Harley-Davidson chief executive officer Matt Levatich received a 15 percent increase in his earned base pay in 2016, his first full year as head of the Milwaukee-based motorcycle maker.
At $1,041,667, Levatich’s earned base pay is still $150,000 lower than former CEO Keith Wandell had in his final full year at the helm. It is also slightly lower than the base compensation Wandell earned in 2010 after adjusting for inflation.
Levatich’s earned base pay in 2015 was $901,500, with the board increasing his annual salary to $1 million in May when he transitioned into the CEO role. The board gave Levatich a 5 percent raise to $1.05 million in March 2015 based on his individual performance, accomplishment of key initiatives and positioning his salary in relation to similar companies, according to securities filings.
The next largest increase in earned base pay was a 10 percent jump for Paul Jones, Harley vice president and chief legal officer. Chief financial officer John Olin’s base was up 4 percent and Lawrence Hund, president and chief operating officer of Harley-Davidson Financial Services increased 4.4 percent.
Levatich is now paid $390,000 more than the next highest paid executive. The board’s Human Resources Committee feels that gap is supported by market data and the level of accountability for Levatich, according to filings.
Levatich’s total compensation also increased from roughly $6.5 million to $9.4 million, largely due to the award of new performance shares that will not actually be paid out until 2018.
The board initiated the performance shares plan with the goal of providing a more direct connection between the company’s performance on certain key measures. The change also eliminated stock options and cash-based long-term incentives.
Levatich and other executives will be granted shares of the company’s stock depending on how the company performs over the next three years. Those measures included the percentage of first-time motorcycle buyers choosing Harley, weighted at 15 percent, and net income and return on invested capital, both weighted at 42.5 percent.
Executives can earn zero to 300 percent of the initial target depending on performance. The company is projecting it will pay out 89.3 percent of the target at the end of 2018. Levatich’s target is 80,146 shares, worth almost $3.2 million when initially granted.
The company is revising its 2017 performance shares plan, eliminating the first-time buyer measure and dropping the maximum award to 200 percent of the initial award.
