Harley-Davidson shareholders approve new direction amidst tension with activist investor
Harley-Davidson Inc. charted a new course at its annual shareholders’ meeting on Tuesday, May 14, approving a series of transformative initiatives to revitalize the iconic motorcycle brand. Despite overwhelming shareholder support for the board’s proposed strategy, the meeting was not without drama, as activist investor H Partners continued its campaign against the company’s current leadership.
A new vision
At the core of the shareholder vote was a sweeping restructuring plan designed to push Harley-Davidson into the future. The company is betting on electric motorcycles, a broader product lineup for younger and more diverse riders, and expanded global market penetration, particularly in Asia. Key elements of the plan include:
- Significant investment in electric motorcycles: Harley-Davidson is doubling its investment in the LiveWire brand, even though the division only sold 33 units in Q1. The company aims to lead the charge in the electric motorcycle market with new high-performance models and enhanced manufacturing capacity.
- Product revamp to attract younger riders: The company plans to introduce more affordable, customizable models that cater to urban commuters and explore alternative fuel options. It will also rejoin the entry-level market in the near future.
- Expansion in global markets: Harley-Davidson is focusing on increasing its presence in emerging economies, particularly in Asia, where motorcycle ownership is on the rise.
- Enhanced shareholder returns: Along with the strategic pivot, Harley-Davidson plans to increase its dividend payouts and implement stock buybacks to appease investors during this period of transformation.
H Partners’ opposition
Despite the board’s vision for a bold future, not all shareholders were on board. H Partners, a prominent activist hedge fund with a significant stake in Harley-Davidson, campaigned vigorously against the board’s proposal and urged shareholders to vote against re-electing current board members.
In an open letter to investors, H Partners criticized the company’s current leadership for a “lack of accountability” and a failure to deliver results in recent years. The firm, which has been an outspoken critic of Harley-Davidson’s strategic direction, argued that the company’s current management was too focused on expanding into new markets and electric motorcycles, rather than strengthening its core business and returning to its roots as a premium brand for motorcycle enthusiasts.
“Harnessing the power of electric vehicles is important, but the future of Harley-Davidson lies in its heritage,” said H Partners’ managing director, Jason Smith, during a press conference ahead of the vote. “The board’s focus on diversifying the brand and chasing after younger riders risks alienating the very loyal customers who have built this company into a global icon. We believe Harley-Davidson needs to double down on its traditional strengths — craftsmanship, quality, and the unique American spirit that has defined the brand for over a century.”
H Partners also accused the board of failing to address key performance issues, including declining sales in North America, an aging customer base, and poor financial performance relative to peers in the motorcycle industry. The hedge fund suggested that a fresh board with more experience in operational efficiency and brand management was necessary for Harley-Davidson’s recovery.
The board’s defense
In response, Harley-Davidson’s leadership doubled down on its commitment to change. CEO Jochen Zeitz, who took the helm in 2020 and has since been credited with steering the company toward a more sustainable, innovative future, defended the restructuring strategy and its focus on adapting to a changing market.
“While we deeply respect the opinions of all our shareholders, it’s clear that the road ahead requires a fundamental shift,” Zeitz said in his remarks following the vote. “The world is changing — consumers are changing, and our brand needs to evolve. We’re committed to preserving the essence of Harley-Davidson while embracing new opportunities for growth and sustainability.”
Zeitz emphasized that the company would continue to engage with its core customers while also expanding its appeal to new generations of riders, noting that the company had already made strides in improving quality and customer satisfaction.
Clear mandate
Despite H Partners’ vocal opposition, the board’s proposed changes were approved by a substantial majority of shareholders, with 82% voting in favor of the new strategic direction. However, the result wasn’t unanimous, and H Partners has made it clear that they will continue to challenge the board’s decisions moving forward.
While H Partners did not succeed in their bid to oust any board members at this meeting, the hedge fund has hinted at further efforts to push for change, suggesting that they may rally additional shareholders for future votes.
Looking forward
While Harley-Davidson’s board and management team are celebrating their victory, the company’s future remains uncertain. The motorcycle industry is undergoing a seismic shift, and Harley-Davidson’s transition into electric motorcycles and its efforts to capture younger, more diverse riders will likely face significant challenges.
The rise of electric vehicles presents both an opportunity and a risk. While it could unlock new growth markets, it also threatens to dilute Harley-Davidson’s iconic identity as a maker of rumbling V-Twin cruisers and heavyweight touring bikes. The question remains whether the brand can successfully balance its storied history with the demands of a changing world.
As the company moves ahead with its ambitious plans, all eyes will be on Harley-Davidson’s performance over the next few quarters.
