Harley-Davidson vs. H Partners: A Proxy War Over Governance, Strategy, and Shareholder Rights

Harley-Davidson (NYSE: HOG) has found itself in a heated corporate showdown with activist investor H Partners, which has launched a sharp proxy campaign targeting the motorcycle giant’s governance, leadership, and strategic direction. The conflict, framed by Harley as a “disingenuous and harmful” attack on shareholder rights, hinges on competing visions for the company’s future—and the methods each side is willing to deploy to win. Let’s dissect the claims, counterclaims, and what investors need to know.

The Core of the Dispute: Governance and Leadership

H Partners’ 2025 proxy campaign centers on three main demands:
1. Replacing Board Nominees with Unnamed Directors: H Partners insists Harley-Davidson’s board lacks the “urgency” to deliver value and seeks to install its own slate of directors—including an H Partners representative—without disclosing their identities. Harley rejects this as a “disenfranchisement of shareholders,” arguing that nominees must be vetted and approved by investors.
2. Accelerating CEO Transition: H Partners pushed for Harley to fast-track its search for a new CEO, pressuring the board to approve a candidate who ultimately failed to meet qualifications. After rejection, H Partners accused Harley of resisting change while withholding the candidate’s identity, a move Harley calls “unconscionable.”
3. Attacking Governance and Strategy: H Partners claims Harley’s board has mismanaged the Hardwire strategic plan, citing underperformance against “peers.” Harley counters that its financial results—13% operating margins (vs. peer medians of 6–7%) and a 70% free cash flow-to-EBITDA ratio—prove the strategy’s success.

The Flaws in H Partners’ Case: Data vs. Rhetoric

Harley’s rebuttal hinges on exposing weaknesses in H Partners’ arguments:

1. Misleading Benchmark Comparisons

H Partners used an “egregiously irrelevant” peer group including BRP Inc. and Polaris Inc., which Harley argues are far smaller and operate in different markets. Harley’s peer group—approved during H Partners’ own Jared Dourdeville’s Board tenure—focuses on firms with $800MM–$3B market caps, aligning with its core business.

2. Executive Turnover Claims: Fabricated or Fabrications?

H Partners alleges high executive turnover undermines stability. Harley refutes this:
- Most senior leaders have been in place since the Hardwire plan launched in 2021.
- Voluntary turnover among salaried employees dropped to a record low of 6% in 2023–2024, below national averages.

3. Confidentiality Violations

H Partners leaked the identity of an unnamed Harley CEO candidate, breaching confidentiality. Harley calls this a “blatant violation” of trust, while H Partners refuses to disclose its own preferred candidate’s identity—a contradiction Harley highlights as hypocritical.

Proxy Fight Tactics: A Battle for Shareholder Votes

H Partners’ BLUE proxy card urges shareholders to withhold votes for Harley’s board nominees and instead support their unnamed slate. Harley argues this risks destabilizing the company, especially as H Partners’ demands include replacing a third of the board.

The stakes are high: if H Partners secures enough votes, Harley’s management could face forced changes, potentially derailing the Hardwire strategy. Investors should note that Harley’s stock has outperformed the broader market since 2023, rising ~18% vs. the S&P 500’s 6% gain, despite the governance turmoil.

Conclusion: A Proxy War with Long-Term Implications

Harley-Davidson’s rebuttals paint H Partners as an activist group prioritizing its own agenda over shareholder interests, using misleading data and aggressive tactics to pressure the board. Key takeaways for investors:
1. Financial Strength: Harley’s superior margins and cash flow suggest the Hardwire plan is working, even if growth is modest.
2. Governance Risks: Allowing H Partners to install an unnamed board slate could destabilize decision-making, particularly amid a CEO transition.
3. Shareholder Rights: H Partners’ refusal to name nominees undermines transparency, a red flag for long-term investors.

The proxy vote outcome, likely in early 2025, will determine whether Harley’s leadership retains control or faces a disruptive overhaul. For now, the data leans in Harley’s favor—but investors should monitor how this battle unfolds, as it could reshape the company’s trajectory for years to come.

Final Take: Harley-Davidson’s financial resilience and strategic execution to date suggest H Partners’ criticisms are overstated. However, the proxy fight’s outcome remains pivotal. Investors should weigh whether H Partners’ demands align with long-term value creation—or risk becoming a distraction from Harley’s steady progress.