Well before the firing of Harley-Davidson CEO Matt Levatich (and it was a firing, no matter how much the Bar & Shield brand touts its “mutual decision” narrative), there has been a wrestling of control over the future of the iconic American motorcycle brand.
Dwindling share prices on the New York Stock Exchange necessitated a change of regime at Harley-Davidson, as shareholders saw a continued loss on their investment with the Milwaukee firm; and thus, a loss of confidence in management’s ability to run the company.
Now with Matt Levatich out and Jochen Zeitz taking on the role of interim CEO and President of Harley-Davidson, a new battle is being fought – what is known in the investing world as a proxy fight.
While the specifics are technical, the concept is quite simple: one of Harley-Davidson’s shareholders is attempting to gather support to take over the company.
The shareholder in question is Impala Asset Management, and the investing firm is looking to put two more seats on the Harley-Davidson Board of Directors. Of note, Impala owns roughly 1.2% of Harley-Davidson’s publicly traded stock.
We can presume from this move that Impala already has considerable support on the Harley-Davidson board, and that the addition of two more favorable seats would give this consortium of interests control over Harley-Davidson.
With Harley-Davidson stock at record lows right now (trading started under $15/share today – a number not seen since the Great Recession), the publicly traded company is especially prone to this proxy fight, as accumulating more stock (and thus accumulating more control) of the company is much easier than it was a few months ago.
Though it is quite hard to wrestle the control of a company from its board of directors (most proxy fights fail), we have seen investing groups have some success in this regard in recent times.
Should it be successful, it means that Harley-Davidson could see a complete regime change in its top-level management, likely with its third CEO in just a handful of months.
The timing couldn’t be worse for the Bar & Shield brand, as the 2021 model year was to be a pivotal make-it-or-break-it moment for the brand. Dealt a body blow already by the COVID-19 outbreak, and now this boardroom infighting, Harley-Davidson’s future is very much on the ropes.
Expect to see more movement on this space over the next few weeks (as early as Wednesday, according to Reuters). They are likely to be critical to the future of the American brand.