Norfolk Southern continues to defend CEO Alan Shaw’s leadership

EAST PALESTINE, Ohio — Norfolk Southern responded Monday to efforts by a group of investors led by Ohio-based Ancora Holdings Group, which holds a $1 billion stake in the railroad and has been heavily critical of the company’s response following and business practices leading up to last year’s train derailment, to replace the NS board of directors and CEO Alan Shaw.

In a press release, Norfolk said it filed its preliminary proxy materials with the Securities and Exchange Commission in connection with its upcoming 2024 Annual Meeting of Shareholders, confirming “its unanimous support for the company’s strategy that balances safe and reliable service, continuous productivity improvement and smart growth” under Shaw’s leadership.

Last week, the investor group announced its nomination of eight for election to the NS Board of Directors, while leveling criticism at Shaw and the board it accuses of “backsliding.” The nominations included transportation network leader Jim Barber, Jr. as Chief Executive Officer and lifelong railroad operator Jamie Boychuk as Chief Operating Officer. Former Ohio Governor John Kasich was also among the nominees.

Norfolk Southern announced its own slate of 13 nominees. Among them are Richard H. Anderson, former CEO of Amtrak and Delta Air Lines, and Mary Kathryn “Heidi” Heitkamp, former U.S. Senator.

Norfolk Southern and Ancora exchanged barbs on Monday, finding fault with the other’s nominees.

Amy Miles, independent chair of Norfolk Southern’s Board of Directors, questioned the Ancora candidates’ experience and called the group’s strategy “short-sighted.”

“Following numerous discussions with representatives of Ancora and its nominees, we have determined that none of them possess skills or experience that are not already well represented among our board nominees,” Miles said. “Further, it would be highly disruptive to our operations, our workers, and the North American supply chain to replace a majority of our well-functioning board, which we have refreshed in a thoughtful and intentional manner over the last several years in order to adopt Ancora’s short-sighted strategy. The board is unanimous in rejecting Ancora’s candidates and remains unwavering in its commitment to act in the best interests of all shareholders.”

“Since Mr. Shaw and his boardroom allies have no credible plan and no viable record to run on, it makes sense that they would initiate a weak and reactionary refresh. It’s now clear that qualified Class I rail executives and relevant former government leaders want no part of Norfolk Southern’s entrenchment agenda,” an Ancora statement said. “Notably, Mr. Anderson’s background of running a passenger airline and then presiding over numerous safety incidents at Amtrak has no place on the board.”

The group went on to accuse Heitkamp of being a lobbyist for a tax loophole that benefits the wealthy.

Ancora also responded to published reports that Shaw was given a 37% pay boost following the train derailment and chemical release with $13.4 million in total compensation in 2023 — including a base salary increase of $200,000 to $1.1 million. Norfolk Southern reported a loss of and a 44% overall net income loss in 2023. Shaw became CEO in May of 2022.

“It’s alarming that the Board rewarded Mr. Shaw with a massive raise and total compensation of $13.4 million during the same year he presided over industry-worst operating results, sustained underperformance and a tone-deaf response to the derailment in East Palestine,” Ancora said in a statement.

While the investment group continues to level both accusations and criticism at the NS Board and Shaw as profits fall, the loss in revenue can be directly linked to the train derailment which the railroad reports have now cost Norfolk Southern over $1 billion to clean up the crash and chemical release. Aside from cleanup-related costs, Norfolk Southern has also shelled out money to improve safety at the railroad road, including the installation of state-of-the-art imaging portals meant to catch the defect that is the suspected cause of the East Palestine derailment, partnership with RapidSOS Wednesday to help equip first responders with critical information to safely respond to a rail emergency and the implementation of additional hot-box detectors to make the distance between them no distance greater than 15 miles. Shaw also won support of the Brotherhood of Locomotive Engineers when Norfolk Southern became the first Class I railroad to join at the request of the U.S. Department of Transportation (USDOT) and the Federal Railroad Administration (FRA) a pilot program of the Confidential Close Call Reporting System (C3RS). The system allows rail employees to confidentially report unsafe events that they experience while being protected from discipline. The program has been proven to improve rail safety.

Since last year’s derailment, Shaw has also directed Norfolk Southern’s “making it right” campaign — an initiative to remedy the impacts the rail disaster caused. To date, those contributions have exceeded $104 million dollars. The contributions have included $21 million in direct assistance to area households, $25 million to renovate the city park, another $25 million to build and fund a first responder regional training center in East Palestine and $4.2 million to protect the municipal drinking water.

Shaw himself has made ongoing trips to the village to oversee efforts and made a personal contribution of nearly $500,000 to establish the Bulldog Legacy Scholarship which is awarded to East Palestine seniors annually.


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