Ancora sees ‘serious governance’ issues with Norfolk Southern COO appointment

Ancora Holdings, which says it owns “a large equity stake” in Norfolk Southern, issued a statement in response to the company’s appointment of “its third COO in two years under CEO Alan Shaw,” stating in part: “The Board and Mr. Shaw put their own interests ahead of shareholders’ interests by paying $25 million and giving up part of Norfolk Southern’s long-term franchise, in the form of concessions related to the Meridian Speedway and Terminal, just to hire a COO without any experience at an Eastern railroad and whose most recent role was eliminated altogether at CPKC. Keep in mind that Norfolk Southern invested approximately $300 million for a 30% stake in the Meridian assets in 2006, suggesting the net present value of that stake is worth significantly more in 2024. The deal disclosed today allows Norfolk Southern to hire one questionable executive while permitting CPKC to leverage concessions to realize greater value from its transaction involving the Meridian & Bigbee Railroad, which it is pursuing with CSX. The deal also proceeded despite Norfolk Southern’s previous concerns about CPKC and CSX’s partnership plans. It appears the Board and Mr. Shaw struck a fool’s bargain that gets Norfolk Southern a short-term PR win while CPKC and CSX, the company’s closest peer, strengthen their partnership and competitive offerings. Based on the real and implied cost of securing Mr. Orr, who analysts and investors have told us they never heard of prior to today, the sitting directors may have signed off on one of the most expensive and overpriced hires in industry history.”