Urges shareholders to vote "FOR" ONLY Norfolk
Southern's 13 highly qualified nominees on the WHITE proxy
card today
ATLANTA, April 19,
2024 /PRNewswire/ -- Norfolk Southern Corporation
(NYSE: NSC) filed a presentation on Friday with the U.S. Securities
and Exchange Commission addressing the flawed assumptions of Ancora
Alternatives LLC's ("Ancora") highly unrealistic near-term
financial targets.
Among many other claims, Ancora grossly overestimates the
12-month savings across numerous categories and their "estimated
savings" are simply not supported by the mathematical reality.
Ancora has unrealistically projected expected savings of
$800 million over 12 months,
resulting in a 62 – 63% operating ratio, while claiming they would
not furlough employees.
In Norfolk Southern's presentation, informed by actual
railroading experience and direct industry expertise, the company
has outlined what the real savings would be in each cost
opportunity Ancora cited. Ancora's misinformed savings estimates
would only amount to $400 million,
and to achieve the remaining $400
million savings in their plan, approximately 2,900 employee
furloughs would be required, despite Ancora's assertions to the
contrary.
The presentation also corrects the false and misleading
statements made by Ancora including:
FALSE &
MISLEADING
STATEMENT
|
THE
FACTS
|
THE
OUTCOMES
|
Disregarding Norfolk
Southern's successful implementation of a modern version of
precision scheduled railroading.
|
Norfolk Southern is
advancing a modern PSR strategy, which is designed to avoid
periodic service problems.
The company is
accelerating the execution of the plan through changes in
leadership and operations.
|
- Customer-centric,
operations-driven network that balances service, productivity, and
growth, with safety at its core
- Prudent approach to
rapidly and sustainably improving its operating ratio
- More reliable
service to grow earnings over the long-term
|
Dismissing the four
decades of success and experience of recently hired COO, John
Orr.
|
John Orr is an expert
and award-winning thought leader in PSR with a proven track record
of improving operations at multiple Class I railroads in regions
spanning Canada, the U.S., and Mexico.
Hiring John resulted in
an inconsequential change to a commercial agreement with
CPKC.
|
- John's expertise is
helping:
- Identify and
eliminate corridor bottlenecks
- Target large-volume
Merchandise terminals for improved velocity and
productivity
- Drive standard
processes across all workstreams
- Rationalize
locomotives and cars
- Replicate best
practices across the network
|
Ignoring significant
safety improvements that are driving results.
|
In the wake of East
Palestine (EP), Norfolk Southern took decisive action to protect
the franchise and shareholders.
Management, with board
oversight, implemented a six-point safety plan and accelerated
enhancements to its safety culture and operational
transformation.
|
- Committed to being
the gold standard for safety in the rail industry
- Reduced the
mainline accident rate by 38% year-over-year in 2023
- Achieved the lowest
mainline accident rate since 1999
and positioned itself among the best of the North American Class I
railroads
- Through its safety
efforts, the board and Alan rebuilt trust and credibility with
regulators and the EP community
|
Overlooking Norfolk
Southern's efficient operations before, and improvements after, the
EP incident.
|
Widening of the
operating ratio occurred in 2023, as Norfolk Southern dealt with
service disruptions and safety investments following the EP
incident.
|
- Remained in-line
with peers at a 62% OR while achieving record revenues in 2022 as
the industry struggled to add headcount after cutting too deeply
and profitability weakened
- Drove 2nd highest
5-year total shareholder return among Class I peers in
2022
- Despite adverse
impact of EP, continued to improve service levels – train speed by
22% and terminal dwell by 11% – since Alan became CEO
|
Discounting Norfolk
Southern's clear plan to close the gap with peers.
|
Norfolk Southern
meaningfully narrowing the gap with peers in 2022 despite COVID
disruptions.
The company has
improved key operating metrics over the last several weeks,
reflecting changes and reprioritizations that were already in
process and accelerated by the arrival of John Orr.
|
- On an achievable
path to close the gap with peers by achieving a sub-60% OR in 3-4
years, without compromising safety, service, customer
relationships, or long-term shareholder
value1
|
Failing to recognize
Norfolk Southern's executive compensation framework that holds
management accountable.
|
The board implemented
executive compensation initiatives, including the addition of OR as
a performance metric.
