Harley-Davidson’s Governance Battle: A Vote for Change or a Risky Gamble?

The upcoming May 14 annual meeting of Harley-Davidson, Inc. (NYSE: HOG) has become a battleground between entrenched corporate leadership and a rebellious shareholder group. H Partners, a 9.1% stakeholder, is waging a high-stakes campaign to oust three directors it blames for the company’s prolonged decline. Their clash with ISS—whose recommendation to vote “FOR ALL” director nominees they call “deeply flawed”—centers on a question critical to Harley’s future: Can a board accused of destroying over $9 billion in shareholder value in recent years deliver the turnaround the brand so desperately needs?

The Case Against the Incumbent Directors

H Partners’ argument hinges on three pillars of underperformance:
1. Leadership Tenure and Value Destruction: CEO Jochen Zeitz, Presiding Director Thomas Linebarger, and 29-year board member Sara Levinson have overseen a catastrophic erosion of shareholder value. Under their directorships, Harley’s total shareholder return (TSR) underperformed the S&P 400 Consumer Discretionary Index by -335%, -403%, and -816%, respectively. Over their combined tenure, the company’s equity value has plummeted by over $9 billion, with $2 billion lost during Zeitz’s five-year CEO tenure alone.
2. Failed Strategic Execution: The Hardwire Strategic Plan, launched in 2021 to streamline operations and focus on core products, has fallen short. Harley has missed or cut quarterly guidance in six of the last nine quarters, trailing revenue and margin targets. Entry-level motorcycle models were axed, dealerships face a 50% failure rate, and competitors gained 23% more U.S. motorcycle registrations under Zeitz’s leadership.
3. Governance Entrenchment: H Partners accuses the board of being “long-tenured, entrenched, and resistant to accountability.” Examples include the controversial closure of Harley’s historic Milwaukee headquarters and a CEO succession process that, in prior cycles, led to equity losses exceeding $1 billion.

ISS’s Counterarguments: Stability vs. Disruption

ISS defends its “FOR ALL” recommendation by citing two points:
- The Hardwire strategy has “stabilized Harley’s trajectory,” reducing debt and improving liquidity.
- The board’s CEO search process, while contentious, was “thorough” and merits support. ISS also warns that H Partners’ campaign risks delaying CEO succession and that their preferred candidate lacks majority board backing.

H Partners dismisses these claims, arguing that “stability” is insufficient when profitability, growth, and brand relevance are collapsing. They also counter that ISS’s analysis ignores the board’s 50% dealership failure rate and $9 billion equity loss, which they call “irreversible damage.”

The Crossroads for Harley’s Shareholders

The vote is a binary choice:
- WITHHOLD on Zeitz, Linebarger, and Levinson (via H Partners’ BLUE proxy card) signals a demand for governance reforms and leadership accountability.
- FOR the directors (via Harley’s WHITE proxy card) preserves the status quo, betting that the Hardwire strategy’s “stabilization” will eventually bear fruit.

The Data Speaks

• Market Performance: Harley’s stock has underperformed the S&P 400 by 246% since Zeitz became CEO in 2019, according to H Partners’ analysis.
• Strategic Failures: Entry-level motorcycle cuts have alienated younger riders, while competitors like Indian Motorcycle and Victory have surged.
• Operational Metrics: U.S. motorcycle registrations excluding Harley rose 23% under Zeitz, while Harley’s domestic sales fell 15% over the same period.

Conclusion: A Vote for Accountability, Despite Uncertainty

H Partners’ campaign is not about installing their own candidates but about forcing accountability on a board that has failed shareholders for over a decade. The data is unequivocal: $9 billion in value lost, chronic misses on financial targets, and a governance structure that has produced neither stability nor growth.

While ISS argues that disruption risks harm, the status quo has already delivered disaster. A withhold vote on the three directors sends a clear message: Harley’s leadership must change to survive. Shareholders who prioritize long-term value over short-term calm should heed H Partners’ warning. The stakes are existential—for Harley’s legacy and its shareholders’ wallets alike.

Final tally: Will shareholders choose to “Free the Eagle” or let the board stay entrenched? The vote on May 14 will decide.