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[CNJRoss]

Norfolk Southern news release

 

FEB. 26, 2024

ATLANTA

Norfolk Southern files preliminary proxy statement, recommends shareholders vote for its director nominees

 

Continues board refreshment with nominations of Richard Anderson and Heidi Heitkamp to board of directors

 

Reiterates focus on safety and service while working to drive significant margin improvement through balanced strategy under CEO Alan H. Shaw

 

Board REJECTS Ancora's nominees and short-sighted plan that jeopardizes sustainable shareholder value creation

 

 

ATLANTA, Feb. 26, 2024 /PRNewswire/ -- Norfolk Southern Corporation (NYSE: NSC) announced Monday that it has filed its preliminary proxy materials with the Securities and Exchange Commission (SEC) in connection with its upcoming 2024 Annual Meeting of Shareholders. The preliminary proxy statement is available on the Investor Relations section of the Norfolk Southern website at www.norfolksouthern.com. In connection with the filing, the Norfolk Southern Board of Directors:

• Announced its slate of 13 highly qualified nominees for the 2024 Annual Meeting, including two new, deeply experienced independent director candidates, Richard H. Anderson, former CEO of Amtrak and Delta Air Lines, and Mary Kathryn "Heidi" Heitkamp, former U.S. Senator.
• Confirmed its unanimous support for the company's strategy that balances safe and reliable service, continuous productivity improvement and smart growth under the leadership of CEO Alan H. Shaw. The strategy is designed to deliver top-tier EPS and revenue growth at industry-competitive margins.  
• Rejected Ancora's control slate of eight nominees as well as its short-sighted strategy.

 

Amy Miles, independent chair of Norfolk Southern's Board of Directors, said, "As a board, our priority is ensuring we have the right composition to guide Norfolk Southern in improving operating performance, enhancing safety, delivering value for our customers and shareholders, and fulfilling our commitments to our stakeholders. Our focus on meaningful refreshment – evidenced by the two new directors added in 2023 and two new nominees presented for the 2024 annual meeting – reflects these strategic priorities and our commitment to strong governance and oversight."

 

Miles continued, "We are open-minded to all opportunities to enhance shareholder value and are committed to overseeing and holding our management team accountable. We are confident that the continued execution of our balanced strategy – under the vision and leadership of Alan Shaw – is critical as we prioritize operational rigor, safety, and service. It is imperative the company continues to execute on its strategy, without interruption or interference, for the benefit of shareholders, customers, communities, and the industry."

 

Miles added, "Following numerous discussions with representatives of Ancora and its nominees, we have determined that none of them possess skills or experience that are not already well represented among our board nominees. Further, it would be highly disruptive to our operations, our workers, and the North American supply chain to replace a majority of our well-functioning board, which we have refreshed in a thoughtful and intentional manner over the last several years in order to adopt Ancora's short-sighted strategy. The board is unanimous in rejecting Ancora's candidates and remains unwavering in its commitment to act in the best interests of all shareholders."

 

Directors Thomas Bell and Steven Leer will not stand for re-election at the 2024 Annual Meeting and as previously announced, Directors Mitchell Daniels, Jr. and Michael Lockhart have reached the mandatory retirement age and are retiring from the Norfolk Southern Board at the 2024 Annual Meeting.

 

Miles concluded, "We are grateful to Tom, Steve, Mitch, and Michael for their meaningful contributions to Norfolk Southern, and in turn look forward to welcoming Heidi and Richard to the board."

 

Relentless focus on safety and service while working to drive significant margin improvement through a balanced strategy

 

Following the East Palestine incident a year ago, Norfolk Southern has made necessary investments to accelerate enhancements to its safety culture and operational transformation. This includes new technology, enhanced training and additional staffing, as well as adjustments to network design and train assembly procedures. Today, the company's mainline accident rate is the lowest it has been in years and is among the best of the US Class 1 rails. These investments and operational advancements have meaningfully improved the company's safety performance and service product in both its intermodal and merchandise networks. The company has fundamentally transformed its processes to reaffirm the trust of its customers, establish confidence with communities, and regain the trust of regulators to position it for sustainability and success in 2024 and beyond.

