Norfolk Southern makes deal with investors to prevent another fight for control of the railroad
Norfolk Southern announced an agreement Thursday with Ancora Holdings to keep the investor from launching a repeat of this year's campaign to take control of the railroad.
Under the deal, Norfolk Southern will add another independent director to its board and work to further improve its operations.
Ancora, meanwhile, agreed to drop its nominations of four new board directors to be elected at next year's annual meeting. The Ohio-based investor won three seats on the board earlier this year, but didn't win enough seats to make the sweeping changes, including replacing management, that it sought.
But management changes came anyway in September, when former CEO Alan Shaw was fired for having an inappropriate relationship with the railroad's chief legal officer. CFO Mark George was promoted to lead the railroad alongside the new operating chief who was hired in the spring in the middle of the fight with Ancora.
George has said he doesn't plan to abandon the strategy Shaw outlined, which aims to maintain more resources on hand during economic downturns so the railroad can provide better service and be prepared to respond to increased shipments when the economy eventually recovers. But George also signaled that he won't tolerate mediocrity and will keep the pressure on to make the railroad more profitable and efficient.
“We are making meaningful progress on key operational metrics, as evidenced by our strong third quarter 2024 results in which we drove productivity, grew volumes, and delivered notable margin improvement," George said.
Ancora's Chairman and CEO Frederick DiSanto and James Chadwick, who leads Ancora Alternatives, indicated they like what they have been seeing.
“In our view, it’s a new day at Norfolk Southern following board refreshment, management enhancements, and new leadership’s efforts to establish a disciplined and operationally led network," DiSanto and Chadwick said in a statement.
Atlanta-based Norfolk Southern Corp. is one of the nation's biggest railroads with tracks crisscrossing the eastern United States.
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