H Partners launches campaign to oust Harley board members: Updated
H Partners Management, one of the largest shareholders of Harley-Davidson, Inc., and firm of former board member Jared Dourdeville, which owns approximately 9.1% of the outstanding shares of the company, announced it has filed a preliminary proxy statement with the U.S. Securities and Exchange Commission (SEC) to solicit shareholders to vote to withhold electing three incumbents – CEO and Chairman Jochen Zeitz, Presiding Director Thomas Linebarger and 29-year director Sara Levinson – at the Harley’s 2025 Annual Shareholders Meeting. Additionally, H Partners issued an open letter to shareholders regarding the reasons for immediate change at the Motor Company.
The full text of the letter follows:
Fellow Shareholders,
H Partners has been one of the largest shareholders of Harley-Davidson for almost five years. Harley-Davidson is a rare company whose significance extends far beyond its immediate stakeholders; its legacy is deeply embedded in loyal rider and dealer communities, as well as in the broader fabric of American culture. We continue to be inspired by the hard work, dedication, and deep commitment of thousands of Harley-Davidson employees, and we continue to believe that the Company’s future can be bright.
We originally engaged with leadership and the Company’s Board of Directors (the “Board”) in 2021 regarding concerns around executive compensation, corporate governance, and board composition. One of our principals, Jared Dourdeville, joined the Board as the result of a cooperation agreement with the Company in February 2022. Since then, we have worked constructively and collaboratively to support Harley-Davidson.
However, 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.
We are not the only stakeholder who has observed these issues: dealer sentiment is near a decade-long low1; and in late summer 2024, a large association of dealers wrote a letter of no confidence in management, effectively calling for CEO Zeitz’s removal due to “brand mismanagement” and “the destruction of dealer profitability.”
We believe an absentee CEO who has already announced his intention to retire should not be making decisions that could affect the long-term prospects of the business. We also believe that the current Board, which is tightly controlled by a small number of entrenched Board members, cannot be trusted to oversee crucial decisions, including CEO succession. Therefore, we are seeking shareholder support to remove CEO and Chairman Jochen Zeitz, Presiding Director Thomas Linebarger, and their fellow long-tenured director Sara Levinson, from the Board.
The underperformance of Harley-Davidson under Mr. Zeitz is undebatable. 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.3 This degree of underperformance corresponds to an approximately $1.8 billion decline in Harley-Davidson’s market value.
While the Company appears to have failed to achieve nearly every objective outlined in its long-term Hardwire Strategic Plan, the Company recently stated that it, “successfully executed the Hardwire Plan.”5 It is in this context that Mr. Zeitz recommended to H Partners that the Company appoint an internal candidate as the next CEO, in order to continue the Hardwire strategy. Due to the widening gulf between reality and the Company’s perception of reality, it has become clear to us that meaningful change is necessary at both the Board and CEO levels.
We believe the Company’s poor performance is also due to an inability to course-correct, in part because the CEO and Presiding Director have seemingly prevented the appropriate flow of information to the Board, and because the Board has been unwilling to hold the CEO accountable for his failures. We believe that this is because Harley-Davidson’s current Board contains an entrenched core of directors, represented by the nearly two-decade overlap of Mr. Zeitz, Mr. Linebarger and Ms. Levinson. We contend their exceedingly long tenures and interconnectivity have rendered them unable to hold each other accountable for poor performance and raise serious questions about their actual independence.
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. This is why, after careful consideration and numerous attempts to address concerns through private dialogue, our Board representative recently resigned his directorship.
In order to put the Company back on the path to success, H Partners is taking the following three steps:
H Partners has filed a preliminary proxy statement with the SEC to solicit fellow shareholders to vote WITHHOLD on the election of Mr. Zeitz (CEO, Chairman, and a Board member for 18 years), Mr. Linebarger (Presiding Director and Board member for 17 years), and Ms. Levinson (Board member for 29 years). In our view, these seemingly out-of-touch directors must be removed from the boardroom so that Harley-Davidson can once again advance the interests of all of the Company’s stakeholders.
H Partners is calling on the Board to immediately remove Mr. Zeitz as CEO and install an internal senior leader as interim CEO on a short-term basis until an external, permanent CEO is selected. We believe it defies logic for Mr. Zeitz, an outgoing CEO with a poor track record at the Company, to make any key decisions that impact the Company’s future. Based on discussions with external parties and a review of social media, we believe that Mr. Zeitz spends far more time in New Mexico, the United Kingdom, and rural Kenya than at the Company’s headquarters in Milwaukee, its manufacturing plants, or its dealerships. We believe that absentee leadership does not serve the Company, especially at this critical moment.
H Partners 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. We believe it is imperative to find a leader who will 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.
While we hoped to work constructively and in a private manner to resolve these issues with the Board, these long-tenured directors made that impossible. We can no longer stand in silence while the future of an iconic American brand hangs in the balance. Our very sizable capital investment in Harley-Davidson should demonstrate not only our alignment of interests with you, but also our sincere desire to be a part of the revitalization of this storied Company.Based on our record of running successful withhold-style contests at companies such as Tempur Sealy International, Inc. (n/k/a Somnigroup International, Inc.), H Partners is confident that it is taking a practical path to driving positive change at Harley-Davidson. We look forward to sharing more details and information with you in the coming days and weeks. In the meantime, we invite feedback from all shareholders and stakeholders. We have launched www.FreeTheEagle.com to deliver updates and gather all viewpoints.
Thank you for your consideration.
Sincerely,
H Partners
The firm has also created a website outlining their position on Harley-Davidson’s board members and to gather more perspectives from stakeholders. The site is called FreeTheEagle.com.
UPDATE April 18
A spokesperson for Harley-Davidson reached out to us to add their response to the issue with H Partners’ proxy campaign:
We are disappointed that H Partners has chosen to take this 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. H Partners has chosen to put its own interest ahead of the interests of other shareholders by attempting to disrupt the Board’s rigorous and thoughtful CEO transition process, creating uncertainty for and putting Harley-Davidson’s future and shareholder value at risk. The Board is committed to acting in the interests of all of Harley-Davidson’s shareholders by continuing to strengthen the Company’s foundation for the future and selecting the right CEO to lead Harley-Davidson into its next chapter.
It’s about time. This should have been done a few years ago. Good brand lousy management!
This is great! When I heard that Zeist wanted to take Harley full electric, I knew he wasn’t the man to guide this legendary brand that actually holds patents on the sound of their engines. Good move. Hearing that he is a lazy absentee is the last straw. Sounds like he needs to be in politics instead. Lazy, crooked absentee.
Harley did not try to patent the sound of their engines. They were unable to trademark the sound, which is too similar to other V engines.
There is so much that continues to be right about this company and this action is a perfect example of that. Make a change for the betterment of the company and the industry.
We care and we are willing to help you succeed. ~Lisa Horney
Harley is a life style, going electric was a waste of money and attention one making good decisions on colors and good updates on the basic models and motors. Many of us have moved from two wheels to the trikes. There are several ways to improve the Tri- glide and Harley continues to produce many different models, but fails to just improve what they have. We had a Tri-glide CVO and then they dropped it, why not independent suspension and maybe a full water cooled motor in the Tri-glide. Harley has all of these things at their disposal, they foul around wasting their time on electric which no one in their right mind cares about.
I have a few shares, and am an H-D motorcycle owner. I will be voting in-line with H-Partners. Take some free advice Mr. Zeitz and associates, step down for the good of the company, the shareholders, the dealers, and the customers.
Harley davidson hired a zundapp to takeover harley davidson. Can’t see how it didn’t workout in harley davidsons total favour