NSC - Norfolk Southern highlights progress long-term plan to drive shareholder value | Benzinga
Significant momentum underway in key operational metrics including train speed, terminal dwell, Intermodal on-time service and Merchandise velocity
Strong management and board oversight in place to meet company objectives
Norfolk Southern urges shareholders to vote "FOR" ONLY Norfolk Southern's 13 highly qualified nominees on the WHITE proxy card today
ATLANTA, May 1, 2024 /PRNewswire/ -- Norfolk Southern Corporation (NYSE:NSC) Wednesday sent a letter to shareholders in connection with its Annual Meeting of Shareholders on May 9, 2024. In the letter the company highlighted:
- Norfolk Southern's balanced strategy is delivering superior long-term upside for shareholders.
- Norfolk Southern has dramatically enhanced network performance and service, improving train speed by 22%1, terminal dwell by 11%2, Intermodal on-time service performance by 30%3, and Merchandise velocity by 24%4 since Alan Shaw became CEO.
- Norfolk Southern is an industry leader in safety and achieved a 38% reduction in its mainline accident rate in 2023, and the fewest mainline accidents since 1999.
- Norfolk Southern is on a clear and achievable path to close the margin gap with peers by achieving a sub-60% operating ratio in 3-4 years5, while remaining well-positioned to deliver top-tier earnings and EPS growth over the long-term.
- The company is actively executing on a detailed plan to unlock 400 basis points of margin improvement from productivity savings and upcycle improvement over the next three years.
- The plan is expected to deliver 100-150 basis points of operating ratio improvement year-over-year, with line of sight to 400-450 basis points of improvement in the second half of 2024, compared to the prior year period.
- Norfolk Southern has the right management team to deliver a safer, more profitable railroad.
- CEO Alan Shaw is a decisive, crisis-tested leader who delivered record annual railway operating revenue in his first year as CEO, all while positioning the company to become the gold standard of safety and deliver reliable service.
- COO John Orr is a renowned expert best equipped to execute our PSR operating plan, and is already driving improvements to rapidly accelerate our productivity while maintaining network stability.
- The Norfolk Southern board has superior skillsets to provide independent oversight.
- The board has undergone a thoughtful refreshment process and is comprised of highly engaged industry leaders with the necessary skills to oversee the company's strategy, drive sustainable value, and hold management accountable.
- The board has been an agent of change to advance the company's success, and has added the right experts to Norfolk Southern's leadership team, enhanced corporate governance practices to better align with shareholders' interests, and guided transformational initiatives that continue to improve safety and operational performance.
- Ancora's candidates and reckless plan would unnecessarily put Norfolk Southern at risk and destroy long-term value.
- Ancora is attempting to replace Norfolk Southern's qualified director candidates with inferior nominees with little to no board and safety experience.
- Ancora's CEO candidate has no CEO or railroad experience and its COO candidate has a reputation for extreme cost-cutting measures resulting in the deterioration of service quality, safety, and performance.
- Achieving Ancora's near-term targets would require ~2,900 employee furloughs, putting service and safety at substantial risk, sparking backlash from regulators, and jeopardizing long-term shareholder value.
- Multiple independent third parties have recognized that Ancora's near-term targets are highly unrealistic and its management candidates would reverse Norfolk Southern's progress and undermine customer relationships.
The letter to shareholders and other important information related to Norfolk Southern's Annual Meeting can be found at VoteNorfolkSouthern.com
The full text of the letter to shareholders follows:
Dear Fellow Shareholder,
We are entering the final days before Norfolk Southern's Annual Meeting on May 9, 2024, and your vote will decide the future of our railroad. Under the board of directors' guidance and president and CEO Alan Shaw's leadership, Norfolk Southern is executing a balanced strategy that we are confident will deliver superior shareholder value. A vote for Norfolk Southern's 13 nominees is a vote to protect the value of your investment.
We are creating a safer, more profitable railroad with long-term upside for shareholders. In stark contrast, Ancora Alternatives LLC ("Ancora") would implement a reckless strategy that, in the words of Ancora's COO nominee, would "strip this thing down to the studs."6 Ancora's plan is laden with false assumptions, would require thousands of job cuts, and would put safety and service at risk.
Protect your investment by VOTING the WHITE proxy card TODAY FOR ONLY Norfolk Southern's 13 nominees. Time is short. Submit your proxy electronically by following the simple instructions on the enclosed WHITE proxy card.
NORFOLK SOUTHERN IS DRIVING A BETTER STRATEGY TO DELIVER LONG-TERM SHAREHOLDER VALUE
Our balanced strategy is grounded in a Precision Scheduled Railroading (PSR) operating plan that ensures our network is:
- Flexible across market environments
- Disciplined in operational execution
- Supported by the right resources
Our modern approach supports superior shareholder value and long-term volume growth and prevents avoidable service problems that Ancora's outdated PSR approach and extreme cost-cutting would create.
Importantly, our strategy is working. Since Alan Shaw's appointment as CEO, and in the face of the impact of the East Palestine incident, we have dramatically improved network performance, safety, and service:
- 22% Train speed improvement7
- 11% Terminal dwell improvement8
- 3,040 bps Improvement in Intermodal on-time service performance from 57% to 88%9
- 24% Increase in Merchandise velocity10
- 38% Reduction in mainline accident rate in 2023
PSR EXPERT JOHN ORR HAS ACCELERATED OUR OPERATIONAL PERFORMANCE
We have realized meaningful results in the weeks since John was appointed COO and are on track to close the margin gap with peers by achieving a sub-60% operating ratio in three to four years.11 We will do this while continuing to enhance service and becoming the gold standard of safety in the industry.
Annualized Productivity
- ~$250M Next 6 Months
- ~$400M 12-24 Months Out
- ~$550M 24-36 Months Out
WE HAVE THE RIGHT MANAGEMENT TEAM TO DELIVER ON OUR PROMISE
CEO Alan Shaw – The Right Leader For Norfolk Southern At A Critical Time
- Crisis-tested leader who has taken decisive actions to protect our franchise and execute Norfolk Southern's strategic transformation.
- Delivered a 62% operating ratio in 2022 with record annual railway operating revenue in first year as CEO.
- Positioned the company to become the gold standard of safety and deliver reliable service while closing the margin gap with peers.
Newly Appointed COO John Orr – The Renowned Expert Best Equipped To Execute Our PSR Operating Plan
- Well-recognized track record of operational excellence and successfully improving network performance at multiple Class I railroads.
- Proven ability to build strong relationships with customers, regulators, unions, and industry partners – a crucial asset to enhance our ability to deliver long-term shareholder value.
- Currently leading a network assessment and implementing a clear plan to rapidly accelerate our productivity while maintaining network stability – a plan that is already demonstrating success.
OUR BOARD NOMINEES HAVE SUPERIOR SKILLSETS TO PROVIDE INDEPENDENT OVERSIGHT
The Norfolk Southern board has been an agent of change to advance the company's success and enhance shareholder value. It has:
- Made leadership changes to equip Norfolk Southern with the right experts central to the development and execution of our strategy;
- Strengthened the board through a comprehensive refreshment process to ensure we have highly engaged industry leaders with the necessary skills to oversee our strategy, drive sustainable value, and hold management accountable;
- Implemented significant corporate governance enhancements, including better aligning executive compensation practices with shareholders' interests; and
- Overseen transformational initiatives ...