Fox Factory Capitulates to Engine Capital: Board Refresh, Transformation Committee Follow 73% Stock Collapse
February 9, 2026 · by Fintool Agent
Fox Factory has agreed to a sweeping board refresh and formation of a Transformation Committee following "constructive discussions" with activist investor Engine Capital, ending months of stock price carnage that has wiped out 73% of shareholder value since January 2024.
The cooperation agreement, announced Sunday, gives Engine Capital two board seats—including veteran activist nominee Alan L. Bazaar—and creates an advisory committee charged with driving "operational excellence and margin improvement" at the beleaguered suspension and performance products maker.
Chairman Dudley W. Mendenhall and director Ted D. Waitman will retire at the 2026 annual meeting.
The Settlement Terms
Under the agreement, Fox Factory will:
- Appoint Alan L. Bazaar as a Class II director within 10 business days
- Add a second independent director with "executive-level operations experience in manufacturing," identified by Engine Capital and approved by the board
- Form a Transformation Committee chaired by existing director Sidney Johnson to oversee profitability initiatives
- Retain a nationally recognized consulting firm to assist management in reducing costs and improving margins
- Cap the board at 7 members through the 2027 annual meeting (requiring Engine's written consent to expand)
- Reimburse Engine Capital up to $350,000 for campaign-related expenses
Engine Capital, which holds approximately 1.7 million shares representing at least 1.5% of outstanding stock, agreed to customary standstill provisions preventing it from acquiring more than 9.9% of the company or launching a proxy fight through 2027.
Ask Fintool AI AgentWhy Engine Targeted Fox Factory: A Margin Crisis
The numbers tell the story. Fox Factory's EBITDA margin has compressed from 18.2% in fiscal 2022 to just 10.3% in fiscal 2024—nearly 800 basis points of profitability erosion. Net income collapsed 97% from $205 million to $6.5 million over the same period.
| Metric | FY 2022 | FY 2024 | Change |
|---|---|---|---|
| Revenue | $1.60B | $1.39B | -13% |
| Net Income | $205M | $6.5M | -97% |
| EBITDA | $292M | $143M | -51% |
| EBITDA Margin | 18.2% | 10.3% | -790 bps |
The stock has reflected this deterioration, falling from $70 in early 2024 to under $20 today.
Management has blamed a confluence of headwinds: softening consumer demand in powersports, tariff pressures on imported components, OEM forecast reductions, and model year changeovers at automotive partners.
"While the underlying demand for Fox's innovative and performance-defining products remained strong, our results in the third quarter landed at the lower end of our guidance range as OEM partners further reduced their forecasts for our products during the quarter," CEO Michael Dennison told analysts in October 2024.
But the company has been taking action. A $25 million cost reduction program is "delivering on schedule," with approximately 30% of benefits realized by Q2 2025. EBITDA margin improved sequentially to 13.1% in Q2 2025—the highest level in nearly two years.
Notably, Dennison signaled confidence by purchasing 22,000 shares at $14.20 in mid-November 2025, near the stock's 52-week low of $13.08.
Ask Fintool AI AgentWho Is Alan Bazaar?
Alan Bazaar brings formidable activist credentials to Fox Factory's board. As CEO and Co-Chief Investment Officer of Hollow Brook Wealth Management, he has served on 16+ public company boards with a track record of value creation.
Prior experience includes:
- Orthofix Medical (current) – appointed following Engine Capital campaign
- Wireless Telecom Group – 10-year tenure
- PDL BioPharma – value realization
- Hudson Global – operational turnaround
- Sparton Corporation – acquired by Elbit Systems
- LoJack Corporation – acquired by CalAmp
- NTS, Inc. – privatized
Bazaar spent over a decade at Richard L. Scott Investments managing public equity portfolios and began his career at Arthur Andersen in business fraud and investigation services. He holds an MBA from NYU Stern and is a CPA.
Engine Capital frequently nominates Bazaar to boards where it campaigns. Most recently, he was nominated to Lyft's board before Engine withdrew following Lyft's agreement to a $750 million accelerated buyback program in May 2025.
Engine Capital's Playbook
Founded in 2013 by Arnaud Ajdler, a former Crescendo Partners partner who teaches value investing at Columbia Business School, Engine Capital has built a reputation for constructive engagement focused on cost discipline and capital allocation.
Recent campaigns include:
- Lyft (2025) – withdrew after $750M buyback commitment
- UniFirst (2025) – won proxy fight, all three nominees elected
- Civeo (2025) – settled with two board seats
- Avantor (2025) – ongoing campaign for operational improvements
- Smiths Group (2024) – called for breakup of UK engineer
"We appreciate the Board's responsiveness and engagement," Ajdler said in the Fox Factory press release. "We believe the appointment of two new directors and the formation of the Transformation Committee reflect a shared commitment to operational excellence."
What the Transformation Committee Will Do
The Transformation Committee's mandate is explicit: oversee management's "efforts with respect to profitability, cost-cutting and margin improvement."
Key provisions:
- Monthly meetings with management and the consulting firm
- Composition: Bazaar, the new manufacturing expert, and two existing directors (Jean H. Hlay and Sidney Johnson, who will serve as Chair)
- Consulting mandate: Management must retain a "nationally recognized consulting firm" to evaluate and implement cost reduction initiatives
The committee structure ensures Engine-aligned directors have direct oversight of the operational transformation Fox Factory is already pursuing internally. Management's existing four-pillar strategy—footprint consolidation, portfolio optimization, working capital management, and the $25 million cost program—will now face board-level scrutiny.
Ask Fintool AI AgentMarket Reaction and What to Watch
Fox Factory shares closed at $19.24 on Friday, roughly flat on the session. The stock has rallied 10% year-to-date from January lows of $17.42, potentially reflecting anticipation of activist involvement.
Key catalysts ahead:
- Bazaar appointment (within 10 business days) – signals activist engagement begins
- Second director identification – Engine must find manufacturing expert acceptable to board
- Consulting firm selection – who gets hired and what they find
- Q4 2025 earnings – next data point on margin trajectory
- 2026 Annual Meeting – Mendenhall and Waitman officially depart; new director up for election
The agreement runs through 30 days before the 2027 annual meeting nomination deadline, with potential extension if Fox Factory re-nominates Bazaar for 2027.
For investors, the question is whether Engine's involvement accelerates the margin recovery Fox Factory has been pursuing—or whether the company's challenges are more structural than operational.
Related
Jefferies LLC advised Fox Factory. Wachtell, Lipton, Rosen & Katz provided legal counsel. Olshan Frome Wolosky LLP represented Engine Capital.