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

By James Rogers

Activist investor Ancora Holdings Group is pursuing a 'reckless and short-sighted' strategy, Norfolk Southern says

Norfolk Southern Corp. has slammed the activist investor calling for the firing of the railroad operator's CEO after a derailment Saturday in eastern Pennsylvania involving three of the company's trains.

The National Transportation Safety Board is investigating a collision and derailment involving the company's trains, the agency said on Saturday. The incident reportedly left train cars derailed along a riverbank in Lower Saucon township, outside of Bethlehem, Pa., although there were no injuries or hazardous-materials concerns, according to Norfolk Southern (NSC).

"Norfolk Southern crews and contractors remain at the derailment site," the company said in a statement provided to MarketWatch Monday. "Site cleanup and track work resumed Sunday afternoon after the NTSB released the site back to us. We will continue to fully support the NTSB's investigation. Norfolk Southern will learn from this incident as we constantly strive to improve safety."

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

In early 2023, the derailment of a Norfolk Southern train in East Palestine, Ohio, thrust the issue of rail safety into the national spotlight.

On Saturday, Ancora Holdings Group, which owns a large equity stake in Norfolk Southern, called for "the immediate termination" of Alan Shaw, the railroad operator's CEO, following the most recent derailment. "An incident like this, which is drawing national news coverage and resulting in more embarrassment for the railroad, should put an end to the Board's unsustainable efforts to save a tainted CEO with no long-term future," Ancora said in a statement.

Ancora recently launched a takeover bid for Norfolk Southern, which the railroad operator has urged its shareholders to reject.

Related: One year after Norfolk Southern's East Palestine derailment, rail safety is still in the spotlight

On Monday, Norfolk Southern also hit back at the activist investor's call to fire Shaw in the wake of the latest derailment. "We believe that a change in leadership at Norfolk Southern would be highly disruptive to our operations, our workers, and the North American supply chain," the company said in a statement emailed to MarketWatch. "The pursuit of a reckless and short-sighted strategy would upend the execution of our balanced strategy that is providing safe service, enhancing productivity, and driving smart growth."

The company's shares rose 1% Monday, outpacing the S&P 500 index's gain SPX of 0.2%.

On Monday, UBS upgraded Norfolk Southern to buy from neutral and also raised its price target to $302 from $238. "We are upgrading NSC to Buy from Neutral because we expect stronger performance in NSC's merchandise network," UBS analyst Thomas Wadewitz wrote in a note.

-James Rogers

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03-04-24 1547ET

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