Norfolk Southern Corp. on Wednesday defended the composition of its board of directors and did not address the fate of CEO Alan Shaw, who is the subject of an activist group’s efforts to remove him and replace him with Jim Barber, a former top UPS Inc. executive.
In a lengthy letter to shareholders, the Atlanta-based Eastern railroad (NYSE: NSC) said that it has maintained an “ongoing process” of board refreshment, noting that six directors have been appointed to the board over the past five years.
There will be more turnover this spring, when two directors, Mitchell Daniels Jr. and Michael Lockhart, retire following Norfolk Southern’s annual meeting, which has not been officially scheduled but is expected to take place in May.
On Tuesday, Ancora Group Holdings, which has amassed a $1 billion stake in the railroad and has agitated for change at the board and top management, proposed a fresh eight-person slate of directors. It proposed that Barber, who retired from UPS in December 2019 as its COO, be chosen to replace Shaw. Ancora has also proposed that Jamie Boychuk, a former top executive at CSX Corp., be appointed as COO, replacing Paul Duncan.
“Since receiving Ancora’s nominations, members of both the board and management team have held multiple discussions with representatives of Ancora to better understand their views and communicate Norfolk Southern’s perspectives on the execution of our strategy,” the Norfolk Southern letter stated.
The railroad said that its board is “composed of highly qualified, independent directors” who bring “expertise in areas relevant to our business.”
Norfolk Southern said it appointed current directors Christopher Jones as chair of its Safety Committee, succeeding Lockhart; and Jennifer Scanlon as chair of the Governance and Nominating Committee, succeeding Daniels. Jones’ appointment became effective Sept. 1, 2023, and Scanlon’s will become effective at or before Daniels’ retirement.
The railroad said that it grew its intermodal business, its most service-sensitive segment, by 5% year over year in the fourth quarter of 2023. “We also significantly improved train velocity and dwell [time] in the fourth quarter [of] 2023, with both metrics reaching their best levels in several years. We achieved these improvements despite the network disruptions we experienced last year,” the letter stated.
It said that the board “regularly evaluates its composition and will continue its careful review of Ancora’s nominees with a focus on advancing our goal of building the safe, reliable, and resilient railroad our customers and shareholders expect.” The board said it will present its formal recommendation on the nominees in the company’s definitive proxy statement, which will be filed with the Securities and Exchange Commission and mailed to all shareholders eligible to vote at the 2024 annual meeting.