Does Harley-Davidson Need A New CEO And Board?

By Rich Duprey (The Motley Fool)

As Harley-Davidson’s (NYSE:HOG) sales enter their fourth year of decline, investors should ask whether the motorcycle maker needs a shakeup. The problem may not just be the soft industry in which it operates, but rather also the front office in Milwaukee. Maybe instead of 100 new models in 10 years, Harley-Davidson needs a new CEO and board of directors.

A long way down Investing legend Warren Buffett once noted, “You only find out who is swimming naked when the tide goes out,” which is another way of saying that everyone looks like a genius in a bull market.

When times were good in the motorcycle business, it was easy for CEO Matt Levatich and the board to appear to be geniuses, but now that the tide is running out on the motorcycle bull market, the CEO and his board are increasingly looking like they’re swimming naked.

During Levatich’s tenure as CEO, which began in May 2015, total motorcycle sales fell 5%, U.S. sales are down more than 6%, foreign sales are off over 1%, and Harley-Davidson’s stock has tumbled 11%. Over that same time frame, the S&P 500 has gained more than 25%, and rival Polaris Industries (NYSE:PII) has seen sales of its Indian Motorcycle brand soar (its stock is down over 9%, but it has been dealing with a massive recall situation in other divisions of its company).

For investors, Harley-Davidson’s stock trades at the same price it did 17 years ago. It’s had ups and downs over that time, rising and falling beyond that threshold, but the fact remains there has been no value creation over nearly two decades.

While Polaris CEO Scott Wine agrees with Levatich that there are significant challenges facing the motorcycle industry today, he’s still managed to keep Indian sales growing at a double-digit rate. To get Harley-Davidson to start growing again, too, maybe it’s time the company had new leadership at the top.

Where are the motorcycle people? Levatich came to Harley in 1994, serving in a variety of capacities, until being elevated to the position of president and COO in 2009 before being appointed to his current position of president and CEO.

Of the nine directors who serve with Levatich on the board, four have come in the last two years, and none has any relevant experience in the motorcycle or related industries. The chairman of the board, who was appointed to the position last year, is a former senior VP at Boeing, while the longest-serving board member (since 1996) is the founder of a digital entertainment company.

Others include a division of General Electric that deals with LED lighting and solar power; a co-founder of a not-for-profit sustainable business practices consultancy; a former Starbucks executive; a former executive of Levi Strauss; an executive with the Bill & Melinda Gates Foundation; one from engine maker Cummins; and the CEO of YUM! Brands Taco Bell division.

Although it’s important for a business to bring in outsiders to a board who can provide a fresh perspective, it’s equally important to have people serving who understand the industry, too, otherwise they’ll be more likely to defer to the CEO. In Harley’s case, Levatich is seen as “the motorcycle guy,” and his prescriptions for rectifying the situation will be viewed in a more positive light than perhaps they ought to be.

Zipper's

35 Responses to “Does Harley-Davidson Need A New CEO And Board?”


  1. 1 Seymour Dec 12th, 2017 at 9:28 am

    I just watched a video made several years ago featuring Frank Zappa. He was talking about the record industry, and how things flourished when people who were willing to try anything were in charge, and how things came to a grinding halt when people who were not willing to try new things (in other words, thought they knew everything about their market) were in charge.

  2. 2 takehikes Dec 12th, 2017 at 9:57 am

    100 models in ten years? What BS. The MoCO makes about 3 different bikes but dress the same pig up many ways. I’ve owned plenty but they need focus. I hope Polaris isnt doing the same thing with Indian. I already have lost track of how many “models” they have.
    Oh and don’t forget the whole price and quality point thing too. I ride a Japanese bike for exactly those reasons.

  3. 3 franco Dec 12th, 2017 at 11:14 am

    Who and why got rid of Buell?

  4. 4 highrpm Dec 12th, 2017 at 11:36 am

    recreation products businesses, being dependent on disposable income, are vulnerable to economic health. when $$$ go south, wall street hammers them. ah, but the vain imaginings of big product development with big money. same dynamic that drives las vegas casinos. and the top brass luv those big compensation packages. poor matt, dancing with the devil.

