The battlelines are being drawn. Harley-Davidson and H Partners, the second-largest shareholder in MoCo, are preparing for a proxy war. At stake is who will take the helm of the US’s largest motorcycle manufacturer. After a number of back-and-forth filings with the Securities and Exchange Commission, both Harley-Davidson and H Partners (including ex-Harley-Davidson Board member Jared Dourdeville) are setting up their offenses and defenses for what could significantly change the path of Harley-Davidson’s executive management and future.

What Is The Problem?

The who, what, when, where, and how so far depends on whose story you believe. There have been SEC filings from both parties, and they often provide conflicting points of view. In a nutshell, Harley-Davidson says it “has successfully executed the Hardwire” strategy developed by the current Chairman of the Board of Directors and CEO, Jochen Zeitz. However, under the Hardwire strategy, Harley-Davidson’s financials have been poor for the last couple of years.

Mr. Zeitz has said he is retiring, and the company says it is in the process of finding his replacement. Adding fuel to the fire, according to an H Partners filing, Zeitz wants Harley’s current CFO, Jonathan Root, to become its new CEO to continue the Hardwire strategy.

However, H Partners, Harley-Davidson’s second largest investor by share count, apparently believes that:

• The Hardwire strategy has failed.
• Harley-Davidson’s Board of Directors is not holding the company accountable for its actions and poor financial performance.
• Executive management is largely physically absent from the business.
• And the company’s actions have detrimentally affected its dealers.
• Other miscellaneous concerns.

Perhaps their biggest concern is that they believe the candidate who replaces Zeitz must be external to the company and wants that candidate to take charge sooner rather than later. And that’s where the latest drama begins.

H Partners partner and ex-Harley-Davidson Board member Jared Dourdeville. Photo: LinkedIn

White and Blue Proxy Cards

Harley-Davidson’s annual meeting is scheduled to be held on May 14, 2025. During that time, Harley-Davidson will hold an election for its Board of Directors. And this is where we get to the current situation of the white and blue proxy cards. If you are not familiar with a proxy card, it’s like an absentee ballot that enables shareholders to vote without physically attending the in-person shareholder meeting.

Harley-Davidson sent shareholders its own “white” proxy card recommending the re-election of all of its current Board members (including Dourdeville) and one new member, Lori Flees, the current CEO and President of Valvoline. In an attempt to oust current Board members Zeitz, Linebarger, and Levinson, H Partners has developed its own blue proxy card that recommends that shareholders vote “withhold” for the current Chairman and CEO Zeitz, Presiding Director Linebarger, and long-time Board member Sara Levinson. (Note: A withheld vote is similar to an abstained vote, but is used where nominees run unopposed and therefore only need a single vote to earn a “plurality.”)

The Back And Forth

Since this entire debacle began, both sides have swapped accusations at each other. Harley-Davidson’s latest shot suggests that H Partners has taken a “…self-serving action targeting members of our board after that firm’s preferred CEO candidate failed to receive majority support from the Board’s Independent Directors.” In other words, Harley-Davidson says H Partners is doing this because H Partner’s “…preferred CEO candidate failed to receive majority support from the Board’s Independent Directors.” While that is apparently true, in actuality, the Board deadlocked by a 4-4 vote of at least one of H Partner’s candidates.

For its part, H Partners says it is calling on shareholders to “…send a clear message to the Board that the status quo is unacceptable, and that a new external CEO should be appointed to renew Harley-Davidson. They are also calling on the Board to “…immediately remove Jochen Zeitz as CEO and install an internal senior leader as interim CEO on a short-term basis until an external, permanent CEO is selected.” Finally, H Partners has replied to a number of Harley’s responses and allegations and suggests that Harley-Davidson materially misrepresented some facts in its responses.

The Crux Of The Matter

The crux of all this arguing and proxy card soliciting is who will take the helm of Harley-Davidson once Jochen Zeitz retires. According to H Partners, at a meeting with Zeitz and Linebarger, H Partners was told that they should consider current CFO Jonathan Root to replace Zeitz. If this is true, it would seem that at least two of Harley-Davidson’s top executives have a preference for Mr. Root’s election as the company’s CEO. On the other hand, H Partners says that Harley-Davidson’s plan should be to hire a candidate external to the MoCo.

Current Harley-Davidson CFO, Jonathan Root. Photo: Harley-Davidson

If there is one thing that is certain, Harley-Davidson’s financial performance during the last two years has been sliding. The current executive leadership at Harley-Davidson is responsible for that performance. To date, they have not made changes that positively impact Harley-Davidson’s financial performance.

We should know more about how this will turn out after Harley’s upcoming 2025 annual meeting is held. Stay tuned, there’s definitely more to come.