalent of the lump-sum payment. Any death benefit payable to Dr. Harman’s designated beneficiary will be paid in five equal annual installments, providing the actuarial equivalent of the lump-sum payment otherwise due.

2002 Key Executive Officers Bonus Plan

      Under the Company’s 2002 Key Executive Officers Bonus Plan, each of the current named executive officers, other than Mr. Palin, is eligible to receive cash awards each fiscal year that a predetermined return on stockholder equity goal is met. This plan is administered by the Compensation and Option Committee, which establishes the target bonuses and the stockholder equity goal each fiscal year. In the event of a change in control of the Company, each plan participant is entitled to the award amount for that fiscal year without proration or any other deduction, provided that he or she is employed by the Company at the time of the change in control or, if the plan participant is no longer employed by the Company, the plan participant’s employment is terminated after commencement of discussions that resulted in a change of control of the Company but within 180 days prior to the change in control.

Severance and Employment Agreements

      The Company has entered into severance agreements with each of Dr. Harman, Messrs. Girod and Brown. The severance agreements provide that if, within the two years following a change in control of the Company, the executive officer is terminated without cause or under certain circumstances terminates his own employment, he is entitled to receive a severance payment equal to three times the sum of his highest annual base salary during any period prior to his termination and his highest incentive pay during the three fiscal years preceding the change in control. The severance agreements also provide that the Company will

pay the executive officer an additional amount for excise taxes, subject to a limitation based on the overall cost of the severance agreements, including any additional payment for excise taxes. Unless the executive officer or the Company notifies the other by September 30 that it does not wish the agreement to be extended, each severance agreement is automatically extended on the following January 1 for an additional year.

      Dr. Geiger serves as Executive Vice President and Chief Technology Officer pursuant to an employment agreement with the Company. Under the terms of his employment agreement, Dr. Geiger receives an annual base salary of not less than $1,000,000, and is eligible to receive an annual bonus at the discretion of the Company based on certain performance parameters established annually by the Company. Dr. Geiger’s employment agreement also provides him with an annual pension benefit of 30% of the average of his highest five consecutive years of eligible salary and incentive compensation plan bonus (after taking into consideration pension benefits he has earned under a prior employment agreement with a subsidiary of the Company). Dr. Geiger is also entitled to certain insurance benefits and participates in some of the Company’s other benefit plans and programs. Beginning August 2007, the employment agreement may be terminated by either party upon 12-months’ notice.

      Mr. Brown serves as Chief Financial Officer pursuant to a letter agreement with the Company. Under the terms of his letter agreement, Mr. Brown receives an annual base salary of $400,000. Mr. Brown also participates in incentive compensation and some of the Company’s other benefit plans and programs. If Mr. Brown’s employment is terminated by the Company before June 30, 2008 for any reason, except for job-related illegal misconduct, he will continue to receive salary and benefit payments for a period of one year or until he accepts other employment.

      Mr. Palin serves as Vice President — Controller pursuant to an employment agreement with the Company. Under the terms of his employment agreement, Mr. Palin’s annual base salary is £230,000, subject to annual review, and he is entitled to participate in the Company’s discretionary bonus plan and the Company’s UK health and life insurance plans. Mr. Palin’s employment agreement also provides that the Company contribute annually to Mr. Palin’s pension scheme an amount not less than 10% of his base salary. If his employment is terminated after a change in control of the Company, Mr. Palin will be entitled to severance and benefits for 24 months. As of June 2005, the employment agreement may be terminated by either party upon 12-months’ notice.

      Mr. Pertz served as Chief Executive Officer pursuant to a letter agreement with the Company from May 1, 2006 through August 21, 2006. Under the terms of his letter agreement, Mr. Pertz received an annual base salary of $850,000. Pursuant to the letter agreement, upon termination of his employment in August 2006, Mr. Pertz received $3,829,200 in severance compensation.

Certain Relationships and Related Transactions

      On August 22, 2005, the Company repurchased 5,000 shares of Common Stock from Dr. Gieger pursuant to the Restricted Stock Agreement, dated as of August 15, 2001, between the Company and Dr. Gieger. As provided in the Restricted Stock Agreement, these shares were valued at $108.05 per share, the closing price of the Common Stock on the New York Stock Exchange on August 2, 2005, the date the Company received Dr. Geiger’s repurchase request.

      Two of Dr. Harman’s adult children, Gina Harman and Lynn Harman, are employed by the Company. Gina Harman serves as President of Harman Consumer Group and as a director of the Company. Lynn Harman serves as Corporate Counsel. For services rendered during fiscal year 2006, Gina Harman was paid salary and bonus of $769,167 and Lynn Harman was paid salary and bonus of $193,933.

