CLEVELAND - In a significant development for Norfolk Southern Corporation (NYSE: NYSE:NSC), two leading independent proxy advisory firms, Institutional Shareholder Services Inc. (ISS) and Glass Lewis, have recommended that shareholders vote for substantial changes to the company's board of directors at the upcoming Annual Meeting on May 9th. ISS has backed five of Ancora Holdings Group's seven director nominees, while Glass Lewis has endorsed six, signaling a push for shareholder-driven change at the railroad operator.
Both advisory firms have expressed concerns over Norfolk Southern's current executive compensation structure and corporate governance. ISS has specifically criticized the exclusion of costs related to the East Palestine derailment from executive compensation calculations, which they believe could lead to increased vesting of performance stock units. Glass Lewis has called for scrutiny of adjustments related to the derailment incident.
The proxy advisors' recommendations come amidst Ancora's campaign for a boardroom shake-up, emphasizing the need for leadership capable of effectively implementing Precision Scheduled Railroading (PSR) to enhance service, safety, and shareholder value. Ancora's proposed CEO, Jim Barber, has been recognized by ISS as a credible candidate with transferable experience and skills for the railroad industry.
ISS has also highlighted the need for change due to Norfolk Southern's underperformance compared to peers and a perceived lack of alignment between the incumbent board's actions and shareholder interests. Replacing key board members with Ancora's nominees, who possess expertise in railroad operations and safety, is seen as a step towards addressing these issues.
Ancora, which holds a significant equity stake in Norfolk Southern, has urged shareholders to support its full slate of nominees. The firm believes that this is the only way to ensure the appointment of Barber and Jamie Boychuk to executive leadership roles and to initiate the implementation of a PSR-powered scheduled network, a strategy they argue has been successful at other Class I railroads.
The recommendations from ISS and Glass Lewis reflect a broader appeal for change among various shareholder groups, including labor unions and customers. As the Annual Meeting approaches, shareholders are now faced with a decision that could reshape the future direction of Norfolk Southern Corporation.
This article is based on a press release statement.
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