Allegations have arisen from H Companions Administration, certainly one of Harley-Davidson’s greatest buyers and the leader of its current boardroom infighting, that retiring CEO Jochen Zeitz and board administrators Thomas Linebarger and Sara Levinson are holding “secret” conferences with choose shareholders forward of subsequent week’s annual shareholder assembly.
The assembly, the stage for its present energy drama to come back to a head, is supposed to elect, or re-elect, the corporate’s board and work out who’ll lead the corporate’s seek for its subsequent CEO.
Nevertheless, the brand new allegations made by H Companions Administration embrace that to garner assist for Harley-Davidson’s present board picks, together with going forward with the corporate’s already acknowledged plan when it comes to discovering a brand new CEO, Zeitz, Linebarger, and Levinson are assembly with shareholders in secret to bolster their place.
That, nevertheless, is not remarkable, although in proxy fights like this, the SEC frowns upon it. What is much extra attention-grabbing is the allegation H Companions Administration states these executives are telling mentioned shareholders, i.e. that the three executives “intend to exit the Board over the subsequent 12 months, the Board now intends to nominate an exterior CEO, and the Board has finished away with the idea of the present CEO transitioning to Govt Chair.”
If that is actual, it might be complicated as hell, because it mainly offers H Companions Administration the result they originally desired, and which precipitated their director to resign from Harley-Davidson’s board. One thing even H Companions Administration asks in its allegations.
“We’re skeptical that Mr. Zeitz, Mr. Linebarger, and Ms. Levinson will actually step down from the Board within the subsequent 12 months, as a result of we’ve got heard these commitments earlier than and they’re by no means adopted by means of on,” states H Partners Management’s release, including, “Nevertheless, even when Mr. Zeitz, Mr. Linebarger, and Ms. Levinson, are being truthful, and even when they plan to step down when a brand new CEO is discovered, then we’re much more perplexed by a number of severe governance questions.”
These questions embrace;
- Why are Mr. Zeitz, Mr. Linebarger, and Ms. Levinson preventing with their shareholders and losing tens of millions of {dollars} of shareholders’ sources in the event that they plan to depart the corporate anyway?
- Why would Mr. Zeitz, Mr. Linebarger, and Ms. Levinson selectively disclose personal info to solely sure shareholders?
- Why ought to shareholders enable Mr. Zeitz, Mr. Linebarger, and Ms. Levinson to pick the subsequent CEO, when shareholders have suffered $9 billion in fairness worth destruction over the course of the previous two CEO succession processes they’ve overseen?
The second query pursuits me greater than the opposite two, because it simply does not make sense.
Zeitz’s retirement announcement, i.e. him leaving on the finish of the 12 months after a brand new CEO was chosen, made sense. You transition from one CEO to the subsequent, permitting them to assist the brand new particular person ease into the roll. The board doing its due-diligence in its seek for a brand new CEO additionally is smart. Even H Companions Administration’s resignation of its board seat after being advised they could not decide the brand new CEO is smart. That is simply human nature.
However after weeks of proclamations of assist for the board, Levinson and Linebarger, and its seek for a brand new CEO, the concept that they three executives would simply concede they will all go away so as to maintain their seats now throughout this subsequent vote, nicely how does that make any sense?
Somebody is enjoying somebody right here, and I am unsure who it’s. However as I mentioned in earlier tales, subsequent week’s shareholder assembly is setting itself as much as be a wild day, one with fireworks on either side. And who will come out on prime is anybody’s guess.
So keep tuned, it is getting messier by the minute.
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