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.
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