The control of Norfolk Southern railroad is up for grabs at its annual meeting, just over a year after a major derailment led to the release of toxic chemicals. The fight for control could determine not only the future management of the railroad but also its practices, such as the use of longer trains. Current management, credited with improving safety practices since the derailment, is facing a challenge from activist investor Ancora Holdings, who seek to make changes to improve profitability at the railroad.
The fight for control of Norfolk Southern has split the railroad’s unions, with disagreements over which management team would be best for safety and the employees. Ancora Holdings believes that the current management has failed to run a safe and profitable railroad and wants to implement changes focused on operating efficiency. PSR, a practice opposed by rail unions and customers, could see a resurgence if Ancora takes control of the railroad.
Despite initial opposition to the takeover effort, the railroad’s unions are now divided on the issue. Most of the unions support current CEO Alan Shaw and Norfolk Southern’s management, citing the efforts made to improve safety since the derailment. However, some unions believe that the changes made by the current management are taking the railroad in the wrong direction, particularly in terms of operating practices such as the use of longer trains.
Ancora has received support from some unions, including the Brotherhood of Locomotive Engineers and Trainmen, as well as the Brotherhood of Maintenance of Way Employees Division. The former UPS executive Jim Barber has been tapped to be the next CEO if Ancora wins control of the railroad. The support for Ancora comes as the unions question the current leadership’s ability to prioritize safety and make necessary changes to prevent similar incidents from occurring again.
The decision on control of Norfolk Southern will ultimately rest with shareholders, who may be dissatisfied with the company’s stock performance and financial results. Shares of Norfolk Southern have decreased since the derailment, while other major railroad companies have seen gains. Shareholder services firms Glass Lewis and ISS have endorsed the takeover effort, believing that Ancora has presented a compelling case for a substantial overhaul of the current leadership.
The outcome of the proxy fight could have far-reaching implications for the future of Norfolk Southern and the practices within the railroad industry. Both sides are making their cases for why they should control the railroad, with safety, profitability, and operating practices at the forefront of the debate. Ultimately, the shareholders will decide which direction Norfolk Southern will take and what changes may be implemented in the coming years to ensure the safety and success of the railroad.
