![US says Norfolk Southern must focus on safety despite investor activism](https://i-invdn-com.investing.com/trkd-images/LYNXNPEK1K0W4_L.jpg)
© Reuters. Norfolk Southern Chief Executive Alan Shaw testifies on the East Palestine, Ohio prepare derailment earlier than a U.S. Senate Environment and Public Works Committee listening to on Capitol Hill, in Washington, U.S., March 9, 2023. REUTERS/Mary F. Calvert/File Photo
By David Shepardson
WASHINGTON (Reuters) -The head of the Federal Railroad Administration on Wednesday urged Norfolk Southern (NYSE:) to deal with security after a gaggle of activist buyers proposed changing the corporate’s prime administration.
FRA Administrator Amit Bose wrote CEO Alan Shaw to “reiterate the only avenue to ensure NS’s immediate and long-term success is through a relentless focus on safety … Any backsliding, as a result of a change in leadership or otherwise, on the safety-oriented path you have laid out and communicated to us will likely attract renewed oversight attention from my office.”
A Norfolk Southern spokesperson mentioned the letter “speaks for itself.”
A gaggle of buyers led by Ancora Holdings on Tuesday mentioned it had proposed changing Shaw and nominated eight administrators to the railroad operator’s board.
Ancora didn’t instantly reply to a request for touch upon the letter.
The investor group, which holds a “large equity stake” within the firm, goals to exchange CEO Alan Shaw with former United Parcel Service (NYSE:) govt Jim Barber and COO Paul Duncan with Jamie Boychuk, a former CSX Corp (NASDAQ:) govt.
Shares of Norfolk had misplaced practically 5% in 2023 amid working challenges and the fallout from a expensive February 2023 derailment in East Palestine, Ohio, which invited scrutiny from the FRA. Shares had been up 1.5% Wednesday.
The FRA mentioned in August Norfolk Southern wanted “significant improvements” in its security tradition after the Ohio derailment.
Bose on Wednesday praised Shaw’s “commitment to investing in safety” and mentioned “those investments are imperative for continuing the unique progress your railroad has made.”
He mentioned knowledge for the primary 11 months of 2023 urged Norfolk Southern was the one main “railroad to achieve significant reductions in the rate of mainline derailments” final yr.
The Wall Street Journal reported late final month that the Ancora-led group had taken a roughly $1 billion stake in Norfolk Southern and had nominated a majority slate of administrators.