 

Today, under Shaw's leadership, Norfolk Southern's plan is focused on three pillars: safely delivering reliable and resilient service, driving continuous efficiency improvement, and propelling smart and sustainable growth. The company's goal is to create a more resilient railroad with a compelling service product to outperform throughout market cycles. As part of that effort, the company is building a more fluid network positioned to take on additional volume and better serve customers so it can deliver on its commitments of top-tier earnings and revenue growth with industry-competitive margins and disciplined capital allocation. Through its scheduled operating model, the company will drive productivity through its network that will result in meaningful annual margin improvements and drive long-term shareholder value.

 

By executing on its strategic vision, Norfolk Southern deployed new initiatives in 2023, and as a result delivered numerous notable operational achievements, including:

• Providing its best intermodal service in over three years in the fourth quarter of 2023 and growing intermodal volume by 5% on a year-over-year basis;
• Achieving industry-leading safety results, notably a 42% reduction in mainline accident rate in 2023 and the fewest mainline accidents since 1999;
• Improving terminal dwell time and manifest train speed year-over-year; and
• Completing over $1 billion in comprehensive infrastructure improvement projects throughout its 22-state network to further enhance safety and efficiency.

 

While 2023 presented several significant challenges to service and financial performance, the company has navigated those challenges and responsibly enhanced service, safety, and growth to protect the franchise and shareholders. Now, in 2024, Norfolk Southern is positioned to advance the scheduled railroading operating principles in its merchandise network that have driven productivity improvements in its intermodal network. By doing so, Norfolk Southern expects to reduce variability, complexity, and cost. At the same time, the management team has been conducting a full portfolio review of the company's intermodal franchise to identify opportunities to further simplify and accelerate the network, ultimately contributing to improving operating margins.

 

Recklessly chasing cost reduction at the expense of safety and service is not a winning strategy for creating sustainable shareholder value. Norfolk Southern's customers, regulators and employees have made it very clear – they will not tolerate service declines and safety lapses in pursuit of extreme near-term cost reductions. As articulated by key regulators, the approach Ancora has outlined, given the track record of certain of its board and management candidates, should be a serious cause for concern among all stakeholders who support the long-term growth and sustainability of the rail industry.

 

Proven commitment to board refreshment

 

As noted in the preliminary proxy materials, the board unanimously recommends that shareholders vote on the WHITE card only for its slate of 13 directors. The Norfolk Southern Board has maintained an ongoing process of refreshment, with six directors appointed to the board in the past five years. In July 2023, Admiral Philip Davidson, U.S. Navy (Ret.) and Francesca DeBiase were added to the board as independent directors, providing significant and immediate contributions to the board's work on safety and risk oversight, as well as operations and logistics expertise. The board is advancing its commitment to refreshment and a strong skill composition with the most recent additions of Anderson and Heitkamp to its slate of director nominees. Specifically:

• Richard H. Anderson: Anderson's significant executive leadership experience in the transportation industry spans over two decades, including his roles as president and CEO of Amtrak and CEO of Delta Air Lines. His rail industry leadership and expertise will serve as a critical perspective to advise senior management and the board on railway and transportation sector issues such as operations, safety, strategic planning, labor relations, environment, and governmental and stakeholder relations, which support Norfolk Southern's balanced strategy.
• Mary Kathryn "Heidi" Heitkamp: Heitkamp's significant public service experience as a U.S. Senator, North Dakota Attorney General, and rail safety advocate will provide the board with in-depth expertise on regulatory matters, safety, and governmental and stakeholder relations. These are essential to the company as it works with federal and state agencies to elevate safety standards across the railroad sector and advance its strategy of delivering safe, reliable service.

