All about the community of model railroading and rail enthusiasm
May 17, 2024
Norfolk Southern repelled an investor attempt to unseat its 13-member board and gain control in May but gave up three seats in the railroad’s annual shareholder vote.
An Ancora Holdings-led investor group reportedly took a $1 billion stake in NS and nominated seven directors to oust CEO Alan Shaw and take over the railroad’s operation. Three were elected, but much of NS’s current leadership stayed in control.
Shaw is still president and CEO, which he has been since 2022. Ancora had nominated former UPS COO Jim Barber to replace him.
Amy E. Miles, who has chaired the board since May 2022, was voted out.
Ancora nominees William Clyburn, Jr., Sameh Fahmy and Gilbert Lamphere were voted in. Each has railroad experience; Clyburn is a former commissioner and vice chairman of the U.S. Surface Transportation Board (STB).
“Our shareholders recognize that positive change is underway at Norfolk Southern,” Norfolk Southern said in a statement. “Moving forward, we will continue building on the significant progress Alan Shaw, (executive vice president) John Orr and the entire team have already achieved. Together, we are building a safer, more profitable railroad, closing the margin gap with our peers and ultimately growing value for our shareholders.”
In January, Ancora nominated a majority of directors in an effort to remove several NS tenured players. Ancora holds that the company is underperforming and lacks a proven strategy in the wake of the East Palestine, OH, derailment a year ago.
At least two railroad unions, including the Brotherhood of Locomotive Engineers and Trainmen Division of the International Brotherhood of Teamsters, pledged support for the Ancora nominees.
Days before the vote, NS’s leadership got a vote of confidence from the STB. In a letter to Shaw from Allison L. Dane Camden, principal deputy assistant secretary for multimodel freight infrastructure and policy, the STB said:
“Norfolk Southern’s progress toward meeting key safety performance indicators is encouraging and demonstrates your leadership and the commitment of all of NS’s hard-working employees. We recognize the progress NS has made to-date towards attaining your own safety goals, as well as the goals we set for all Class I railroads following the East Palestine derailment. …”
Camden said much work remains in safety, improved service and sustainable growth, but she applauded NS’s response to the supply chain disruption caused by the collapse of the Francis Scott Key Bridge in Baltimore this spring.
“Norfolk Southern is becoming a more productive and efficient railroad,” Shaw said after a lukewarm first-quarter performance. “There is still work to be done to achieve industry-competitive margins and our target of a sub-60% adjusted operating ratio in three to four years, and we are taking all the right steps to deliver on our promise.”
Shaw added that Orr, who was recently appointed, “is executing precision scheduled railroading principles and accelerating our operational improvements, which are already yielding positive results. We are moving with urgency, and we are confident in our ability to achieve our near- and long-term operating and financial targets.”
Despite 4 percent volume growth, first-quarter revenue at $3 billion was down 4.1 percent compared to 2023. A lower fuel surcharge and the continuation of adverse patterns in late 2024 affected earnings, the company said.
Results also were impacted by the $600 million agreement in principle to resolve a consolidated class action lawsuit relating to the East Palestine derailment.
NS expects a $50 million-$100 million revenue hit in the second quarter resulting from the port disruption caused by the bridge collapse.
