Ohio-based Ancora Holdings Group, LLC (collectively with its
affiliates, “Ancora” or “we”), which owns a large equity stake in
Norfolk Southern Corporation (NYSE: NSC) (“Norfolk Southern” or the
“Company”), today issued the below statement in response to the
Company’s appointment of its third COO in two
years under CEO Alan Shaw:
“The Board and Mr. Shaw put their own interests ahead of
shareholders’ interests by paying $25 million and giving up part of
Norfolk Southern’s long-term franchise, in the form of concessions
related to the Meridian Speedway and Terminal, just to hire a COO
without any experience at an Eastern railroad and whose most recent
role was eliminated altogether at CPKC.1 Keep in mind that Norfolk
Southern invested approximately $300 million for a 30% stake in the
Meridian assets in 2006, suggesting the net present value of that
stake is worth significantly more in 2024. The deal disclosed today
allows Norfolk Southern to hire one questionable executive while
permitting CPKC to leverage concessions to realize greater value
from its transaction involving the Meridian & Bigbee Railroad,
which it is pursuing with CSX.2 The deal also proceeded despite
Norfolk Southern’s previous concerns about CPKC and CSX’s
partnership plans.3 It appears the Board and Mr. Shaw struck a
fool’s bargain that gets Norfolk Southern a short-term PR win while
CPKC and CSX, the Company’s closest peer, strengthen their
partnership and competitive offerings. Based on the real and
implied cost of securing Mr. Orr, who analysts and investors have
told us they never heard of prior to today, the sitting directors
may have signed off on one of the most expensive and overpriced
hires in industry history.
Norfolk Southern’s leadership took this costly and defensive
step amidst an election contest, absent a comprehensive search and
interview process, and without providing shareholders any say in
the decision.4 We believe this action does not just deprive
shareholders of the best possible COO and strengthen two other
Class I railroads, but it puts in place an individual with limited
experience as an operations leader and little involvement in any
recent PSR implementation. The fact is Mr. Orr was appointed EVP of
Operations at Kansas City Southern after it had already announced
its merger with Canadian Pacific in March 2021 and well after Sameh
Fahmy, our director candidate, oversaw a multi-year network
transformation as EVP of PSR at Kansas City Southern.
It is important to note that the Board not only rejected the
opportunity to speak with our proposed COO, who has received
extremely positive feedback from shareholders, but it never even
offered to have a substantive discussion with us about freeing him
up from expiring employment obligations. It speaks volumes about
the Board and Mr. Shaw’s motives that they would not even have an
introductory call with a seemingly superior operator, who was the
EVP of Operations at CSX when it outperformed Norfolk Southern on
every key railroading metric (despite the wildly misleading claims
in the Company’s March 20th letter). They made this conscious
decision, which entailed an excessive cash payment and commercial
concessions, despite fully knowing that our candidate is getting
strong praise from the investment community, suggesting a disregard
for shareholders’ feedback and interests. This decision was also
made after the Board became aware of publicly filed legal actions
involving Mr. Orr.
Based on Norfolk Southern’s repeated acts of desperation and
factually inaccurate attacks on our people, it seems the Board and
Mr. Shaw will do and say anything to try to stay in place. However,
the appointment of Mr. Orr and the publication of seemingly
fanciful financial and operational targets do not represent a
‘reset’ for Norfolk Southern’s reeling leadership – to the
contrary, what has come out today only reinforces the need for
sweeping leadership changes atop the Company. Norfolk Southern
needs a Board that puts shareholders’ interests ahead of insiders’
interests.”
To recap:
- Norfolk Southern has paid $25 million and given away a key
element of its franchise to hire Mr. Orr, resulting in what we
consider to be an ill-conceived deal that benefits competitors and
harms shareholders.
- Mr. Orr, who was hastily hired without a broad search and
lacks Eastern railroad experience, does not appear to be the best
available executive to implement PSR principles and help transform
Norfolk Southern’s network.
- Much to our disappointment, the Board refused to even speak
with our proposed COO, Jamie Boychuk, who oversaw best-in-class
operating metrics and network efficiencies at CSX.
- Rather than putting the best people in place to drive
shareholder value, the Board seems to be making costly deals and
poor decisions at the expense of shareholders in order to insulate
CEO Alan Shaw and incumbent directors.
- Mr. Orr’s hire does not change our view that the Company
continues to have the wrong CEO in Mr. Shaw and the wrong strategy
in the form of “resilience” railroading.
