When Harley-Davidson’s CEO left that job on February 28, the company said that he had “stepped down,” presumably to spend more time with his family or something. But an investment firm trying to install new board members at Harley said that Matt Levatich didn’t step down at all. No, they claim he was fired.
Well, “terminated” is the word the firm’s CEO uses in a press release today, and he also takes some credit for it. The firm, called Impala Asset Management, is trying to replace two Harley board members with picks of its own, while the company itself said earlier this week that it was happy with its current board and urged investors to keep them.
Here’s the spicy part of Impala’s release, attributed to Impala founder Robert Bishop, emphasis mine:
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. 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 $US11 ($19) 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 $US8.5 ($15) 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.
A spokeswoman for Harley declined to comment on the record but said that the company stood by its position that the parting with Levatich was mutual.
What’s the truth here? Well, consider that saying that the parting was mutual certainly serves both Levatich and Harley. If Levatich was publicly fired, for example, he might have a harder time finding his next job, while for Harley, the company and board might want to be seen as something other than a company who publicly fires its CEO since, you know, we’re all just friends here.
For Impala, saying that the company fired Levatich is a way to embarrass the company’s board and perhaps squeeze out some votes from shareholders for its two board candidates. In the end, none of it much matters since shareholders, if they’re even paying attention, will believe what they want to believe at the end of the day and vote accordingly.
That said, all of this is sort of interesting, in that Impala, which owns 1.2% of Harley, is probably right that the board needs a shakeup. Whether it can convince shareholders of that is another matter altogether, though you can be sure more lobs from Impala are coming.
“At the appropriate time, we at Impala will present our detailed case to investors in full,” Bishop says in the release before, hilariously, adding:
Given the ongoing national emergency posed by COVID-19, and out of respect for all stakeholders of Harley during this time of duress, we believe that now is not the appropriate time to hold this discussion.
It’s almost like a firm sent out a press release to get people to talk about this in the time of coronavirus! I wonder which firm that was.