Harley-Davidson Fights Back Against H Partners' Disinformation Campaign: A Shareholder Value Showdown

The battle for Harley-Davidson’s future has escalated into a high-stakes proxy war, with activist investor H Partners Management launching a campaign to unseat three directors and overhaul the company’s strategy. But Harley-Davidson isn’t backing down. In a forceful rebuttal, the iconic motorcycle manufacturer has fired back at H Partners’ claims of governance failures, financial underperformance, and strategic missteps. Let’s dissect the conflict and its implications for investors.

The Proxy Fight: H Partners’ Claims vs. Harley’s Reality

H Partners’ campaign hinges on three core accusations:
1. Leadership Failure: CEO Jochen Zeitz and two long-tenured directors (Thomas Linebarger and Sara Levinson) are accused of entrenching poor governance and destroying shareholder value.
2. Strategic Blunders: The Livewire electric motorcycle line is labeled a “horribly misguided” initiative, while the discontinuation of the classic Sportster 883 model is cited as a missed opportunity to attract younger riders.
3. Financial Underperformance: H Partners claims Harley has lost $2 billion in market value over five years and lags peers in margins, cash flow, and total shareholder return (TSR).

Harley-Davidson’s response? A data-driven rebuttal that paints H Partners as disingenuous disruptors. The company argues its Hardwire strategic plan has delivered measurable results, and its governance is robust. Let’s parse the evidence.

Financial Performance: Harley’s Case for Success

Harley refutes H Partners’ claims with hard numbers:

1. Operating Margins:
   
   Harley’s margins averaged 13% over the past three years—4 percentage points above its peer median.

2. Free Cash Flow (FCF):
   Harley’s FCF has averaged 70% of EBITDA since 2022—double the peer median of 35%. This cash generation has fueled shareholder returns:

3. A 25% reduction in shares outstanding since 2022 (the most among peers).

4. $1.4 billion returned to shareholders via buybacks and dividends since 2022.

5. Total Shareholder Return (TSR):
   Under Zeitz’s leadership (May 2020–April 2025), Harley’s TSR outperformed its peer group by ~10 percentage points, with a 5-year annualized TSR of 8.2% vs. peers’ -1.8%.

Governance and Leadership: A Rigorous Process or Entrenchment?

H Partners alleges the board’s CEO succession process was mishandled, rejecting their preferred candidate without justification. Harley counters that the search was transparent and rigorous:

• A four-member committee (including H Partners’ own representative, Jared Dourdeville) evaluated candidates.
• H Partners’ candidate was denied unanimous support due to lacking “skills and vision for Harley’s heritage.”
• The board accused H Partners of hypocrisy: Dourdeville had supported Zeitz’s leadership for three years until his candidate was rejected.

Harley also highlights board refreshment:
- 33% of directors added in the past four years, including two CEO-level executives (one pending election at the May 14 shareholder meeting).
- Annual anonymous director evaluations have found no governance shortcomings.

The Product Strategy Debate: Livewire vs. Legacy

H Partners and ally Purple Chip Capital argue that Harley’s pivot to electric vehicles (via Livewire) has alienated traditional riders. They demand a return to classic models like the Sportster 883. Harley’s rebuttal?

• The Livewire line is a strategic innovation, not a distraction. While sales are small, they represent a long-term bet on EV adoption.
• Harley’s core touring segment (74.5% U.S. market share) remains profitable, and the company has launched new models like the Sportster S to blend heritage with modern tech.

The debate boils down to this: Is Harley’s diversification into EVs a risk or a growth lever? For now, cash flow and margins suggest the strategy isn’t harming fundamentals.

The Risks of H Partners’ Campaign

Harley warns that H Partners’ “withhold” votes could destabilize the CEO succession process, deterring top candidates. The company also accuses H Partners of:
- Confidentiality breaches: Leaking details about a confidential CEO candidate while hiding their own.
- Misleading benchmarks: Using irrelevant peers (e.g., Winnebago, a recreational vehicle maker) to criticize performance.

Investors should note that H Partners’ preferred candidate was never formally proposed to the board, raising questions about the group’s credibility.

Conclusion: A Vote for Stability or Disruption?

The May 14 shareholder meeting will decide Harley-Davidson’s course. Here’s why investors should heed Harley’s warnings:

1. Financial Outperformance: Harley’s margins, cash flow, and TSR all outpace peers. A shows resilience in a tough economy.
2. Governance Integrity: The board’s refreshment and transparent CEO search suggest accountability. Replacing directors mid-process risks derailing the succession.
3. Strategic Continuity: The Livewire line and Hardwire plan are bets on long-term trends. Disrupting leadership now could harm execution.

H Partners’ campaign, meanwhile, lacks a clear path forward. Their candidate’s rejection, Purple Chip’s small stake (1%), and the board’s documented performance make their claims of “value destruction” hard to swallow.

Final Call: Vote FOR Harley’s board nominees. The data supports continuity, and the stakes for shareholders couldn’t be higher.

Data sources: Harley-Davidson’s SEC filings, 2024 investor presentations, and peer comparisons from Morningstar.