Delivers Final Thoughts on the Opportunity
for a Lasting Turnaround and Significant Value Creation
Thanks Shareholders for Their Consideration
and Time in Recent Weeks
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 letter from James Barber, Jr.,
who is one the seven unaffiliated and qualified candidates the firm
is seeking to elect to the Company’s 13-member Board of Directors
(the “Board”) at the Annual Meeting of Shareholders (the “Annual
Meeting”) on May 9, 2024. Vote on the BLUE Proxy Card to elect the entire Shareholder
Slate at the Annual Meeting.
***
Norfolk Southern Shareholder,
I appreciate that many of you are evaluating what my colleagues
and I have said in recent weeks about moving Norfolk Southern
forward. Both sides have obviously sent you a lot of information to
consider and digest before votes are cast at the Annual Meeting.
Rather than ask you to read another long letter, I’m writing to you
to share just a few personal thoughts on why I want to be part of
the railroad’s turnaround and what I plan to deliver for you and
the other constituents.
When Ancora approached me in 2023 about serving as a proposed
director and its suggested CEO, I spent a lot of time independently
analyzing Norfolk Southern and considering whether my skills could
speed up a turnaround. I am blessed to be able to be selective at
this point in my life, and I don’t have any unfulfilled goals in my
career after 35 great years at UPS. This enabled me to take my time
assessing Norfolk Southern’s challenges and opportunities from the
perspective of each of the Company’s key constituents:
shareholders, customers, employees, regulators and the communities
that trains run through each day. After thinking everything through
and reflecting on the transferability of my experiences, I knew I
could help move this great brand in the right direction – whether
that be as a director, CEO or both.
In terms of what our slate wants to deliver, it starts with a
culture of accountability, integrity, safety, sustainability and
teamwork – all of which underpin highly-efficient and
service-oriented logistics companies. These priorities are core to
our three-year strategy for initiating a network redesign and
implementing true Precision Scheduled Railroading (“PSR”). This
strategy, which is distinct from Norfolk Southern’s resilience
model, involves laying a foundation that positions proven operators
to deliver quantifiable improvements in three primary areas:
- Service – Transitioning to a true scheduled network will
dramatically increase on-time delivery for customers, leading to
more trust and more high-margin revenue over time. The Company’s
Merchandise Trip Plan Compliance has dramatically underperformed
the Surface Transportation Board’s 82% compliance target for years.
This weak service has nothing to do with the East Palestine
derailment, but rather maintaining a poorly designed network with
excess assets and lax scheduling. Fortunately, our strategy
provides a roadmap for getting Trip Plan Compliance well above the
federal compliance target in the coming quarters.
- Safety – A true scheduled network will allow Norfolk
Southern’s most valued asset, its people, to return home in the
same condition they report to work in while also reducing
catastrophic incidents that absorb shareholder capital and hinder
the brand. In terms of KPIs, we will target a decline in severe
derailments and a reduction in the number of reported accidents
relative to total network activity. Although accidents periodically
occur, Norfolk Southern’s current resilience model has led to the
industry’s most costly and severe derailments over the past
two-and-a-half years. Safety isn’t a buzzword to me, but an output
of tangible policies that are deeply ingrained in an organization.
Our strategy accounts for concrete initiatives that will cut down
on train switches, decrease dangerous train congestion, and reduce
burnout and hours unpredictability.
- Shareholder Value – I am a true believer that the
organization with the best network wins for all constituents. With
our scheduled network in place, Norfolk Southern will have a
transparent path to balancing service and safety enhancements with
operating ratio and share price improvements. A redesigned network
powered by PSR will benefit from a permanent reduction in assets,
delays and touch points. As assets come out of the network, we will
rely on annual attrition (not job cuts or furloughs) to right size
our workforce. All of this should ultimately translate to
approximately $1.1 billion in annualized savings and an operating
ratio in the mid-to-high 50s.
When we first hit the road in this campaign, it was clear some
of the Company’s constituencies would need to be convinced about
what our slate brings to the table. After all, it’s not enough to
diagnose problems and speak in broad terms about solutions. On a
personal level, one of the most rewarding parts of this contest has
been earning the belief of the BLET Teamsters and BMWED Teamsters.
As a former Teamster, I’m incredibly grateful for the opportunity
to earn their support. My goal is to bring this same spirit of
constructive thinking and teamwork to Norfolk Southern and its
boardroom.
Thank you again for your consideration and time, and we will
reward you and all the constituents for a vote of confidence in us.
We look forward to delivering the best results possible for
you.
Sincerely, Jim Barber
***
Proxy Advisory Firm
Support:
“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.”
