News & Reviews News Wire Norfolk Southern names CPKC executive John Orr as chief operating officer (updated)

Norfolk Southern names CPKC executive John Orr as chief operating officer (updated)

By Bill Stephens | March 20, 2024

Orr, who brings decades of Precision Scheduled Railroading experience, was selected as NS aims to fend off a proxy fight launched by an activist investor group

Email Newsletter

Get the newest photos, videos, stories, and more from brands. Sign-up for email today!

ATLANTA — Norfolk Southern today named Canadian Pacific Kansas City executive John Orr as its chief operating officer in a bid to thwart an activist investor group led by Ancora Holdings.

Norfolk Southern Chief Operating Officer John Orr. CPKC

CEO Alan Shaw said Orr is committed to providing customers with a high level of service as part of the railroad’s resiliency-based growth plan.

“John is a deeply respected and accomplished leader, and is the right chief operating officer to ensure execution of our strategy of balancing safe service, productivity, and growth,” Shaw said in a statement. “He has a proven ability to build strong relationships with customers, regulators, unions, and industry partners.”

Citing lagging operational, financial, and fallout from the East Palestine, Ohio, hazardous materials derailment, Cleveland-based Ancora aims to oust Shaw and wants to install former CSX operations chief Jamie Boychuk as NS’s chief operating officer. At CSX, Boychuk worked alongside CEO E. Hunter Harrison as the Eastern railroad implemented the low-cost Precision Scheduled Railroad operating model in 2017. CSX dismissed Boychuk in August 2023.

Orr, who worked at Canadian National for most of his career, brings Precision Scheduled Railroading experience to NS, something that’s coveted on Wall Street.

Orr, who was CPKC’s executive vice president and chief transformation officer, previously served as Kansas City Southern’s chief operating officer from 2021 to 2023. A fourth-generation railroader, Orr began his career in 1985 as a conductor at Canadian National, where he rose through the ranks and was named senior vice president and chief transportation officer in August 2018. He left CN in February 2019.

Former CN CEO Claude Mongeau, who sits on the NS board and led CN through a period of rapid growth, said Orr is “one of the most effective operating leaders” in railroading.

“I’ve worked closely with John at CN as we first implemented scheduled railroading with a more customer-centric agenda, and I can vouch for his unwavering commitment to safety,” Mongeau said in a statement. “I’m confident that he will help the NS team deliver on its balanced strategy to drive top-tier revenue and earnings growth at industry-competitive margins.”

Amy Miles, Norfolk Southern’s independent board chair, said, “Alan, together with the board, took decisive action in recruiting John, an exceptional talent who will help accelerate the execution of our strategy and deliver results for our shareholders. John is a proven railroad operator, and we are confident he brings the right skills and experience to drive profitable growth over the long term. Importantly, he shares our commitment to the critical cultural transformation at Norfolk Southern that values our employees, customers, shareholders, and communities.”

CPKC CEO Keith Creel thanked Orr for his contributions to the railway.

“On behalf of the Board of Directors and the CPKC family I would like to thank John for his contributions and impactful leadership,” Creel said in a statement. “I have had the pleasure to serve and lead with John directly or indirectly for over the last two decades. His strong operating acumen and leadership capabilities has enabled him to build a strong team currently leading our CPKC Mexico Operations. As a result, the team is ready to take the reins and continue to build on the operational momentum generated since this historic combination took place last April. As leaders we are charged to leave our organizations better– John has undoubtedly impacted Kansas City Southern (KCS) and CPKC in a positive way, for which we are grateful.”

In exchange for waiving the non-compete clause in Orr’s contract, CPKC received $25 million from NS and also gained unspecified “commercial considerations” related to the Meridian Speedway, the CPKC-NS joint venture linking Meridian, Miss., and Shreveport, La.

The deal, CPKC said, “will expand competition and unlock additional value related to CPKC’s proposed Meridian & Bigbee Railroad acquisition.” CSX and CPKC have proposed acquiring and operating Genesee & Wyoming short line Meridian & Bigbee to connect their networks and create a new interline route linking the Southeast with Texas and Mexico.

Norfolk Southern has also agreed to temporary limited no-hire and non-solicitation restrictions for a short list of CPKC employees of CPKC. Orr will remain subject to his non-solicitation restrictions.

CPKC will not fill Orr’s role as chief transformation officer.

Orr replaces Paul Duncan, a former BNSF Railway operating official who made a meteoric rise in his two years at NS. Duncan joined NS in March 2022 as vice president of network planning and operations. He was promoted to senior vice president of transportation and network operations in September 2022.

Duncan became chief operating officer on Jan. 1, 2023, just over a month before the East Palestine derailment, which has been blamed on the catastrophic failure of a wheel bearing.

