Stride settles with activist Fivespan, adding its founder to the board

Boardroom Alpha · Executive Brief

Stride (LRN) has $1 billion of cash and securities, a stock that has lost 44% in a year and, by the end of the month, an activist investor co-chairing a new board committee that will recommend how to use it. The online-school operator settled on October 8 with Fivespan Partners, an activist fund that had nominated its own candidates for the board, setting up a possible proxy fight at the December annual meeting. Under the deal, which Stride disclosed in an 8-K, Fivespan founder Dylan Haggart, a former ValueAct Capital partner, joins the board as an independent director and co-chairs the new Capital Allocation Committee. Stride expects the committee’s first review to take about three months.

How Stride got here

Until last fall, Stride was growing fast. Revenue rose 18% in the year to June 2025, to $2.4 billion, as average enrollment climbed to 234,000. The shares hit a record close of $169.81 in August 2025. Then, on October 29, 2025, they fell 54% in a day. Management said a rollout of new learning and technology platforms “did not go as smoothly as we anticipated,” raising withdrawals and cutting new enrollments. Revenue still rose 4.7% in the year to June 2026, within the company’s forecast, but growth faded as the year went on, and June-quarter revenue fell 2.7% from a year earlier. In July, CEO James Rhyu left and director Robert Knowling took over. The stock fell 15% the day Stride announced the change, along with preliminary results.

The business still produces cash. Stride earned $338 million in the year to June and generated $355 million of free cash flow. It has never paid a dividend, and it bought back no stock on the open market in the five fiscal years to June 2025. On November 3, 2025, it authorized $500 million of buybacks; in the year to June it spent $188.7 million, at an average of $81.50 a share, close to the October 8 close of $81.36. At June 30 it held $1.03 billion of cash and marketable securities, about $500 million more than its lease obligations and the $420 million of convertible notes it must repay in September 2027.

Enter Fivespan

Fivespan first reported a Stride stake in its 13F for June 30: 553,151 shares, or 1.3% of the company and about 11% of Fivespan’s reported holdings. It probably owns more now. The agreement lets Fivespan pick a successor if one of the new directors leaves, but only if it has held at least 2.5% of Stride since signing, about twice its June stake. On September 1 Fivespan gave notice that it would nominate directors and bring a shareholder proposal; on September 28 it demanded to inspect Stride’s books and records. Ten days later the two sides had a deal.

Fivespan hasn’t said publicly why it invested in Stride, beyond Haggart’s statement that the fund believes “in Stride’s significant long-term growth potential.” At Appian and BlackLine, where it disclosed stakes above 5% this year, it said it bought because it believed the shares were undervalued and listed capital allocation and dividend policy among the topics it might raise. Haggart and Sarah Coyne, a former ValueAct partner whom press reports name as Fivespan’s co-founder, led ValueAct’s 2022 campaign at the New York Times, according to those reports. Stride is Fivespan’s first public settlement that we found.

What happens next

The new committee is the center of the deal. Haggart co-chairs it with Brian Shepherd, a former CSG Systems CEO who joined the board in July; director Aida Alvarez is a member, and CEO Knowling sits in without a vote. It can’t be disbanded without Fivespan’s consent while the agreement lasts. Stride expects the initial review to be done “within the next three months.” The company will then announce “its target capital structure and a clear framework for allocating future cash flows to maximize long-term value,” after asking shareholders for their priorities. In front of the committee: $311.3 million of buyback authority still unused at June 30, and the notes due in 2027. Haggart may share board information with Fivespan’s staff and advisers, provided they keep it confidential.

In return, Fivespan withdrew its nominations, proposal and books-and-records demand. It can’t run a proxy fight or own more than 7.5% until August 12, 2027, by our calculation, and until then it votes with the board on directors and most other proposals. Stride isn’t the first company to give an activist a new committee. Of 162 cooperation agreements at other companies in the past two years, at least 14 created one, according to Boardroom Alpha data; Jack in the Box, Americold, CoStar and Pure Cycle formed committees on capital allocation or finance.

The two new directors

Dylan Haggart, 39, spent a decade as a ValueAct partner before founding Fivespan in 2023. He has been a Seagate Technology director since 2018 and sat on Fiserv’s board from 2022 to 2024 under an agreement with ValueAct. At Stride he also joins the Compensation Committee. The agreement required Stride to open a seat for him, and director Allison Lawrence steps down to become a non-voting observer; she rejoins the board after the annual meeting, when it grows from eight to ten.

Steven Guttentag, 63, a former classroom teacher, has spent most of his career in online schooling and the technology behind it. He co-founded Connections Education, an online-school operator that Pearson bought in 2011 and that, as Connections Academy, still competes with Stride; he ran Pearson’s online and blended learning unit from 2014 to 2018. He later led Reading Plus and EPS Learning, two literacy companies, and was once chief information officer of the School District of Philadelphia. The agreement says he is not Fivespan’s representative. He is a board observer until the meeting, then becomes a director and joins the Academic and the Nominating and Corporate Governance committees.

What to watch

• Oct. 20
  First-quarter results, the first full quarter under Knowling, and guidance for the fiscal year to June 2027.
• Oct. 30
  Haggart joins the board and the Capital Allocation Committee takes effect.
• Mid-November
  Fivespan’s 13F for September 30, the first public look at its stake since June.
• Dec. 10
  Annual meeting, with Haggart on the company’s slate.
• Early January
  The committee’s initial review is expected to be done, after which Stride is to announce its target capital structure and capital allocation framework.

Sources: Stride’s 8-K as linked, with the cooperation agreement and press release filed with it; Stride’s 10-Ks, Fivespan’s 13F and 13D filings, press reports, and Boardroom Alpha data, as of October 9, 2026. Returns are total returns to the October 8 close. The standstill end date is our calculation from the bylaws’ notice window and the December 10 meeting date. Boardroom Alpha is an independent research and analytics company and does not invest. This brief is for information only and is not investment advice.