DEFA14A: Harley-Davidson Urges Shareholders to Vote White Proxy Card Amidst H Partners' Boardroom Challenge

Harley-Davidson is urging shareholders to vote for its director nominees on the white proxy card, countering what it describes as a disruptive campaign by H Partners to gain control of the board.

Summary

• Harley-Davidson has issued a statement to shareholders regarding its upcoming annual meeting and a challenge from H Partners.
• The company is urging shareholders to vote using the white proxy card for Harley-Davidson's director nominees.
• Harley-Davidson claims H Partners is attempting to disrupt the company and gain control after their preferred CEO candidate was not supported by the board.
• The company defends its board's skills and experience, particularly in the ongoing CEO search.
• Harley-Davidson highlights its financial performance, stating it has outperformed its peers, with higher cash conversion and premium margins.
• The company accuses H Partners of reversing their previous support for the current CEO and board.
• Harley-Davidson emphasizes its corporate governance processes for CEO succession and board refreshment.
• The company encourages shareholders to discard any blue proxy cards they may receive from H Partners.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company highlights its strengths and defends its position, the proxy fight introduces uncertainty and potential disruption.

Positives

• Harley-Davidson highlights its strong financial performance, outperforming peers in operating margin and cash conversion.
• The board emphasizes its experience and skills are critical for choosing the next CEO.
• CEO Jochen Zeitz is committed to a smooth leadership transition.
• The company has a well-defined CEO search process and board refreshment strategy.

Negatives

• H Partners is attempting to disrupt the company and gain control of the board.
• H Partners is criticizing the company's strategy, execution, and compensation, despite previously supporting them.
• The proxy fight creates uncertainty and potential distraction for management.

Risks

• The proxy fight with H Partners could lead to instability and impact the CEO search process.
• H Partners' actions could undermine the board's ability to attract the best CEO and director candidates.
• The company faces risks related to executing its business plans, managing supply chain issues, and adapting to changing market conditions.
• The company acknowledges 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 2025 annual meeting of shareholders and potential costs and management distraction attendant thereto.

Future Outlook

The company's future outlook is subject to risks and uncertainties, including the ability to execute its business plans, manage supply chain issues, and adapt to changing market conditions. The outcome of the proxy fight with H Partners could also impact the company's future direction.

Management Comments

• Jochen Zeitz: 'Im here to finish what I started channeling my deep passion and commitment to Harley-Davidson by ensuring the next leader of this great Company is best positioned to drive value for our stakeholders.'
• Norman Thomas Linebarger: 'In this critical moment for Harley-Davidson, Im focused on ensuring the Board is able to maintain the stability, leadership and independence required to pick the right CEO who will usher in Harley-Davidsons next era of success, building on this storied Companys remarkable legacy.'
• Sara Levinson: 'I have great respect for the unique brand and culture that are essential to our employees, dealers, and, most importantly, our riders. I deeply value the powerful emotions reflected in every product and experience we create. Preserving this connection is critical to Harley-Davidsons future success.'

Industry Context

The announcement comes amidst a challenging operating environment for the motorcycle industry, with companies navigating supply chain issues, changing consumer preferences, and increased competition. The proxy fight highlights the importance of corporate governance and shareholder engagement in shaping the strategic direction of companies in this sector.

Comparison to Industry Standards

• Harley-Davidson claims to have outperformed its peers with a 13% operating margin compared to a peer median of 9% from 2022-2024.
• The company also reports a free cash flow as a percentage of EBITDA of 70% compared to a peer median of 33% from 2022-2024.
• Comparable companies in the motorcycle industry include Polaris Industries, Yamaha Motor, and Honda Motor Co.
• These companies also face similar challenges related to supply chain disruptions, changing consumer preferences, and increased competition from electric vehicle manufacturers.

Stakeholder Impact

• The proxy fight could impact shareholder value and the company's strategic direction.
• The outcome of the CEO search will affect employees, dealers, and riders.
• The company's ability to execute its Hardwire strategic plan will impact its long-term success and stakeholder relationships.

Next Steps

• Shareholders need to vote on the director nominees by the May 14, 2025 annual meeting.
• The board will continue its CEO search process.
• The company will continue to execute its Hardwire strategic plan.

Key Dates

Keywords

Harley-Davidson, H Partners, Proxy Fight, Board of Directors, CEO Search, Shareholders, Corporate Governance, Annual Meeting, Director Nominees, Vote