Jim Barber, Former UPS COO and Member of Ancora’s Slate, Sends Letter to Norfolk Southern Shareholders Ahead of May 9th Annual Meeting
Delivers Final Thoughts on the Opportunity for a Lasting Turnaround and Significant Value Creation
Thanks Shareholders for Their Consideration and Time in Recent Weeks
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Norfolk Southern Shareholder,
I appreciate that many of you are evaluating what my colleagues and I have said in recent weeks about moving
When Ancora approached me in 2023 about serving as a proposed director and its suggested CEO, I spent a lot of time independently analyzing
In terms of what our slate wants to deliver, it starts with a culture of accountability, integrity, safety, sustainability and teamwork – all of which underpin highly-efficient and service-oriented logistics companies. These priorities are core to our three-year strategy for initiating a network redesign and implementing true Precision Scheduled Railroading (“PSR”). This strategy, which is distinct from Norfolk Southern’s resilience model, involves laying a foundation that positions proven operators to deliver quantifiable improvements in three primary areas:
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Service – Transitioning to a true scheduled network will dramatically increase on-time delivery for customers, leading to more trust and more high-margin revenue over time. The Company’s Merchandise Trip Plan Compliance has dramatically underperformed the Surface Transportation Board’s 82% compliance target for years. This weak service has nothing to do with the
East Palestine derailment, but rather maintaining a poorly designed network with excess assets and lax scheduling. Fortunately, our strategy provides a roadmap for getting Trip Plan Compliance well above the federal compliance target in the coming quarters.
- Safety – A true scheduled network will allow Norfolk Southern’s most valued asset, its people, to return home in the same condition they report to work in while also reducing catastrophic incidents that absorb shareholder capital and hinder the brand. In terms of KPIs, we will target a decline in severe derailments and a reduction in the number of reported accidents relative to total network activity. Although accidents periodically occur, Norfolk Southern’s current resilience model has led to the industry’s most costly and severe derailments over the past two-and-a-half years. Safety isn’t a buzzword to me, but an output of tangible policies that are deeply ingrained in an organization. Our strategy accounts for concrete initiatives that will cut down on train switches, decrease dangerous train congestion, and reduce burnout and hours unpredictability.
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Shareholder Value – I am a true believer that the organization with the best network wins for all constituents. With our scheduled network in place,
Norfolk Southern will have a transparent path to balancing service and safety enhancements with operating ratio and share price improvements. A redesigned network powered by PSR will benefit from a permanent reduction in assets, delays and touch points. As assets come out of the network, we will rely on annual attrition (not job cuts or furloughs) to right size our workforce. All of this should ultimately translate to approximately$1.1 billion in annualized savings and an operating ratio in the mid-to-high 50s.
When we first hit the road in this campaign, it was clear some of the Company’s constituencies would need to be convinced about what our slate brings to the table. After all, it’s not enough to diagnose problems and speak in broad terms about solutions. On a personal level, one of the most rewarding parts of this contest has been earning the belief of the
Thank you again for your consideration and time, and we will reward you and all the constituents for a vote of confidence in us. We look forward to delivering the best results possible for you.
Sincerely,
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Proxy Advisory Firm Support:
“Having given due consideration to the arguments presented by each side, we believe Ancora has presented a compelling case for supporting a substantial overhaul of the Company's current leadership.”
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“[…] Ancora’s candidates for the Company's top executive roles –
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“Investors who support Ancora’s campaign will likely view the initial focus on a PSR-driven network redesign as a positive first step, as a successful redesign could yield improved asset utilization and greater efficiencies, thereby contributing to increased shareholder value.”
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“It would therefore be justifiable for shareholders who have already lost faith in the current management team to support the entire dissident slate.”
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“[James Barber] appears to be a capable candidate with experience and skills that should be transferable to the railroad industry, which makes him a credible director and CEO candidate.”
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“It is important to recognize that the dissident has also articulated a plan that appears logical (the underlying model has been implemented successfully at other Class I railroads), and has assembled a credible management team that features a COO with proven experience.”
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“We support Ancora’s plan to replace Norfolk Southern’s current CEO
-Egan-Jones
“We believe that the collective skills and expertise of the seven Ancora Nominees will provide a pathway for growth and competent railroad services and restore public trust at the same time.”
-Egan-Jones
Union Support:
“Mr. Barber has not only demonstrated positive relationships with labor here, but also had direct experience driving productive engagement with the
-The
“Based on our discussions with Ancora director candidate and proposed CEO
-The
“BLET’s three elected
After the railroad’s CEO
-The
“The BMWED-IBT, after more than a year of non-committal hedging on reasonable, needed changes and untenable shakiness in management at
Following yesterday’s earnings call and a reasonably constructive meeting with a potential new leadership team, our Brotherhood has determined that a change at the top would be the best course of action for BMWED-IBT members.
For many months since
-The
Customer Support :
“We believe in shareholder activism when the activist has a plan and knows how to execute the plan. That seems to be the case of your current effort, and therefore you have my support… the outcome of the proxy fight will have no impact on our customer or supplier relationship with Norfolk Southern.”
-Cleveland-Cliffs Inc.,
Shareholder and Wall Street Support :
“The status quo at
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“We believe a change in management and refreshment of the board at NSC are warranted and could stimulate improved operations and thus equity performance. For these reasons, we intend to support the election of dissident nominees
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“We see value in potential management change with
-Barclays,
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About Ancora
Founded in 2003,
Advisors
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MoveNSCForward@longacresquare.com
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