The board eliminated
the 2023 annual incentive awards payout.
|
- Addresses
shareholder feedback and holds management accountable to deliver on
key objectives
- Ensures alignment
between executive pay and outcomes experienced by shareholders and
other stakeholders
|
Mischaracterizing
Norfolk Southern's superior and fit-for-purpose
board.
|
The board has
proactively refreshed its ranks and provided effective oversight to
ensure best-in-class governance practices and that it has the
necessary expertise to oversee Norfolk Southern's
success.
Norfolk Southern has
director nominees with broad operations and logistics experience,
including seven former CEOs or presidents of large-scale
organizations.
|
- Appointed six new
directors in the last five years, including two in 2023
- Taken initiatives
to improve operations and oversight, including in safety,
enterprise risk management, and cybersecurity
|
|
1 The
operating ratio improvements discussed and presented on this page
represent adjusted operating ratio. See "Non-GAAP Financial
Measures" below for information regarding the definition and
reconciliation to GAAP operating ratio.
|
Norfolk Southern has communicated consistently and transparently
with shareholders on the company's progress and achievements. In
contrast, Ancora has resorted to spreading false and misleading
statements and deliberately ignoring material facts.
The presentation and other important information related to
Norfolk Southern's Annual Meeting can be found at
VoteNorfolkSouthern.com.
Your Vote is Important
Norfolk Southern believes all of its 13 nominees are uniquely
qualified to oversee the company's strategy, drive sustainable
value, and hold management accountable. Norfolk Southern
strongly urges shareholders to protect their investment by VOTING
the WHITE proxy card "FOR" ONLY Norfolk Southern's 13
nominees.
Please simply DISCARD any Blue proxy card you may receive
from Ancora. If you inadvertently voted using a Blue proxy card,
you may cancel that vote simply by voting again TODAY using the
company's WHITE proxy card. Only your latest-dated vote will
count!
If you have any questions or require any
assistance with respect to voting your shares, please contact our
proxy solicitor:
INNISFREE M&A
INCORPORATED
Shareholders may call:
1 (877) 750-9496 (toll-free from the U.S. and Canada)
+1 (412) 232-3651 (from other countries)
About Norfolk Southern
Since 1827, Norfolk Southern
Corporation (NYSE: NSC) and its predecessor companies have safely
moved the goods and materials that drive the U.S. economy. Today,
it operates a customer-centric and operations-driven freight
transportation network. Committed to furthering sustainability,
Norfolk Southern helps its customers avoid approximately 15 million
tons of yearly carbon emissions by shipping via rail. Its dedicated
team members deliver more than 7 million carloads annually, from
agriculture to consumer goods, and Norfolk Southern originates more
automotive traffic than any other Class I Railroad. Norfolk
Southern also has the most extensive intermodal network in the
eastern U.S. It serves a majority of the country's population and
manufacturing base, with connections to every major container port
on the Atlantic coast as well as major ports in the Gulf of Mexico and Great Lakes. Learn more by
visiting www.NorfolkSouthern.com.
Important Additional Information
The Company has filed a definitive proxy statement (the "2024
Proxy Statement") on Schedule 14A and a WHITE proxy card with the
Securities and Exchange Commission (the "SEC") in connection with
the solicitation of proxies for its 2024 Annual Meeting of
Shareholders (the "2024 Annual Meeting"). SHAREHOLDERS ARE STRONGLY
ADVISED TO READ THE COMPANY'S 2024 PROXY STATEMENT (INCLUDING ANY
AMENDMENTS OR SUPPLEMENTS THERETO), THE WHITE PROXY CARD AND ANY
OTHER DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Shareholders may
obtain a free copy of the 2024 Proxy Statement, any amendments or
supplements to the 2024 Proxy Statement and other documents that
the Company files with the SEC from the SEC's website at
www.sec.gov or the Company's website at
https://norfolksouthern.investorroom.com as soon as reasonably
practicable after such materials are electronically filed with, or
furnished to, the SEC.
