Cleveland-Cliffs backs activist in Norfolk Southern proxy battle

Cleveland-Cliffs Inc., a major customer of Norfolk Southern Corp., has backed activist investor Ancora Holdings Group in its effort to overhaul the board of the railway company.

The US steel producer is supporting Ancora’s campaign to have seven directors and a new chief executive officer installed at Norfolk Southern, according to a letter seen by Bloomberg News.

“We believe in shareholder activism when the activist has a plan and knows how to execute the plan,” Lourenco Goncalves, CEO of Cleveland-Cliffs, wrote in the letter to Ancora.

Goncalves said the outcome of the proxy fight will have no impact on its customer or supplier relationship with Norfolk Southern.

A representative for Ancora declined to comment, while spokespeople for Cleveland-Cliffs and Norfolk Southern didn’t immediately provide comment. 

Norfolk Southern CEO Alan Shaw has been leading an effort among railroads to improve customer and union relationships after several years of heavy cost-cutting that increased profit margins but resulted in spotty service and disgruntled workers. 

Those plans to keep a buffer of workers during a freight downturn with the goal of maintaining service when volume rebounded were derailed by the crash of a train carrying chemicals in East Palestine, Ohio, in February 2023.

Ancora has proposed Jim Barber, the ex-chief operating officer of United Parcel Service Inc., to replace Shaw as CEO of Norfolk Southern.

Shares in Norfolk Southern have risen just over 1.5% this year, giving the company a market value of roughly $54.2 billion.