  5. 5 greybeard1 Dec 12th, 2017 at 12:00 pm

    They need to fish with whatever bait works, metaphorically speaking.
    I don’t mean to get out of the cruiser business as, obviously, cruisers sell.
    No, HD needs to diagnose the problem as you would an electrical problem; “work back to the source”.
    Where’s the last place you have power?
    Where’s the point it stops?

    Starting at the dealerships because that’s the last point you can analyze your influence.
    Are the dealers “taking care of business?” then work back.

    Then, do they offer product that the active portion of the market really wants?
    Can’t make a product then force feed it to the customers.

  6. 6 kingcycles Dec 12th, 2017 at 12:19 pm

    Harley is stuck in an interesting situation. They have tried a few different things in the past, but the “old skool” crowd would have none of it. The FXR and a few other later model bikes are an example. They didn’t look like a Harley to them. They didn’t care that they were better motorcycles. All they cared about was the look. You can still hear it today with people bitching about the new bikes. They keep making the same bike because it seems a large part of their base asks for it. The younger crowd is not interested in $30,000.00 cattle haulers.

  7. 7 fuji Dec 12th, 2017 at 12:29 pm

    Some board members are reaching their term expiration . Will this be reasoning for HD to say we are making changes ?

    Internal promotion of resent past was an indicator of change at the top. Grooming of a new wave maybe for a female.

    I’m for what about BOB who would be a shoe in . The great CARNAC KNOW ALL SEE ALL.!

    Go to the outside world and get a worthy business leader NOT ASSOCIATED WITH THE MOTOR
    COMPANY !

  8. 8 Chief Waldo Dec 12th, 2017 at 12:33 pm

    I think that the comparison with Indian is unfair, at this point. HD still is the gorilla in the room with almost 50% of the US market, while Indian Sales are a much smaller part of that. I’m a fan of Indian Motorcycles – I owned a (Gliroy) 2002 Indian Chief – and know the quality of Polaris motorcycles – having owned a 2008 Victory Vision – but it doesn’t take much to recognize that it’s the Indian name that’s driving the growth of Polaris’s motorcycle sales when compared to HD. There is a heritage and mystique to the name Indian Motorcycle that people want. Despite making a very dependable and stylish product, Polaris couldn’t get the sales it was looking for with Victory. Yes. Indian is biting into HD sales, but that will only be until it reaches the market saturation point for people who want to be part of that name and all that they imagine goes with it. And it could very well be, in a few more years, Indian and HD will each have more equivalent market share. But the situation at this point isn’t about growth, or who makes a better product, or who has a better price point. It’s about two iconic names coming (back) into balance.
    HD has made some important moves in improving the product, and expanding the product line into the 500cc and 750cc market (although, the execution of that expansion could have been better – just read the industry reviews), but they, as well as Polaris, should be taking a good look at Triumph and to a smaller extent, BMW, who both offer a product range going well beyond heavyweight cruisers. That’s where the new riders may be…

    That being said, I think one or two more people with better knowledge of the motorcycle industry on the board would be a great idea.

  9. 9 BobS Dec 12th, 2017 at 2:08 pm

    I also wouldn’t compare Harley to Indian. After all, Indian is just Polaris and Polaris motorcycle sales are in rapid decline. This “double digit growth” is just pseudo book cooking. Last year they had three “brands” and this year just two, although it’s all the same company. Weird. So without that third brand sales are down for the company 35-50%. The execs at Harley look like geniuses in an honest and true comparison.
    I think Harley definitely needs more motorcycle people in the boardroom, but looking at the companies over the last couple years I think Harley is moving in the right direction with more powerful, better handling, better braking improvements. They are at least trying to tackle the problem by building better bikes. Their competitor is trying to tackle the problem by pretending to be older. Everybody is (was) excited to see Indian be a major manufacturer again but I think that only gets you so far. To grow from 2500 units to 3500 units is one thing. To grow from 250,000 units to 350,000 units I think you have to start by building better bikes. If I was on the board I’d give Levatich more time.

