The activist investors seeking to take control of Norfolk Southern’s board are gaining key support for their bid to replace management at the railroad. CEO Alan Shaw is fighting back, believing his long-term strategy is best for investors, customers, and workers. Proxy advisory firm Glass Lewis has recommended shareholders vote for Ancora’s nominees, including former UPS executive Jim Barber, citing the need for a substantial overhaul of the railroad’s leadership due to underperformance compared to its peers.
The main contention lies in Shaw’s strategy of maintaining resources during a downturn and investing in safety measures, which he believes will benefit the company in the long run. Despite recent profit shortcomings, Shaw remains confident in the railroad’s ability to improve its financials over the next few years, especially following the appointment of new COO John Orr. However, Ancora and its nominees argue for a more drastic overhaul to streamline operations and boost profits in line with industry standards.
The endorsement of Ancora’s plan by major customer Cleveland-Cliffs and two labor unions, including the Brotherhood of Locomotive Engineers and Trainmen, adds weight to the activist investors’ campaign. This support comes amidst accusations of backroom deals and attempts to sway votes in favor of Ancora by promising favorable terms to specific stakeholders. While some rail unions have endorsed Shaw, others fear that Ancora’s cost-cutting plan may compromise the safety and service improvements implemented since the 2023 Ohio derailment.
As the shareholder vote scheduled for May 9 approaches, tensions between Norfolk Southern’s current management and Ancora continue to escalate. Shaw remains open to a possible settlement but rejects the terms proposed by the investors. Ancora, on the other hand, defends its actions, accusing Shaw of disingenuous behavior in criticizing their quest for stakeholder support while also rejecting any possible compromises on management changes. Both sides are entrenched in their positions, with the outcome of the upcoming vote likely to determine the future direction of Norfolk Southern and its operations.
