DEFA14A: Harley-Davidson Responds to Shareholder Feedback on Executive Compensation

Harley-Davidson adjusted its executive compensation plan in response to shareholder feedback, incorporating performance-based stock units and eliminating supplemental incentives.

Summary

• Harley-Davidson engaged with shareholders owning over 30% of outstanding shares after the 2024 Annual Meeting to discuss executive compensation and corporate governance.
• Shareholders expressed a preference for Performance Share Units (PSUs) in the CEO's Long-Term Incentive Plan (LTIP) and against supplemental incentive opportunities.
• In response, the Human Resources Committee (HRC) approved the CEO's 2025 LTIP awards with a mix of 50% PSUs and 50% restricted stock units (RSUs).
• The PSUs vest based on company performance over a 3-year period, using the same measures as other Named Executive Officers (NEOs).
• The HRC did not provide NEOs with any supplemental incentive plans in 2025, aligning with its commitment to avoid one-time awards.

Sentiment

Score: 7

Explanation: The document reflects a positive response to shareholder concerns and a commitment to aligning executive compensation with company performance. However, it also acknowledges risks and uncertainties associated with forward-looking statements.

Positives

• Harley-Davidson actively engaged with shareholders to address concerns about executive compensation.
• The company responded to shareholder feedback by incorporating PSUs into the CEO's LTIP and eliminating supplemental incentives.
• The changes align executive compensation with company performance and shareholder interests.

Risks

• The document contains forward-looking statements that are subject to risks and uncertainties.
• These risks include the company's ability to execute its business plans, manage supply chain issues, and adapt to changing market conditions.
• Uncertainties regarding actions that have been taken and may in the future be taken by H Partners Management, LLC in furtherance of its campaign relating to the 2025 Annual Meeting and potential costs and management distraction attendant thereto.

Future Outlook

The document contains forward-looking statements regarding the company's beliefs, plans, strategies, and financial prospects, which are subject to risks and uncertainties.

Management Comments

• The Chair of the Human Resources Committee (HRC) led constructive engagement calls with multiple investors.
• Shareholders provided feedback that was consistent with the feedback provided in engagement calls held prior to the 2024 Annual Meeting that were disclosed in the proxy statement for the 2025 Annual Meeting.

Industry Context

Shareholder engagement on executive compensation is a common practice among publicly traded companies, especially in response to advisory votes on executive pay. Harley-Davidson's actions reflect a commitment to addressing shareholder concerns and aligning executive incentives with company performance.

Comparison to Industry Standards

• Many companies use a mix of performance-based and time-based equity awards in their executive compensation plans.
• The specific mix and performance metrics vary depending on the company's industry, size, and strategic goals.
• Companies like Polaris Inc. and Brunswick Corporation, which operate in similar industries, also disclose their executive compensation practices in their proxy statements.

Stakeholder Impact

• Shareholders: The changes to executive compensation are intended to align management interests with shareholder value.
• Executives: The new compensation structure will incentivize performance and long-term value creation.

Next Steps

• Shareholders are urged to read the proxy statement and related documents carefully before voting at the 2025 Annual Meeting.

Key Dates

Keywords

executive compensation, shareholder engagement, LTIP, PSUs, RSUs, corporate governance, Harley-Davidson