(Reuters) – An Ancora Holdings-led investor group has taken a roughly $1 billion stake in Norfolk Southern and nominated a majority slate of directors to the railroad operator’s board in a bid to oust CEO Alan Shaw, the Wall Street Journal reported.
The director slate includes former Ohio Governor John Kasich and Sameh Fahmy, who was an executive at railroad operator Kansas City Southern, the report said on Wednesday, citing people familiar with the matter.
In the past few weeks, Norfolk Southern – among the top-five largest railroad operators in North America by revenue – has met with the group and the group’s director nominees have raised a number of issues including how the firm handled a train derailment last year and what they view as Shaw’s failure to hit operating targets, the report added.
A Norfolk train comprising three locomotives and 150 freight cars derailed near East Palestine, Ohio, last February, sending a cloud of smoke over the town and causing temporary evacuation for thousands of residents.
Norfolk Southern last week reported fourth-quarter profit below analysts’ estimates, hurt by lower revenue across the U.S. railroad operator’s merchandise, intermodal and coal businesses.
Hedge funds Sachem Head Capital Management and D.E. Shaw have also recently been building their own stakes in Norfolk Southern, the report said.
Post-pandemic changes in U.S. consumer spending, shifting from goods to services, combined with global shipping delays, have left freight railroads operating in a low volume environment.
Norfolk Southern and Ancora Holdings didn’t immediately respond to a Reuters request for comment.
(Reporting by Kanjyik Ghosh; Editing by Rashmi Aich)
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