Matthew S. Levatich — Ex Harley-Davidson President and CEO
Harley-Davidson, Inc. announced yesterday that Matthew Levatich has stepped down as President and CEO and as a member of the Board of Directors. The Board of Directors appointed current Board member Jochen Zeitz as interim President and CEO following the abrupt resignation of Levatich. A search committee is being formed, and the Company will utilize an external search firm to undertake the process to find a new CEO. The press release also stated that Levatich would assist with the transition through the end of March.
Levatich had a 26-year career at Harley-Davidson with the last five years as President and CEO. The abrupt departure marks 5-years of sliding sales and the value of the Milwaukee motor company has been cut in half. It was not a cheerful week at Harley-Davidson!
The board and the CEO share responsibility for corporate performance, so it stands to reason that when a CEO fails, the board has failed as well. I would speculate the company board is reacting to pressure from shareholders and seeks to appease investors in the short term by handing them the CEO’s head on a platter. The investment community will want a replacement CEO who’s both promising and reassuring—and they’ll want him fast.
Jochen Zeitz — Harley-Davidson interim President and CEO
If we were to step into a time-machine and journey back to the future… from the V-Rod to the Buell Blast. Who can forget the MV Agusta dumpster fire and in the parlance of our time, there is now a green machine— LiveWire—a motorcycle short on juice, and one that few people want or can afford to buy. Harley’s attempts to branch out has with out a doubt shown mixed results, at best. In fact, some observers wonder if the company is “asleep at the switch.”
It would seem that “seeing the problem is easier than fixing it!” Levatich’s mantra that Harley-Davidson doesn’t build motorcycles, it builds riders, always seemed a bit odd. That’s like saying, “It’s not about horsepower, but more ideas per horsepower.” Or “we don’t build motorcycles, we’re a lifestyle merchant company.” It’s that line of reasoning which is nice for marketing collateral, but when you actually dissect its meaning, it’s a “wait, huh?” moment.
Harley-Davidson Five-Year Sales Slump
Levatich was promoted when Harley announced in February 2015 that he would succeed Keith E. Wandell as President and CEO of Harley-Davidson, Inc. upon Wandell’s retirement on May 1st.
You might even recall that back in August 2008, Matt Levatich, who at that time was vice president and general manager of parts and accessories and custom vehicle operations (CVO), was named managing director of its newly acquired premium Italian motorcycle company MV Agusta Group. I blogged about this $108 million acquisition being a train wreck (Go Italian) back in 2008. That deal was heavily promoted as a major part of Harley’s bid to increase its presence in Europe, where it had seen sales grow in the double digits the previous three years, offsetting weaker performance in the US. The $108 million included $69 million paid to erase MV’s debts and included the Cagiva brand.
Just 14 months later, the Milwaukee “jetsetters” revealed during the Q3’09 financial results, the motor company would divest from the Italian national symbol of motorcycling and the real gut punch was—they would discontinue the Buell® product line. I don’t recall seeing a lot of MV Agusta T-shirts, coffee and dog collars so, I guess it wasn’t a good fit. Unfortunately, Levatich will go down in the motorcycle history books as the man that shut down Buell. Granted the previous CEO, Keith E. Wandell, started unwinding the process caught up in the axel, but Levatich concluded the 16-years of collaboration. It never added up as a smart business decision and every time I go back and research the articles and press releases it sounds more like someone had a vendetta they wanted to settle.
It’s my view that the blame for Harley-Davidson’s poor results lies squarely with the board of directors!
Poor performing companies don’t get that way because of any single decision or for that matter any single leader. Patterns of historical decisions, strategic neglect, and misallocation of resources all contribute to the deterioration in performance; some contributing factors may even lie outside the company’s control—looking at you tariffs!
Typically a CEO is dismissed not because the board has thoughtfully and deliberately concluded that it’s time for a change at the top, but because investors, concerned about poor performance, demand a change.
Let’s hope Mr. Zeitz and the board of directors have a blueprint for success.
UPDATED: March 1, 2020 — added sales chart and text on length of Levatich career.
UPDATED: March 4, 2020 — According to the company’s 8-K regulatory filing on Monday, March 2nd, Levatich will receive a severance in line with the company executive severance plan. The company’s 2019 proxy statement states; top company officers will receive a cash severance of 24 months of base salary and 18 months continuation of certain employee benefits, such as life insurance, medical, dental, vision, as well as outplacement and financial planning benefits, if employment is terminated for reasons other than for cause. The Milwaukee motor company had 12 previous quarters of sales decline, and Levatich’s severance payment will be $2,152,500. Assuming a 2018 base salary of $1,076,250.
Photos courtesy of Harley-Davidson. Sales chart courtesy of Bloomberg news.
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