A Leading Independent Proxy Advisory Firm
Concludes There is a “Compelling Case for Supporting a Substantial
Overhaul of the Company’s Leadership”
Glass Lewis Recommends Shareholders
“WITHHOLD” Support for Six Current
Directors, Including Chair Amy Miles (~10-Year Board Tenure) and
CEO Alan Shaw (~30-Year Company Tenure)
Glass Lewis States Proposed CEO Jim Barber
and Proposed COO Jamie Boychuk “Have Compelling Credentials and
Track Records”
Ancora Urges Shareholders to Take One Step
Further by Electing the Full Shareholder Slate at the May 9th
Annual Meeting
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 announced that Glass, Lewis & Co. ("Glass
Lewis"), a leading independent proxy advisory firm, recommends the
Company’s shareholders vote to elect six dissident nominees on the
BLUE Proxy Card at the upcoming Annual Meeting of
Shareholders (“Annual Meeting”) on May 9, 2024. In particular,
Glass Lewis recommends for the following Ancora nominees: Betsy
Atkins, James Barber, Jr., William Clyburn, Jr., Sameh Fahmy,
Gilbert Lamphere and Allison Landry.
Frederick D. DiSanto, Chairman and Chief Executive Officer of
Ancora, and James Chadwick, President of Ancora Alternatives LLC,
commented:
“We appreciate that Glass Lewis has conducted an extremely
thoughtful and thorough analysis of Norfolk Southern, resulting in
a recommendation for six of our unaffiliated and qualified director
candidates, including proposed CEO Jim Barber. Glass Lewis affirms
our view that several tenured insiders, including Chair Amy Miles,
Director Claude Mongeau and CEO Alan Shaw, should be immediately
replaced due to their apparent responsibility for sustained
underperformance. Additionally, the firm’s report accurately
diagnoses that the Board and Mr. Shaw are committed to an unproven
strategy ‘that relies on inherently incompatible railroading
concepts.’ Lastly, the report highlights the Board’s recent string
of reactive moves, including the decision to provide financial and
strategic consideration to a competitor – without a shareholder
vote – in order to hire an operating executive during a contest.
Although we believe the only way to ensure a change in CEO and
shift in strategy is to elect our full slate, this recommendation
from Glass Lewis sends an important message to shareholders about
the urgent need for changes in leadership and strategy at Norfolk
Southern.”
In its report, Glass Lewis noted the following regarding the
need for change at Norfolk Southern:1
- “Having given due consideration to the arguments presented by
each side, we believe Ancora has presented
a compelling case for supporting a substantial overhaul of the
Company's current leadership.”
- “Based on our review, we believe the
operating performance of the Company has been consistently worse
than its peers for an extended period.”
- “We are also inclined to agree with Ancora’s critique of
the Company's current operating strategy
as being one that relies on inherently incompatible railroading
concepts.”
- “[I]t’s not readily evident to us the
Company's current leadership had built up a sufficiently positive
track record such that investors might reasonably have the patience
to allow management to implement a relatively novel operating
strategy.”
- “[T]he Company's hiring of Mr. Orr has
understandably raised more than a few eyebrows for several
reasons. In order to hire Mr. Orr away from CPKC, the
Company had to pay CPKC $25 million in cash and provide certain
commercial and operational considerations related to the Meridian
Speedway (which the Company operates with CPKC) and the Meridian
Terminal.”
- [Hunter Harrison’s] reimbursement arrangement was put to a vote
and approved by CSX shareholders. The Company did not put the
buyout arrangement to a shareholder vote prior to formally hiring
Mr. Orr.
- “The fact that multiple labor unions have now taken the
relatively extraordinary step of publicly supporting an activist
hedge fund in Ancora seemingly belies the
Company's narrative of having strong support among its stakeholders
and raises further questions regarding the ability of the current
management team to improve its relationship with the Company's
workforce.”
In its report, Glass Lewis noted the following regarding the
dissident slate’s proposed strategy and management team:2
- “Investors who support Ancora’s
campaign will likely view the initial focus on a PSR-driven network
redesign as a positive first step, as a successful
redesign could yield improved asset utilization and greater
efficiencies, thereby contributing to increased shareholder
value.”
- “We also believe that Ancora’s
candidates for the Company's top executive roles – James Barber,
Jr. as CEO and Jamie Boychuk as COO – have compelling credentials
and track records.”
