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Steel giant Cleveland-Cliffs (CLF) has thrown its weight behind activist investor Ancora Holdings in a high-stakes proxy battle with railway behemoth Norfolk Southern (NYSE:NSC).
Cleveland-Cliffs CEO Lourenco Goncalves penned a supportive letter to Ancora, highlighting their mutual business ties and endorsing Ancora’s stand against Norfolk Southern.
Ancora, holding a significant $1 billion stake in NSC, launched a proxy fight in February aimed at replacing CEO Alan Shaw with Jim Barber, former COO of UPS, as the new CEO, and appointing Jamie Boychuk, a former CSX executive, as the COO. The activist firm has laid out a comprehensive three-year plan to drive Norfolk Southern’s operating ratio below 60% through the enforcement of a precision scheduled railroading strategy.
Reflecting on past victories, Goncalves reinforced his faith in activism, drawing parallels between Ancora’s current aspirations and Cliffs’ successful activist campaign in 2014. He emphasized the importance of a well-crafted plan and execution prowess, which he sees in Ancora’s current efforts.
Notably, Cleveland-Cliffs’ endorsement arrives following the public support garnered by Ancora from the Brotherhood of Locomotive Engineers and Trainmen, advocating for a change in Norfolk Southern’s leadership. The Brotherhood of Maintenance of Way Employees Division of the International Brotherhood of Teamsters also echoed this sentiment, throwing their weight behind Ancora’s cause.
Conversely, amidst concerns over potential understaffing risks engendered by Ancora’s proposed strategy, the American Federation of Labor and Congress of Industrial Organization sided with Norfolk Southern’s management.
The crucial proxy vote is scheduled for May 9, setting the stage for a pivotal moment in the corporate battle for control and direction.