 

Norfolk Southern's recommended director candidates are: Richard H. Anderson, Philip S. Davidson, Francesca A. DeBiase, Marcela E. Donadio, Mary Kathryn "Heidi" Heitkamp, John C. Huffard, Jr., Christopher T. Jones, Thomas C. Kelleher, Amy E. Miles, Claude Mongeau, Jennifer F. Scanlon, Alan H. Shaw, and John R. Thompson. Each of these candidates is highly qualified and together bring the superior credentials and skills – including significant safety, operational, risk management, and strategic leadership experience – that are essential to supporting Norfolk Southern's operations in furtherance of its strategic goals and delivering significant shareholder value.

 

The board of directors REJECTS Ancora's nominees and its short-sighted plan

 

The Norfolk Southern Board and management team have engaged extensively with Ancora, including interviewing and considering each of its nominees. The board has initiated multiple attempts to reach a reasonable resolution that is in the best interests of all Norfolk Southern shareholders.

 

In the coming weeks, Norfolk Southern will provide more information about its strong board candidates and management team and its balanced strategy to create long-term shareholder value. The company will also provide details regarding how Ancora's nominees and plan may not only hinder the successful execution of a strategy that is yielding results, but also threaten Norfolk Southern's progress on safety, its continued commitment to the community of East Palestine, and its improved relationships with regulators and other stakeholders. Many of these concerns have already been raised in public forums by regulators following Ancora's announcement of its plans.

 

Norfolk Southern's definitive proxy materials will soon be mailed out to all shareholders and include a WHITE card with voting instructions. Your vote FOR all 13 Norfolk Southern director nominees on the WHITE card will be critical.

 

In the interim, Norfolk Southern strongly urges shareholders to simply discard and NOT vote using any blue proxy card sent by Ancora.

 

 

[CNJRoss]

Progressive Railroading, February 2024

 

Guest comment: Deja vu, all over again

 

By Robert Primus
 
Nearly 10 years ago, the largest freight railroads in the United States, commonly known as Class Is, began to cut costs aggressively. They claimed that the cuts were necessary to implement a new operating philosophy called Precision Scheduled Railroading (PSR).
 
But PSR was merely a pretext for a scorched-earth plan to drastically reduce their costs. Spurred by activist investors, the Class I railroads made deep cuts to their labor force, their locomotives and rail equipment, and their physical infrastructure. “Less is more” was the prevailing theme. Between 2017 and 2022, Class Is cut nearly one-third of their rail labor force. As a result, profits for the railroads soared. Markets cheered as the railroads poured money to their shareholders through dividends and stock buybacks, and the Class I CEOs received accolades for dramatic reductions in their companies’ expenses.

 

SNIP

 

As a result, service levels plummeted, with near-catastrophic consequences across many sectors of American business, from agriculture and energy to automotive and manufacturing. Railroads lost market share to trucks. Ultimately, it was American consumers who paid the greatest price, as the service failures led to a substantial rise in transportation costs which, in turn, further fueled inflation.

 
At the same time, the network started to see signs that the Class Is were ready to chart a new course. Several CEOs who had spearheaded the extreme cost-cutting departed and were replaced by individuals who recognized that a resilient and service-focused freight-rail network would foster substantial long-term revenue growth and profits.  . . . Departing from past practice, they would not furlough employees at the slightest economic downturn but instead would determine the appropriate number to manage the economic ebbs and flows evenly.
 
Is it working? Operating metrics are pointing in a positive direction. Service has improved significantly throughout 2023, in large part due to a rebound in rail labor.  . . .  And yes, even with this “pivot to growth,” the Class Is remain financially healthy and highly profitable.
 
And just when you think our freight-rail network and national supply chain are back on solid ground, we now face yet another assault from those who view the Class Is as short-term cash cows. Activist investors are taking aim at one of the Class I CEOs who pursued the new, growth-focused approach. They are trying to blame him for legacy policies associated with PSR that he is rightly trying to correct.

