Activist investor pushes board shake-up at Forward Air

Activist investor Ancora Holdings Group is calling on Forward Air shareholders to vote against three legacy board directors who it asserts have “egregious M&A records” and “histories of presiding over massive value destruction.”

The Wednesday letter calls for the removal of board Chairman George Mayes and directors Javier Polit and Laurie Tucker. All three have served on Forward’s (NASDAQ: FWRD) board for at least four years, a period which included a controversial acquisition of Omni Logistics that has left the Greeneville, Tennessee-based company with a significant debt load.

The firm also claims the board has been slow to earnestly execute a strategic review of Forward’s options, which include a potential sale to private equity, after announcing at the beginning of the year it would do so. 

“In the four months since its announcement, the Board has moved alarmingly slowly, causing us to become deeply troubled by its apparent inability or unwillingness to advance shareholders’ best interests,” the letter said. “We fear that the Board has not even entered into non-disclosure agreements with any interested parties as of the date of this letter.”

Ancora also restated Wednesday previously voiced complaints about the Omni combination, which it said was “intentionally structured to avoid a pre-closing shareholder vote” and “effectively coerced shareholders to vote for their own dilution.” (The deal’s structure required Forward’s shareholders to either vote to convert the nonvoting, preferred shares allocated to Omni holders to common, voting stock, or face paying a large dividend on those shares.)

The transaction was funded with $1.85 billion of debt, leaving Forward at a 5.5 times net debt leverage ratio at the end of 2024 and gave Omni’s private equity backers – Ridgemont Equity Partners and EVE Partners – control over a 38% voting bloc. Those shares are required per deal terms to vote in favor of board-chosen directors at future elections.

Shares of FWRD were trading at $17.33 at 12:59 p.m. EDT on Wednesday, up 3.6% on the day but 46% lower year to date. The stock is trading at just a fraction of the $110 share price held prior to the Omni merger announcement.

“We continue to believe that the private market is the best place for Forward Air to fix its balance sheet issues, improve operations and profitability, and serve customers and other stakeholders,” Ancora said. “We also expect a sale to deliver a meaningful premium relative to the Company’s current share price, while eliminating further risk for long-suffering shareholders.”

The board and management team have turned over since the January 2024 closing of the Omni acquisition.

A 12-person board includes 11 independent directors, seven of whom have been appointed post-merger (three directors designated by Omni). Forward’s new CEO, Shawn Stewart, is the only employee at the company on the board. Stewart was previously a unit head at Ceva Logistics and arrived at Forward after it was forced to close on the contested merger.

Stewart has filled the C-Suite as well as one board seat with other former Ceva leaders in his first year at the helm. However, the new group hasn’t announced a formal go-to-market strategy, nor provided any updates on the strategic review.

“While the Board has replaced the Company’s CEO and tinkered with its composition, this does not absolve the targeted directors, who have stood by while shareholder value has been destroyed,” Ancora said.

The letter said the recent announcement of Forward’s plan to reincorporate in Delaware, which on the surface appears to ease the path to a potential sale, is nothing more than “an unconscionable entrenchment maneuver.” It said the board’s changed view of Tennessee M&A law, prompting the decision to redomicile, is another delay and an attempt at “self-preservation.”

Ancora said it was respecting the strategic review process when it opted not to nominate potential board replacements earlier this year. It said the three targeted directors will be forced to resign if they don’t get 50.1% of the vote. It recommends shareholders vote against the targeted directors at the June 11 annual meeting.

“Under the stewardship of the targeted directors, Forward Air has delivered negative total returns and significantly underperformed relevant indexes. The evidence suggests shareholders can expect lasting damage should these directors remain in their seats,” the letter said.

“It is time for the entire Board to recognize that shareholders will not tolerate more episodes of avoidable value destruction at Forward Air. One way or another, change is coming to the Company.”

Ancora holds a 4.1% stake in the company.

A preliminary proxy filed by Forward calls for the board size to be reset at 11 members as one current director is not standing for reelection.

Forward will report first-quarter results on Wednesday after the market closes.

FreightWaves has reached out to Forward for comment.

More FreightWaves articles by Todd Maiden:

• Chorus of investors calling on Forward Air to consider a sale grows
• Activist investor urges Forward Air to go private
• Forward Air investor flips to activist, may explore ‘strategic alternatives’

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