CLEVELAND — With less than a week to go in its Norfolk Southern proxy fight, activist investor Ancora Holdings has questioned the railroad’s service improvements, won support from a small proxy advisory firm, and sought to woo shareholders with a letter from CEO candidate Jim Barber Jr.
NS has touted the pace of operational improvements since new Chief Operating Officer John Orr joined the railroad on March 20. Merchandise train speeds and terminal dwell have improved 8% to 10% since then as Orr has put a focus on terminal operations.
But Ancora said Thursday that those improvements come off of the lowest train speeds and peak terminal dwell performance.
“The Company is seemingly cherry picking the worst data points (highest terminal dwell data point and lowest train speed data point) since the … earnings call in late January to highlight its operational improvements. These data points just so happen to coincide with the hiring of Mr. Orr on March 20,” Ancora said in a May 1 presentation.
“Further, the purported productivity and operational efficiency actions taken over the past three months have yielded zero improvements in terminal dwell and train speed relative to the levels seen in early February,” Ancora said.
The two major proxy advisory firms, Institutional Shareholder Services and Glass Lewis, have recommended that investors elect a majority of Ancora’s board candidates. Glass Lewis endorsed six of its seven candidates, including Barber, while ISS recommended five candidates but did not advocate for ousting CEO Alan Shaw.
Neither ISS nor Glass Lewis recommended giving Ancora a majority of seats on the board. But today proxy advisor firm Egan-Jones recommended that investors back Ancora’s entire slate of board candidates.
“We’re pleased Egan-Jones is recommending shareholders vote on the Blue proxy card for all of our director candidates, including experienced Board member and proven network leader Jim Barber. All three proxy advisory firms now support significant change at Norfolk Southern,” Ancora CEO Frederick DiSanto and Ancora Alternatives President James Chadwick said in a statement.
“If shareholders support a majority change of the Board, they can ensure that operationally proficient management commences a network redesign and properly implements Precision Scheduled Railroading. This three-year strategy, which differs greatly from Norfolk Southern’s resilience railroading model, has driven superior service, safety and long-term value at every other publicly-traded Class I rail,” they added. “Given the potential for Norfolk Southern needing a new CEO after next month’s federal report on the East Palestine derailment, now is the time to install proven leadership who can execute a tried-and-true strategy that benefits all stakeholders.”
The NS board has unanimously backed Shaw and the railroad’s better way strategy, and is urging investors to elect all of the company’s preferred board candidates. It made a pitch to investors in a May 1 letter.
Barber, in a letter to shareholders today, asked for support of Ancora’s strategy to fully implement a Precision Scheduled Railroading operating model at NS.
“When Ancora approached me in 2023 about serving as a proposed director and its suggested CEO, I spent a lot of time independently analyzing Norfolk Southern and considering whether my skills could speed up a turnaround. I am blessed to be able to be selective at this point in my life, and I don’t have any unfulfilled goals in my career after 35 great years at UPS. This enabled me to take my time assessing Norfolk Southern’s challenges and opportunities from the perspective of each of the Company’s key constituents: shareholders, customers, employees, regulators and the communities that trains run through each day,” he wrote. “After thinking everything through and reflecting on the transferability of my experiences, I knew I could help move this great brand in the right direction — whether that be as a director, CEO or both.”
The outcome of the proxy battle will be determined at the NS annual meeting on May 9.
Hopefully the NS will continue to be the last bastion of a pension offering company without the hostile takeover from Ancora. Also, does anyone remember Mr. Boychuck being in charge at the time of the largest Canadian crude trail disaster The Lac-Mégantic rail disaster occurred in the town of Lac-Mégantic, Quebec, Canada, on July 6, 2013? Not sure that should qualify anyone as an industry leader with that on their record.
If shaerholders are going to vote for some change, then make it a hedged bet. Keep Shaw and his team intact but elect some of Ancora board members and see what can happen, just as Institutional Shareholder Services advisors suggested, and to a lesser extent, Glass Lewis. If changes are needed then let them occur in a atmosphere of cooperation rather than the ALL or NOTHING, scorched earth, “,,,take it down to the studs…” program Ancora proposes. That would be the rational, sane thing to do. Anything else is like launching a missile attack and hoping you knock out all the oppositions weapons before they can launch a counter strike and destroy you… What ends up as Mutually assured self destruction, The Lose-Lose proposition… That;s you choice and its not pretty.
wall street takeover jobs lost sellign off the railroad for profit
I wish bottom-feeder vulture Ancora instead would take over a company that we could live without, like General Motors. The death of Norfolk Southern would be a catastrophe to our nation. And the way things look now, it seems possible.
Sure hope Ancora gets their butts kicked. NS’s long-term plan is a good one and will result in improved service that their customers can rely on in good times and bad. I am really tired of greedy wall street trying to tell the railroads how to run their business. Look what happened the last time railroads cut to the bones to improve the operating ratio. They are still trying to recover and lost a lot of customers to the trucking industry as a result. Stockholders will make a lot more in the long run with the current plan than they will with the short-term profit followed by losses when the economy goes south again and then the railroads can’t catch up when it picks up again.
I own a measly 30 shares of NS stock. They were ‘given’ to me back in the 1990’s while I was an employee. As I recall, this was a reward for being a safe worker.
Over the last several weeks I have received FOUR proxy voting cards from NS. The first came along with the Annual Report and another document explaining in detail the nature of the Ancora proxy fight and NS’s position. [all 4 of the vote cards were the ‘white’ ones. I have not ever received a ‘blue’ one.]
I returned my vote with the first card. Today I called the number shown for information just to ask them why I kept getting proxy vote cards. They said this was common (they’ve never done this before) and not to worry; they would only count the last card they received.
Just seems strange to me that they keep sending out voting cards to stockholders. I thought maybe they were desperate for votes and maybe were trying to sort of “stuff the ballot box”. Anyone else experience multiple voting solicitations?
And just for information: I did not vote for any of the Ancora supported nominees!
In proxy vote contests a shareholder can vote for a slate of directors as many times as they want. Only the most recently submitted set of cards count. NS is trying to max out votes for their slate of directors from shareholders who have had a change of mind.
From what I have read about this, from multiple sources, is that the stockholders of Norfolk Southern can look forward to NS shrinking, the company becoming smaller and with less $$$$, and them losing stock value, should Ancora take over the board.
And if Ancora’s proposed CEO did all of his “assessing” of NS while still a UPS employee – that says all one needs to know about his skills, not only his loyalty.