Worried about the alleged internal battles at Harley-Davidson? Fear no longer—we’re supposed to see it worked out with new management in places this summer. And, while they’re finding a new CEO, they’re also going to need a new COO, apparently.
First up, the latest news: Harley-Davidson hasn’t said much about what the reason is, but it’s just been announced that COO Michelle Kumbier will be parting ways with the company. No real details have been given, but it’s effective this weekend, and may be a way of the MoCo cutting the budget. She was due a considerable bonus if she was an active employee next year, reports the BizTimes. She had been with the company since 1997 in a variety of leadership roles.
It’s a sign of the times, for sure. During the past few weeks, there’s been considerable gossiping about behind-the-scenes unhappiness surrounding Harley-Davidson. It started when CEO/President Matt Levatich stepped down from his role at the end of February. While the official line at the time was that it was a voluntary exit from power, there was an immediate whisper campaign saying Levatich was actually canned. He said, she said, whatever. There’s no doubt that some shareholders were unhappy about the company’s performance over the past few years, as there’s been a constant slide in sales. The whole industry is down, sure, but that doesn’t keep shareholders happy.
After Levatich was out, Harley-Davidson appointed an interim big boss: board member (since 2007) Jochen Zeitz was promoted temporarily to the top role.Previously, Zeitz worked with footwear brand Puma and luxury goods company Kering. But Zeitz wasn’t expected to take the top role permanently, and while H-D looks for a new big boss, the alleged unhappiness ramped up. Supposedly, investor Impala Asset Management (who supposedly owns between 1 and 2 per cent of the company) wanted to get a couple more members on the board. Reuters says Impala wanted Brent Dewar and Leo Hindery, Jr. on the board, no doubt to influence not only the board’s decisions on operations, but to help select a new director. However, after some scrapping, Reuters says a deal was worked out. You can see the resulting Form 8-K filing with the Securities and Exchange Commission here.
According to that filing,
Among other things, the Agreement provides that: (i) Impala withdraws its notice of intent to nominate two candidates; (ii) after the 2020 Annual Meeting concludes but by July 31, 2020, one new director will be appointed to the Board either by expanding the size of the Board by one or by filling a vacancy created by any member of the Board being unable or ceasing to serve on the Board due to death, disability or resignation (such new director, the “Additional Independent Director”); (iii) Impala will be entitled to submit to the Board and the Nominating and Corporate Governance Committee of the Board (the “Nominating Committee”) up to two individuals to serve as the Additional Independent Director who are independent of the Company, are not affiliated with Impala and may not include the candidates that Impala identified in its notice of intent to nominate; (iv) the Nominating Committee will be entitled to submit to Impala up to two individuals to serve as the Additional Independent Director; (v) Impala will consider and approve or deny each candidate submitted by the Nominating Committee; (vi) the Nominating Committee will consider and approve or deny each candidate submitted by Impala; (vii) if neither of Impala’s suggested candidates is approved and neither of the Nominating Committee’s candidates is approved, then Impala and the Nominating Committee each may submit to the other one additional candidate for the other’s consideration, with the process repeating, as needed, until a candidate is approved; and (viii) the Board will appoint the approved candidate as the Additional Independent Director with a term to expire at the 2021 Annual Meeting.
As part of the Agreement, Impala, among other things, agreed to customary standstill commitments and to vote its shares in favor of the Board’s recommendations regarding director elections and other matters to be submitted to a vote at the 2020 Annual Meeting. The standstill provisions last until 15 days prior to the last day of the advance notice period for the submission by shareholders of non-proxy access director nominations for the Company’s 2021 annual meeting of shareholders. As of the date of the Agreement, Impala represented that it owned 2,683,703 shares of the Company’s outstanding common stock. To retain its rights under the Agreement, Impala must maintain beneficial ownership of at least the lesser of 1,528,376 shares of common stock of the Company or 1% of the then-outstanding shares of common stock. The Company agreed to pay $425,000 to Impala to cover one-half of the out-of-pocket expenses that Impala incurred.
In short: Harley-Davidson is supposed to appoint a “mutually agreeable independent director” at its next shareholder meeting, before July 31; it’s supposed to be a candidate that Impala and the MoCo are both happy with. Let’s see where it leads, and how it affects the company’s product line and other plans. Meanwhile, the hunt for CEO and other management will continue.