Harley Confirms Zeitz 'Retirement'
Harley-Davidson's hand has been forced with what is likely a sooner than intended announcement that Chairman, CEO and President Jochen Zeitz is to retire.
With calls for him to do so (or for him to be fired) growing ever louder in the past six months, there are reports that Harley had already identified three 'preferred' candidates for one or another combination of the roles, but the board has been unable to agree on a selection that would unify some greatly differing views about the problems the company faces and its best way forward.
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Harley-Davidson has announced the upcoming retirement of Chairman, CEO and President Jochen Zeitz. |
Essentially, the board is split. This led to an announcement confirming that Zeitz is in the departure lounge, as the company became forced into embarking on a broader and much more public executive search.
The fact that the board disagreed over who and how the vacancies should be filled emerged as board member Jared Dourdeville exposed disagreements over policy in an acrimonious resignation letter in early April.
Dourdeville was the board member (since 2022) representing New York investment firm H Partners, which owns some 8 or 9 percent of Harley's stock, making it the second largest shareholder. In his resignation letter (released to the SEC in heavily redacted form) Dourdeville accused Harley's leadership, including Zeitz, of making decisions that have damaged the Harley brand.
His concerns included (but were not limited to) the company's work-from-home policy, a failure to deal with dealer inventory issues, a perceived neglect of the entry-level motorcycle market, poor handling of the attacks on its DEI policies (not least the politically motivated attacks by right wing activist Robby Starbuck), a failure to focus on dealer profitability and poor leadership by certain of Harley's independent directors.
Specifically, he called for the resignations of longtime directors Sara Levinson and "Presiding Director" Tom Lineberger, the Lead Independent Director in addition to the replacement of Jochen Zeitz.
Dourdeville had written to the board expressing his concerns on April 1, following that up with a formal resignation letter on April 5. He stated that it had been "an honor" to serve as a board member and that Harley-Davidson is a "rare company with a meaning that stretches beyond its immediate stakeholders".
However, even though the SEC filing of his letter was heavily redacted, it was clear that he was 'pulling no punches'. That said, there is much about this incident that 'sounds' disingenuous. Dourdeville had hitherto been a loyal board member, voting without fail for board approved decisions and positions and even agreeing that the present directors should extend their service.
He was appointed to Harley's board in 2022 when H Partners expressed concern about Harley's corporate governance, the composition of the board, and how much money its board members were making from the gig.
Dourdeville's observations about Harley's management failures are far from lacking merit, not least where a failure to implement the planned reduction in dealer inventory, boost dealer profitability, protect brand reputation, protect Harley-Davidson Inc profitability and attract new customers with 'entry level' product are concerned.
Indeed, the focus on reduced numbers of ever more expensive motorcycles has, in particular, put Harley in the position of waving goodbye to the zeitgeist of the contemporary motorcycle industry as it disappears in the opposite direction in their rear-view mirror. Righteous death is still death.
It is safe to assume that this story is a "work in progress" so rather than trying to unpick the 'he said, she said' details of an internecine dispute among members a clearly dysfunctional board (one that that is clearly and increasingly adrift from where motorcycle sales are to be found in the years ahead), look for a further update in the upcoming May edition of AMD Magazine.
Meanwhile, whatever it has taken to shake up Harley's senior management, hurrah. The company's market cap is now below the $3bn mark, with its share price circling the $20.00 drain - making Harley-Davidson seriously vulnerable to hostile take-over bids and acquisitions by rivals.
The May edition of AMD Magazine is due to 'go live' at www.amdmag.com by April 20.