An overview of the exterior of Norfolk Southern’s headquarters in Atlanta, Georgia, April 1, 2023.
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south norfolk It’s been almost two months since the battle began with activist investor Ancora, which is trying to shake up the railway’s board and oust CEO Alan Shaw.
The company is now targeting Norfolk Southern’s new executive director, John Orr, over what the activist calls an “excessive” acquisition plan and a career marred by allegations of racism and sexism. It has established.
Last month, Norfolk Southern University plucked Orr from rival CPKC, paying him tens of millions of dollars and releasing him from his contract. The move was widely seen as a response to criticism of Ancora’s management and was praised by several Wall Street analysts.
in Letter to Norfolk Southern Shareholders On Friday, Mr. Ancora highlighted Mr. Orr’s past misconduct, raising questions about his hiring even though the executive has overseen improvements to the railroad’s operations in his three weeks on the job.
Ancora has documented both alleged and substantiated workplace misconduct dating back to Mr. Orr’s time as a mid-level executive at Canadian National. A Canadian Arbitration Commission appointee substantiated allegations that Mr. Orr had verbally abused a female employee in the early 2000s.
The employee and another witness told an employment tribunal at the time that Mr Orr regularly abused and yelled at employees, calling them “fuck you, damn you” and “fuck you”. fool. ” Witnesses told the arbitrator that there were instances in which Ms. Orr told employees that she was “so stupid and embarrassed.”
The arbitrator found that claim to be credible.
Mr. Ancora also flagged a lawsuit filed in 2019 by a Black executive who described Mr. Orr’s treatment of employees and subordinates as “terrible.” The lawsuit was brought against a Canadian citizen alleging racial discrimination.
Orr’s behavior was “so egregious” that Canada National was forced to provide him with executive coaching, according to a lawsuit filed in 2020. Orr’s deposition was sealed and the lawsuit was settled in 2022.
Before Orr’s hiring was announced, Ancora drew attention to allegations about Orr’s conduct in an email to two Norfolk Southern board members obtained by CNBC.
Ancora said in a statement Friday that hiring Mr. Orr was an expensive offer that would harm shareholders. As part of the agreement, Norfolk Southern announced it would pay Mr. Orr’s former employer $25 million in cash and provide unspecified additional concessions on major rail hubs and lines in the southern United States. The income is evaluated at approximately 1% of the road price.
In announcing Orr’s hiring, Norfolk Southern did not disclose the initial impact of the concession or the expected ramifications in the coming years.
“Flawed premise”
Norfolk Southern Railway told CNBC in a statement that Ancora’s analysis of the value of the route, known as the Meridian Speedway Agreement, is “based on completely inaccurate and flawed assumptions.” I said this in that it assumes you are giving up more revenue than you actually are.
“As we have previously stated, this revised agreement is by no means a consequential concession,” the company said.
Mr. Ancora is seeking to oust Mr. Shaw from Norfolk Southern along with Mr. Orr in favor of former UPS CEO Jim Barber and former CSX executive vice president Jamie Boychuk, respectively. Activists say Norfolk Southern University is far below its peers and place the blame for that at the feet of Shaw and the board of directors.
Norfolk Southern said Orr has a “track record of driving business results while operating safely and with integrity.”
A company spokesperson said: “Ancora is attempting to defame John by fabricating allegations against his former employers, one of which is over 20 years old. “This is nothing more than an attempt to distract from the facts regarding one COO candidate, Jamie Boychuk.” he told CNBC. “Mr. Orr’s and Mr. Boychuk’s track records and industry reputations are simply incomparable.”
Jamie Boychuk and John Orr.
Courtesy: Longacre Square Partners and Norfolk South
Norfolk Southern’s general meeting of shareholders is scheduled for May 9th.
Ancora has the support of other stakeholders in its fight against the company. Neuberger Berman, which holds a small position in southern Norfolk, said Friday it supports Mr. Ancora’s position, citing the railroad’s “long history of poor governance” that preceded its transformation efforts.
Gordon Haskett analyst Don Bilson said in a note to clients on Friday that a settlement between the two parties is unlikely. Mr. Shaw previously told CNBC that the company offered Mr. Ancora “some” board seats in the settlement.
Ancora told CNBC he has made repeated attempts to reach a settlement with the company, both directly and through advisors. From Ancora’s perspective, any settlement would be conditional on a shake-up of the board and the removal of Shaw. The board has repeatedly expressed confidence in Shaw, who has said he is not interested in a settlement that would lead to his departure.