***
About Ancora
Founded in 2003, Ancora Holdings Group, LLC offers integrated
investment advisory, wealth management, retirement plan services
and insurance solutions to individuals and institutions across the
United States. The firm is a long-term supporter of union labor and
has a history of working with union groups and public pension plans
to deliver long-term value. Ancora’s comprehensive service offering
is complemented by a dedicated team that has the breadth of
expertise and operational structure of a global institution, with
the responsiveness and flexibility of a boutique firm. For more
information about Ancora, please visit https://ancora.net.
Advisors
Cadwalader, Wickersham & Taft LLP is serving as legal
advisor, with Longacre Square Partners LLC serving as
communications and strategy advisor and D.F. King & Co., Inc.
serving as proxy solicitor.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
The information herein contains “forward-looking statements.”
Specific forward-looking statements can be identified by the fact
that they do not relate strictly to historical or current facts and
include, without limitation, words such as “may,” “will,”
“expects,” “believes,” “anticipates,” “plans,” “estimates,”
“projects,” “potential,” “targets,” “forecasts,” “seeks,” “could,”
“should” or the negative of such terms or other variations on such
terms or comparable terminology. Similarly, statements that
describe our objectives, plans or goals are forward-looking.
Forward-looking statements are subject to various risks and
uncertainties and assumptions. There can be no assurance that any
idea or assumption herein is, or will be proven, correct. If one or
more of the risks or uncertainties materialize, or if the
underlying assumptions of Ancora Alternatives LLC (“Ancora
Alternatives”) or any of the other participants in the proxy
solicitation described herein prove to be incorrect, the actual
results may vary materially from outcomes indicated by these
statements. Accordingly, forward-looking statements should not be
regarded as a representation by Ancora Alternatives that the future
plans, estimates or expectations contemplated will ever be
achieved. You should not rely upon forward-looking statements as a
prediction of actual results and actual results may vary materially
from what is expressed in or indicated by the forward-looking
statements. Except to the extent required by applicable law,
neither Ancora Alternatives nor any participant will undertake and
specifically declines any obligation to disclose the results of any
revisions that may be made to any projected results or
forward-looking statements herein to reflect events or
circumstances after the date of such projected results or
statements or to reflect the occurrence of anticipated or
unanticipated events.
Certain statements and information included herein have been
sourced from third parties. Ancora Alternatives does not make any
representations regarding the accuracy, completeness or timeliness
of such third party statements or information. Except as may be
expressly set forth herein, permission to cite such statements or
information has neither been sought nor obtained from such third
parties. Any such statements or information should not be viewed as
an indication of support from such third parties for the views
expressed herein.
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
Ancora Alternatives and the other Participants (as defined
below) have filed a preliminary proxy statement and accompanying
BLUE proxy card (the “Proxy Statement”) with the Securities and
Exchange Commission (the “SEC”) to be used to solicit proxies for,
among other matters, the election of its slate of director nominees
at the 2024 annual meeting of shareholders (the “2024 Annual
Meeting”) of Norfolk Southern Corporation, a Virginia corporation
(“Norfolk Southern” or the “Corporation”). Promptly after filing
its definitive proxy statement with the SEC, Ancora Alternatives
will forward the definitive proxy statement and accompanying BLUE
proxy card to each stockholder entitled to vote at the 2024 Annual
Meeting.
The participants in the proxy solicitation are Ancora Catalyst
Institutional, LP (“Ancora Catalyst Institutional”), Ancora Merlin
Institutional, LP, (“Ancora Merlin Institutional”), Ancora Merlin,
LP (“Ancora Merlin”), Ancora Catalyst, LP (“Ancora Catalyst”),
Ancora Bellator Fund, LP (“Ancora Bellator”), Ancora Impact Fund LP
Series AA (“Ancora Impact AA”) and Ancora Impact Fund LP Series BB
(“Ancora Impact BB”) (each of which is a series fund within Ancora
Impact Fund LP) (Ancora Catalyst Institutional, Ancora Merlin
Institutional, Ancora Merlin, Ancora Catalyst, Ancora Bellator,
Ancora Impact AA and Ancora Impact BB, collectively, the “Ancora
Funds”), Ancora Advisors, LLC (“Ancora Advisors”), The Ancora Group
LLC (“Ancora Group”), Ancora Family Wealth Advisors, LLC (“Ancora
Family Wealth”), Inverness Holdings LLC (“Inverness Holdings”),
Ancora Alternatives, Ancora Holdings Group, LLC (“Ancora Holdings”)
and Frederick DiSanto (collectively, the “Ancora Parties”); and
Betsy Atkins, James Barber, Jr., William Clyburn, Jr., Nelda
Connors, Sameh Fahmy, John Kasich, Gilbert Lamphere and Allison
Landry (the “Ancora Nominees” and, collectively with the Ancora
Parties, the “Participants”).
