Harley-Davidson’s Boardroom Battle

Harley-Davidson’s CEO Jochen Zeitz has already made it clear that’s he’s retiring from that role later this year after the completion of the five-year “Hardwire” strategy that he put in place in 2020—but that’s not enough for the company’s second-largest shareholder, which has launched a campaign to prevent Zeitz and two fellow directors from being reelected at the company’s 2025 annual meeting of shareholders on May 14.

The move comes from investment group H Partners, which took a 9.1% stake in Harley-Davidson in 2022, resulting in one of its own principals, Jared Dourdeville, joining the Harley-Davidson board the same year. Dourdeville resigned from the Harley-Davidson board April 5, shortly before Harley-Davidson confirmed, on April 8, that Zeitz is retiring this year, and a search has begun for a new CEO.

In a statement filed with the SEC following Dourdeville’s resignation from the board, including a redacted version of his resignation letter, it’s revealed that Dourdeville’s preferred CEO candidate as replacement for Zeitz was not offered the role, and that appears to have sparked the conflict that led first to his resignation and now to the campaign by H Partners to have Zeitz, Presiding Director Thomas Linebarger, and fellow director Sara Levinson removed.

In an open letter to shareholders, H Partners says: “…over the last year, it has become increasingly apparent to us that there have been major execution issues, overseen by an absentee CEO; that the CEO and Presiding Director have not been fully transparent with the rest of the Board; and that certain long-tenured Board members have been unwilling to hold the CEO accountable for severe value destruction and the cultural depletion of this iconic American company.”

It goes on to claim that dealer sentiment is near a decade-long low and to point out Harley-Davidson’s underperformance on the stock market, saying: “Since Mr. Zeitz was appointed Chairman and CEO on February 28, 2020, the Company has underperformed the S&P 500 and the S&P 400 Consumer Discretionary Index by 104% and 81%, respectively.”

H Partners says that Dourdeville resigned because: “As only one voice on a Board that included eight or nine members during his tenure, our Board representative’s ability to influence the Board was limited — an issue that was further exacerbated by the outsized influence that Mr. Linebarger and Mr. Zeitz exhibited over practically all Board topics or matters.”

In its open letter, H Partners calls for three steps. It wants shareholders to vote “Withhold” on the election of Zeitz, Linebarger, and Levinson as directors at the next shareholder meeting. It calls for the immediate removal of Zeitz as CEO and the installation of an interim CEO during the search for a full-time replacement. And finally, it wants shareholders to call for that new CEO to be an external appointment who can “repair the relationship with dealers, engage with riders, respect and strengthen the brand, improve the corporate culture, restore the physical presence of the Company at its historic Milwaukee headquarters, and return Harley-Davidson to greatness.”

As part of its efforts to garner shareholder support, H Partners has launched a website, freetheeagle.com, laying out its position and explaining what it is asking its fellow shareholders to do. It also includes a link to H Partners’ open letter in full.

A redacted version of Dourdeville’s resignation letter can be read here. It shows similar sentiment to the H Partner’s open letter to shareholders. In it, he details what he describes as the company’s “severe underperformance” in terms of share value and criticizes elements of the culture at the company, including remote working for white-collar employees. He says: “At its highest levels, Harley-Davidson lacks a winning culture. This is particularly unfortunate for the Company’s hard-working employees, whose passion and persistence defines Harley-Davidson. Without an in-person presence, I do not see any way to perpetuate the Harley-Davidson culture and community.”

He also targets the performance of the “Hardwire” strategy championed by Zeitz since he replaced previous CEO Matt Levatich and dismantled many of the new model plans that had been put into place by his forebear, bringing the curtain down on planned new models like the Bronx streetfighter. While Dourdeville says he supported Zeitz’s strategy of investing in core touring and cruiser lines, he says: “However, the outcome of Jochen’s Hardwire strategy so far is worrying: touring and cruiser unit sales have declined 20% since 2019, and the dealership network is flooded with excess inventory. When Jochen stepped in as CEO, dealers held 99 days of inventory on average, a level that Jochen intended to reduce. However, the opposite has happened — the dealership network averaged more than 140 days of inventory during 2024.”

He goes on to point out that the company lacks entry-level models, saying that sales of such bikes have fallen by 75% since Zeitz took the reins.

Harley-Davidson’s response SEC report announcing the resignation addresses many of the points raised in the letter and lays out the timeline leading up to Dourdeville’s resignation. It can be read in full here, but says: “In over three years on the Board, Mr. Dourdeville never voted against the Director majority on any matter, except one — the Board’s decision not to extend an offer to his preferred CEO candidate.”

The timeline says that on March 26 the board met with three candidates to replace Zeitz as CEO. On March 28 the board decided not to offer the role to any of the candidates. On April 1 Dourdeville sent a letter demanding the resignation of three directors. On April 3 the company filed its proxy statement recommending the reelection of all current directors. And on April 5 Dourdeville resigned.

Answering specific points raised in his letter, the Harley’s report says: “During his tenure as a Director, Mr. Dourdeville did not voice concerns in the boardroom over the Hardwire strategic plan and he confirms in his resignation letter that elements of the plan were ‘central to his firm’s investment thesis.’”

It goes on to say: “The Company has successfully executed the Hardwire, reinvigorating the brand during one of the most challenging operating environments in the history of the Company. While the Company has not been able to achieve its financial ambitions given the extremely challenging market environment, it has delivered a better total shareholder return than all but one of its peers in the motorcycle and powersports industries” and points out that Dourdeville never mentioned or called for changes regarding its hybrid and remote working policies.

Whether H Partners’ efforts to instigate immediate change at board level for Harley-Davidson will be effective or not remains to be seen, but with Zeitz already planning to step down later this year and the search for a new CEO underway, we can be sure that whatever happens we’ll be hearing a lot more about it in the coming weeks and months.