  10. 10 Kevin Dec 12th, 2017 at 4:14 pm

    Chief Waldo,

    You are right. This is nothing more than a veiled Indian PR hit. Indian isn’t even in the ballpark of Harley. The “Harley is doomed” articles have become popular clickbait and largely don’t show accurate numbers. Its silly.

  11. 11 ozzie21 Dec 12th, 2017 at 6:18 pm

    Drain the swamp……
    Absolutely….. clean house. How many different shades of lipstick can you paint a pig with anyway?
    Get real about electric motorcycles. Look at the Lightening LS-218. The fastest production motorcycle in the world – gas or electric. But now H-D has fallen too far behind to ever catch up. Yes keep the V-Twin touring bikes but water cooling has to be the way for real power and reliability.
    Discontinuing the V-Rod was the dumbest thing they ever did. Fastest most reliable motorcycle they ever put out. Excuse was EPA restrictions. But Ducati has the XDiavel which is a winner all the way. H-D could have easily upgrade the V-Rod (6-speed tranny & boosted HP) to be a serious competitor to the XDS.

  12. 12 Roberto Dec 12th, 2017 at 10:12 pm

    They don’t know bikes and they don’t know their base. The burdens put on the dealerships leave them in a place where they are alway scheming to make a buck. Everything is homogenized, the company that espouses individuality crushes it. Cold ,impersonal and phony. Look at dealership websites,they’re all the same. After 35 years on 5 different HD’s ,looks like I’m done. Don’t need a bike that I have to add transmission fluid and drain the primary every couple of thousand mile, did that wth my old shovel and I ain’t in my 20’s anymore.

  13. 13 ozzie21 Dec 13th, 2017 at 8:29 am

    Roberto….well said. I travel a lot and I used to make it a point to drop into any local H-D dealerships in my travels. 20-30 years ago every one was unique and individual experience. I don’t bother doing that any more. There’s nothing left that defines one dealer from another. I couldn’t tell you the difference between the dealer in Seattle, New York or Toronto…samesame. Even the people look the same in them. And yes sometimes it seems many dealerships and the people involved with them behave like the sleazy stereotypical “used car salesman” trying to squeeze every penny they can out of you. But H-D on a corporate level has them boxed into a corner just trying to survive. I was recently in a Northern Midwestern H-D dealership that I have bought bikes from before. As recently as 3-4 years ago if you looked into the service area you saw 8-10 mechanics busy. They had a dyno room that was booked up and busy most of the time. Now the service are is empty. One mechanic working. No more dyno……. sure not like it was 10-15 years ago.

  14. 14 Tim Dec 13th, 2017 at 8:30 am

    So Harley’s Chickens have come home to Roost….Over the past decade (and a little more)The MoCo has been strangling their dealers. The had to build temples to Milwaukee, then the could not sell to local shops or customers who wanted to purchase in bulk (buying a case of oil instead of 4 qts), not allowing dealers to sell aftermarket parts, only allowing 1 or 2 displays on non-hd stuff on their showroom floor, telling their customers they cannot put any part on their new motorcycle unless it was officially HD or their warranty was voided. Many customers blamed the local dealers for all this, but I am lead to believe that it was Milwaukee who pressures the dealer to tow their line (i of course welcome any proof that I may be wrong) not to mention designing and producing bikes no one wants. One thing about Willie G was he was at the shows, talking to bike owners (HD and others) and seeing what was gaining in popularity. I feel the current designers just try to force what they want to build on the consumer. I have been hearing that with the popularity of the FXR coming back into vogue, and all the retro stuff out there, why didn’t they do a nostalgia Low rider and FXRT

  15. 15 george barnard Dec 13th, 2017 at 9:05 am

    Yes its time for the leadership to change. First leadership has actually been missing for a long time ( you can get a death certificate seven years after filing a missing persons report ). The management at HD has been clipping and trimming the pieces of the puzzle according to the spread sheet/wall street school of thought. Trimming the costs and clipping the employees may seem smart but its no guarantee that what they`re throwing at the wall will stick. And following this school of thought leads to the next guiding mantra- the beatings will continue until managements compensation improves, moral doesn`t fit on a spread sheet.So after all their hard work clipping and trimming the pieces the puzzle is finished for 2018. Unfortunately the finished puzzle doesn`t show the picture of a single marketable motorcycle but the odd pieces of eight different ones all jumbled. The softail is a good piece of engineering but it reeks of eight different colonic by products thrown at a wall. If this is leadership they need to start eating more meat.

