Norfolk Southern bolsters executive team as it faces activist fight

Norfolk Southern Corp. hired John Orr as its new chief operating officer, bolstering the railroad’s executive ranks as it faces pressure from an activist shareholder to revamp its leadership.

Orr, a protégé of industry legend Hunter Harrison, joins from rival Canadian Pacific Kansas City Ltd. where he specialized in precision scheduled railroading strategies. In the new role, effective immediately, Orr will have oversight responsibility in areas such as safety, transportation, network planning and operations, according to a statement Wednesday.

Norfolk agreed to a one-time payment of $25 million to CPKC to waive Orr’s non-compete provisions, a move that Norfolk said reflected the executive’s “unique set of skills and experience and his expected impact on long-term value creation.” The pact also includes “certain operational and commercial considerations” related to the Meridian Speedway rail route and the Meridian Terminal.

Norfolk is seeking to fend off a proxy fight after activist investor Ancora Holdings Group built a stake and called for substantial changes, citing poor decision-making and underperformance. The railroad was already struggling to move past a costly derailment in East Palestine, Ohio, last year that drew national attention.

Ancora, which previously proposed rail executive Jamie Boychuk as COO, criticized Norfolk’s latest move, saying Orr has limited operations experience and the deal included costly concessions.

“Based on the real and implied cost of securing Mr. Orr, who analysts and investors have told us they never heard of prior to today, the sitting directors may have signed off on one of the most expensive and overpriced hires in industry history,” the investment firm said in an emailed statement. “What has come out today only reinforces the need for sweeping leadership changes atop the company.”

Ancora has proposed eight new directors, including former Ohio Governor John Kasich. The investment firm also is seeking to replace Norfolk Chief Executive Officer Alan Shaw with Jim Barber, the former chief operating officer of United Parcel Service Inc.

Orr’s appointment comes less than a month after Norfolk nominated two new director candidates — former Delta Air Lines Inc. CEO Richard Anderson and onetime North Dakota senator Heidi Heitkamp.