NS names new COO as proxy fight continues
Activist investors set goal of 57% operating ratio, plan full-fledged PSR approach
WITH A MAY 9 SHAREHOLDER VOTE looming, Norfolk Southern and activist investor Ancora Holdings sought to win support for their dueling visions of the railroad’s future.
Ancora has been critical of the railroad’s lagging financial and operational performance, as well as its response to the Feb. 3, 2023, hazardous materials wreck in East Palestine, Ohio. Cleveland-based Ancora wants to gain control of the NS board, replace CEO Alan Shaw with former UPS executive Jim Barber Jr., and name former CSX operations boss Jamie Boychuk as chief operating officer.
In a March letter to shareholders, Ancora said its plan to fully implement the low-cost Precision Scheduled Railroading operating model at NS would cut costs, focus on the most profitable merchandise traffic, and produce a 57% operating ratio within three years. That would be a 10.4-point improvement over NS’s 2023 operating ratio.
NS on March 20 named Canadian Pacific Kansas City Operations Executive John Orr as its chief operating officer. Orr brings Precision Scheduled Railroading operating experience, something that’s coveted on Wall Street. He previously served as senior vice president and chief transportation officer at Canadian National.
In a bid to shore up investor support, NS in April pruned its intermodal network and made the operating ratio a key component of its executive compensation plans. NS eliminated 53 low-volume intermodal lanes — or 15% of its intermodal network — that had limited growth prospects. The railroad did not say how much volume would be lost. The railroad aims for a sub-60% operating ratio within three or four years.
Analysts expected NS and Ancora to reach a settlement before the annual meeting. — Bill Stephens