Norfolk Southern addresses 'mischaracterizations' of its strategy

Norfolk Southern Corp. today responded to what the company's leaders have characterized as recent false and misleading claims about the railroad's business strategy and commitment to safety.

NS issued its statement following a March 2 derailment of an NS train in eastern Pennsylvania, and as activists investors stage a proxy fight to overhaul the company's board and replace President and CEO Alan Shaw.

On March 2, an NS train derailed along the Lehigh River in Lower Saucon Township, east of Allentown, Pennsylvania. Multiple container cars left the tracks and two locomotives rolled over onto the river’s embankment. There were no reported injuries or leaks of hazardous materials, according to a report by cnn.com, citing an NS spokesperson.

The National Transportation Safety Board announced on social media site X that it is investigating the accident.

On March 3, Ancora Holdings Group LLC, a major investor in NS that has launched the proxy battle, issued a statement saying that the board should "immediately" replace NS's leadership following the railroad’s latest derailment. Previously, Ancora has said its effort to replace a majority of the board and the company’s top leadership is in part rooted in the Feb. 3, 2023, derailment of an NS train in East Palestine, Ohio.

In today's statement, NS officials said the proxy battle has led to a mischaracterization of its strategy.

"It is unfortunate that a serious situation is being used to mislead stakeholders and to advance a proxy fight narrative," NS officials said.

NS quickly responded to the March 2 derailment in Pennsylvania, which resulted in no harm to the community and no hazmat concerns from the rail cars, railroad officials said. The company is cooperating with the NTSB investigation.

Also, NS leads the industry on safety as a result of robust safety initiatives, company officials said.

"As a result of our robust safety initiatives, Norfolk Southern achieved a 42% reduction in our mainline accident rate year-over-year in 2023. Today, the company's mainline accident rate is the lowest it has been in years and is among the best of the North American Class I rails. We are actively building on these achievements and helping the industry become even safer," they said.

The statement also addressed recent questions that Ancora has raised over an increase in Shaw’s compensation in 2023, the same year as the East Palestine derailment. Then board did not raise his pay by 37% as Ancora stated, NS officials said.

"Compared to his target compensation, in 2023 CEO Alan Shaw saw a 33% reduction in his realizable compensation at year end. The difference in his compensation for 2023 compared to 2022 reflects the fact that 2023 was his first full year as CEO," they added.

The entire NS statement can be read here.