Norfolk Southern calls on shareholders to reject activist investor's takeover bid
By James Rogers
Activist investor Ancora Holdings Group is calling for the ouster of Norfolk Southern CEO Alan Shaw
Norfolk Southern Corp. has urged shareholders to get behind the company's management team to fight an activist investor's takeover bid and its calls for the ouster of the railroad operator's CEO, Alan Shaw.
Last month Ancora Holdings Group, which owns a large equity stake in Norfolk Southern (NSC), called for "the immediate termination" of Shaw following a derailment in eastern Pennsylvania involving three of the company's trains. Ancora is also urging the company's shareholders to support its push to elect its slate of seven directors to the 13-member Norfolk Southern board. 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 Southern, Ancora said in a letter to shareholders last week. Norfolk Southern's annual meeting is on May 9.
In a letter Tuesday, Norfolk Southern's board urged shareholders to vote for the company's own 13 nominees. "The Norfolk Southern board strongly recommends shareholders reject Ancora's misguided efforts to implement destabilizing changes during this pivotal transition period for Norfolk Southern," the board wrote. "At the helm of Norfolk Southern is our experienced, tested, and responsible management team that is executing a plan in the best interests of our shareholders."
Related: Norfolk Southern slams activist calling for CEO's firing following train derailment
In the letter, the board highlighted the recent appointment of industry veteran John Orr as Norfolk Southern's chief operating officer. Orr's appointment will accelerate the company's "operational improvements," the letter said.
"Norfolk Southern's board of directors and management team are working closely together to strengthen our railroad for success in the near and long-term, and to deliver value to shareholders," the board wrote. "Our strategy is taking hold. Already, it has catalyzed meaningful change, and proven its resilience to the significant challenges Norfolk Southern has faced."
Ancora wants Jamie Boychuk, the former executive vice president at CSX Corp. (CSX), to be appointed Norfolk Southern COO.
Related: One year after Norfolk Southern's East Palestine derailment, rail safety is still in the spotlight
In early 2023, the derailment of a Norfolk Southern train in East Palestine, Ohio, thrust the issue of rail safety into the national spotlight.
Last month, the Transportation Trades Department of the AFL-CIO union urged Norfolk Southern shareholders to oppose Ancora's proposed ouster of Shaw. "We urge you not to replace Mr. Shaw with Ancora's proposed candidate, as it will have lasting deleterious effects on the safety and service of NS, and the railroad industry as a whole," Transportation Trades Department President Greg Regan wrote in a letter to Norfolk Southern shareholders.
Norfolk Southern shares fell 0.4% Tuesday. The company's stock is up 6% in 2024, compared with the S&P 500 index's SPX gain of 8.9%.
-James Rogers
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04-02-24 1050ET
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