 

 

More here.  

 

Robert Primus is a member of the Surface Transportation Board (STB). He was sworn in as a member on Jan. 7, 2021, following his confirmation by the U.S. Senate on Sept. 16, 2020. A native of Madison, New Jersey, Primus previously served as the STB’s vice chairman from February 2021 to February 2022. For the past 30 years, he has been involved in various aspects of the U.S. Congress and federal legislative process.

[CNJRoss]

Progressive Railroading, 3/1/24

 

Ancora complains NS is conducting a smear campaign

 

Ancora Holdings Group LLC, the activist investor that’s attempting a takeover of Norfolk Southern Corp. leadership, is accusing the Class I of conducting a "scorched earth campaign" against it.

 

In an open letter to NS Chairwoman Amy Miles, Ancora alleges that the company is “serving at the pleasure of CEO Alan Shaw — rather than the other way around."

 

Signed by Jim Chadwick on behalf of the investor group, the letter asks the NS board to explain why Shaw received a 37% increase in the value of his compensation in the same year as the NS train derailed in East Palestine, Ohio. It also asks the board to reflect on shareholder concern that the board is conducting a smear campaign against Ancora.

 

 

Continue here.  

[CNJRoss]

Progressive Railroading, 3/4/24

 

Norfolk Southern addresses 'mischaracterizations' of its strategy

 

Norfolk Southern Corp. today responded to what the company's leaders have characterized as recent false and misleading claims about the railroad's business strategy and commitment to safety.

 

NS issued its statement following a March 2 derailment of an NS train in eastern Pennsylvania, and as activists investors stage a proxy fight to overhaul the company's board and replace President and CEO Alan Shaw.

 

 

Continue here.  

[CNJRoss]

Norfolk Southern news release

 

Norfolk Southern corrects false and misleading claims

 

Company remains committed to enhancing safety and aligning management with shareholders' interests

 

ATLANTA, March 4, 2024 /PRNewswire/ -- Norfolk Southern Corporation (NYSE: NSC) is focused on executing its strategy, competing on operational excellence by balancing safe, reliable, resilient service with continuous productivity improvement and smart, sustainable growth. With recent mischaracterizations of the facts, it is necessary for Norfolk Southern to correct the record. The company issued the following statement Monday, highlighting its safety achievements and the board's efforts to align management with shareholders' interests:

 

Misrepresenting our safety record

It is unfortunate that a serious situation is being used to mislead stakeholders and to advance a proxy fight narrative. On March 2, Norfolk Southern quickly responded to a derailment in Lower Saucon Township, PA. The derailment resulted in no harm to the community and no hazardous material concerns from the railcars. We take this incident seriously and work hard to avoid all accidents. The National Transportation Safety Board is investigating this incident, and we will work closely with them to understand how it happened and prevent others like it.

 

Norfolk Southern is leading the industry when it comes to safety. As a result of our robust safety initiatives, Norfolk Southern achieved a 42% reduction in our mainline accident rate year-over-year in 2023. Today, the company's mainline accident rate is the lowest it has been in years and is among the best of the North American Class I rails. We are actively building on these achievements and helping the industry become even safer.  

 

We are committed to building on our safety track record and setting the gold standard for rail safety. We know there is no single solution when it comes to safety. Last year, we initiated a six-point safety plan and made necessary investments to accelerate enhancements to our safety culture and operational transformation. This included installing cutting-edge digital train inspection portals, implementing enhanced employee training, and being the first Class I railroad to join the Federal Railroad Administration's Confidential Close Call reporting system. We are incorporating feedback from our labor leaders and partnering on new safety initiatives. We also hired Atkins Nuclear Secured as an independent safety consultant. With significant project management and Nuclear Navy experience, they have conducted a comprehensive safety assessment, and we are implementing changes based on their recommendations.

