The leadership battle at US railroad Norfolk Southern (NS) has ramped up in the last week as unions, customers, and even regulators have taken sides in the company’s fight against new board member proposals from investor group Ancora.
Both sides of the proxy battle have received support from industry figures recently as the fight comes to a head this week with NS’ Annual General Meeting on 9 May where votes on all the board nominees will be tallied and key leadership figure such as CEO Alan Shaw could be ousted in favour of Ancora’s CEO nominee Jim Barber.
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This week, NS leadership touted the support of Surface Transportation Board (STB) Chairman Martin Oberman who described Ancora’s campaign to install new leadership, including a new COO, as causing “serious concerns to all rail stakeholders.”
Speaking at a North American rail conference, Oberman said that Ancora seemed to be “operating on a different planet” in regard to its proposals to decrease NS’ focus on intermodal traffic, saying that the investment firm was “unaware of changes in the railroad industry over the last 20 years” that had highlighted intermodal as the “future of growth”.
Meanwhile, Ancora has been highlighting support from two unions that represent 41.5% of NS workers, with the Brotherhood of Locomotive Engineers and Trainmen Division (BLET) Teamsters and the Brotherhood of Maintenance of Way Employees Division (BMWED) Teamsters both backing the activist investment firm.
BMWED President Tony Cardwell said that after a “reasonably constructive” meeting with Ancora’s proposed leadership team, his union had decided to support their changes.
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By GlobalDataHe said: “The BMWED-IBT, after more than a year of non-committal hedging on reasonable, needed changes and untenable shakiness in management at Norfolk Southern, has determined that a change in leadership is needed for the freight rail carrier and its employees.”
The months long battle for the future of NS has seen frequent accusations and barbs thrown between the two sides, with Ancora’s complaints about current leadership focussing on issues such as the railroad’s safety record, maximising operating and staff efficiencies, and implementing Precision Scheduled Railroading (PSR) more extremely.
On the last point in particular, Ancora has said that increasing the level of PSR used at NS would reduce the volume of trains in operation, install a timetable that “supports more predictable costs”, and lead to a reduced headcount, particularly pointing to its COO candidate’s, Jamie Boychuk, experience with the system at rival railroad CSX.
However, some industry sources such as union group the Transportation Trades Department (TTD) of AFL-CIO have warned that Ancora’s proposals would be doubling down on a “failed strategy” while Oberman said that the changes promoted by Boychuk at CSX caused “immediate and catastrophic consequences” to the industry.
