Harley-Davidson Faces Governance Crisis as H Partners Escalates Shareholder Battle

Harley-Davidson’s storied legacy as the “motorcycle of freedom” faces an uncharacteristic clash of wills between its board of directors and a major shareholder, H Partners Management, LLC. The stakes are high: at the heart of the dispute is control over the company’s leadership, its strategic direction, and whether its governance practices align with shareholder interests. The battle, unfolding ahead of the May 14, 2025 Annual Meeting, could reshape the future of one of America’s most iconic brands—and its stock price.

The Conflict Unfolds: H Partners’ Allegations

H Partners, which holds 9.3% of Harley’s shares, has accused the board of making secret commitments to select investors, including assurances that CEO Jochen Zeitz, Presiding Director Thomas Linebarger, and longtime director Sara Levinson would step down within a year. The firm claims this violates SEC proxy rules by creating a two-tiered shareholder system, where only an “elite” group gains privileged access to non-public information. H Partners argues that these directors’ alleged plans undermine governance and shareholder value, citing $9 billion in equity value destruction over two CEO transitions since 2015.

The firm is urging shareholders to vote “WITHHOLD” for Zeitz, Linebarger, and Levinson using its BLUE proxy card, arguing their continued presence poses a “material threat” to the company. Two proxy advisory firms, Glass Lewis and Egan-Jones, have endorsed this stance, adding credibility to H Partners’ campaign.

Harley-Davidson’s Defense: A Strategic Rebuttal

Harley’s response is a meticulously crafted defense of its governance, leadership, and financial performance. The company emphasizes its Hardwire strategic plan, launched in 2020, which it claims has delivered results despite macroeconomic headwinds. Key points include:

1. Financial Outperformance:
2. Operating margins: 13% (2022–2024), 4 percentage points above peer medians.
3. Free cash flow: 70% of EBITDA (peers average 30%).
4. Shareholder returns: 10% higher TSR than peers since 2020, with a 25% reduction in shares outstanding since 2022.

1. CEO Search Transparency:
   Harley denies secret commitments, stating the board followed proper process. CEO Zeitz announced his retirement intentions in September 看不出， the search committee—including H Partners’ director Jared Dourdeville—was formed in December 2024. H Partners pushed for an accelerated timeline to evaluate its preferred candidate, which Harley rejected, citing misalignment with the brand’s heritage. The company accused H Partners of leaking confidential information about another candidate and calling their campaign “a blatant disregard for governance.”

2. Governance Integrity:
   Harley highlights its board refreshment efforts, with 33% turnover since 2021, including two new CEO-level directors and a third nominee (Lori Flees) awaiting shareholder approval. Annual board evaluations, conducted anonymously, received no objections from directors—including Dourdeville—until his abrupt resignation after his candidate was rejected.

The Heart of the Dispute: Trust and Leadership

The conflict hinges on competing narratives of accountability. H Partners paints the board as an entrenched, secretive group whose poor decisions have eroded the brand. Harley counters that its leadership has navigated a turbulent industry—marked by supply chain disruptions, inflation, and shifting consumer preferences—with measurable success.

Critically, the board’s stance on CEO succession is a focal point. Harley argues that allowing the search committee to proceed independently ensures the best candidate is chosen, while H Partners insists the board’s track record disqualifies it from such decisions.

Risks and Considerations for Investors

• Proxy Voting Outcomes: A withhold vote for Zeitz, Linebarger, and Levinson could weaken board cohesion, potentially derailing the CEO search.
• Strategic Execution: The Hardwire plan’s success hinges on global expansion, digital innovation, and dealer network stability. Disruption to leadership could stall these efforts.
• Shareholder Sentiment: H Partners’ campaign, while backed by proxy advisors, faces skepticism over its motives. The firm’s sudden shift from board supporter to adversary after its candidate was rejected raises questions about its alignment with long-term value.

Conclusion: A Test of Leadership and Legacy

Harley-Davidson’s governance battle is a microcosm of broader corporate governance challenges: transparency versus expediency, shareholder democracy versus executive autonomy. The company’s financial metrics—strong margins, cash flow, and shareholder returns—suggest the board has navigated recent turbulence effectively. However, the allegations of secrecy and H Partners’ aggressive tactics highlight governance vulnerabilities.

Investors must weigh two narratives:
1. Harley’s Case: A disciplined, results-driven board steering a brand through tough markets, with a proven track record of outperforming peers.
2. H Partners’ Case: A governance failure that risks stifling innovation and alienating shareholders.

The stock’s performance—currently trading at $[X] (as of [date])—reflects this tension. Should shareholders side with Harley’s board, the company could continue executing its strategy, potentially rewarding investors with further growth. A H Partners victory, however, might lead to leadership upheaval, creating uncertainty but also the potential for a fresh start.

Ultimately, the outcome of this proxy battle will determine not just who leads Harley-Davidson next, but whether its legendary brand can sustain its ride into the future.