Railroad Giant Norfolk Southern Reaches Deal with Activist Investor
In a move to avoid a second proxy fight in as many years, Norfolk Southern has struck a deal with activist investor Ancora. As part of the agreement, the railroad’s board will expand from 13 to 14 members, with an unspecified candidate set to join the board after a search process.
Averting a Proxy Fight
Ancora had previously nominated four candidates to Norfolk’s board, but withdrew them as part of the cooperation agreement. The activist investor had been pushing for changes at the company, including the removal of former CEO Alan Shaw, who was ousted due to an inappropriate workplace relationship with the company’s chief legal officer.
New Leadership and Direction
Norfolk Southern’s chief, Mark George, expressed confidence in finding the right independent director to join the board. Ancora’s President, Fred DiSanto, and activism chief, Jim Chadwick, praised the company’s progress, saying 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.
Shaw’s Ouster and Investigation
Shaw’s removal from the top job came after the board began probing reports of an inappropriate relationship with a senior executive, later revealed to be chief legal officer Nabanita Nag. The company is still conducting an internal investigation into the nature of Nag and Shaw’s relationship.
Ancora’s Track Record
Ancora manages $10 billion for its clients and has pursued campaigns at several companies, including C.H. Robinson, Forward Air, and Hasbro. The activist investor’s efforts have led to significant changes at Norfolk Southern, with shares outperforming railroad peers since Ancora began its engagement with the company.
A New Era for Norfolk Southern
With this deal, Norfolk Southern can focus on its operations and growth, free from the uncertainty of a proxy fight. The company’s commitment to finding the right independent director to join its board signals a new era of cooperation and progress.
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