 

Distorting the facts on management compensation

Similarly, the facts about the compensation of Norfolk Southern's management team have been distorted. The Norfolk Southern Board took clear and decisive action in its 2023 compensation decisions, including exercising discretion to eliminate annual performance-based incentive payouts for 2023. The board is committed to best-in-class corporate governance practices. Contrary to Ancora's claims, the board did not "raise CEO pay 37%". The board's purposeful efforts to maintain alignment between management and shareholders' interests through our compensation program are clear:

• • Compared to his target compensation, in 2023 CEO Alan Shaw saw a 33% reduction in his realizable compensation at year end. The difference in his compensation for 2023 compared to 2022 reflects the fact that 2023 was his first full year as CEO. 
  • The board used its discretionary authority to eliminate the 2023 annual incentive awards for the CEO and all the company's executive vice presidents. This decisive action reflects the board's focus on ensuring alignment between executive pay outcomes and the outcomes experienced by our shareholders and other stakeholders during 2023.
  • 92% of Shaw's target compensation was provided in the form of at-risk or performance-based incentives with value tied to the achievement of preset, rigorous performance goals or our stock price performance.
    • Specifically, 60% of Shaw's equity awards issued in 2023 are performance-based and will only be earned if certain metrics and targets are met in the future, at the end of the three-year performance period. The remaining 40% is delivered in a mix of restricted stock units and stock options that vest over four years with value directly tied to our stock price performance.
  • Adjustments related to East Palestine were implemented to establish a precedent that would ensure that sizable future recoveries from insurance and third parties would not create a windfall in future years.

 

Norfolk Southern's engagement with Ancora

We have engaged constructively, and in good faith, with Ancora in an effort to understand their views and avoid a proxy contest. The Norfolk Southern Board remains open to any opportunity to find a reasonable resolution, as outlined in our preliminary proxy materials. However, it was after thoughtful consideration that we determined Ancora's proposed changes to the Norfolk Southern Board, management team, and strategy would undermine the important progress we have made to protect and enhance our business and franchise, and would lead to the deterioration of shareholder value.

 

Norfolk Southern's definitive proxy materials will soon be mailed out to all shareholders and include a WHITE card with voting instructions. Shareholders' votes FOR only the 13 Norfolk Southern director nominees on the WHITE card will be critical.

 

In the interim, Norfolk Southern strongly urges shareholders to simply discard and NOT vote using any blue proxy card sent by Ancora.

 

 

 

[CNJRoss]

Trains News Wire

 

STB chairman disappointed activist investors haven’t agreed to meet regarding their plans for Norfolk Southern

 

By Bill Stephens | March 11, 2024

 

Martin J. Oberman sought a meeting with Ancora executives more than a month ago

 

WASHINGTON — Surface Transportation Board Chairman Martin J. Oberman says he’s disappointed that executives from Ancora Holdings, the activist investor firm engaged in a proxy battle with Norfolk Southern, have yet to schedule a meeting to discuss its goals for the railroad.

 

Ancora Holdings Group Chairman and CEO Frederick DiSanto and Ancora Alternatives President James Chadwick wrote to Oberman on Feb. 5 to summarize their views about NS. They also wrote that they would be available to speak with Oberman about NS, CEO Alan Shaw, and the railroad’s board of directors.

 

Oberman’s office called Ancora the next day to arrange a meeting. “You responded by indicating that Ancora was not prepared to meet at that time, despite your offer,” Oberman wrote. “I am disappointed that you have not yet scheduled a meeting.”

 

 

Continue here.  

[CNJRoss]

Trains News Wire

 

Ancora responds to STB’s request for a meeting about NS proxy fight

 

By Bill Stephens | March 15, 2024

 

The activist investor group says it will meet with regulators next month, after it releases its 100-day plan for Norfolk Southern

 

WASHINGTON — Ancora Holdings, which is leading an activist investor group that’s fighting a proxy battle to oust Norfolk Southern’s management, has responded to Surface Transportation Board Chairman Martin J. Oberman’s request for a meeting about its plans for the railroad.