Ancora Alternatives, as the general partner and investment
manager of each of the Ancora Funds and as the investment manager
of the Ancora Alternatives separately managed accounts (each, an
“SMA”) may be deemed to beneficially own in the aggregate 918,804
shares of Common Stock (of which 836,004 shares of Common Stock are
directly and beneficially owned by the Ancora Funds, including the
123,500 shares of Common Stock underlying 1,235 American call
options held directly and beneficially in aggregate by the Ancora
Funds, and of which 82,800 shares of Common Stock are held
indirectly and beneficially by the Ancora Alternatives SMAs).
Ancora Advisors, as the investment advisor to the SMA of Ancora
Advisors, may be deemed to beneficially own all of the 270 shares
of Common Stock held in the Ancora Advisors SMA. Ancora Group, as
the sole member of Ancora Advisors, may be deemed to beneficially
own all of the 270 shares of Common Stock held in the Ancora
Advisors SMA. Ancora Family Wealth, as the investment advisor to
the Ancora Family Wealth SMAs, may be deemed to beneficially own
all of the 9,847.28 shares of Common Stock held in the Ancora
Family Wealth SMAs. Inverness Holdings, as the sole member of
Ancora Family Wealth, may be deemed to beneficially own all of the
9,847.28 shares of Common Stock held in the Ancora Family Wealth
SMAs. Ancora Holdings, as the sole member of each of Ancora
Alternatives, Ancora Group and Inverness Holdings, may be deemed to
beneficially own in the aggregate 928,921.28 shares of Common Stock
held by the Ancora Funds (including the 123,500 shares of Common
Stock underlying 1,235 American call options), the Ancora
Alternatives SMAs, the Ancora Advisors SMA and the Ancora Family
Wealth SMAs. Mr. DiSanto, as the Chairman and Chief Executive
Officer of Ancora Holdings, may be deemed to beneficially own in
the aggregate 928,921.28 shares of Common Stock held by the Ancora
Funds (including the 123,500 shares of Common Stock underlying
1,235 American call options), the Ancora Alternatives SMAs, the
Ancora Advisors SMA and the Ancora Family Wealth SMAs. The Ancora
Parties beneficially own 928,921.28 shares of Common Stock in the
aggregate (including the 123,500 shares of Common Stock underlying
1,235 American call options). Gilbert Lamphere owns 1,200 shares of
Common Stock and Sameh Fahmy owns 3,000 shares of Common Stock.
IMPORTANT INFORMATION AND WHERE TO FIND IT
ANCORA ALTERNATIVES STRONGLY ADVISES ALL SHAREHOLDERS OF NORFOLK
SOUTHERN TO READ THE PRELIMINARY PROXY STATEMENT, ANY AMENDMENTS OR
SUPPLEMENTS TO SUCH PROXY STATEMENT, THE DEFINITIVE PROXY
STATEMENT, AND OTHER PROXY MATERIALS FILED BY ANCORA ALTERNATIVES
AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON
THE SEC’S WEBSITE AT WWW.SEC.GOV. THE DEFINITIVE PROXY STATEMENT,
WHEN FILED, AND OTHER RELEVANT DOCUMENTS, WILL ALSO BE AVAILABLE ON
WWW.MOVENSCFORWARD.COM AND THE SEC WEBSITE, FREE OF CHARGE, OR BY
DIRECTING A REQUEST TO THE PARTICIPANTS’ PROXY SOLICITOR, D.F. KING
& CO., INC., 48 WALL STREET, 22ND FLOOR, NEW YORK, NEW YORK
10005 (SHAREHOLDERS CAN CALL TOLL-FREE: +1 (866) 227-7300).
____________________
1 See press releases issued by Norfolk Southern and CPKC on
March 20, 2024.
2 See press release issued by CPKC on March 20, 2024 and Freight
Waves article, “CPKC and CSX file plans paving way to
Mexico-Southeast corridor,” dated October 17, 2023.
3 See Freight Waves article, “Norfolk Southern wants close look
at proposed CPKC-CSX Southeast corridor,” dated October 27,
2023.
4 See press releases and securities filings made by Norfolk
Southern, which reveal no detail on a wide-ranging search process
or an intent to provide shareholders an opportunity to vote.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240320518681/en/
Longacre Square Partners Joe Germani / Charlotte Kiaie,
646-386-0091 MoveNSCForward@longacresquare.com D.F. King & Co.,
Inc. Edward McCarthy 212-229-2634 MoveNSCForward@dfking.com
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