Norfolk Southern Says Its Equity Holder Ancora Holdings Group Issued A Letter To Fellow Shareholders Regarding The Board Of Directors' Apparent Failures Of Diligence And Poor Judgment In Appointing John Orr As COO
Author: Benzinga Newsdesk | April 05, 2024 07:21am
Here are just a few of the key points about this latest failure of governance:
The Board's reactive process for hiring a COO was run from a position of weakness and did not even include a discussion with our proposed candidate, Jamie Boychuk, who helped CSX Corporation ("CSX") outperform Norfolk Southern on every key railroading metric during his tenure as EVP of Operations.
Based on Norfolk Southern's own disclosures and statements regarding the importance of the Meridian Speedway and Terminal, we estimate the undisclosed consideration paid by the Company to hire Mr. Orr as COO may far exceed the $84 million paid by CSX to hire industry legend Hunter Harrison as CEO.
In addition to depriving shareholders of the same type of vote that CSX held when it paid $84 million for Mr. Harrison, the Board and Mr. Shaw have failed to disclose all of the relevant details about Norfolk Southern's agreement with CPKC.
The Board did not aggressively search for or hire a COO with important experience at an Eastern Class I railroad, but rather one of convenience with ties to current director Claude Mongeau.
The Board did not hire a COO with expertise in Precision Scheduled Railroading ("PSR") implementations; to the contrary, one of our nominees – Sameh Fahmy – joined Kansas City Southern in 2019 as EVP of PSR to lead the successful network transformation that Mr. Orr (who joined in April 2021) erroneously claims credit for.
- Mr. Orr has been accused of abusive behavior and serious misconduct in the workplace, according to legal filings found by Ancora and interviews Ancora has conducted with executives in the industry.
- Concerns about Mr. Orr's workplace behavior at Canadian National Railway Company ("Canadian National") should have been known to the Board based on our private warning and the fact that one of Norfolk Southern's current directors, Mr. Mongeau, was CEO of Canadian National for years.
- The only industry endorsements for Mr. Orr since his appointment as COO have come from Mr. Mongeau and individuals at CPKC, which just received massive financial and strategic consideration from Norfolk Southern in exchange for Mr. Orr.
Posted In: NSC
