Matt Levatich Harley-Davidson CEO politics silicon confirms sacked
Matt at the 115th Harley party in 2018

Sacked Harley boss paid $11m, say investors

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A boardroom battle is brewing at Harley-Davidson as investors trying to wrestle control have suggested CEO and president Matt Levatich was sacked last month and was paid a record $11m last year.

His departure comes as the company experiences its biggest sales slide since the Global Financial Crisis.

Hedge fund Impala Asset Management who have a 1.2% share in Harley, have launched their first proxy battle to have two nominees on the new board.

Harley replied that it is happy with its nine nominees.

But Impala isn’t backing down and released a controversial statement to investors that claims Levatich was sacked or “terminated” and paid a record sum. It also complains about the salary for temporary replacement Jochen Zeitz.

We have had significant concerns about the strategic direction and actions taken by the Board under former Chairman Michael Cave’s stewardship for some time – and we have voiced these concerns privately to Harley,” Impala says. 

Notably, it took our urging to convince the Board to terminate the prior CEO, Matthew Levatich, despite years of poor performance. 

In 2019, Mr. Levatich’s reported compensation increased to a new annual record of more than $11 million, even as adjusted motorcycle operating income declined by more than 20% and the stock underperformed Harley’s peers.

The Board has still not shown that it is focused on positive change. To the contrary, one of the first decisions the incumbent directors made after firing Mr. Levatich was to reward their longstanding colleague, Jochen Zeitz, the new Acting President and CEO, with a pay package that could provide up to $8.5 million in salary, bonuses and restricted units for a short assignment.

This is yet another instance of this Board being tone deaf to the plight of shareholders and further demonstrates the need for new perspectives on the Board.”

Sacked or mutual agreement?

Matt Levatich Harley-Davidson CEOP and president boss Hog
Levatich in Australia last year

Harley has not replied to Impala’s claims, but their original announcement said Levatich was stepping down after a mutual agreement with the board.

They have also not answered our questions from a couple of weeks ago that included whether the boss was sacked and his severance payment arrangements.

Looks like tough times ahead for Harley who this week announced temporary factory closures in the US after a worker at their Pilgrim Rd engine factory in Milwaukee tested positive for coronavirus.

It is too early to say what effect the new boss, new board, coronavirus and the likely recession will have on this major motorcycle manufacturer, but we will keep you updated.

  1. More than 50% of HOG’s share price was lost in the 5 years this guy was the CEO. He appears to be being rewarded for failure. However, this is merely a symptom. The one and only problem Harley ever had was, and which is at the root of all of its problems, it was bailed out by the US govt and benefited from highly restrictive tariffs about 40 years ago. It was, effectively, inured, incubated and protected from a competitive environment. The world of business is Darwinian – businesses have to fail for general progress to be made. That company has never been allowed to fail; instead, it was mollycoddled. When a business fails, the next business that comes along to fill its boots will have adapted to be in line with the needs of the market. That next business won’t make the same decadent mistakes as the previous, failed, business. Mistakes like putting people in charge who don’t understand the product, or the market, and who have nothing personally invested in the business’s affairs, so they don’t personally suffer if the business does poorly. That’s a big mistake. Another one: investing in product development too late, relying on lifestyle marketing, etc. All easy to see, in retrospect. Letting Harley suffer the consequences of its poor business practices is a necessity. That business needs to fail to leave a lacuna for another (also American?) fitter business to pick up where it left off.

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