Impala Asset Management, which owns around 2% of Harley-Davidson’s stock, has nominated former NASCAR president Brent Dewar and The YES Network founder Leo Hinery Jr. to be directors of the Milwaukee-based motorcycle maker. “As long-term shareholders of Harley-Davidson, we are enthusiastic about the Harley-Davidson brand, products, employees and dealers. However, execution failures and lack of accountability have led to years of operational and stock price underperformance,” Impala said in a proxy filing. The filing also details Impala’s involvement in pushing now-former chief executive officer Matt Levatich out of the company. “Under Mr. Levatich’s tenure, Harley-Davidson lost market share in nearly every geography and experienced significant declines in motorcycle revenue, margins, cash flow and returns on capital,” the filing says. “This declining performance was the direct result, we believe, of decisions that were made concerning new product launches, changes to the manufacturing footprint (including the closing of a U.S. manufacturing facility), marketing, and compensation metrics that misaligned incentives. During this period, we believe that customers, employees and dealers became increasingly disaffected with the company, leading to performance troubles.” Impala’s desire to nominate two directors first emerged in a Harley proxy filing on Friday. At the time and in statements since the filing, Harley has said it believed its nine director nominees “have the right experience, have a deep understanding of our company and its markets, and are more capable than the Impala nominees to lead our company forward.” “We believe the candidates proposed by Impala would not add additional skills or diversity to the board as their stated skill sets are already well represented among our nine candidates,” Harley said in a statement. “We are confident that we have the right leadership and the right strategy in place to continue creating value for shareholders and to achieve Harley-Davidson’s long-term strategic objectives.” Harley has seen dramatic change in its leadership in the last few months, at least partially at the urging of Impala. Levatich stepped down on Feb. 28 and was replaced on an acting-basis by board member Jochen Zeitz. The investor’s proxy filing says Impala sent a letter to the board on Jan. 24 calling for a new CEO. “We do not have confidence in Mr. Levatich’s ability to fix the problems that have been created on his watch. We believe his credibility with key constituencies is damaged beyond repair. We believe the board should immediately begin to search for a new chief executive officer,” the letter concluded, according to the filing. Impala met with Michael Cave, then Harley’s chairman, independent director Thomase Linebarger, Levatich and other Harley executives during a Feb. 7 meeting in Milwaukee. The meeting included a 54-page presentation by Impala on its views of Levatich, the board and the company’s needs. A second meeting took place Feb. 25 where Cave and Linebarger told Impala that Levatich would be terminated but the board had rejected its calls for new directors. Impala says the need for a change in the board is evident from the decision to appoint Zeitz, a director since 2007, as acting CEO and give him a pay package potentially worth $8.5 million. It also argues the board has resisted changes to Harley’s “More Roads” plan, a strategy aimed at turning around the company’s performance by growing ridership and launching into new segments. “Impala believes the board needs fresh eyes to look at the ‘More Roads’ strategy to determine whether it should be maintained, significantly altered, or scrapped. It certainly seems unwise to recruit a new CEO with a pre-determined strategy,” the filing says. In nominating Dewar, Impala pointed to his experience with GM from 1978 to 2010, including as executive vice president of global Chevrolet from 2009 to 2010. Dewar, 64, is currently president of Whitby Advisors. He was president of NASCAR from 2017 to 2018 and served as the organization's COO from 2013 to 2017. Hindrey, 72, is chairman and CEO of Trine Acquisition Corp. and managing partner of InterMedia Partners, a series of media industry private equity funds.
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