Glass Lewis Recommends Norfolk Southern's Shareholders Vote The Blue Proxy Card "For" Six Of Ancora's Director Candidates, Including Proposed CEO Jim Barber

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A Leading Independent Proxy Advisory Firm Concludes There is a "Compelling Case for Supporting a Substantial Overhaul of the Company's Leadership"

Glass Lewis Recommends Shareholders "WITHHOLD" Support for Six Current Directors, Including Chair Amy Miles (~10-Year Board Tenure) and CEO Alan Shaw (~30-Year Company Tenure)

Glass Lewis States Proposed CEO Jim Barber and Proposed COO Jamie Boychuk "Have Compelling Credentials and Track Records"

Ancora Urges Shareholders to Take One Step Further by Electing the Full Shareholder Slate at the May 9th Annual Meeting

Ohio-based Ancora Holdings Group, LLC (collectively with its affiliates, "Ancora" or "we"), which owns a large equity stake in Norfolk Southern Corporation (NYSE:NSC) ("Norfolk Southern" or the "Company"), today announced that Glass, Lewis & Co. ("Glass Lewis"), a leading independent proxy advisory firm, recommends the Company's shareholders vote to elect six dissident nominees on the BLUE Proxy Card at the upcoming Annual Meeting of Shareholders ("Annual Meeting") on May 9, 2024. In particular, Glass Lewis recommends for the following Ancora nominees: Betsy Atkins, James Barber, Jr., William Clyburn, Jr., Sameh Fahmy, Gilbert Lamphere and Allison Landry.

Frederick D. DiSanto, Chairman and Chief Executive Officer of Ancora, and James Chadwick, President of Ancora Alternatives LLC, commented:

"We appreciate that Glass Lewis has conducted an extremely thoughtful and thorough analysis of Norfolk Southern, resulting in a recommendation for six of our unaffiliated and qualified director candidates, including proposed CEO Jim Barber. Glass Lewis affirms our view that several tenured insiders, including Chair Amy Miles, Director Claude Mongeau and CEO Alan Shaw, should be immediately replaced due to their apparent responsibility for sustained underperformance. Additionally, the firm's report accurately diagnoses that the Board and Mr. Shaw are committed to an unproven strategy ‘that relies on inherently incompatible railroading concepts.' Lastly, the report highlights the Board's recent string of reactive moves, including the decision to provide financial and strategic consideration to a competitor – without a shareholder vote – in order to hire an operating executive during a contest. Although we believe the only way to ensure a change in CEO and shift in strategy is to elect our full slate, this recommendation from Glass Lewis sends an important message to shareholders about the urgent need for changes in leadership and strategy at Norfolk Southern."

In its report, Glass Lewis noted the following regarding the need for change at Norfolk Southern:1

  • "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."
  • "Based on our review, we believe the operating performance of the Company has been consistently worse than its peers for an extended period."
  • "We are also inclined to agree with Ancora's critique of the Company's current operating strategy as being one that relies on inherently incompatible railroading concepts."
  • "[I]t's not readily evident to us the Company's current leadership had built up a sufficiently positive track record such that investors might reasonably have the patience to allow management to implement a relatively novel operating strategy."
  • "[T]he Company's hiring of Mr. Orr has understandably raised more than a few eyebrows for several reasons. In order to hire Mr. Orr away from CPKC, the Company had to pay CPKC $25 million in cash and provide certain commercial and operational considerations related to the Meridian Speedway (which the Company operates with CPKC) and the Meridian Terminal."
  • [Hunter Harrison's] reimbursement arrangement was put to a vote and approved by CSX shareholders. The Company did not put the buyout arrangement to a shareholder vote prior to formally hiring Mr. Orr.
  • "The fact that multiple labor unions have now taken the relatively extraordinary step of publicly supporting an activist hedge fund in Ancora seemingly belies the Company's narrative of having strong support among its stakeholders and raises further questions regarding the ability of the current management team to improve its relationship with the Company's workforce."

In its report, Glass Lewis noted the following regarding the dissident slate's proposed strategy and management team:2

  • "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."
  • "We also believe that Ancora's candidates for the Company's top executive roles – James Barber, Jr. as CEO and Jamie Boychuk as COO – have compelling credentials and track records."
  • "[…] Ancora maintains that Mr. Barber's experience is highly relevant given that UPS and Norfolk Southern are transportation network businesses with many similar characteristics. It's also worth noting that CSX's current CEO, Joseph R. Hinrichs, had a professional background primarily in the automotive industry – specifically, having held various leadership roles at Ford Motor Company – prior to joining CSX in 2022. Thus, there appears to us to be a very recent precedent for a railroad firm to look outside the industry to fill their top executive role."
  • "Based on FRA data, we observe that CSX generally had lower rates of reported train accidents and injuries than the Company during Mr. Boychuk's tenure at CSX (from 2017 to 2023). Overall, we believe Mr. Boychuk is a credible and capable candidate to serve as the Company's COO and lead Ancora's proposed PSR strategy for the Company."
  • "According to a recent anonymous shipper survey conducted by equity research firm Stephens Inc., a vast majority of survey respondents expressed negative sentiment for Ancora's plan and positive sentiment for the Company's plan. However, 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."
  • Further, considering that railroad safety is currently at the forefront of the minds of various key stakeholders, we believe a "slash-and-burn" approach would likely be untenable […] Ancora likely understands this line of thinking, as it has not called for any draconian cost cuts and, instead, has made safety a stated priority."
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