Harley-Davidson’s Governance Battle: A Crucial Vote for Investors

Investors, buckle up! Harley-Davidson is in the middle of a heated governance battle that could redefine its future—and your portfolio. Activist investor H Partners is waging war against Harley’s leadership, accusing them of financial underperformance, poor strategy execution, and flawed governance. Meanwhile, Harley’s management is firing back, calling H Partners’ claims “misleading” and defending its progress. This isn’t just a boardroom fight—it’s a critical moment for shareholders. Let’s dive into the details to see who’s right and what this means for investors.

The Claims: Harley vs. H Partners

Harley-Davidson’s Case for Leadership

Harley’s management insists it’s delivering results under CEO Jochen Zeitz’s Hardwire Strategic Plan, which focuses on operational efficiency, global expansion, and shareholder returns. Key metrics include:
- Operating margins of 13% (2022–2024), outperforming its peer median by ~4 percentage points.
- Free cash flow (FCF) at 70% of EBITDA, double the peer median.
- Total shareholder return (TSR) of ~10 percentage points above peers since Zeitz took the helm in 2020.

Harley also highlights its capital discipline: a 25% reduction in shares outstanding over three years, a 14% dividend hike, and $1.4 billion returned to shareholders since 2022.

H Partners’ Charges of Failure

H Partners, owning ~9% of Harley, argues that Zeitz’s leadership has led to:
- TSR underperformance versus peers.
- Declining operating income under Hardwire.
- Entrenched directors (including Zeitz, Tom Linebarger, and Sara Levinson) who’ve overseen decades of value destruction.

They cite Levinson’s 29-year tenure as a red flag, noting Harley’s market cap has fallen 75% during her board tenure. H Partners is pushing shareholders to vote “WITHHOLD” on the BLUE proxy card to oust these directors.

The Proxy Fight: A Governance Showdown

The crux of the battle is the May 14 annual meeting, where shareholders will decide the fate of Harley’s board. Here’s what’s at stake:

1. CEO Succession Chaos
2. Harley’s search for Zeitz’s successor hit turbulence when H Partners pushed for their preferred candidate, who failed to secure majority board support.

3. H Partners accuses the board of rushing the process to block their choice, while Harley claims confidentiality was breached when H Partners leaked details about other candidates.

4. Peer Benchmarking Wars

5. Harley uses a peer group of $800M–$3B leisure/powersports firms (e.g., Polaris, Winnebago).

6. H Partners allegedly used irrelevant peers (like larger, unrelated companies), which Harley calls “egregiously misleading.”

7. Conflicts of Interest?

8. H Partners’ rep, Jared Dourdeville, resigned abruptly after their candidate was rejected. Harley claims H Partners is now “engineering” a board takeover via the BLUE proxy, bypassing shareholder input.

The Data: Who’s Right?

Let’s cut through the noise with hard numbers:

This chart will show whether Harley’s TSR has truly outperformed peers or if H Partners’ claims hold water.

This comparison will test Harley’s claim of superior profitability.

The Risks and Rewards

• Investing in Change: If H Partners wins, Harley could get fresh leadership and a strategic reset. But abrupt changes might spook investors and partners.
• Sticking with the Status Quo: Voting “FOR” the current board (via the WHITE proxy) could mean continuity, but risks entrenching underperforming directors.
• The Governance Minefield: The board’s handling of the CEO search and confidentiality breaches raises questions about oversight quality.

Action! What Should Investors Do?

1. Dig into the Data: Study Harley’s TSR performance against its peer group. If the charts confirm Harley’s claims, it strengthens the case for the current leadership.
2. Watch the Proxy Vote: A withhold vote above 30% could force concessions. Track how major shareholders (like mutual funds) align.
3. Consider the Long Game: Harley’s brand is iconic, but its market is shrinking (North American sales dropped 4.2% in 2024). Success depends on executing Hardwire’s global growth and cost-cutting goals.

Conclusion: A Fork in the Road for Harley

The math is clear: Harley’s financial metrics (margins, FCF) beat its peer group, but its stock has lagged. H Partners’ push to replace directors highlights governance risks but lacks a clear path to value creation. Investors must decide whether Harley’s current team can navigate a tough industry—or if a shakeup is worth the gamble.

Final Take:
- Hold or Buy: If you believe in Harley’s operational execution and its ability to stabilize sales in key markets (like India’s 135% growth), stick with the WHITE proxy.
- Sell or Stay Out: If you side with H Partners’ governance critique and see the board as a drag, the BLUE proxy might be your play—but proceed with caution.

The stakes are high: This vote could determine whether Harley-Davidson revives its legacy or becomes a cautionary tale of boardroom battles gone wrong.

This final chart will show if Harley’s cash generation truly outshines competitors—or if H Partners’ criticism holds merit.

Investors, this is your moment to decide. The throttle is yours!