By John Keilman

Two influential proxy advisory firms recommended divergent paths for Harley-Davidson investors ahead of a shareholder vote that could shape the motorcycle maker's future.

ISS said in a report this week that an activist investor, H Partners, hasn't made a compelling case to remove three members of Harley's board, each of whom has served for at least 17 years. They are Chairman Jochen Zeitz, who is also the company's chief executive, and directors Thomas Linebarger and Sara Levinson.

The other major proxy firm, Glass Lewis, reached a different conclusion. It said Tuesday the directors had "overseen starkly suboptimal shareholder returns," and that removing them from the eight-person board likely wouldn't create any problems.

Harley and H Partners didn't immediately respond to requests for comment.

The split decision adds new intrigue to a boardroom battle that is set to be resolved at Harley's May 14 annual meeting. The company last week reported first-quarter sales and profits that were down significantly year-over-year; it blamed high interest rates and low consumer confidence.

Jared Dourdeville had been H Partners' representative on Harley's board for three years, but he resigned last month to launch the proxy fight. He has said in Securities and Exchange Commission filings that he became concerned with how the company was executing its strategy, and heaped much of the blame on Zeitz.

Zeitz has announced plans to retire this year. Dourdeville said the CEO and his two longest-serving colleagues on the board shouldn't be involved in choosing a successor.

Harley calls the campaign a case of sour grapes that began when H Partners' pick for CEO didn't get majority support from the board. Though the company's stock is down 35% over the past year, Harley says it is faring better in a rough economy than other companies that sell big-ticket recreational products.

ISS agreed with Harley that the campaign had created an unwarranted distraction to the CEO search. Glass Lewis said the board has taken little responsibility for the company's struggles.

Each side has stumped for its position through SEC filings and online presentations. Other parties have chimed in as well. The National Powersports Dealer Association, which says it represents about 170 of Harley's roughly 570 U.S. dealers, publicly sided with H Partners Tuesday.

The company has said it doesn't view the association as an official body and engages with a separate council of dealers.

Baltimore investor Phil VanderHeyden holds about 300 Harley shares. He said that while he understands the tough environment for discretionary products such as motorcycles, he has been disappointed in Zeitz's leadership and plans to vote with H Partners as a protest.

"I think it's useful to fire a shot across the bow of management," VanderHeyden said.

Jason Bremer, who owns three Harley dealerships in Texas and Minnesota, also holds shares in the company. He hasn't yet decided how to vote but lamented the boardroom dispute, saying it was causing patrons to question the brand's long-term future.

"It's like letting the customers see mom and dad fight," he said. "What good does it really do?"

Write to John Keilman at john.keilman@wsj.com

(END) Dow Jones Newswires

May 06, 2025 19:02 ET (23:02 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.