Activist investor Ancora Holdings Group LLC this week urged fellow shareholders to vote against three current board members of Forward Air Corp. at the June 11 annual meeting.
Board Chairman George S. Mayes, Jr., and Directors Javier Polit and Laurie Tucker supported Forward Air’s “disastrous acquisition” of Omni Logistics LLC in 2023 and then resisted public calls from several shareholders to run a strategic review in 2024, according to Ancora.
“Unfortunately, the board’s debt-fueled acquisition of Omni and evident resistance to running a credible strategic review of sale options have been the primary catalysts of tremendous value destruction,” wrote Ancora executives in a letter sent to fellow shareholders this week.
Ancora, which first invested in Forward Air in 2020, currently has a roughly 4.1-percent stake and is a top 10 shareholder of the ground transportation and related logistics services company.
In a May 7 letter to shareholders, Fredrick DiSanto, chairman and CEO of Ancora Holdings Group, and James Chadwick, president of Ancora Alternatives LLC, wrote that their company has had a long history of engaging with Forward Air’s leadership to deliver value-enhancing suggestions pertaining to capital allocation, corporate governance, operations and strategy.
However, they pointed out that the Forward Air Board launched a long-overdue review of strategic alternatives in January only after a disclosure of interest from a potential acquirer emerged, and several months after public urging from multiple large, independent shareholders, according to the letter.
“The board’s timing leads us to ask if it disingenuously announced a strategic review just one month ahead of the nomination window for the 2025 Annual Meeting in order to stave off an election contest?” wrote the Ancora executives. “It certainly seems that way to us.”
In the four months since, DiSanto and Chadwick said the board has moved “alarmingly slowly,” causing Ancora to become concerned about Forward Air’s “apparent inability or unwillingness” to advance shareholders’ best interests.
“We fear that the board has not even entered into non-disclosure agreements with any interested parties as of the date of this letter,” wrote the execs. “As such, we plan to send the board a clear message that the status quo is unacceptable in light of the significant value that has been destroyed and the time-sensitive opportunity currently in front of Forward Air.”
Specifically, Ancora plans to vote against Mayes, Polit, and Tucker, whom the firm says “cannot be trusted to oversee the company’s current strategic review based on their history of inaction, failed oversight, and highly problematic decisions related to transactions.”
In addition to the Omni acquisition, for example, Ancora says these three directors have overseen years of “massive value destruction.”
For instance, under the stewardship of the targeted directors, Ancora said that 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,” DiSanto and Chadwick wrote.
They also noted that the board appears to be slow-walking Forward Air’s sale process and the company’s stock has suffered for it.
“It took the board three months after hiring bankers to even announce a formal sale process,” wrote the Ancora executives. “Since October, Forward Air’s stock has declined by more than 58 percent as the board has not reported any meaningful progress.”
Relatedly, Mayes previously was forced to leave his position as COO at Diebold Inc., which provides technology, software, and services, after the company eliminated the position in 2015. As a result, Mayes left Diebold, which he joined in January 2005 as vice president of global manufacturing. Mayes was named COO in January 2013.
At Forward Air’s June 11 annual meeting, Ancora will withhold votes from the three directors, who are required to resign if they don’t win 50.1 percent of the shareholder vote, but said it would welcome the opportunity to be proven wrong about its concerns if the Forward Air Board could address Ancora’s stated issues.
“It is time for the entire board to recognize that shareholders will not tolerate more episodes of avoidable value destruction at Forward Air,” wrote Ancora. “One way or another, change is coming to the company.”
Forward Air released first-quarter earnings on Wednesday, reporting consolidated revenue of $613 million compared to $542 million a year ago. Income from operations improved to $5 million compared to a $66 million loss from operations last year.
As of earlier Friday, Forward Air’s shares were trading at $17.23 following an all-time high of more than $121 in January 2022.