ATLANTA — A Monday filing with the U.S. Securities and Exchange Commission shows that Atlanta-based railroad company Norfolk Southern increased CEO Alan Shaw’s salary by close to 40% over the year after a train derailed in Ohio and caused environmental and structural damage to the town.
Since the East Palestine, Ohio train derailment in early February 2023, the company’s net income, essentially its profit, fell roughly 44%.
According to the company’s SEC filings, from 2022 to 2023, its annual net income fell from $3.27 billion to about $1.83 billion, or about 44% lower.
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Meanwhile, the filing showed Shaw’s income increased to $13.4 million, up from the previous year’s $9.77 million, equal to about 37% higher in 2023.
The new filings with the SEC, the federal agency charged with oversight of potential market manipulation and other market factors, come as a group of activist investors from Ancora Holdings, LLC, an Ohio-based investment firm, is working to replace some or all of the company’s board and current leadership.
As previously reported by Channel 2 Action News, Ancora wants to remove the current CEO and COO of Norfolk Southern, as well as replace all eight embers of the current board, citing “poor decisions” by executives and a lowered stock performance.
Current reports of the company’s stock price show that it has bounced back after falling for several months in the wake of the East Palestine, Ohio derailment.
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The day after the Feb. 2, 2023 train derailment, stock prices were at $252.12 per share. On Feb. 27, prices were at $252.89 at 2:45 p.m.
In contrast to the claims regarding safety, performance and leadership, a proxy statement filed by Norfolk Southern with the SEC on Monday said the board remains fully in support of Shaw and that the management team would not agree to a change of leadership.
A statement from the company added that they believed Ancora’s replacement of leadership plan was a “short-sighted strategy” and rejected the plan outright, with the chair of the company board saying the current leadership team was the right one for the job of delivering for its shareholders and customers.
“As a board, our priority is ensuring we have the right composition to guide Norfolk Southern in improving operating performance, enhancing safety, delivering value for our customers and shareholders, and fulfilling our commitments to our stakeholders. Our focus on meaningful refreshment – evidenced by the two new directors added in 2023 and two new nominees presented for the 2024 annual meeting – reflects these strategic priorities and our commitment to strong governance and oversight,” Amy Miles, independent chair of Norfolk Southern’s Board of Directors, said in a statement.
Channel 2 Action News reached out to Ancora for their response to the Norfolk Southern filing. A representative for the company responded in part:
“It’s alarming that the Board rewarded Mr. Shaw with a massive raise and total compensation of $13.4 million during the same year he presided over industry-worst operating results, sustained underperformance and a tone-deaf response to the derailment in East Palestine. This failure of corporate governance, which is buried within a more than 100-page regulatory filing, reinforces the need for sweeping changes to Norfolk Southern’s well paid Board. We hope labor leaders, regulators and others take the opportunity to question the pay-for-failure mentality in the company’s boardroom.”
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