Dive Brief:

• Harley-Davidson CEO Jochen Zeitz pointed to the company’s CFO, Jonathan Root, as a potential candidate to succeed him in the role of top executive following his retirement, shareholder H Partners alleged in a Monday securities filing — the latest twist in an ongoing proxy battle between the shareholder and the motorcycle company regarding the future of the company’s leadership. The investment firm, which owns a 9.1% stake in the Milwaukee, Wisconsin-based motorcycle company, launched an activist campaign calling for changes in leadership earlier this month.  
• The Monday filing follows only a few short days after H Partners released a presentation as part of its campaign on April 23, where it questioned allowing what it termed as a “lame duck” CEO to make decisions for the company’s future: “We Do Not Believe an Outgoing CEO and Directors With a Track Record of Value Destruction Should Be Making Critical Long-Term Decisions,” reads the title of one presentation slide.
• The filing also follows after three unnamed potential candidates for CEO — including one supported by Jared Dourdeville, a former Board member and partner at H Partner — each failed to receive majority support from the board’s independent directors, Harley-Davidson said in an 8-K filed with the Securities and Exchange Commission on April 5. The filing also includes Dourdeville’s announcement that he would be resigning from the board.

Dive Insight:

In a Tuesday response to what it termed “H Partners' Disingenuous and Harmful Claims,” Harley-Davidson noted that “after careful evaluation by the independent Directors, H Partners' candidate failed to earn majority Board support as the Board determined the candidate lacked the skills and qualities needed to uphold Harley-Davidson's rich heritage and drive value for all stakeholders.”

The motorcycle company also classified the shareholder’s ongoing campaign as “disruptive,” arguing that it “offers no constructive solutions that will benefit Harley-Davidson or its shareholders, and is in our view designed to enable H Partners to appoint unelected and unnamed Directors — including an H Partners representative after their representative just resigned from the Board — depriving shareholders of their right to choose their own representatives.”

H Partners has also refused to reveal the identity of their preferred CEO candidate, Harley-Davidson alleged.

The motorcycle company began a search for its next CEO in Q4 2024, after Zeitz announced his intent to step down in 2025 after five years in the role, according to a company announcement which noted Zeitz would remain CEO until a successor had been found. Shortly after Zeitz took the CEO chair in 2020, the company announced its “Hardwire” initiative — a strategic plan spanning from 2021 to 2025 aimed at improving shareholder value and creating long-term, profitable growth.

The company faced significant headwinds over its past year that impacted its financial results, with high interest rates and declining customer confidence contributing to a decrease in motorcycle sales, according to its Q4 and full-year 2024 results reported in February. For the fourth quarter ended Dec. 31, Harley-Davidson reported a net loss of $117 million, according to its earnings report.

In its urging for leadership change, H Partners argues Zeitz’s Hardwire plan has missed key metrics, and is seeking to compel both his resignation and the resignations of Presiding Director Thomas Linebarger, and another director, Sara Levinson, “who we believe have failed to hold management accountable and whose interests do not appear to be aligned with shareholders,” according to the presentation. The firm is asking shareholders to vote “withhold” for the elections of all three leaders during Harley-Davidson’s annual shareholder meeting in May, according to its announcement earlier this month.

The investment firm also floated the idea of another executive stepping in immediately as an interim CEO in its presentation, stating “we believe CFO and President, Commercial Jonathan Root is already effectively running day-to-day operations at this point.”

A long-time company veteran, Root joined Harley-Davidson’s financial services subsidiary in 2011 and was appointed to the role of CFO in 2023, CFO Dive reported at the time. Last year, he was also appointed to the role of president.

The motorcycle company’s annual meeting is scheduled to take place May 14. Harley-Davidson did not immediately respond to requests for comment. H Partners declined to comment beyond its filing.