An investor group led by Ancora Holdings has acquired a substantial stake of approximately $1 billion in Norfolk Southern (NYSE:NSC) and has put forth a majority slate of directors with the aim of removing CEO Alan Shaw, as reported by the Wall Street Journal.
The nominated directors include former Ohio Governor John Kasich and Sameh Fahmy, a former executive at Kansas City Southern (NYSE:KSU). In recent weeks, Norfolk Southern, one of North America’s top-five largest railroad operators by revenue, engaged with the investor group. The nominated directors have raised concerns about the company’s handling of a train derailment last year and their perception of Shaw’s failure to meet operating targets. The incident involved a Norfolk train derailing near East Palestine, Ohio, causing a temporary evacuation of residents.
Norfolk Southern’s fourth-quarter profit, reported last week, fell below analysts’ expectations due to lower revenue in merchandise, intermodal, and coal businesses. Hedge funds Sachem Head Capital Management and D.E. Shaw have also been increasing their stakes in Norfolk Southern. The freight railroad industry has been operating in a low-volume environment due to changes in U.S. consumer spending post-pandemic, coupled with global shipping delays shifting from goods to services.