EQUITY COMPENSATION PLAN INFORMATION

      As of June 30, 2006, the 1992 Incentive Plan and the 2002 Stock Option and Incentive Plan were the only compensation plans under which securities of the Company were authorized for issuance. These plans, including amendments to the 1992 Incentive Plan, were approved by the Company’s stockholders. The table provides information as of June 30, 2006:

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table shows, as of August 31, 2006, the beneficial ownership of shares of Common Stock for (a) all stockholders known by the Company to beneficially own more than 5% of the shares of Common Stock, (b) each of the current directors, (c) the Company’s Executive Chairman, Chief Executive Officer and the three other most highly paid executive officers of the Company and (d) all of the Company’s directors and executive officers as a group. Some of the information in the table is based on information included in filings made by the beneficial owners with the Commission.

INDEPENDENT AUDITOR

      Selection. KPMG LLP served as the Company’s independent auditor for fiscal year 2006 and has been selected by the Audit Committee to serve as the Company’s independent auditor for fiscal year 2007. Representatives of KPMG LLP will attend the Meeting, will have an opportunity to make a statement and will be available to respond to questions.

      Audit and Non-Audit Fees. The following table presents fees for professional audit services rendered by KPMG LLP for the audit of the Company’s annual financial statements for fiscal year 2006 and fiscal year 2005, and fees billed for other services rendered by KPMG LLP.

      The Audit Committee’s policy is to pre-approve all audit and non-audit services provided to the Company by the independent auditors (except for items exempt from pre-approval requirements under applicable laws and rules). The Audit Committee has pre-approved certain services that KPMG is to provide to the Company in fiscal year 2007, including quarterly review of financial statements, tax compliance and tax consultation services related to income tax and the filing of income tax and VAT returns, consultations on the Company’s compliance with Section 404 of the Sarbanes-Oxley Act of 2002, and consulting related to acquisitions.

REPORT OF THE AUDIT COMMITTEE

      The Audit Committee is currently composed of four directors who are neither officers nor employees of the Company. All members of the Committee are “independent” as that term is defined by the New York Stock Exchange listing standards. The Committee operates under a written charter approved by the Board.

      In connection with its review of the audited financial statements appearing in the Company’s Annual Report on Form 10-K for fiscal year 2006, the Committee:

      Based on the review and discussions referred to above, the Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for fiscal year 2006, as filed with the Commission.

      The Committee has selected and engaged KPMG LLP as the Company’s independent auditor to audit and report to the Company’s stockholders on the Company’s financial statements for fiscal year 2007.

      This report is submitted by the members of the Audit Committee.

September 5, 2006

STOCK PRICE PERFORMANCE GRAPH

      The following graph compares changes in cumulative total returns (assuming reinvestment of cash dividends) on shares of the Common Stock for the five-year period ending June 30, 2006 against the S&P Composite-500 Stock Index and the S&P 500 Consumer Discretionary Index. The stock price performance graph assumes an initial investment of $100 at the market close on June 30, 2001. Dates on the chart represent the last trading day of the indicated fiscal year. The stock price performance shown on the graph below is not necessarily indicative of future performance of the shares of Common Stock.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and executive officers and persons who beneficially own more than 10% of the Company’s Common Stock to file initial reports of ownership and reports of changes in ownership with the Commission. Based solely on a review of the copies of such forms furnished to the Company and written representations from the Company’s directors and executive officers, the Company believes that all Section 16(a) filing requirements applicable to its directors and executive officers were complied with during fiscal year 2006, except that each of Ms. Hufstedler, Ms. Korologos, Mr. Meyer and Mr. Weiss inadvertently filed one late Form 4 related to an automatic option grant on November 2, 2005, and Ms. Korologos inadvertently filed one late Form 4 related to a sale of Common Stock on November 4, 2005.

STOCKHOLDER PROPOSALS FOR 2007 ANNUAL MEETING OF STOCKHOLDERS

      In order to be included in the Company’s proxy materials for the 2007 Annual Meeting of Stockholders, a stockholder proposal must be received in writing by the Company at 1101 Pennsylvania Avenue, N.W., Suite 1010, Washington, D.C. 20004 by May 14, 2007, and otherwise comply with all requirements of the Commission for stockholder proposals.

      The Company’s By-Laws provide that any stockholder who desires to bring a proposal before an annual meeting must give timely written notice of the proposal to the Company’s Secretary. To be timely, the notice must be delivered to the above address not less than 60 nor more than 90 days before the first anniversary of the date on which the Company first mailed its proxy materials for the immediately preceding annual meeting. Stockholder proposals for the 2007 Annual Meeting of Stockholders must be received not later than July 13, 2007. However, the Company’s By-Laws also provide that if an annual meeting is called for a date that is not within 30 days before or after the anniversary of the prior year’s annual meeting, then stockholder proposals for that annual meeting must be received no later than the close of business on the 10th day following the day on which public announcement is first made of the date of the upcoming annual meeting. The notice must also describe the stockholder proposal in reasonable detail and provide certain other information required by the By-Laws. A copy of the By-Laws is available upon request from the Company’s Secretary.