  16. 16 Boomer Dec 13th, 2017 at 9:20 am

    Harley is feeling the effects of new generations not so much interested in riding motorcycles but rather spending $50 on a video game to get what they think is the same thrill without all the risk of riding on over populated roads. I’ve seen plenty of people who live in cities quit riding because they got spooked after seeing so many people they know get in bad accidents.

    The fact is the average working man hasn’t gotten a raise (when counting for inflation) since the 1970’s. A new touring bike from HD or Polaris costs as much as a house did the last time they got a raise. Polaris made a huge mistake buying the Indian name and dropping the Victory brand for this reason. Victory’s were affordable and reliable with low maintenance required. Exactly what young people want; at least those who would rather ride the real thing instead of a video game.

  17. 17 pabstbluerigid Dec 13th, 2017 at 9:35 am

    Teerlink was the “last of the greats.”

    what’s lacking now, passion & a vision…

    the future is the past forgotten? jus sayin.’

    focus on what you do well, and do it the best you can. priced right, serving the dealers & the customers – before the shareholders.

    Teerlink, Ron Hutchinson, Willie….those were the days.

  18. 18 Guzzigreg Dec 13th, 2017 at 10:25 am

    HD need a CEO who is a motorcyclist that understands the different genres within the motorcycling world.

  19. 19 Sam Dec 13th, 2017 at 11:04 am

    Hmm. Could be a little skinny dipping going on.

  20. 20 It's Not VIN Number! Dec 13th, 2017 at 12:14 pm

    @franco Buell never made money. Year over year, they spent more than they made.

  21. 21 evo80 Dec 13th, 2017 at 1:15 pm

    They need to not be coming up with 100 new models and just need to make bikes that are reliable.For most part they are excluding recalls for things like dangerous clutches.I have bought 3 new harleys since 1982 and all of them ran and handled great,but I am 59 and will not buy a new one .The 2015 Road Glide Special will last me many many years.And I dont give a hoot about the m8 the twin cam has enough power for me.And I never thought the guys in upper management helped or hurt the bikes but they sure could treat their workers with understanding that wages if higher and they make a better bike a buyer will pay up for it. And if they want cheaper labor they will get what they pay for and then the management will have to suffer the loss of their job.I forgot they will get millions in severance!

  22. 22 Opera & Iron Dec 13th, 2017 at 2:05 pm

    @franco Keith Wandell got rid of Buell because he couldn’t understand why anyone would want to ride a sportbike.

  23. 23 Weld and Grind Dec 13th, 2017 at 3:05 pm

    Here is what I’ve been seeing over the years – no one at the is invested in a bike, goes to events or rides one – unless it’s for appearance only. Or at least that is perception … There’s a market out there of people that want to ride with the “bar & shield” but have started to realize that for the money they’re spending they can get something else hand made or find someone that is selling theirs that only rode it to BIKE NIGHT.

    No one at the top seems to want to listen to any ideas that IMPROVE what was in their stables for many years … all they want to see is less innovation, less choices and charge more $$$$$$. They’re number crunchers – period. Making people jump thru hoops instead of remembering the “Code” and not realizing that giving a little goes a long way when helping a dealership or a customer.

    Here’s a prime example – take a look at the FXDB (StreetBob) & look at all of the pictures of them chopped, changed & revamped … some aftermarket, some hand made – all of them – to remove that bland factory stank that they kept reproducing. Yet – the boardroom keeps their head down to keep counting $$$$ and to see how they can squeeze instead of grow. They need someone who rides (doesn’t have to wrench) and has passion for the bikes, the owners and the builders that keep ideas fresh & alive.

    Does HD need a new CEO & board ??? You bet they do …

    Keep the rubber down and the wind in your face …

  24. 24 Martin Twofeather Dec 13th, 2017 at 4:18 pm

    The answer is simply yes before they ruin a good product!

