Norfolk Southern appoints new board members to block activist

Norfolk Southern (NYSE:NSC) is taking steps against an activist investor by appointing two new appointees to its 13-member board.

The railroad operator has filed preliminary proxy materials with the U.S. SEC to appoint former CEO of Amtrak and Delta Air Lines (DAL) Richard Anderson and former U.S. Senator Mary Kathryn “Heidi” Heitkamp. The new board members are in response to efforts by Ancora Holdings to replace the current board and appoint a new CEO and COO.

"As a board, our priority is ensuring we have the right composition to guide Norfolk Southern...our focus on meaningful refreshment--evidenced by the two new directors added in 2023 and new new nominees presented for the 2024 annual meeting -- reflects these strategic priorities and our commitment to strong governance and oversight," the company said in today's filing.

Ancora has accumulated a $1B stake in Norfolk Southern (NSC) and has been actively seeking to not only replace the board, but to oust the company’s current CEO Alan Shaw with former UPS COO Jim Barber as CEO and former CSX vice president of operations Jamie Boychuk as COO. Boychuk left CSX in August and is still under a non-compete agreement with his former company.

The company has been plagued by lawsuits and regulatory scrutiny following a catastrophic derailment in East Palestine, Ohio last February, which was followed less than a month later by a second derailment in Ohio. The company’s CEO appeared before Congress to answer questions about the accident and paid $21M to the more than 4,000 families impacted by the toxic spill. The company still faces a 58-count civil lawsuit by the Ohio Attorney General’s office which is currently pending the findings from the National Transportation Safety Board.

"Since Mr. Shaw and his boardroom allies have no credible plan and no viable record to run on, it makes sense that they would initiate a weak and reactionary refresh," a spokesperson from an Ancora-led group told Seeking Alpha.

Norfolk Southern (NSC) shares are fractionally higher at Monday’s open.