Harley-Davidson Responds To Ex-Board Member’s Rebukes

[advrider]

It didn’t take long for Harley-Davidson to respond to its ex-board member’s resignation letter. In a nutshell, Harley says that its ex-board member Jared Dourderville knew about many of the things he complained about in his letter and did not voice any concerns until recently. The MoCo provided a long list of responses to Dourdeville’s claims, consistently emphasizing that Dourdeville hadn’t previously expressed concerns on several of the issues cited in his letter.

Harley’s Response

Responding to the letter, Harley provided a lawyerly list of its own set of facts, saying:

1. “Up until December 2024, Dourderville and representatives from H Partners were requesting Presiding Director, Tom Linebarger, and Chairman and Chief Executive Officer, Jochen Zeitz, to extend their commitment to continue leading the Company transformation for several additional years.”
2. “At a Board meeting in February 2025, Mr. Dourderville voted in favor of all current Company Directors standing for reelection, without discussion or objection. At that time, while the Board was in the process of searching for a successor to the Chief Executive Officer, Mr. Dourdeville and H Partners continued to support a long-term commitment from Presiding Director Linebarger to continue leading the Company’s transformation.”
3. In late March 2025, the Board evaluated three candidates for the CEO role and decided not to offer any of the candidates the role.
4. Mr. Dourdeville was not a dissenting voice in the boardroom as to matters he raised in his letter. In over three years on the Board, Mr. Dourdeville never voted against the Director majority on any matter except one – the Board’s decision not to extend an offer to his preferred CEO candidate. Below is the timeline of Mr. Dourdeville’s resignation from the Board:
   4.1 On Wednesday, March 26, 2025, the Board met with three CEO successor candidates.
   4.2 On Friday, March 28, 2025, a Board meeting was held with each Director, understanding their fiduciary duty to act independently and in the best interest of all shareholders. After each Board member had the opportunity to weigh in on the three CEO candidates, the Board decided not to extend an offer to any of the candidates.
   4.3. On Tuesday evening, April 1, 2025, Mr. Dourdeville sent a letter to the Board demanding the immediate resignation of three Directors.
   4.4. On Thursday, April 3, 2025, the Company filed its proxy statement recommending the reelection of all current Directors. That same day the Board e-mailed Mr. Dourdeville advising him that it was in the process of fully evaluating the points raised in his letter and proposing times for the entire Board to meet to formally discuss them. Mr. Dourdeville did not respond to this e-mail or object to the proposed plan.
   4.5. On Friday, April 4, 2025, Mr. Dourdeville agreed to attend a meeting of the Board to be held on Monday, April 7, 2025, at 7:00 a.m. central, to discuss his April 1, 2025 letter and demands.
   4.6 The following day, Saturday, April 5, 2025, Mr. Dourdeville resigned from the Board before the agreed Board meeting was able to take place.
5. The Company is in the final year of the Hardwire, its five-year strategic plan (2021-2024). During his tenure as a Director, Mr. Dourdeville did not voice concerns in the boardroom over the Hardwire strategic plan and he confirms in his resignation letter that elements of the plan were “central to his firm’s investment thesis.”
6. The company has successfully executed the Hardwire, reinvigorating the brand during one of the most challenging operating environments in the history of the Company. While the Company has not been able to achieve its financial ambitions given the extremely challenging market environment, it has delivered a better total shareholder return than all but one of its peers in the motorcycle and powersports industries.
7. While the Company continues to evolve its operating model and working culture, it has largely used the same widely publicized hybrid and remote working model for certain salaried roles since Mr. Dourdeville joined the Board in February 2022, allowing the Company to benefit by hiring from national and international talent pools. Mr. Dourdeville never raised this as a concern in Board meetings or called for a change in approach.

Jared Dourdeville’s photo is gone from the board lineup. Photo: Harley-Davidson

Truth, Spin, Or A Mixture Of Both?

No one except the people sitting in Harley-Davidson’s boardroom really knows what did or did not happen during Dourdeville’s tenure as a board member. Harley-Davidson consistently says Dourdeville went along with almost all of the majority recommendations, with things running smoothly until December 2024. If that’s the case, what happened to cause Dourdeville to pull the eject handles and punch out of Harley-Davidson’s board so quickly?

Looking At Harley-Davidson’s Side Of The Story: Commentary

Without having attended Harley’s board meetings, it’s difficult to tell what really happened behind closed doors and whether any of the allegations on any side of this issue are true, false, or spin. Accordingly, the only things we can draw considered conclusions on are the happenings outside the boardroom.

It is worth noting Harley’s claims that it “…has successfully executed the Hardwire, reinvigorating the brand during one of the most challenging operating environments in the history of the Company.” Depending on how you interpret success, Hardwire seems to have been a flop, not a successful plan. According to Harley-Davidson, the intent of Hardwire is to make Harley-Davidson “one of the most desirable brands in the world.” However, based on the company’s continually shrinking sales and revenue, it might be seen as a stretch to say that the Hardwire plan is successful.

Harley’s statement that “…it has delivered a better total shareholder return than all but one of its peers in the motorcycle and powersports industry…” should be clarified. To understand how Harley performed, we need to know which companies it thinks are its peers. Are we just talking about cruiser manufacturers or all motorcycle manufacturers in the US or the world?

In the US, motorcycle sales were generally flat, but Harley-Davidson’s sales slipped. Harley’s stock has dropped from $41 to about $21 from a year ago today, nearly halving share value. Around the time Zeitz became CEO, Harley slashed its dividend from $0.38/share to $0.02/share. However, since 2021, Harley’s dividends have risen back to around $0.18/share and have been relatively stable. So, from a dividend perspective, dividends have risen and become somewhat stable, but they are less than half of what they were in March 2021.

What’s The Truth?

It’s difficult to ascertain the real facts of this mess. Clearly, Dourdeville thinks Harley’s board is a problem, but the current board apparently does not. Stay tuned; this is going to be interesting.

Vezi sursa