Certain Information Concerning Participants
The Company, its directors and certain of its executive officers
and employees may be deemed participants in the solicitation of
proxies from shareholders in connection with the matters to be
considered at the 2024 Annual Meeting. Information regarding the
direct and indirect interests, by security holdings or otherwise,
of the persons who may, under the rules of the SEC, be considered
participants in the solicitation of shareholders in connection with
the 2024 Annual Meeting is included in Norfolk Southern's 2024
Proxy Statement, filed with the SEC on March
20, 2024. To the extent holdings by our directors and
executive officers of Norfolk Southern securities reported in the
2024 Proxy Statement for the 2024 Annual Meeting have changed, such
changes have been or will be reflected on Statements of Change of
Ownership on Forms 3, 4 or 5 filed with the SEC. These documents
are available free of charge as described above.
Cautionary Statement on Forward-Looking Statements
Certain statements in this press release are "forward-looking
statements" within the meaning of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995, as amended.
These statements relate to future events or our future financial
performance, including statements relating to our ability to
execute on our strategic plan and our 2024 Annual Meeting and
involve known and unknown risks, uncertainties, and other factors
that may cause our actual results, levels of activity, performance,
or our achievements or those of our industry to be materially
different from those expressed or implied by any forward-looking
statements. In some cases, forward-looking statements may be
identified by the use of words like "may," "will," "could,"
"would," "should," "expect," "plan," "anticipate," "intend,"
"believe," "estimate," "project," "consider," "predict,"
"potential," "feel," or other comparable terminology. The Company
has based these forward-looking statements on its current
expectations, assumptions, estimates, beliefs, and projections.
While the Company believes these expectations, assumptions,
estimates, and projections are reasonable, such forward-looking
statements are only predictions and involve known and unknown risks
and uncertainties, many of which involve factors or circumstances
that are beyond the Company's control. These and other important
factors, including those discussed under "Risk Factors" in our
Annual Report on Form 10-K for the year ended December 31, 2023, as well as the Company's
subsequent filings with the SEC, may cause actual results,
performance, or achievements to differ materially from those
expressed or implied by these forward-looking statements. The
forward-looking statements herein are made only as of the date they
were first issued, and unless otherwise required by applicable
securities laws, the Company disclaims any intention or obligation
to update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise.
Non-GAAP Financial Measures
This document includes the presentation and discussion of
adjusted operating ratio. This figure adjusts our GAAP financial
results to exclude the effects of the direct costs resulting from
the East Palestine incident. We use this non-GAAP financial measure
internally and believe this information provides useful
supplemental information to investors to facilitate making period
to period comparisons by excluding the costs arising from the East
Palestine incident, and in 2024, also excluding other charges
relating to restructuring efforts, shareholder matters and a
deferred tax adjustment. While we believe that this non-GAAP
financial measure is useful in evaluating our business, this
information should be considered as supplemental in nature and is
not meant to be considered in isolation from, or as a substitute
for, the related financial information prepared in accordance with
GAAP. In addition, this non-GAAP financial measure may not be the
same as similar measures presented by other companies. See below
for a reconciliation of the 2023 non-GAAP operating ratio figures
provided in this document to GAAP operating ratio. With respect to
projections and estimates for future non-GAAP operating ratio,
including full year 2024 adjusted operating ratio guidance and our
longer term adjusted operating ratio target, the Company is unable
to predict or estimate with reasonable certainty the ultimate
outcome of certain items required for the GAAP measure without
unreasonable effort. Information about the adjustments that are not
currently available to the Company could have a potentially
unpredictable and significant impact on future GAAP results.
The following table adjusts our 2023 GAAP financial results to
exclude the effects of the East Palestine incident. The income tax
effects of this non-GAAP adjustment were calculated based on the
applicable tax rates to which the non-GAAP adjustment related:
|
Non-GAAP
Reconciliation for 2023
|
Reported
(GAAP)
|
East Palestine
Incident
|
Adjusted (non-
GAAP)
|
($ in millions,
except per share amounts)
|
Income from railway
operations
|
$2,851
|
$1,116
|
$3,967
|
Income taxes
|
$493
|
$270
|
$763
|
Net income
|
$1,827
|
$846
|
$2,673
|
Diluted earnings per
share
|
$8.02
|
$3.72
|
$11.74
|
Railway operating ratio
(percent)
|
76.5
|
(9.1)
|
67.4
|
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SOURCE Norfolk Southern Corporation