Ancora's $1B Stake Sparks Proxy Battle for Norfolk Southern's Future: Report

Norfolk Southern Corp NSC is gearing up for a board refresh to counter a proxy battle initiated by shareholder-activist group Ancora Holdings. 

Regulators and a union group expressed concerns that a leadership change at Norfolk Southern could undermine recent safety initiatives. 

The Federal Railroad Administration administrator, Amit Bose, warned against any deviation from the company’s safety-focused trajectory. 

Ancora aims to transform Norfolk Southern into a “safer, more sustainable railroad” and plans to disclose further details of its strategy in the upcoming weeks.

In response, the company unveiled a roster of 13 board nominees, which includes two fresh faces: Richard Anderson, former CEO of Amtrak and Delta Air Lines, and Mary Kathryn “Heidi” Heitkamp, a former U.S. senator. 

Ancora Holdings, led by an investor group, had amassed a $1 billion stake in Norfolk Southern, announcing plans to overhaul the board and replace CEO Alan Shaw, according to a Wall Street Journal report.

Ancora’s proposed director candidates, including former Ohio Gov. John Kasich, outlined a new management team featuring ex-UPS COO Jim Barber Jr. as CEO and former CSX executive Jamie Boychuk as COO. 

Norfolk Southern expressed reservations, the WSJ noted, citing concerns about Boychuk’s noncompete agreement and his reputation for aggressive cost-cutting. 

The company affirmed its support for CEO Shaw and his strategic direction, emphasizing the importance of continuity in executing the existing strategy.

Norfolk’s independent board chair, Amy Miles, stressed the urgency of the company’s uninterrupted execution of its strategy. 

The firm believes Ancora’s approach is shortsighted and could jeopardize recent progress made following a significant train derailment last year. 

The investor group, however, contends that Shaw and the Norfolk board lack a credible plan and a viable record.

Ancora criticized Anderson’s safety record at Amtrak and argued against his inclusion on the board. Norfolk Southern has been addressing challenges in a sluggish freight market. 

The company emphasized its focus on safety and service throughout 2023 and aimed to enhance productivity in the current year.

With the annual meeting date yet to be announced, Norfolk Southern added two new board members in the previous year. Two existing members, Mitchell Daniels Jr. and Michael Lockhart, are set to retire. 

Price Action: NSC shares are down 0.04% at $254.46 on the last check Tuesday.