News / Ancora launches boardroom bid for control of NS rail operations

Photo: Alan Stoddard, Dreamstime.com

Investor group Ancora Holdings has stepped up its drive to oust Norfolk Southern Railway’s (NS) leadership.

Less than a month after taking a $1bn stake in the Class I rail carrier, Ancora has proposed eight candidates for the NS board from its own ranks to replace CEO Alan Shaw and others.

Ancora claimed its own leadership could drive up the NS share price by about 65%, to $420.

The group revealed its challenge to the NS leadership late last month after it acquired the shares in the Class I carrier. It argues current management plans will keep the company lagging behind its peers.

NS shares slipped nearly 5%  last year, in the wake of the fiery derailment at East Palestine, Ohio, and operating challenges, and its results have lagged those of its main rivals.

Ancora slammed the NS board for “poor decisions with regard to the company’s leadership, safety priorities and strategies”, which had delivered “industry-worst operating results, sustained share price under-performance and a tone-deaf response” to the East Palestine disaster.

“Mr Shaw’s strategy is equal parts unambitious and impractical,” it added.

And Ancora is not alone in its dissatisfaction with NS results. Following the release of Q4 and full-year results in late January, Wall Street analysts showed scepticism about its performance and plans – two firms, TD Cowen and Morgan Stanley, cut their NS ratings.

In response to Ancora’s announcement yesterday, TD Cowen analyst Jason Seidl wrote: “We believe an activist involved in NSC may still lead to changes that close the gap between its US Class 1 peers.”

The announcement said Ancora was looking forward to sharing a presentation on its 100-day transition plan, and details of “our reliable network strategy”.

It also revealed Ancora wants former UPS COO Jim Barber to take over the reins at NS and suggested Jamie Boychuk, a former executive at CSX, should be COO.

Mr Barber, who retired from UPS last year after almost four decades, has only experience of the rail sector as a customer, while Mr Boychuk, who followed Hunter Harrison to CSX to implement ‘precision railroading’, left the carrier for undisclosed reasons last August. According to Ancora profiles of its proposed NS directors, he “helped CSX amass a strong safety record and reduce burdens on rail workers”.

This may raise some eyebrows among rail labour groups in light of Mr Boychuk’s association with precision railroading, which has been repeatedly linked to rail performance and safety issues.

The NS board formally acknowledged receipt of the directorial nominations from Ancora, and said: “Since receiving Ancora’s nominations, members both of the board and the management team have held multiple discussions with representatives of Ancora to better understand their views and communicate Norfolk Southern’s perspectives on the execution of our strategy.

“At Ancora’s request, and in accordance with the board’s normal process, members of the governance and nominating committee and the board carefully evaluated and interviewed all of Ancora’s nominees.”

It added that refreshing the board of directors was a routine process, which saw two new appointments last year and two more determined for later this year.