Ancora Issues Letter to Norfolk Southern’s Board to Refute False and Unsupported Claims, Including Those Regarding Railway Labor Act Violations and “Vote Buying” from Labor
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Members of the Board,
Ancora owns a meaningful equity stake in
Public Support for Ancora’s Full Slate from Multiple Unions
It’s been inaccurate when
BLET:
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General Chairmen of theBrotherhood of Locomotive Engineers and Trainmen , Representing Members atNorfolk Southern , Address CEOAlan Shaw’s “Unfounded and Desperate” Attacks on Labor Discussions (May 2, 2024 – Link Here)
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The
Brotherhood of Locomotive Engineers and Trainmen , an Affiliate of theInternational Brotherhood of Teamsters , Calls for New Leadership atNorfolk Southern (April 26, 2024 – Link Here)
BMWED:
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The BMWED Teamsters Reiterates Support for
Jim Barber atNorfolk Southern (May 2, 2024 – Link Here)
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The
Brotherhood of Maintenance ofWay Employes Division of the International Brotherhood of Teamsters Determines that a Change in Leadership is Needed AtNorfolk Southern (April 25, 2024 – Link Here)
Facts Regarding the Ancora Nominees’ Appropriate Engagement with Unions
When
- The parties are completely confident that they are in compliance with applicable law, including the Railway Labor Act.
- The parties aligned on memoranda that list concepts and principles for improving the treatment of workers, including as a result of enhanced training, improved safety and better quality of life.
- The memoranda contemplate points of alignment that would only go into effect if the Company and the unions agreed to implement them after the contest, including following a customary process to negotiate and reach agreement on definitive terms.
- Norfolk Southern’s own counsel wrote to Ancora and acknowledged that memoranda among the parties were not binding on the Company.
Response to Additional False and Unsupported Claims
Although election contests are hard fought, it’s disappointing to see some of you resorting to what we believe to be outright lies (as laid out below). Ignoring the truth could have serious ramifications beyond the scope of the situation. It needs to stop.
In the media and throughout a recent
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East Palestine – You say the “East Palestine incident was not due to bad management or inattention to safety,”2 while the reality is theNational Transportation Safety Board concluded the derailment was “100% preventable” and that the Company’s people on the ground “lacked the scientific background” to recommend what has been deemed an unnecessary toxic chemical burn.3
- Management’s Commitments – You say “[w]e make promises and we’ve continued to keep our promises […].”4 In reality, you have presided over an industry-worst Trip Plan Compliance rate that significantly lags the government’s 82% target, meaning on-time delivery commitments to many customers aren’t met. Additionally, you have overseen six straight quarters of misses on consensus EBIT, meaning the expectations of the financial community aren’t met. You also have union leaders making statements about how your “failure to adequately address significant safety and operations concerns raised by BMWED and others has seriously undermined the railroad.”5
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Settlement Discussions – You say when it is convenient that Ancora will only settle for control.6 The reality is we have repeatedly stated a desire to settle for minority change of the Board and an orderly CEO transition, which appears inevitable at this point given fading confidence in
Mr. Shaw .7Mr. Shaw also continues to conflate a CEO transition with majority representation on the Board when talking about settlements. When we made all of our unaffiliated nominees available for interviews prior to proxies being filed, it was the Board that showed no real desire to settle by interviewing each candidate once for between 20 minutes to 30 minutes at a time.
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Shipper Sentiment –
Mr. Shaw says 80% of customers may leave due to our slate’s plan. In reality, you are exploiting an anonymized and opaque survey put together by a friendly firm.8 The survey has been best addressed by a leading independent proxy advisor, who notes “in the absence of further information and a more comprehensive breakdown of the total number of shippers and the types of shippers who were surveyed, we are hesitant about putting much, if any, stock into the results of that survey.”9 You also fail to acknowledge that Cleveland-Cliffs Inc., perhaps Norfolk Southern’s largest customer on a revenue basis, has publicly supported our slate.