 

“We suggest a discussion with yourself and the continuing Board Members once we have had a chance to make public our 100-day and initial operating plan in accordance with U.S. Securities and Exchange Commission disclosure requirements for investor communications. We expect those filings to be made by mid-April allowing us ample time to coordinate calendars ahead of the Norfolk Southern Annual Meeting,” Ancora Holdings Chairman and CEO Frederick DiSanto and Ancora Alternatives President James Chadwick wrote in a March 14 letter to Oberman.

 

 

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[CNJRoss]

Trains News Wire

 

Ancora’s safety white paper can’t withstand a simple fact check: Analysis

 

By Bill Stephens | March 13, 2024 | Last updated on March 14, 2024

 

The activist investor’s take on the Norfolk Southern collision and derailment in Pennsylvania misses the mark

 

Ancora Holdings, the activist investor leading a proxy fight against Norfolk Southern, says it’s taking the high road and conducting a fact-based campaign to oust the railroad’s management. The reality is that Ancora is stuck on the misinformation highway with a safety white paper that makes several claims that can’t hold up to scrutiny.

 

Ancora’s white paper was released on March 7, five days after a collision and derailment involving three NS trains in Lower Saucon Township, Pa. An eastbound train struck the rear of a stationary train at 7:15 a.m., with derailed cars fouling the adjacent track. Less than a minute later a westbound train came along, struck the wreckage, and derailed, the National Transportation Safety Board said on March 6. No one was injured, but diesel fuel and plastic pellets were spilled into the Lehigh River.

 

The wreck, Ancora says, is more justification for the NS board to immediately dismiss CEO Alan Shaw. Ancora correctly concludes that the Lower Saucon incident was preventable. But its white paper contains several glaring errors. 

 

SNIP  

 

It’s fair game to challenge a railroad’s safety record and pose critical questions about a particular incident. But Ancora loses credibility when it makes points that are flat-out wrong, gets ahead of the facts, and rushes to judgment.

 

 

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Related:  NS freight train derailment near Bethlehem, PA

[CNJRoss]

FreightWaves, 3/25/24

 

 

Vote on insurgent effort at Norfolk Southern set for May 9

 

Railroad replaces COO in fight against Ancora’s push for new CEO and 8 board members

 

Norfolk Southern has set May 9 as the date for its annual meeting, when an insurgent campaign to put outside directors on the company’s board and a new CEO in place will come to a head.

 

The Class 1 railroad formally set the date in its proxy letter to shareholders, sent last week. The meeting will be virtual and can be streamed on the company’s website, though participation is limited to shareholders. It begins at 8:30 a.m. Eastern.

 

Amy Miles, Norfolk Southern’s (NYSE: NSC) board chair, is the signatory of the letter aimed at the shareholders who will determine whether the various entities that operate under the name Ancora Catalyst Institutional will prevail in its effort to place eight candidates chosen by the investor group on the company’s board.

 

 

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[CNJRoss]

Progressive Railroading, 3/26/24

 

Ancora outlines path to a 57% OR at Norfolk Southern

 

Editor's note: This story has been updated with a statement from Norfolk Southern Corp.

 

Ancora Holdings Group LLC, the activist investor seeking to replace the majority of Norfolk Southern Corp.'s board as well as President and CEO Alan Shaw, today outlined what it describes as its three-year path to achieve "superior performance and significant value creation" at the Class I.

 

In a letter to shareholders, Ancora officials detail their proposed leadership team's strategy and targets for a precision scheduled railroading-powered network, which includes reaching a 57% operating ratio (OR).

 

In addition, Ancora announced that it is filing a definitive proxy statement with the U.S. Securities and Exchange Commission in connection with its nomination of seven candidates for election to the NS board at the 2024 annual meeting of shareholders scheduled for May 9.

 

 

Continue here.