Activist investor Ancora ramps up pressure in Norfolk Southern board battle

By James Rogers

The Norfolk Southern proxy fight is intensifying ahead of the company's annual meeting on May 9

Activist investor Ancora Holdings Group has again urged Norfolk Southern Corp. shareholders to support its bid to take control of the railroad operator's board.

In a Monday letter, Ancora urged shareholders to support its slate of seven nominees to Norfolk Southern's (NSC) 13-member board at the company's annual meeting on May 9. Ancora holds a large equity stake in Norfolk Southern.

"Do you want Norfolk Southern to have leadership with the experience and judgment to properly implement Precision Scheduled Railroading ("PSR"), so the Company can finally achieve the service, safety and long-term value realized by every other publicly traded Class I rail?" Ancora said in the letter. "If the answer is 'yes,' this Annual Meeting represents your best opportunity to usher in the type of change that drove lasting turnarounds at rails such as Canadian Pacific and CSX."

Related: Norfolk Southern fires back at activist Ancora as proxy fight intensifies

PSR focuses on the movement of individual train cars, rather than whole trains. A key railroad industry trend of recent years, PSR aims to boost efficiency by streamlining operations.

Ancora described its board nominees as "the right Slate at the right time" and "the right management at the right time" in the letter to shareholders. "The Shareholder Slate as a whole is greater than the sum of its parts," it added. "It is uniquely positioned to add value right away and build consensus in an expeditious manner."

Rather than an outright takeover, Ancora is looking to change who controls the company's board. The seven Ancora nominees are independent of the investment group.

Related: Norfolk Southern slams activist calling for CEO's firing following train derailment

Norfolk Southern referred MarketWatch to a statement the company released Friday urging shareholders to vote for the railroad operator's nominees to the board.

The railroad operator's shares are up 0.3% on Monday morning. Norfolk Southern's stock is up 2.4% in 2024, compared with the S&P 500 index's SPX gain of 4.3%.

The proxy fight over Norfolk Southern is intensifying. Earlier this year, Ancora launched its bid to take control of the company's board, which the railroad operator has urged its shareholders to reject. If elected, the new board members would seek to appoint Jim Barber, a former chief operating officer at United Parcel Service Inc. (UPS), as CEO of Norfolk Ancora. "Nominee and CEO candidate Jim Barber, who previously served as UPS' COO and ran its transportation networks, has a unique background as one of the country's largest rail customers with vast knowledge of shippers' needs," Ancora said in Monday's letter.

Related: Norfolk Southern urges shareholders to reject activist investor's takeover plan

Last week, Ancora issued a presentation "on the urgent need for leadership, safety and strategy changes" at Norfolk Southern. In a presentation filed with the Securities and Exchange Commission Friday, Norfolk Southern slammed the "flawed assumptions" of Ancora's "highly unrealistic near-term financial targets" for the company.

Last month Edgepoint Investment Group, which holds a $960 million stake in Norfolk Southern, said it is "fully supportive" of Ancora's "meaningful dialogue" with Norfolk Southern. Ancora has also received the support of Norfolk Southern investor Neuberger Berman.

Earlier this month, Norfolk Southern said it has reached an agreement in principle to settle a class-action lawsuit brought after last year's derailment of one of the company's trains in East Palestine, Ohio.

Related: CSX 'solid and steady' despite Baltimore bridge collapse, say analysts

Norfolk Southern, which reports first-quarter results on April 24, has said that its second-quarter revenue will be impacted by the collapse of the Francis Scott Key Bridge in Baltimore.

-James Rogers

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04-22-24 1101ET

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