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Investor Activism Alters 5 Seats On Forward Air Board

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An activist investor group led by Ancora Advisors has effected change to five seats on asset-light trucking and logistics company Forward Air's (NASDAQ: FWRD) board.

Forward announced Monday after the market close that it has "appointed five independent and highly qualified directors" in connection with an agreement with Ancora. The directors will join the board immediately and stand for election at the annual meeting on May 19.

New agreement brings back former leadership

The cooperation agreement between Forward and Ancora resulted in two director seats being designated by Ancora — Scott Niswonger and Richard Roberts, both of whom held prior leadership roles at Forward. Ancora has endorsed the other three additions chosen by Forward — George Mayes, Chitra Nayak and Javier Polit, which are said to have "substantial experience across operations, finance and technology."

Niswonger founded Landair Transport in 1981 and sister company Forward Air in 1990. The companies were split into separate publicly traded companies in 1998. Niswonger remained as chairman of Landair until it was acquired in 2018 by Covenant Transportation, now Covenant Logistics Group (NASDAQ: CVLG). He also served as chairman and CEO of Forward from 1990 to 2003 and again in 2005.

Roberts previously served as SVP and secretary of Landair, while holding similar duties at Forward. He was a director on both the Forward and Landair boards. His active involvement with the companies spanned from 1994 to 2003.

Forward also announced that it has entered into a consulting agreement with former CFO Andy Clarke, who was part of the investor group and instrumental in conveying the activists' thesis behind the call for change.

Two current members will not stand for reelection in May, leaving a 13-person board consisting of 12 independent directors, nine of whom have joined in the past four years.

"We are pleased to welcome this group of outstanding directors to the Forward Air Board at this important time for the company," said Tom Schmitt, Forward's chairman, president and CEO. "With these appointments, our board reflects our strong commitment to refreshment and best-in-class governance. We are eager to benefit from the diverse insights and significant expertise of our new directors as we work to build on our momentum."

CFO resigns

Forward announced Monday in a separate filing with the Securities and Exchange Commission that CFO Michael Morris had announced his resignation on Sunday. Schmitt will fill the role until a replacement is found. Morris' resignation is effective March 27, at which time he will serve as an adviser for six months to ensure a smooth transition.

"Having served in public company financial roles for 24 years, Mr. Morris expressed his desire to diversify his career experience by serving as the chief financial officer of a privately held portfolio company. Mr. Morris indicated that while he had no current intent to transition to such a role, he was presented with a unique opportunity that accelerated his plans. There are no disagreements between Mr. Morris and the Company," the filing read.

Activist efforts started in October

The shakeup was first revealed at the end of 2020 when the group announced it had acquired a more than 5% equity position in Forward with the goal of improving its capital allocation strategy, divesting noncore assets and making changes to management and the board. The group contended that Forward's continued pursuit of "noncore" product offerings like intermodal, drayage and final mile, which are outside of its core airport-to-airport, less-than-truckload routes, have been dragging margins and the company's valuation lower.

As talks between the two parties broke down, Ancora moved forward with the nomination of four candidates for election, including a push for Clarke to become chairman. The group also said it would look to divest the intermodal segment and use the proceeds as well as other capital to repurchase Forward's stock.

Ancora now holds a 6.4% stake in Forward's outstanding shares, a position it began building in late October.

"The constructive engagement between the company and Ancora during the last few months will benefit the long-term interests of our shareholders," continued Schmitt. "As we emerge from the pandemic a stronger company with enhanced offerings and service, we are confident in our ability to deliver long-term shareholder value."

Clarke has partnered with Ancora in the past, including activist investor efforts at Canadian automotive, truck and equipment fleet manager Element Fleet Management (TSX: EFN), and discount retailer Big Lots (NYSE: BIG). Clarke holds board seats at both of those companies.

"We are pleased to have worked constructively with the board and management team to reach this agreement to strengthen the board, which we believe will help enhance value for shareholders. We appreciate the thoughtful dialogue with Tom and the Board as we worked together to ensure Forward Air is best positioned for the future," said Fred DiSanto, chairman and CEO of Ancora.

Morgan Stanley (NYSE: MS) is serving as Forward's financial adviser.

Click for more FreightWaves articles by Todd Maiden.

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