DEFA14A: Harley-Davidson Defends Board Nominees Amidst Shareholder Activism

Harley-Davidson urges shareholders to vote for all director nominees, disagreeing with Glass Lewis and Egan-Jones recommendations while highlighting ISS support and the progress made under the Hardwire strategic plan.

Summary

• Harley-Davidson has issued a statement disagreeing with recommendations from Glass Lewis and Egan-Jones against their director nominees for the upcoming 2025 Annual Meeting of Shareholders.
• The company highlights that Institutional Shareholder Services Inc. (ISS) recommends voting FOR ALL of Harley-Davidson's director nominees.
• Harley-Davidson argues that the Glass Lewis and Egan-Jones reports fail to recognize the progress made under the Hardwire strategic plan and the board's strong governance.
• The company believes removing two independent directors would introduce significant risk and jeopardize shareholder value.
• Harley-Davidson claims to have outperformed its peers since Jochen Zeitz became CEO, with higher total shareholder return (TSR), operating margins, and free cash flow as a percentage of EBITDA.
• The Board urges shareholders to vote FOR ALL of the company's nominees on the WHITE proxy card and discard any BLUE proxy card received from H Partners.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive as the company defends its board nominees and highlights its recent outperformance, but the proxy fight introduces uncertainty.

Positives

• ISS supports Harley-Davidson's director nominees.
• The Hardwire strategic plan is driving outperformance.
• Harley-Davidson has outperformed its peers in TSR, operating margins, and free cash flow since Jochen Zeitz became CEO.
• The board has experience, expertise and institutional knowledge to select Harley-Davidson's next leader.

Negatives

• Glass Lewis and Egan-Jones recommend against some of Harley-Davidson's director nominees.
• H Partners is running a campaign against the company's director nominees, introducing uncertainty.
• The company believes removing two independent directors would introduce significant risk and jeopardize shareholder value.

Risks

• The H Partners campaign could disrupt the CEO search process.
• Challenging macroeconomic conditions could impact the company's business.
• Failure to execute the Hardwire strategic plan could negatively impact performance.
• Uncertainties regarding actions that have been taken and may in the future be taken by H Partners in furtherance of its campaign relating to the Company’s Annual Meeting of shareholders and potential costs and management distraction attendant thereto.

Future Outlook

The company expects to continue executing its Hardwire strategic plan and managing the CEO transition process.

Management Comments

• Amid challenging macroeconomic conditions, our strategy is driving outperformance relative to our peers and delivering value for all shareholders, said Tom Linebarger, Presiding Director of the Board.
• We also believe removing two independent Directors with the institutional knowledge critical in selecting the strongest CEO candidate, as well as an outgoing CEO who is fully committed to supporting a successful transition, would introduce significant risk to the Company and jeopardize shareholder value, Mr. Linebarger continued.
• The launch of this misguided campaign is, in our view, an attempt to engineer an outcome in the CEO search process that they alone desire.

Industry Context

The announcement comes amidst a proxy fight with H Partners, highlighting the increasing pressure on companies to deliver shareholder value and maintain strong corporate governance.

Comparison to Industry Standards

• Harley-Davidson compares its performance to its peer median in terms of TSR, operating margins, and free cash flow.
• The company claims its TSR is ~10 percentage points higher than its peer median since Jochen Zeitz became CEO.
• Harley-Davidson's operating margins are ~4 percentage points above its peer median from 2022-2024.
• The company's free cash flow as a percent of EBITDA was 70%, over twice its peer median from 2022-2024.
• Specific comparable companies are not named in the document.

Stakeholder Impact

• The outcome of the proxy vote will impact shareholders, employees, and other stakeholders.
• The company urges shareholders to protect the value of their investment and preserve the future of Harley-Davidson.

Next Steps

• Shareholders are urged to vote FOR ALL Harley-Davidson Director nominees on the WHITE proxy card.
• Shareholders are asked to discard any BLUE proxy card received from H Partners.

Key Dates

Keywords

Harley-Davidson, Director Nominees, Proxy Fight, Shareholder Activism, Hardwire Strategic Plan, ISS, Glass Lewis, Egan-Jones, Board of Directors, Annual Meeting