  25. 25 Willyd Dec 13th, 2017 at 5:01 pm

    Ummmmmmh! Taco Bell! What a bunch of very rich morons!

  26. 26 rebel Dec 14th, 2017 at 8:51 am

    don’t need “new” management just fix the one you have, getting a divorce fixes little, their all the same, trust me.

  27. 27 Phill_MoGraves Dec 14th, 2017 at 5:40 pm

    The dicks at the top of the company normally do not decide on design direction.
    Blaming the CEO for a poor design or bike is simply stupid.

  28. 28 Sparky Dec 18th, 2017 at 12:02 pm

    At this point it is market share, the pie is not getting a whole lot bigger. That being said H.D. is getting left in the dust by other brands that are doing a far better job of attracting newer customers. Indians proposed flat track / street bike is brilliant and the Scout is a nice little bike that is much more appealing than the Street Rod. Take the V Rod engine and put it in a Sport Touring chassis design and H.D. would have the new customer coming in the door that they tried for with the original design, which failed new customers. With a Sport Touning platform they would also have every police department in the country. The company is in dire need of people who understand the motorcycle business and fewer bean counters.

  29. 29 mike corbin Dec 18th, 2017 at 2:11 pm

    The HD products are better than ever , I think the marketing needs a Blue Ocean look see.

  30. 30 NewYorkMyke Dec 18th, 2017 at 6:38 pm

    Mike Corbin you are right on and that’s the bottom line. Sales is only one measure but the greatness of a product is how great the product is! The 2018!model lineup is absolutely superb & only getting better! Our service departments are smarter & better supported by the factory than any brand out there & our employees overall are smarter, better trained & more committed to the brand than ever before. Go anywhere on your HD motorcycle & you’ll be supported by the best dealer network in the world! Sales will be there & as that is my way of making a living I’m not going to diminish its importance but as long as we keep making great Motorcycles & working together building this brand, this great American brand, we’ll be fine…& thanks for caring!

  31. 31 The Bear Dec 19th, 2017 at 12:26 am

    Most of the Baby Boomers are on their last motorcycle, as in “this one will see me out”. That removes, what, about half of the US market for cruisers? This is true no matter how good the products are, and both the Motor Company and Indian are building terrific bikes. The problem, as Mike points out, lies in selling them. But perhaps a marketing genius from the motorcycle industry is needed for that. Any contenders? Oh, and hi, Mike. Hope all is well.

  32. 32 hark Dec 19th, 2017 at 10:18 am

    I know first hand what the real problems are…they are way too smart to listen to me.

  33. 33 Tim Dec 21st, 2017 at 7:34 pm

    absolutely! For a company that was making a comeback after making some mistakes, to take an American icon and close a factory here in the USA and open one up in Japan taking American jobs with it, Lost my impression of an American motorcycle company who wants to remain an American company.

  34. 34 Highrider Dec 23rd, 2017 at 2:53 am

    Last year I wrote HD CEO and included some suggestions for a completely new bagger to add to their current line up. To be honest, I thought that since Victory Magnums had gone away, that some of the styles of those bikes could be copied by HD and sold as a complete new bagger, not 100% copy mind you, but I did like many of the body parts on the Victory Magnum.
    It took Harley 4 months to respond to basically prove who I was, resubmitt again along with waivers. I was not asking for anything, just offered a few suggestions. and it was addresses to Mr. Levatich and I got a form , unsigned response.

    The second thing I see is that Indian is filling their dealerships with almost 2 of each model and color, where as Harley dealers don’t have many of the current line up models on the floor, let alone different colors and no 115 bikes yet or merchandise.

    I love Harley, but I agree they have a problem and one of them is they are too concerned about being PC.

  35. 35 Steve Jan 9th, 2018 at 9:14 am

    After riding an 05 Heritage for over 13 years, I decided to give the ’18 Heritage a try. This bike is amazing. I know, I know, a lot of “old school guys don’t like ’em. Some never like anything different. Time will tell, but my first impression is a good one.

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