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By Stephanie Elverd
Special to The Times
EAST PALESTINE - As revitalization and remediation efforts continue in East Palestine in the wake of last year's Norfolk Southern train derailment, so does the setting of the stage for an attempted company takeover at the shareholder meeting set for May 9.
An activist investor group led by Ancora Holdings and the embattled board of the railroad are now months into a proxy battle which began in January when the Ohio-based group took a $1 billion stake in the railroad and began a bid to oust CEO Alan Shaw by nominating new majority directors. Those nominations included transportation network leader Jim Barber Jr. as chief executive officer and lifelong railroad operator Jamie Boychuk as chief operating officer. Former Ohio Gov. John Kasich was also among the nominees.
On Friday, Ancora shared a letter it sent to fellow shareholders, taking aim at Norfolk Southern's appointment of John Orr last month as the company's executive vice president and chief operating officer.
Orr was lauded by NS when announced as the COO, with the railroad noting his "turnaround of Canadian Pacific Kansas City's Mexico operations" and the role he played in the "improvements in Canadian National Railway's safety and operational performance."
Ancora wasn't as impressed with Orr's resume.
"We all want a safer, more reliable and higher-performing railroad with a substantially greater share price. Unfortunately, the board and CEO Alan Shaw continue to take actions that place their self-preservation ahead of our shared goal," Ancora's letter read. "The most recent example of this is their decision to enter into a costly and opaque agreement to extricate John Orr from Canadian Pacific Kansas City Limited and make him the third COO in two-and-a-half years under Mr. Shaw."
In the letter, Ancora reiterated its criticism of Orr's appointment and repeated accusations of "abusive behavior and serious misconduct in the workplace." Ancora detailed the reported misconduct, alleging Orr was verbally abusive toward a female employee in the early 2000s while he was a mid-level executive at Canadian National.
"Mr. Orr denied the verbal abuse allegations, but the adjudicator found that evidence of verbal abuse by Mr. Orr was credible," the letter stated.
Ancoara also mentioned a 2019 lawsuit filed against Canadian National by an employee that made a claim of racial discrimination. It was ultimately settled.
Ancora also lambasted Norfolk Southern over what it called Orr's "weak credentials" and accused the railroad of engaging in a process that "deliberately excluded highly qualified COO candidates" and paying an excessive "undisclosed consideration" that included costly concessions to CPKC in a hushed deal to "to hire an individual whose most recent role at CPKC was just eliminated altogether."
Ancora's letter alleges that Norfolk Southern agreed to pay $25 million in cash and give up part of the company's interest in a line of track that runs west from Meridian, Mississippi, to Shreveport, Louisiana and is known as the Kansas City Southern-Norfolk Southern Meridian Speedway. Ancora said Norfolk Southern invested approximately $300 million for a 30% stake in the Meridian assets in 2006.
"Granting the cash and undisclosed concessions to a competitor essentially allows Norfolk Southern to hire a single executive with questionable qualifications while permitting CPKC to leverage the concessions according to its own plans," Ancora charged.
Ancora's letter also accused Norfolk Southern of throwing former COO Paul Duncan "under the bus" after "ardently defending" Duncan.
Ancora's inflammatory letter comes days after the company urged shareholders to "vote for only Norfolk Southern's 13 Nominees" in a 12-page letter. Norfolk Southern defended Orr and denied any connection between his appointment and the railroad's Meridian assets.
"It is clear that despite Ancoraás statements to the contrary, John Orr is well known as an effective and successful operator," Norfolk Southern stated. "In addition to their misleading claims on Orr's background, Ancora has made highly inaccurate claims regarding our agreement with CPKC in connection with appointing Orr, and the considerations related to the Meridian Speedway and the Meridian Terminal."
Norfolk Southern also dismissed Ancora's proposed plans as nothing more than a "slash and burn" strategy and praised Shaw for his response to the derailment.
"Alan again proved his leadership following the East Palestine derailment by supporting the needs of the community while protecting the franchise and shareholders," the company stated. "With the support of the board,
Alan accelerated investments in safety and made fundamental changes to our operating processes.
These investments enhanced our position to deliver long-term growth, and are driving industry-leading safety results and garnering strong support from our customers, regulators and union leaders."
The Brotherhood of Locomotive Engineers and Trainmen threw their support behind Shaw in February as the proxy battle began to heat up.
Ancora, on the other hand, has called Shaw's response to the rail disaster "tone deaf" and in a previous statement said, as an Ohio-based company, Ancoara has "loved ones and family who have been directly impacted by the tragedy in East Palestine, Ohio , meaning this campaign is about much more than financial returns to Ancora."