Less than a month after taking a billion-dollar stake in railroad Norfolk Southern Corp. (NYSE: NSC) and vowing to oust CEO Alan Shaw, activist group Ancora Holdings Group on Tuesday proposed a new slate of directors at Norfolk Southern, as well as a new CEO, former UPS Inc. executive Jim Barber.
Ancora has also proposed that Jamie Boychuk, a former executive at CSX Corp. be appointed as COO, replacing Paul Duncan.
The proposed eight-member board slate includes former Ohio Gov. John Kasich; Barber; Samet Fahmy, a former top executive at Kansas City Southern; William Clyburn Jr., a former vice chairman at the Surface Transportation Board; and Alison Landry, a longtime transportation analyst.
Ancora also has an equity stake in freight broker C.H. Robinson Worldwide Inc. and has actively agitated for change at the Eden Prairie, Minnesota-based company.
Barber, who spent nearly 40 years at UPS, a major Norfolk Southern intermodal customer, was UPS’ COO when he retired in December 2019. Barber, who sits on Robinson’s board, was also in line for the CEO job there. The position was eventually awarded to Dave Bozeman, who left a top job at Ford Motor Co. to join Robinson.
In a statement unveiling its proposals at Norfolk Southern, Ancora said the railroad has exceptional workers and a strong customer base but suffers from the board’s “poor decisions with regard to the company’s leadership, safety priorities and strategy.” The railroad is still dealing with the fallout from the East Palestine, Ohio, derailment in 2023.
Since Shaw’s appointment, the railroad’s status as the industry’s worst-performing carrier has been reinforced by industry-worst operating results, sustained share price underperformance and a tone-deaf response” to the derailment, Ancora said.
The company said it has complained for months about management’s “equal parts unambitious and impractical” strategy, only to have its concerns fall on deaf ears at the railroad.
In a note, Jason H. Seidl, analyst at Cowen & Co., said that “we believe Barber to be respected by investors in the transportation sector, though not revered within railroading given the bulk of his experience is in parcel. Regardless of the potential CEO succession, we believe an activist involved in NSC may still lead to changes that close the gap between its U.S. Class I peers.”
Seidl added that Ancora’s proposed board “is robust in our view with representation of regulators, operators, technology, and finance experts while also being a significantly diverse arrangement. Given the challenged outlook facing NSC currently, we believe it is likely that the current Board will be under pressure.” While acknowledging that Norfolk Southern’s management has “faced external shocks that exacerbated weak performance, shareholders could look past the uncontrollables in favor of a fresh slate and revised strategy,” he wrote.
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