Duncan led the implementation of Norfolk Southern’s TOP|SPG operating plan in 2022 and played a central role in the railroad’s recovery from service problems related to widespread crew shortages.

“I want to thank Paul Duncan for the leadership, passion, and dedication he brought to Norfolk Southern throughout his tenure. His contributions were instrumental in enhancing our safety culture and improving our service product,” Shaw said. “On behalf of the management team, I wish Paul all the best in his future endeavors.”

Ancora has proposed a majority slate of eight board candidates and has touted former UPS executive Jim Barber Jr. as its chief executive candidate [see “Activist investor seeks to install former UPS president …,” Trains News Wire, Feb. 20, 2024].

Ancora issued a statement on Wednesday afternoon that was highly critical of NS’s decision to hire Orr, pay CPKC a $25 million fee, and give CPKC certain rights on the Meridian Speedway.

“The Board and Mr. Shaw put their own interests ahead of shareholders’ interests by paying $25 million and giving up part of Norfolk Southern’s long-term franchise, in the form of concessions related to the Meridian Speedway and Terminal, just to hire a COO without any experience at an Eastern railroad and whose most recent role was eliminated altogether at CPKC,” Ancora said.

“The deal disclosed today allows Norfolk Southern to hire one questionable executive while permitting CPKC to leverage concessions to realize greater value from its transaction involving the Meridian & Bigbee Railroad, which it is pursuing with CSX. The deal also proceeded despite Norfolk Southern’s previous concerns about CPKC and CSX’s partnership plans,” Ancora said. “It appears the Board and Mr. Shaw struck a fool’s bargain that gets Norfolk Southern a short-term PR win while CPKC and CSX, the Company’s closest peer, strengthen their partnership and competitive offerings. Based on the real and implied cost of securing Mr. Orr, who analysts and investors have told us they never heard of prior to today, the sitting directors may have signed off on one of the most expensive and overpriced hires in industry history.”

Ancora also criticized NS for not undertaking a comprehensive search for a COO and without considering Boychuk.

“We believe this action does not just deprive shareholders of the best possible COO and strengthen two other Class I railroads, but it puts in place an individual with limited experience as an operations leader and little involvement in any recent PSR implementation,” Ancora said. “The fact is Mr. Orr was appointed EVP of Operations at Kansas City Southern after it had already announced its merger with Canadian Pacific in March 2021 and well after Sameh Fahmy, our director candidate, oversaw a multi-year network transformation as EVP of PSR at Kansas City Southern.”

“It speaks volumes about the Board and Mr. Shaw’s motives that they would not even have an introductory call with a seemingly superior operator, who was the EVP of Operations at CSX when it outperformed Norfolk Southern on every key railroading metric (despite the wildly misleading claims in the Company’s March 20th letter),” Ancora said. “They made this conscious decision, which entailed an excessive cash payment and commercial concessions, despite fully knowing that our candidate is getting strong praise from the investment community, suggesting a disregard for shareholders’ feedback and interests.”

Note: Updated at 4:10 p.m. Central with comment from Ancora.

7 thoughts on “Norfolk Southern names CPKC executive John Orr as chief operating officer (updated)

  1. I’ve felt (but can’t prove it) that NS has been playing “second fiddle” to CSX and others ever since Wick Moorman left. It seemed that Wick enjoyed being a railroader (and especially an NS railroader), and his enthusiasm was infectious. I believe Cindy Sandborn was the same way. Now it’s just a job.

    I guess moving from Norfolk to Atlanta across the street from the Varsity hasn’t made a difference.

  2. Someone should ask Ancora why Boychuck doesn’t work at CSX any more if he’s so great. ….or maybe one of the Trains reporters can ask Boychuck or Ancora for us?

  3. Ancora announced their proxy fight for NS back around February 20th; NS announces the hiring of Orr and departure of Duncan yesterday.

    Given the relatively brief time period involved here, I have to wonder if overtures to CPKC and Orr were taking place prior to Ancora’s formal launch of their proxy fight.

  4. So $25m and giving in on some possible long-term commercial matters is the price for Alan Shaw and the NS Board to keep their positions.

    1. Did Duncan get fired, resign or retire? Was he sacrificed to hold off Anchora?That would give clarity to this change.

      Yes, Shaw and the Board may keep their positions. In this case, instrumental in the long term turn around at NS to keep moving forward, not backward as is Anchora’s short term plan, which will effect everything put in place at NS for employees. the customers and the communities they serve… and yes, management. Anchora Holdings doesn’t give a lick about any of those parties, only those whom they represent, a defined minority of those interested in the LONG TERM success of the railroad…

You must login to submit a comment