-Glass, Lewis & Co.
“[…] 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.”
-Glass, Lewis & Co.
“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.”
-Glass, Lewis & Co.
“It would therefore be justifiable for shareholders who have
already lost faith in the current management team to support the
entire dissident slate.”
-Institutional Shareholder Services
“[James Barber] 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.”
-Institutional Shareholder Services
“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.”
-Institutional Shareholder Services
“We support Ancora’s plan to replace Norfolk Southern’s current
CEO Alan Shaw, whom we believe has failed to exercise a creditable
leadership during his tenure. Due to this, we strongly recommend
that shareholders support the election of Jim Barber as we believe
that his best-in-class experience in logistics and transportation
system will pave way for the Company to realign its strategies to
achieve its targets and increase business outlook.”
-Egan-Jones
“We believe that the collective skills and expertise of the
seven Ancora Nominees will provide a pathway for growth and
competent railroad services and restore public trust at the same
time.”
-Egan-Jones
Union Support:
“Mr. Barber has not only demonstrated positive relationships
with labor here, but also had direct experience driving productive
engagement with the Teamsters while COO and President of
International at UPS. In fact, the largest private sector
collective bargaining agreement in the United States is the
UPS-Teamsters National Master Agreement.”
-The Brotherhood of Locomotive Engineers and Trainmen, May 2,
2024
“Based on our discussions with Ancora director candidate and
proposed CEO Jim Barber, the BMWED Teamsters is confident that his
leadership would drive necessary changes and improvements to ensure
our Norfolk Southern members are protected and succeed on the job.
Jim has proven to us that he can build bridges and work with all
stakeholders, including labor unions, underpinning our trust in his
capabilities. Additionally, we are very confident that our members’
concerns will be appropriately and effectively addressed if Jim is
helping turn around Norfolk Southern.”
-The Brotherhood of Maintenance of Way Employes, May 2, 2024
“BLET’s three elected General Chairmen representing locomotive
engineers and trainmen at Norfolk Southern met with Ancora’s
leadership team yesterday and determined that they are the right
leaders for Norfolk Southern moving forward.
After the railroad’s CEO Alan Shaw hired COO John Orr and
following the public comments of both those executives on their
strategy for NS, our General Chairmen determined that a change at
the top is needed. Although this decision was not easy, the General
Chairmen believe it is necessary.”
-The Brotherhood of Locomotive Engineers and Trainmen, April 26,
2024
“The BMWED-IBT, after more than a year of non-committal hedging
on reasonable, needed changes and untenable shakiness in management
at Norfolk Southern, has determined that a change in leadership is
needed for the freight rail carrier and its employees.
Following yesterday’s earnings call and a reasonably
constructive meeting with a potential new leadership team, our
Brotherhood has determined that a change at the top would be the
best course of action for BMWED-IBT members.
For many months since East Palestine, the BMWED has not been
able to get assurances from the current leadership to implement
needed policy and procedural changes to prevent such tragedies from
reoccurring. At this juncture, seeing no path forward, we see no
reason to support the current administration at Norfolk
Southern.”
-The Brotherhood of Maintenance of Way Employes, April 25,
2024
Customer Support:
“We believe in shareholder activism when the activist has a plan
and knows how to execute the plan. That seems to be the case of
your current effort, and therefore you have my support… the outcome
of the proxy fight will have no impact on our customer or supplier
relationship with Norfolk Southern.”
-Cleveland-Cliffs Inc., April 27, 2024
Shareholder and Wall Street
Support:
“The status quo at Norfolk Southern will lead to continued
underperformance of the railroad. We believe Jim Barber, Jamie
Boychuk and a reconstituted board are required to drive stronger
safety, service and value creation at the Company.”
-EdgePoint Investment Group, May 1, 2024
“We believe a change in management and refreshment of the board
at NSC are warranted and could stimulate improved operations and
thus equity performance. For these reasons, we intend to support
the election of dissident nominees Betsy Atkins, James Barber, Jr.,
William Clyburn, Jr., Sameh Fahmy, John Kasich, Gilbert Lamphere,
and Allison Landry.”
-Neuberger Berman, April 5, 2024
“We see value in potential management change with Jim Barber as
CEO and Jamie Boychuck as COO as proposed by the activist investor
Ancora… especially given the historical margin underperformance of
Norfolk Southern.”
-Barclays, March 25, 2024
***
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240503600829/en/
Longacre Square Partners Greg Marose / Joe Germani, 646-386-0091
MoveNSCForward@longacresquare.com D.F. King & Co., Inc. Edward
McCarthy 212-229-2634 MoveNSCForward@dfking.com
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