- ISS Confirms Jim Barber is a “Capable Candidate with Experience
and Skills that Should be Transferable to the Railroad Industry,
Which Makes Him a Credible Director and CEO Candidate”
- ISS Joins Glass Lewis in Recommending Shareholders
“WITHHOLD” on Chair Amy Miles
(~10-Year Tenure) and Several Other Incumbents
- Report Follows a Separate Recommendation from Glass Lewis to
Elect Six Ancora Nominees (Including Jim Barber) and “WITHHOLD” on
Six Incumbents (Including CEO Alan Shaw)
- Together, ISS and Glass Lewis Endorse Significant
Shareholder-Driven Change by Supporting Ancora’s Director
Candidates
- Ancora Urges Shareholders to Support a
Referendum by Electing its Full Slate, Which is the Only Way to
Ensure Jim Barber and Jamie Boychuk Implement a PSR-Powered
Scheduled Network
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 Institutional Shareholder Services
Inc. (“ISS”), a leading independent proxy advisory firm, has
recommended that Norfolk Southern shareholders support meaningful
boardroom change by voting for five of its seven director
candidates (the “Shareholder Slate”) at the Company’s 2024 Annual
Meeting of Shareholders (the “Annual Meeting”) on May 9th. ISS
recommends that shareholders elect William Clyburn, Jr., Sameh
Fahmy, John Kasich, Gilbert Lamphere and Allison Landry to the
Company’s Board of Directors (the “Board”). Previously, Glass Lewis
recommended shareholders elect six of Ancora’s director candidates,
including proposed CEO Jim Barber.
Notably, both ISS and Glass Lewis recommend AGAINST Norfolk Southern’s proposed executive
compensation. ISS is concerned by the effect of excluding costs
associated with the derailment in East Palestine on increased
vesting of closing cycle PSUs, while Glass Lewis noted that “the
adjustments related to East Palestine require scrutiny.” The
implications of questionable compensation decisions were raised by
Ancora early in its campaign. The combination of the Board’s
defensive actions and unflinching loyalty to Mr. Shaw and his
strategy amidst stakeholder pushback gives credence to ISS’
scrutiny of the incumbent directors’ alignment with shareholder
interests.
Frederick D. DiSanto, Chairman and Chief Executive Officer of
Ancora, and James Chadwick, President of Ancora Alternatives LLC,
commented:
“The leading proxy advisory firms have collectively sent a clear
message about the need for significant, shareholder-driven change
at Norfolk Southern. On the heels of Glass Lewis recommending for
six of our seven director candidates, including proposed CEO Jim
Barber, we are pleased to see ISS conclude that it’s ‘justifiable
for shareholders who have already lost faith in the current
management team to support the entire dissident slate.’ Both proxy
advisory firms accurately diagnosed that Norfolk Southern has been
plagued by disappointing corporate governance, misaligned executive
compensation, poor safety and an unproven operating strategy that
hasn’t produced shareholder value. It is encouraging that incumbent
leadership was not able to rely on its meritless attacks and
scripted platitudes to avoid accountability. However, as long as
long-term insiders like Alan Shaw and Ms. Miles are in key
decision-making roles, we believe the institutional biases that
have hindered Norfolk Southern will remain in place and stall value
creation.
As we continue to tell shareholders, this contest should come
down to a simple question:
Do you want Norfolk Southern to have leadership
with the experience and judgment to properly implement Precision
Scheduled Railroading (“PSR”), so the Company can finally achieve
the service, safety and long-term value realized by every other
publicly traded Class I rail?
If the answer to this question is ‘yes,’ we need to turn the
page on this dark chapter and install all seven members of the
Shareholder Slate. This is the only way to ensure Mr. Barber and
Jamie Boychuk are appointed to executive leadership and start
implementing a PSR-Powered Scheduled Network. In our view, they are
best positioned to replicate the type of value creation
shareholders enjoyed at once troubled railroads like Canadian
Pacific and CSX.”
***
In its report, ISS made the following points regarding the need
for change at Norfolk Southern:1
- “It is important to establish from the outset that there is a
clear case for change.”
- “All in, the prevailing strategy has yet to translate into
lasting operational improvements, and TSR has underperformed peers
over every relevant measurement period.”
- “Shareholders have also been provided with numerous reasons to
believe that their best interests are not being prioritized by the
board. These are serious problems, and they reflect underlying
issues with oversight and accountability that will require
substantial change to rectify.”
ISS made the following comments with respect to the incumbent
Board and management’s decisions:2
- “[T]he board has made compensation decisions that are
challenging to justify, orchestrated an expensive hire as part of a
defensive maneuver in this proxy contest, and established a pattern
of insufficient disclosure on key matters.”
- “[COO John Orr] was hired under concerning circumstances – at a
substantial (and perhaps not fully understood) cost to the company
– which is effectively an indictment of the board.”
- "This is a clear sign of reactive, rather than proactive
oversight […] there are concerns about the board's related
messaging in this proxy contest, including the assertions it has
made about its progress thus far and the comparative safety of its
strategy relative to that of the dissident."
- “As board chair, Amy Miles arguably bears the most
responsibility for this state of affairs. She has a decade of
tenure, and her leadership of the board has coincided with many of
the concerning developments underpinning the dissident's case for
change.”
- “Replacing Miles, Thompson, and Scanlon with dissident nominees
possessing deep expertise in railroad operations and safety (Sameh
Fahmy, Gilbert Lamphere, and William Clyburn) would remove the
majority of the cohort most responsible for the board's disconnect
with shareholders, while infusing needed independence and a
diversity of perspective on key strategy, operational, and
regulatory matters.”
ISS also noted the following with regard to the Shareholder
Slate’s proposed strategy and management team, stating:3
- “In fact, the dissident has received public support from
several different types of shareholders, including labor unions, as
well as at least one large customer, which suggests that its
arguments have broad appeal.”
- “It is important to recognize that the dissident has also
articulated a plan that appears logical (the underlying model has
been implemented successfully at other Class I railroads), and has
assembled a credible management team that features a COO with
proven experience.”
- “Although we are not supporting dissident nominee and CEO
selection James Barber, he appears to be a capable candidate with
experience and skills that should be transferable to the railroad
industry, which makes him a credible director and CEO
candidate.”
- “It would therefore be justifiable for shareholders who have
already lost faith in the current management team to support the
entire dissident slate.”
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 ISS was neither sought nor
obtained. 2 Permission to use quotations from ISS was neither
sought nor obtained. 3 Permission to use quotations from ISS was
neither sought nor obtained.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240430788019/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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