      Notice of a stockholder’s intent to make a nomination for director at the 2007 Annual Meeting of Stockholders must be received by the Secretary of the Company 90 days in advance of the annual meeting. The notice must include certain information regarding the nominees as required by the By-Laws. Stockholders may also submit recommendations for director candidates to the Nominating and Governance Committee by following the procedures described on page 10 of this Proxy Statement.

OTHER MATTERS

      The Board does not intend to present any other matter of business at the Meeting. However, if any other matter is properly presented at the Meeting, the shares represented by your proxy will be voted in accordance with the best judgment of the proxy holders.

Washington, D.C.

September 8, 2006

Appendix A

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED

POLICY OF THE BOARD OF DIRECTORS REGARDING DIRECTOR ELECTIONS

      In an uncontested election of Directors, any nominee for Director who receives a greater number of votes “withheld” from his or her election than votes “for” his or her election (a “Majority Withheld Vote”) shall tender his or her resignation as a Director to the Board of Directors promptly following the certification of the election results. Neither broker non-votes nor abstentions shall be deemed to be votes “withheld” from a Director’s election.

      The Nominating and Governance Committee will consider the tendered resignation and recommend to the Board of Directors whether to accept or reject it. The Board of Directors will act on the tendered resignation, taking into account the Nominating and Governance Committee’s recommendation, within 90 days following the certification of the election results. The Board of Directors will disclose its decision whether to accept or reject the tendered resignation (and the reasons for rejecting the tendered resignation, if applicable) promptly thereafter in a press release disseminated in the manner that Company press releases typically are distributed. The Nominating and Governance Committee in making its recommendation, and the Board of Directors in making its decision, may each consider any factors or other information that it considers appropriate and relevant.

      If a Director’s tendered resignation is accepted by the Board of Directors, then the Board of Directors may fill the resulting vacancy or decrease the number of directors comprising the Board of Directors in accordance with the provisions of the Company’s By-Laws. If the Director’s resignation is not accepted by the Board of Directors, such Director will continue to serve until the annual meeting of stockholders held in the third year following the year of his or her election and until his or her successor is elected and qualified.

      Any Director who tenders his or her resignation pursuant to this policy shall not participate in the Nominating and Governance Committee recommendation or Board of Director action regarding whether to accept the resignation offer.

      The Board of Directors may at any time in its sole discretion supplement or amend any provision of this policy in any respect, repeal the policy in whole or part or adopt a new policy relating to director elections with such terms as the Board of Directors determines in its sole discretion to be appropriate. The Board of Directors will have the exclusive power and authority to administer this policy, including without limitation the right and power to interpret the provisions of this policy and make all determinations deemed necessary or advisable for the administration of this policy. All such actions, interpretations and determinations which are done or made by the Board of Directors in good faith will be final, conclusive and binding.

Appendix B

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED

CATEGORICAL INDEPENDENCE STANDARDS FOR DIRECTORS

(AMENDED AND RESTATED AS OF AUGUST 16, 2005)

      A director of the Company who satisfies each of the following criteria will be presumed to be an independent director of the Company:

      As used in these Standards, an “immediate family member” means a person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who shares such person’s home.

      As used in these Standards, an “executive officer” means the Company’s president, principal accounting officer (or, if there is no such accounting officer, the controller), any vice president in charge of a principal business unit, division or function (such as sales, administration or finance), and any other officer or individual who performs policy-making functions for the Company.

      In making a determination regarding a director’s independence, the Board of Directors of the Company will endeavor to ascertain all relevant facts and circumstances, and will consider all relevant facts and circumstances that become known to the Board, including the director’s banking, consulting, legal, accounting, other professional, commercial, industrial, tax exempt and familial relationships. Each member of the Company’s Board of Directors shall, in good faith, disclose to the Board all facts and circumstances he or she reasonably believes necessary or appropriate in order to permit the Board to make a determination regarding whether the director meets the criteria set forth in these Standards.

      In making a determination regarding a director’s independence, any interest or relationship of a director of a type described in Item 404 of Regulation S-K promulgated by the Securities and Exchange Commission that is not required to be disclosed pursuant to Item 404 shall be presumed not to be inconsistent with the independence of such director, except to the extent otherwise expressly provided with respect to a particular interest or relationship in the rules established by the New York Stock Exchange.