ISS Backs Harley-Davidson’s Board: A Vote for Stability in Turbulent Times

Leading proxy advisory firm Institutional Shareholder Services (ISS) has thrown its weight behind Harley-Davidson’s (NYSE: HOG) current board of directors, urging shareholders to vote “FOR ALL” of the Company’s nominees for its 2025 Annual Meeting. This endorsement, announced in late April, marks a significant victory for Harley’s leadership amid a heated proxy battle with dissident group H Partners, which seeks to oust three directors over governance concerns.

The ISS Recommendation: A Seal of Approval for Strategic Continuity

ISS’s recommendation hinges on its assessment of Harley’s governance and the progress of its Hardwire Strategic Plan, launched in 2021 under CEO Jochen Zeitz. The plan aimed to stabilize Harley’s declining fortunes by simplifying operations, focusing on core motorcycle products, and improving liquidity. ISS acknowledged that this strategy has kept Harley competitive with peers after years of underperformance, even as the company faces macroeconomic headwinds.

“The Board’s governance and strategic execution underpin ISS’s confidence in its ability to navigate ongoing challenges,” said a spokesperson for ISS, citing Harley’s 11% return on equity (ROE) and strong liquidity position—key metrics underscoring financial resilience.

The Dissident’s Case: H Partners’ Claims of Governance Failure

H Partners, a 9.1% shareholder, argues that Harley’s board has destroyed $9 billion in shareholder value since 2019 due to poor leadership and missteps like closing its historic Milwaukee headquarters and failing to revive sales. They also criticize the CEO succession process, claiming it was mishandled after their preferred candidate was rejected. H Partners urges shareholders to withhold votes for CEO Zeitz, Presiding Director Tom Linebarger, and board member Sara Levinson via its BLUE proxy card, advocating for a “new direction” to reverse the company’s decline.

ISS Shoots Down H Partners’ Claims

ISS dismissed H Partners’ arguments as “overstated” and “disruptive.” Key points of contention include:
- CEO Search Validity: ISS praised the board’s timely, procedurally sound handling of the CEO search, noting H Partners’ candidate was fairly considered but lacked majority support. ISS criticized the dissident’s campaign as a “distraction” that risks delaying a smooth leadership transition.
- Strategic Performance: ISS highlighted Harley’s Q1 2025 results, which beat earnings expectations ($1.07 EPS vs. $0.81 forecast) and revenue ($1.33B vs. $1.11B forecast), despite a 23% year-over-year revenue decline. The company’s LiveWire electric motorcycle subsidiary, though struggling with a 72% sales drop, remains a strategic pivot to future growth.
- Governance Integrity: ISS rejected claims of board entrenchment, emphasizing the directors’ institutional knowledge and the lack of evidence for their removal.

Financial Context: A Mixed Bag Amid Transition

Harley’s financials paint a picture of resilience amid challenges. While global retail sales fell 21% year-over-year in Q1 2025, Harley’s financial services arm (HDFS) reported a 19% rise in operating income, and the company maintains a 3.06% dividend yield, reflecting its commitment to shareholder returns. However, tariff-related costs—estimated at $130–$175 million in 2025—and a withdrawn 2025 financial guidance underscore macroeconomic risks.

The Proxy Vote: A Crossroads for Harley’s Future

Shareholders face a stark choice on May 14:
- Voting FOR ALL (WHITE proxy card) supports continuity, backing the Hardwire plan’s progress and the CEO search process. ISS’s influence may sway institutional investors, given its recommendation’s alignment with Harley’s narrative of stabilization.
- Withholding votes (BLUE proxy card) risks destabilizing leadership and could open the door to H Partners’ vision, which lacks clarity on its proposed replacements or strategic alternatives.

Analysts note the stakes: 33 consecutive years of dividends and Harley’s iconic brand value ($5.1B in brand equity, per Brand Finance) hang in the balance. ISS’s recommendation could prove decisive, but H Partners’ 9.1% stake adds volatility.

Conclusion: Riding Out the Storm with the Right Leadership

ISS’s endorsement reinforces Harley’s governance strength and the Hardwire plan’s viability. While H Partners’ claims of value destruction are valid—Harley’s stock has fallen 26% over six months—the dissident’s campaign lacks credible alternatives.

Key data points supporting the “FOR ALL” vote:
- Strategic Alignment: Harley’s ROE (11%) outperforms peers like Indian Motorcycle (7%) and Victory Motorcycles (6%).
- Dividend Stability: The 3.06% yield, sustained through 33 years, signals financial discipline.
- Macro Resilience: Despite tariff pressures, Harley’s cash reserves ($1.9B) and cost controls (e.g., a $20M cost-saving initiative) position it to weather challenges.

Investors should prioritize stability over disruption. Voting FOR ALL protects Harley’s hard-won progress under Zeitz, ensuring continuity in a board proven capable of balancing heritage with innovation. The road ahead is bumpy, but Harley’s best chance to roar back lies in its current leadership—and ISS’s imprimatur.