Cleveland-Cliffs Backs Ancora in Norfolk Southern Fight
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Cleveland-Cliffs Inc., a major customer of Norfolk Southern Corp., has backed activist investor Ancora Holdings Group in its effort to overhaul the board of the railway company.
The U.S. steel producer is supporting Ancora’s campaign to have seven directors and a new CEO installed at Norfolk Southern, according to a letter seen by Bloomberg News.
“We believe in shareholder activism when the activist has a plan and knows how to execute the plan,” Lourenco Goncalves, CEO of Cleveland-Cliffs, wrote in the letter to Ancora.
Goncalves said the outcome of the proxy fight will have no impact on its customer or supplier relationship with Norfolk Southern.
A Better Way: We're charting a new course in the industry, driving long-term value creation through our strategy to build a more resilient railroad by balancing safe service, productivity, and smart growth.
🔗 See how at https://t.co/Qr2PDISodJ. pic.twitter.com/y8AYHYsvVE — Norfolk Southern (@nscorp) April 26, 2024
Norfolk Southern CEO Alan Shaw has been leading an effort among railroads to improve customer and union relationships after several years of heavy cost-cutting that increased profit margins but resulted in spotty service and disgruntled workers.
Those plans to keep a buffer of workers during a freight downturn with the goal of maintaining service when volume rebounded were derailed by the crash of a train carrying chemicals in East Palestine, Ohio, in February 2023.
Ancora has proposed Jim Barber, the ex-chief operating officer of UPS Inc., to replace Shaw as CEO of Norfolk Southern. The activist investor also received backing this month from the BLET Teamsters and BMWED Teamsters, which together represent about half of Norfolk Southern’s unionized workforce.
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A spokesperson for Norfolk Southern said the company had partnered with its customers to make “significant progress to deliver enhanced service while creating a safer, more productive railroad.” The spokesperson said an independent survey found that 86% of its rail customers supported the company’s plans, and that 91% saw Ancora’s strategy as risky.
A representative for Ancora said it is “disingenuous for Norfolk Southern to rely on an anonymized, small-scale survey.” A spokesperson for Cleveland-Cliffs didn’t immediately provide comment.
Shares in Norfolk Southern have risen just over 1.5% this year, giving the company a market value of roughly $54.2 billion.
