Norfolk Southern: Activist Ancora Secures Powerful Endorsement in Bid to Shake Up Company Leadership
Ancora Advisors, an active investor, has garnered a crucial endorsement from proxy advisory firm Glass Lewis, bolstering its campaign to overhaul the board of directors at Norfolk Southern and replace CEO Alan Shaw. Glass Lewis has recommended that shareholders support Ancora’s nominees, citing a compelling case for a leadership overhaul at the railroad giant.
The six board nominees recommended by Glass Lewis are:
- Betsy Akins
- Jim Barber
- William Clyburn
- Sameh Fahmy
- Gilbert Lamphere
- Allison Landry
Glass Lewis has also advised shareholders to withhold support from the current CEO, Shaw, and board chair Amy Miles. Notably, the proxy advisory firm has praised Ancora’s nominees for their “compelling credentials and track records.”
Ancora is proposing former UPS executive Jim Barber as the next CEO of Norfolk Southern and former CSX executive Jamie Boychuk as the COO. Barber brings 35 years of experience in logistics, while Boychuk boasts two decades in the railroad industry.
In a statement, Norfolk Southern has vehemently denounced the Glass Lewis recommendations, labelling them “misguided”. The company maintains that replacing six directors, including CEO Shaw, would jeopardize its operations and undermine shareholder value.
Ancora’s efforts have received a boost from two Teamsters unions, which represent approximately half of Norfolk Southern’s unionized workforce. The unions have pledged their support for the activist’s plan to overhaul the company’s operations.
Ancora has criticized Norfolk Southern’s current operating strategy, arguing that it relies on incompatible railroading concepts. In contrast, Ancora advocates for a Precision Scheduled Railroading (PSR) approach, which focuses on maintaining stringent schedules and minimizing wasted hours.
In response to pressure, Norfolk Southern has appointed veteran railway executive John Orr to implement an operating plan that combines aspects of both PSR and resilience models. However, critics remain skeptical of the plan’s efficacy.
Support from proxy advisory firms is crucial for activists aiming to influence shareholder votes. Ancora’s endorsement by Glass Lewis is a major development, but it does not guarantee victory.
A settlement between Ancora and Norfolk Southern seems unlikely. Shaw has reportedly offered a couple of board seats to the activist, but the proposal was rejected. Ancora remains adamant that Shaw must step down as CEO as a condition for any deal.
With the shareholder meeting just a week away, both Ancora and Norfolk Southern will continue to make their case to investors. ISS, another influential proxy advisory firm, is expected to issue its recommendations soon, adding further intrigue to the ongoing battle for control of Norfolk Southern.
Data sourced from: cnbc.com