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Director
Claude Mongeau – Your promotion of Mr. Mongeau’s purported expertise in governance, regulatory affairs and risk management lacks foundational support.10 With regard to governance, he is a champion of the costly and poorly-disclosed deal withCanadian Pacific Kansas City Limited to acquire new COOJohn Orr – without a shareholder vote – during an election contest.11 Reports from leading independent proxy advisors detail the governance issues, including insufficient disclosure, associated with the Board’s deal to obtainMr. Orr , who is Mr. Mongeau’s former underling.12 Although it is curiously omitted from his campaign-related biographies,Mr. Mongeau is also a former long-term director of AtkinsRéalis (f/k/a SNC-Lavalin Group Inc.), the parent of the supposedly independent safety consultant –Atkins Nuclear Secured – retained by the Company following theEast Palestine disaster.13 The Company appears to want to obscure this, even thoughMr. Mongeau serves on the Board’s Safety Committee, which is involved in the relationship. In multiple forms of engagement with Ancora and our nominees,Mr. Mongeau demonstrated an inability to maintain a collegial and professional demeanor, indicating his continuing presence on the Board may be disruptive to incumbents and new members.
With respect to regulatory matters and risk mitigation, it is notable thatMr. Mongeau is Chair of theHuman Resources Committee and a member of the Corporate Governance Committee at TD Bank, which is reportedly being probed by theU.S. Department of Justice and other regulators due to the bank’s failure to detect money laundering.14 SinceMr. Mongeau became a director in 2015, TD Bank’s board of directors has encountered a number of high-profile regulatory and legal issues stemming from the bank’s apparent failure to maintain a culture of compliance and mitigate money laundering risks.15
A railroad with so many regulatory and legal issues of its own, likeNorfolk Southern , can do better when it comes to populating its boardroom.
In light of the foregoing points, we hope the several members of the Board who are credible, effectively experienced and open-minded guide the Company to accommodate our multiple requests to cease making false and unsupported claims. Our unaffiliated nominees look forward to moving past this contest and partnering with those of you who continue to serve to do what is best for
Sincerely,
Chairman and Chief Executive Officer
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President
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About Ancora
Founded in 2003,
Advisors
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The information herein contains “forward-looking statements.” Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as “may,” “will,” “expects,” “intends,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “potential,” “targets,” “forecasts,” “seeks,” “could,” “should” or the negative of such terms or other variations on such terms or comparable terminology. Similarly, statements that describe our objectives, plans or goals are forward-looking. Forward-looking statements relate to future events or future performance and involve known and unknown risks, uncertainties, and other factors that may cause actual results, levels of activity, performance or achievements or those of the industry to be materially different from those expressed or implied by any forward-looking statements.
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
The participants in the proxy solicitation are
Ancora Alternatives and the other Participants have filed a definitive proxy statement and accompanying BLUE proxy card (the “Definitive Proxy Statement”) with the
IMPORTANT INFORMATION AND WHERE TO FIND IT
ANCORA ALTERNATIVES STRONGLY ADVISES ALL SHAREHOLDERS OF NORFOLK SOUTHERN TO READ THE DEFINITIVE PROXY STATEMENT, ANY AMENDMENTS OR SUPPLEMENTS TO SUCH DEFINITIVE PROXY STATEMENT, AND OTHER PROXY MATERIALS FILED BY ANCORA ALTERNATIVES AS THEY CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS ARE AVAILABLE AT NO CHARGE ON THE SEC’S WEBSITE AT WWW.SEC.GOV AND AT ANCORA ALTERNATIVE’S WEBSITE AT WWW.MOVENSCFORWARD.COM. THE DEFINITIVE PROXY STATEMENT AND ACCOMPANYING PROXY CARD WILL BE FURNISHED TO SOME OR ALL OF THE COMPANY’S SHAREHOLDERS. SHAREHOLDERS MAY ALSO DIRECT A REQUEST TO THE PARTICIPANTS’ PROXY SOLICITOR,
Information about the Participants and a description of their direct or indirect interests by security holdings or otherwise can be found in the Definitive Proxy Statement.
1 See Trains.com article entitled, “NS says activist investor violated Railway Labor Act by negotiating deal with engineers’ union (updated),” dated
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3 See public statements from National Transportation Safety Board Chair Jennifer L. Homendy.
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5 See press release from the BMWED issued on
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7 See Ancora disclosures from
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9 See
10 See Norfolk Southern’s proxy statement.
11 See
12 See
13 See Norfolk Southern’s proxy statement and website, and Atkins Nuclear Secured’s initial report dated
14 See
15 See press release from TD Bank issued on
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MoveNSCForward@longacresquare.com
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