A panoramic view of the exterior of the Norfolk Southern Airlines headquarters in Atlanta, Georgia, on April 1, 2023.
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norfolk southern airways The battle with activist investor Ancora, which is trying to shake up the railroad’s board and oust chief executive Alan Shaw, has been going on for nearly two months.
Now the company is pointing the finger at Norfolk Southern’s new operating chief, John Orr, for what the campaigner calls an “excessive” acquisition program marred by accusations of racial and gender discrimination. career.
Last month, Norfolk Southern poached Orr from rival CPKC and paid tens of millions of dollars to release him from his contract. The move was widely seen as a response to criticism of Ancora’s operations and drew praise from several Wall Street analysts.
in a Letter to Norfolk Southern Shareholders Ancora on Friday highlighted Orr’s past misconduct, raising questions about his hiring even as the executive oversaw improvements to rail operations within three weeks of taking the job.
Ancora documented Orr’s alleged and substantiated workplace misconduct dating back to his time as a mid-level manager at Canadian National. A Canadian Arbitration Commission appointee confirmed allegations that Orr used abusive language toward a female employee in the early 2000s.
The employee and another witness told the employment tribunal at the time that Orr regularly cursed and shouted at the employee, calling her a “f—— b—-” and “f–” – —-“Fool. A witness told the arbitrator that Orr once told the employee she was “so stupid and so embarrassing.”
The arbitrator found the claims credible.
Ancora also pointed to a 2019 lawsuit filed by a black executive that said Orr treated employees and subordinates “terribly.” The lawsuit was filed against the National Party of Canada, alleging racial discrimination.
According to documents filed in the 2020 lawsuit, Orr’s conduct was allegedly “so bad” that the Canadian Nationals were forced to provide him with executive coaching. Orr’s testimony was sealed and the case was settled in 2022.
Allegations about Orr’s behavior in emails Ancora sent to two Norfolk Southern board members and obtained by CNBC raised concerns before Orr’s hiring was announced.
Ancora said in a statement Friday that hiring Orr was a costly proposition that harmed shareholders. As part of the agreement, Norfolk Southern said it would pay Orr’s former employer $25 million in cash and provide additional undisclosed benefits for a key rail hub and route in the southern United States. income.
When Orr’s hiring was announced, Norfolk Southern did not disclose the initial impact of the concessions or the expected ripple effects in the coming years.
“Flawed premise”
Norfolk Southern told CNBC in a statement that Ancola’s analysis of the value of the route – the Meridian Highway Agreement – was “completely inaccurate and based on a flawed premise” because it assumed Norfolk Keke Southern gave up more revenue than it actually did.
“As we have said before, the revised agreement is in no way a consequential concession,” the company said.
Ancora is seeking to oust Norfolk Southern CEO Alan Shaw and Orr in favor of former UPS CEO Jim Barber and former CSX executive vice president Jamie Boychuk, respectively. The activist said Norfolk Southern’s performance lagged far behind its peers and put the blame on Shaw and the board.
Regarding Orr, Norfolk Southern said he “has a track record of improving performance while operating safely and with integrity.”
A company spokesman said: “Ancora’s attempt to smear John by digging up allegations against his former employer, one of which dates from more than 20 years ago, is nothing more than an attempt to deflect attention from their deeply flawed COO candidate Jamie Boychuk. attention to the facts,” he told CNBC. “The track records and industry reputations of Mr. Orr and Mr. Boychuk are simply not comparable.
Jamie Boychuk and John Orr.
Provided by Longacre Square Partners and Norfolk Southern
Norfolk Southern’s shareholder meeting is scheduled for May 9.
Ancora has received support from other stakeholders in its fight against the company. Neuberger Berman, which owns a small stake in Norfolk Southern, said Friday it would support Ancora’s slate, citing a “long history of poor governance” in the railroad’s transformation efforts.
A settlement appears unlikely, Gordon Haskett analyst Don Bilson said in a note to clients on Friday. Shaw previously told CNBC that the company offered Ancora “several” board seats as part of the settlement.
Ancora told CNBC it has made multiple attempts to reach a settlement with the company, either directly or through advisers. From Ancora’s perspective, any settlement would depend on a board update and Xiao’s ouster. The board has repeatedly expressed confidence in Shaw and said it was not interested in a settlement that would lead to his departure.
watch: Barclays upgrades Norfolk Southern
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