ATLANTA — Norfolk Southern has issued a letter and launched a website with information urging the shareholders to vote for the railroad’s slate of board nominees in the proxy fight with a group of activist investors, and set May 9 as the date for its annual shareholders meeting that will determine the outcome of that vote.
The moves follow the railroad’s filing of proxy materials with the Securities and Exchange Commission, and come shortly after NS announced earlier today (Wednesday, March 20) that it had replaced its chief operating officer, Paul Duncan, with CPKC’s John Orr in its latest move to turn back the activist investors led by Cleveland-based Ancora Holdings [see “Norfolk Southern names CPKC executive …,” Trains News Wire, March 20, 2024].
NS, in a 13-page letter to stockholders signed by current board members, argues for the performance of current CEO Alan Shaw, who the letter says has taken “decisive action” and is implementing a strategy “that demonstrated it can deliver safe and reliable service, continuous productivity improvements, and growth;” that Shaw has led the company through a crisis in the wake of the February 2023 East Palestine derailment; and cites the hiring of Orr “to identify and implement further operating improvements, and consistent with direct feedback from shareholders.”
Ancora has put forward a slate of eight nominees to the board and has said that if that slate wins, i twill replace Shaw as CEO with former United Parcel Service executive Jim Barber Jr., with former CSX head of operations Jamie Boychuck as chief operating officer [see “Activist investor seeks to install former UPS president …,” News Wire, Feb. 20, 204]. Today’s NS letter says Ancora’s “misguided” effort would “introduce significant risk, impede our progress, and destroy long-term value” and that the activist investors are “attempting to recycle a slash-and-burn playbook without understanding the current regulatory, labor, and competitive environments.” It says the math behind the short-term targets promoted by Ancora would only work with significant and immediate employee furloughs, despite its statement that is has no such plan
“Based on well-established history,” the letter argues, “employee furloughs would translate to poor service and missed growth during the upcoming market recovery,” would damage relationships with stakeholders, and place safety gains at risk. Avoiding furloughs to be prepared for growth has been one of the key tenets of the NS strategy under Shaw.
It says that the railroad remains open to a resolution but that Ancora is adamant that any such solution would require replacement of Shaw; NS says that would “undermine the important progress we have made,” and argues Ancora is offering “inferior” management candidates. It says Barber has no CEO experience, is not familiar with operations, and by retiring in 2019, has not had to deal with the impacts of the pandemic, while noting that Boychuk — who was at Canadian National prior to his time at CSX — “departed his last two companies under uncertain circumstances.” It says CSX’s train speed, dwell time, and mainline accident rate all worsened during Boychuk’s tenure as COO.
The railroad’s SEC proxy materials are available at this page on its website. NS also launched the VoteNorfolkSouthern.com website with additional information.
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