Harley-Davidson has announced additional actions to adjust to the financial impacts of COVID-19. Although the MoCo has already shuttered its manufacturing plants, it is now taking other steps to cut costs.
As a public company with slumping sales, these latest actions may be seen as a way to appease shareholders. In a press release, Jochen Zeitz, acting president and CEO of Harley-Davidson said:
“The effects of COVID-19 on economies around the world have been swift and unprecedented. It is essential for us to respond quickly, adapt and position the company to manage near-term challenges while preparing to reenergize the business for the recovery and beyond.
Harley says that it will significantly reduce all non-essential spending. In addition, they are taking salary reduction measures. Zeitz and the Board of Directors will temporarily forgo salary and cash compensation.
Some may see these steps as a “calming measure” aimed at Impala Asset Management. Impala recently waged a short term proxy fight claiming that the Board of Directors had mismanaged the company. They also said that Zeitz’s $8M a year salary is excessive.
Other measures include a 30 percent salary reduction for executive leadership. Harley’s salaried employees in the USA will see 10 to 20 percent salary reductions. Harley will also scrap merit increases for 2020. Lastly, the company is implementing a hiring freeze.
Harley had already put the majority of its production employees on temporary layoff with medical benefits. The MoCo says it will revisit its salary reduction measures at the end of its second fiscal quarter.
Impact on employees
In discussing the impacts on its employees, Zietz said:
“We understand that navigating this new reality has a real impact on our employees. Their dedication to Harley-Davidson is never taken for granted, and we thank them for supporting one another and rallying together as we manage the profound impact of COVID-19.”
According to USA Today, Robin Farley of UBS Investment Research said dealers reported very slow business in the second half of March. Although sales are languid, Harley continues to ban its dealers from selling their motorcycles online, but “they have now looked the other way to let dealers sell parts and accessories online.”