In March, the holder of two percent of Harley-Davidson’s shares signaled that they were starting a proxy fight for seats on Harley’s board, also claiming that Harley’s former CEO Matt Levatich was fired earlier this year, and didn’t step down as he said. It was all (slightly) spicy stuff, but today Harley said that the fight was over for now.
The shareholder, an investment firm called Impala Asset Management, had wanted to get Leo Hindery, a former executive at AT&T, and Brent Dewar, a former president of NASCAR, on Harley’s board. That sparked a brief proxy fight, or fight to attract shareholder votes for board candidates. But under an agreement announced in SEC filings today, the company said that the fight was over.
According to the terms, Harley and Impala will mutually agree on a single board member, and neither of them will be Hindery or Dewar. That person will either replace someone on the current Harley-Davidson board or be added to the board, expanding its size by one from its current size of nine.
The selection process, per that filing:
(iv) the Nominating Committee will be entitled to submit to Impala up to two individuals to serve as the Additional Independent Director; (v) Impala will consider and approve or deny each candidate submitted by the Nominating Committee; (vi) the Nominating Committee will consider and approve or deny each candidate submitted by Impala; (vii) if neither of Impala’s suggested candidates is approved and neither of the Nominating Committee’s candidates is approved, then Impala and the Nominating Committee each may submit to the other one additional candidate for the other’s consideration, with the process repeating, as needed, until a candidate is approved;
The upshot of all this is that Impala will get a voice in the room, even if that voice may not be what the company needs right now. From a Bloomberg story earlier this month:
Impala Asset Management LLC filed documents Wednesday nominating two directors to the motorcycle maker’s board. If it’s successful, the fund has CEO candidates in mind who could take Harley back to basics and focus on the 35-year-old to 60- something American gearheads who buy expensive motorcycles, people familiar with Impala’s thinking said.
That would be a potential revision of the company’s current strategy, which has seen it enter new market segments such as electric motorcycles in the U.S. and low-priced bikes overseas.
Focusing on Harley’s current, shrinking core demographic is absolutely not what the company should be doing right now, but I applaud Impala for thinking inside the box. And while they will have a voice in the room under this arrangement, they will still be outnumbered when it comes to votes.
The interesting thing to watch is how closely Harley sticks with its plan to release a bunch of electric bikes given that the reaction to the LiveWire has been so tepid, even though it is fun to ride. Whichever way they go—either leaning into electric or pulling the plug on some of the planned bikes—could be a clue to whether this whole episode had any effect on Harley’s long-term strategy, or if it was just a tempest in a teapot.
What I do know is that sticking to its core demographic has led to Harley U.S. sales figures declining every year for the past five. But the slate is now clean for new leadership, and maybe a new direction for Harley as well.