Harley-Davidson's Governance Battle: Ride the Wave or Abandon the Bike?

The roar of Harley-Davidson’s engines has long been a symbol of rebellion and freedom. Today, its boardroom is the battleground. Shareholders just staged a historic revolt, withholding nearly 50% of votes for CEO Jochen Zeitz and two other directors—marking a brutal rebuke of leadership. Yet Harley’s financials scream “buy me”: 13% operating margins, $257 million in productivity savings, and a 43% upside implied by analyst price targets. So, where’s the truth? Is this a once-in-a-decade opportunity or a governance time bomb? Let’s rev this engine and find out.

The Proxy Revolt: A 50% Withhold Vote Is a Red Flag

H Partners, a 9.3% shareholder, led a campaign to oust Zeitz and two board stalwarts, arguing they’ve destroyed $9 billion in shareholder value since 2015. The result? A stunning 48% of total votes withheld for Zeitz, with over 40% against the others—levels that would topple most boards. Even scarier: 90% of institutional investors withheld their support.

Harley’s response? Public capitulation. The board agreed to:
1. Resign three directors by 2026 (ending Zeitz’s tenure).
2. Hire an external CEO (no more “insider” leadership).
3. Kill the Executive Chair role for Zeitz post-retirement.

This isn’t just a governance reset—it’s a death knell for the old guard. But here’s the catch: H Partners still smells smoke. They’ve accused the board of making secret backroom deals with select shareholders to secure votes, a move they say violates SEC rules. If true, this could reignite the firestorm.

The Financial Case: Harley’s Engine Still Roars

Despite the governance chaos, Harley’s financials are smoking hot. The company’s 13% operating margins crush the industry median by 400 basis points. It’s returned $1.4 billion to shareholders since 2022 via buybacks and dividends, slashing its share count by 25%—the most among peers. Analysts are bullish: the average price target of $31 implies a +43% gain from current levels.

The crown jewel? LiveWire, Harley’s electric-vehicle subsidiary. Despite headwinds, it’s growing at 46% annually, holding 65% U.S. EV market share. Critics cite LiveWire’s struggles scaling globally, but let’s be clear: this is still a $2.5 billion revenue machine with room to grow.

Harley’s Hardwire strategy—focused on cost-cutting, margins, and innovation—is delivering. The company’s free cash flow (FCF) hit 70% of EBITDA, double the peer average. Even if Zeitz is gone by year-end, the CEO search committee has vetted 120 candidates, signaling a disciplined process.

The Governance Gamble: Trust, But Verify

The board’s survival isn’t a free pass. Investors must ask:
- Can Harley avoid another governance scandal under new leadership?
- Will the external CEO truly prioritize shareholder value over legacy projects?
- Is the $9 billion value erosion a past wound or a ticking time bomb?

H Partners’ skepticism is valid. The board’s secret backroom deals—promising resignations in exchange for votes—reek of desperation. If they’ve already broken shareholder trust, why believe the next promise? Meanwhile, Zeitz’s exit in 2025 removes a polarizing figure, but the Executive Chair role (now scrapped) was a red flag of overreach.

The Bottom Line: Buy the Dip, but Buckle Up

This is a buy—now—but with a seatbelt. Harley’s fundamentals are too strong to ignore, and the governance overhaul is forcing accountability. The board’s concessions signal they’ve heard shareholders. The new CEO will likely accelerate LiveWire’s growth and tighten margins further.

Action Items:
1. Buy Harley now at $21.50, targeting $31.
2. Set a stop-loss at $18—a 20% drop would signal deeper issues.
3. Monitor the CEO appointment (due by late 2025). A visionary leader here could supercharge the stock.

The governance battle is over—Harley’s board survived, but it’s a new era. This isn’t a “buy and forget” stock. Stay vigilant, but don’t miss the rally. The road ahead is bumpy, but the engine’s still firing. Ride the wave—carefully.

Final Call: BUY Harley-Davidson with caution. Governance scars may linger, but the financials and strategy are too compelling to ignore. This is a call option on leadership change—and the upside is worth the risk.