Man, Harley Davidson News Keeps Getting Worse
Harley Davidson was in big trouble before the coronavirus hit China. The stock has been tanking badly. It’s new ebike called “Live Wire” had to be pulled from the market for a time in October. Once it was back nobody wanted it. Just a few weeks ago its CEO of five years and the Harley Board decided to “uncouple.” Now the news is that he was fired. Today it closed its Menomonee Falls, Wisconsin, production plant, and that’s not even the worse news from Harley today.
There is boardroom drama like you can’t believe
There is boardroom drama like you can’t believe while Harley hangs by a thread. A hedge fund that owns 1.9 million Harley shares is trying to stab two of its own into the morass as directors that would oversee the nine-member board. So, basically a $2.8 billion fund run by Robert Bishop is trying to take over Harley. This is coming at the worst time with the production shutdown and the board looking for a full-time CEO.
The Impala Asset Management fund owns 1.2% of Harley. It wants Brent Dewar, a former auto exec; and Leo Hindery, Jr., who has been on several boards of directors, to essentially take the reins away from the board. As was expected the board has rejected the two men saying they “would not bring fresh skills.” Before this Impala was recommending board member replacements that the current board was also rejecting.
The Impala hedge fund has been criticizing Harley for months
Impala has been publically hammering Harley for months. It has criticized Harley for continuing to lose market share. Impala is also mad that the board has been so slow in taking any decisive action. It was Impala that forced the board to dump former CEO Matt Levatich. Now it wants more control.
Rather than duel it out behind the scenes Impala has taken this public. In a recent filing, it said, “Impala approached the board and advocated for the removal of then-CEO Levatich and a modest refresh of the board itself. We believed then, and still believe, that the Company underperformed its potential under Mr. Levatich and that the board should have taken action on its own.”
Coronavirus has cause more problems than just the plant closure
The coronavirus has also thrown a monkey wrench into the mess with the travel ban to Europe. The interim CEO is board member Jochen Zeitz. He is trying to run the company remotely from his native Germany without the ability to travel to the US. Before the travel ban, it was thought he would relocate to Wisconsin. Sending out videos from his German digs he has enthusiastically said he is “hitting the ground running.” Yeah, great.
Zeitz was the main board member ramrodding the Live Wire. That bike has done nothing to shore up Harley’s falling stock and market share. He was the former CEO of Puma and snagged the interim Harley CEO gig with Impala’s blessing. While Live Wire is a good product hitting the market at $30,000 is a nonstarter.
The reveal by Harley of future products has done nothing to prop it up.
To try and bolster the falling stock Harley has announced upcoming products. These are an off-road adventure motorcycle, a naked sportbike, EV, and some cheaper Harleys that are more in the tradition of past efforts. None of these announcements have even slightly moved the needle up.
Those affected by layoffs will continue their Harley medical benefits. While Harley says it will stay closed only through the end of March, at the rate the virus is spreading that seems very optimistic.