Activist secures three board seats at US railroad Norfolk Southern, falls short of removing CEO

In a bold move, activist investor Ancora has secured three board seats at Norfolk Southern, one of the largest freight railroad companies in the US. The Ohio-based investor fell short of ousting CEO Alan Shaw but managed to shake up the company’s leadership in a dramatic display of shareholder discontent.

Ancora’s proxy fight aimed to install a new CEO and streamline the company’s operations by cutting costs. The investor argued that Norfolk Southern should adopt a simplified approach and reduce the number of employees and railcars to improve efficiency.

The board shake-up comes on the heels of a hazardous train derailment in East Palestine, Ohio, which raised safety concerns across the industry. Ancora’s board appointments, including a former executive from the US railway regulator, signal a partial victory for the hedge fund.

While Norfolk Southern hailed the changes as positive, independent railroad analyst Anthony Hatch noted that the company remains on notice despite Ancora’s defeat in securing a majority of board seats or removing Shaw. Critics of Ancora’s campaign warned that cost-cutting measures could leave railroads under-resourced.

The activists’ aggressive push for a comprehensive overhaul of Norfolk Southern faced backlash from industry observers, who cautioned against drastic changes. The campaign, seen as an opportunistic attack following the East Palestine disaster, drew criticism from outgoing STB chair Martin Oberman.

Veteran rail executive Henry Posner highlighted the challenges facing Norfolk Southern, including market share issues and recovery efforts post-disaster. The clash between investors and management underscores the ongoing struggle to balance short-term gains with long-term sustainability in the rail industry.