Norfolk Southern Corp. and activist investor Ancora Holdings Group LLC reached an agreement to work together to identify an independent director who will join the railroad company’s board of directors, preventing what would have become another proxy fight.
“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,” said Ancora Chairman and CEO Frederick DiSanto and James Chadwick, president of Ancora Alternatives LLC, in a joint Nov. 14 statement.
“I am confident that together with Ancora we will find the right independent director to join our board and support our team as we continue to build on the positive momentum that is under way at Norfolk Southern,” said Mark George, chief executive officer of the Atlanta-based Norfolk Southern, one of America’s four major freight railroads.
The addition of the new director, who is expected to improve the board’s gender diversity and executive leadership experience, will expand Norfolk Southern’s Board of Directors to 14 members, including 13 independent members.
Under the agreement, Ancora also agreed to: withdraw its nomination of four director candidates for election at the Norfolk Southern 2025 Annual Meeting of Shareholders; vote in accordance with the board’s recommendations in connection with any vote of Norfolk Southern shareholders, including at the 2025 annual meeting; and to a standstill provision, the statement says.
The full agreement will be filed on a Form 8-K with the Securities and Exchange Commission, according to the companies.
The agreement follows a proxy fight Ancora launched in May at Norfolk Southern’s annual meeting in which it nominated seven directors as part of a bid to take control of the railroad’s 13-member board and overhaul its operations.
The activist successfully picked up three board seats for its candidates, but failed to get former Norfolk Southern President CEO Alan Shaw fired following the massive derailment of a Norfolk Southern freight train in East Palestine, Ohio, in February 2023 that released toxic chemicals and increased the nation’s focus on railroad safety.
Prior to the agreement announced on Thursday, Ancora planned to pursue a second proxy fight to oust Shaw, but the railroad’s board fired him in September, launched an investigation into the former executive’s inappropriate workplace relationship with the company’s chief legal officer, and replaced Shaw with George.
“The company’s focus on governance and its overall progress is further evidenced by the board’s decisive action with respect to its internal investigation, which we are told has been thorough and wide ranging,” Ancora’s DiSanto and Chadwick said. “The Norfolk Southern of today is on the right track.”
The Ancora execs said they look forward to continuing to support Norfolk Southern leadership’s “go-forward actions” to drive enhanced value for shareholders and other stakeholders.
Added George: “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. Our strategy is unlocking the full value of the business for shareholders, customers, communities, and employees.”