A trio of proxy advisor firms have shared their outside opinions on whether
Harley-Davidson shareholders should support a campaign aimed at shaking up the company’s leadership structure.
The campaign,
launched last month by New York-based
H Partners Management, hopes to convince Harley-Davidson shareholders to withhold re-electing three members of the Harley-Davidson board: CEO
Jochen Zeitz, board member
Sara Levinson, and board member
Tom Linebarger.
H Partners, which owns a 9.1% stake in Harley, is also calling on the board to immediately remove Zeitz as CEO and install a senior leader to the position temporarily.
On Monday, the proxy advisory firm
Institutional Shareholder Services Inc. said it recommends Harley shareholders vote to confirm all of the company’s preferred board candidates. ISS believes H Partners “has not presented a compelling case for change.”
ISS argues that the Hardwire strategy introduced by Zeitz has had a “positive impact on the trajectory” of the company, which had “lost considerable ground” before he took over as interim CEO.
“The HOG Zeitz inherited was in decline,” a press release from ISS says. “He attempted to stabilize the business, simplify operations, and refocus on the core. Even the dissident recognizes the logic of this strategy.”
ISS said it also believes Harley-Davidson initiated a CEO search “promptly” and with the “correct procedural steps” after Zeitz announced his intent to retire this year.
“We are pleased that ISS recognizes the strength of our board and governance structure, as demonstrated by our comprehensive CEO search process,” said Linebarger. “We believe it also highlights the flaws in H Partners’ actions and the disruption their campaign is bringing to the board’s ongoing efforts. ISS’s recommendation underscores the board’s important role in effectively overseeing management’s execution of the Hardwire strategic plan, which ISS acknowledges is positively impacting the company amid challenging and volatile macroeconomic conditions.”
H Partners support
The day after ISS released its opinion, two other proxy advisor firms said they recommend Harley-Davidson shareholders support H Partners’ “withhold” campaign.
Those firms are
Glass, Lewis & Co. and
Egan-Jones Ratings Company. Among the reasons both firms recommend supporting H Partners’ campaign are an alleged lack of accountability, “severe underperformance,” and “poor governance.”
“We believe investors should be concerned that the board not only concedes very limited culpability for Harley's very evident operational struggles, but, in fact, routinely faults external factors and declares strategic success despite a raft of seemingly wide performance misses and retreating metrics,” a report from Glass Lewis says.
Canton, Georgia-based private investment firm
Purple Chip Capital has also announced
plans to support H Partners’ campaign.
Other large Harley-Davidson shareholders, including
Dimensional Fund Advisors and
Fidelity Investments, declined to comment on individual stocks.
Harley-Davidson’s annual meeting is scheduled for May 14. In addition to Zeitz, Linebarger and Levinson, the board is
recommending Lori Flees, president and CEO of
Valvoline, to fill a vacant seat. That seat was vacated last month by H Partners partner
Jared Dourdeville.
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