Norfolk Southern CEO Alan Shaw testifies during a Senate Commerce, Science and Transportation Committee hearing titled “Improving Rail Safety in Response to the East Palestine Derailment” in Washington , United States, March 22, 2023.
Evelyn Hockstein | Reuters
Southern Norfolk-Investment unions and pension funds should back activist Ancora’s full slate of seven directors at the railway’s shareholder meeting later this month, two different ISS proxy advisory services say said.
Taft-Hartley Advisory Services and ISS Social Advisory Services, focusing their respective recommendations on regulated unions and socially responsible investors, said in their reports, both seen by CNBC, that an Ancora majority would help address “negligence” of the current board and address “serious accountability concerns.”
“The proxy contest focuses on the debate over which management team is best suited to lead the company forward. It is therefore important to give dissenters a sufficient voice large so that their case for change of management is properly considered,” both said. the report said.
The recommendations also expressed support for Ancora’s CEO’s choice of Jim Barber as a “trusted” director and CEO, given criticism that his lack of rail experience is a responsibility. The former UPS executive “appears to be a capable candidate, with experience and skills that could transfer to the railroad industry,” reports said.
Lead advisors ISS and Glass Lewis, two proxy giants, said shareholders should back most of Ancora’s nominees at Norfolk Southern’s May 9 meeting. Glass Lewis endorsed six of Ancora’s directorial choices, including Barber.
ISS previously confirmed five of Ancora’s nominees, declining to back activist investors’ proposed CEO Barber, but noting he would also likely be a competent executives.
Thursday’s news “represents an important message to unionized retirement plans and companies that prioritize both socially responsible and value-enhancing investing,” Ancora said in a statement. announced to CNBC, adding that Ancora’s three-year strategy of building the railroad on a precise schedule “is very different from the resilience of the Norfolk Sothern railroad.” model” and has performed well at four other publicly traded Class I railroads.
So far, the proxy adviser’s endorsement has backed a clear mandate to turn around the troubled railway, which has underperformed its stock market peers. and are still grappling with the fallout from the derailment in East Palestine, Ohio.
The two more relevant ISS recommendations carry particular weight because of the derailment, which released more than 100,000 gallons of toxic chemicals into the environment, and because of the outsized influence of unions over the railroad industry.
Union support was split between management and activist investors. Two different Teamsters unions are backing the activist, about 42% of NSC’s unionized workforce. Another union coalition is backing management.
The union support is unusual for activist campaigns at the railroad, which typically focus on reducing costs and headcount to improve operating ratios, a measure of public finances. important for the railway industry.
But Ancora has managed to secure union endorsement and support from some shareholders. Neuberger Berman said previously it would support Ancora’s case for change at Norfolk Southern, while Canadian asset manager EdgePoint also reaffirmed on Thursday that it would vote its shares with the activist. this move. (EdgePoint was initially partnered with Ancora’s campaign at Norfolk Southern but dissolved that agreement several months earlier.)
Top institutional shareholders include Vanguard, BlackRock, State Street and Dodge & Cox, as well as California pension funds, CalPERS and CalSTRS, and Colorado public pension funds.