- “[…] Ancora maintains that Mr. Barber’s experience is highly
relevant given that UPS and Norfolk Southern are transportation
network businesses with many similar characteristics. It’s also
worth noting that CSX’s current CEO, Joseph R. Hinrichs, had a
professional background primarily in the automotive industry –
specifically, having held various leadership roles at Ford Motor
Company – prior to joining CSX in 2022. Thus, there appears to us to be a very recent precedent for a
railroad firm to look outside the industry to fill their top
executive role.”
- “Based on FRA data, we observe that CSX generally had lower rates of reported train accidents
and injuries than the Company during Mr. Boychuk's tenure at CSX
(from 2017 to 2023). Overall, we believe Mr. Boychuk is
a credible and capable candidate to serve as the Company's COO and
lead Ancora’s proposed PSR strategy for the Company.”
- “According to a recent anonymous shipper survey conducted by
equity research firm Stephens Inc., a vast majority of survey
respondents expressed negative sentiment for Ancora’s plan and
positive sentiment for the Company's plan. However, in the absence of further information and a more
comprehensive breakdown of the total number of shippers and the
types of shippers who were surveyed, we are hesitant about putting
much, if any, stock into the results of that
survey.”
- Further, considering that railroad safety is currently at the
forefront of the minds of various key stakeholders, we believe a
“slash-and-burn” approach would likely be untenable […]
Ancora likely understands this line of
thinking, as it has not called for any draconian cost cuts and,
instead, has made safety a stated priority.”
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,” “intends,” “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 relate to future events
or future performance and involve known and unknown risks,
uncertainties, and other factors that may cause actual results,
levels of activity, performance or achievements or those of the
industry to be materially different from those expressed or implied
by any forward-looking statements. Norfolk Southern Corporation, a
Virginia corporation (“Norfolk Southern”), has also identified
additional risks relating to its business in its public filings
with the Securities and Exchange Commission (the “SEC”). Ancora
Alternatives LLC (“Ancora Alternatives”), and as applicable the
other participants in the proxy solicitation, have based these
forward-looking statements on current expectations, assumptions,
estimates, beliefs, and projections. While Ancora Alternatives and
the other participants, as applicable, believe these expectations,
assumptions, estimates, and projections are reasonable, such
forward-looking statements are only predictions and involve known
and unknown risks and uncertainties, many of which involve factors
or circumstances that are beyond the participants’ control. 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 or any of the other participants 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
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., Sameh Fahmy,
John Kasich, Gilbert Lamphere and Allison Landry (the “Ancora
Nominees” and, collectively with the Ancora Parties, the
“Participants”).
Ancora Alternatives and the other Participants have filed a
definitive proxy statement and accompanying BLUE proxy card (the
“Definitive Proxy Statement”) with the SEC on March 26, 2024 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 of Norfolk Southern.
IMPORTANT INFORMATION AND WHERE TO FIND IT
ANCORA ALTERNATIVES STRONGLY ADVISES ALL SHAREHOLDERS OF NORFOLK
SOUTHERN TO READ THE DEFINITIVE PROXY STATEMENT, ANY AMENDMENTS OR
SUPPLEMENTS TO SUCH DEFINITIVE PROXY STATEMENT, AND OTHER PROXY
MATERIALS FILED BY ANCORA ALTERNATIVES AS THEY CONTAIN IMPORTANT
INFORMATION. SUCH PROXY MATERIALS ARE AVAILABLE AT NO CHARGE ON THE
SEC’S WEBSITE AT WWW.SEC.GOV AND AT ANCORA ALTERNATIVE’S WEBSITE AT
WWW.MOVENSCFORWARD.COM. THE DEFINITIVE PROXY STATEMENT AND
ACCOMPANYING PROXY CARD WILL BE FURNISHED TO SOME OR ALL OF THE
COMPANY’S SHAREHOLDERS. SHAREHOLDERS MAY ALSO DIRECT 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).
Information about the Participants and a description of their
direct or indirect interests by security holdings or otherwise can
be found in the Definitive Proxy Statement.
1 Permission to use quotations from Glass Lewis was neither
sought nor obtained. Emphasis added by Ancora. 2 Permission to use
quotations from Glass Lewis was neither sought nor obtained.
Emphasis added by Ancora.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240429971056/en/
Longacre Square Partners Greg Marose / 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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