It’s been a bumpy ride for Norfolk Southern, one of the nation’s largest railroads and one of Atlanta’s most prominent Fortune 500 companies.
To better understand all the nuances of the past 15 months, I reached out to Tom Bell, former CEO of Cousins Properties, who has been on the board of Norfolk Southern for 14 years until deciding not to stand for election at the company’s May 9 annual meeting.
Bell, who still calls Atlanta home, was actively involved in the decision to move the company’s headquarters from Norfolk to Atlanta, which was announced in late 2018. He has been the most prominent independent director from Atlanta.
First, let me explain why Norfolk Southern’s last 15 months have been bumpy.
On Feb. 3, 2023, a Norfolk Southern train carrying toxic chloride derailed in East Palestine, Ohio, and three days later a decision was made to have controlled burn of the toxic materials, which put the national spotlight on the railroad.
Partly because of the East Palestine event, a shareholder group named Ancora decided to make a play to take over leadership of Norfolk Southern hoping to remove Alan Shaw, Norfolk Southern’s CEO since December 2021. It presented a slate of seven board directors, which would have given it control of the company.
But at the company’s annual meeting on May 9, Ancora fell short of a takeover. Instead, only three of Ancora’s directors were elected — compared to 10 directors backed by Norfolk Southern — giving the railroad a clear majority.
“It could have been much worse,” said a relieved Tom Bell during a recent phone interview. “I don’t think the addition of these three directors will be negative for the company. They have some railroad experience that could be valuable to the company.”
The newly constituted board held its first meeting last Friday, according to spokesman Tom Crosson. He pointed to a release the company had issued May 15 where Shaw said, “I have connected with each of our board members and appreciate the expertise they bring to help advance Norfolk Southern. I also appreciate the support of our employees, customers and shareholders over the last few months. We are focused on delivering results and building on the considerable momentum underway as we accelerate our operational improvements.”
In our interview, Bell shared his insights on the past several months.
“Initially all [Ancora] were requesting was a meeting,” said Bell, adding the meeting occurred with Norfolk Southern Chair Amy Miles and a couple of other directors (not Bell or Shaw). “They wanted to talk about Alan. Their position was they thought the company was being poorly managed and that Alan was not the right person to run the company.”
One of Ancora’s complaints was that Norfolk Southern had not embraced Precision Scheduled Railroading (PSR). In a slight shift in strategy, Norfolk Southern hired John Orr as its chief operating officer in March. Orr had implemented PSR at Canadian Pacific Kansas City, where he had spent most of his career.
Bell said Ancora had “bad information” on Shaw’s abilities — thinking he was more of a marketing guy than an operating leader.
“When we selected Alan, we had done an extensive search, and he really was the best candidate,” Bell said. Before being named CEO, Shaw was serving as Norfolk Southern’s chief marketing officer. He succeeded Jim Squires, who was CEO when Norfolk Southern decided to move the company to Atlanta. Squires also led the effort to build the company’s new headquarters building on West Peachtree in Midtown.
Bell said board members and Ancora explored adding mutually acceptable directors to Norfolk Southern’s board, but they couldn’t agree.
“We were open-minded about reaching some accommodations,” Bell said. “As the conversations went on, they got less and less interested in facts. They wanted to take over the company.”
In an interesting Atlanta twist, Ancora’s choice for Norfolk Southern CEO was Jim Barber, former COO for Atlanta-based UPS.
“I don’t know Jim Barber,” said Bell, who said the proxy fight got increasingly ugly.
A Norfolk Southern casualty in that fight was Chairwoman Miles, who lost her board seat during the annual meeting.
“That’s a tragedy because she’s done a spectacular job,” Bell said. “She improved the governance structure of directors. It’s just tragic she was taken out in the situation.”
The new board is a bit less diverse, because two female Norfolk Southern directors lost their seats and were replaced by men. Also, the railroad’s senior African American director John Thompson lost his seat in the proxy fight. But Ancora’s nominee William Clyburn (a cousin of longtime U.S. Congressman Jim Clyburn) was elected.
Bell is confident the three Ancora directors will be team players.
“First of all, their fiduciary responsibility is to the shareholders and not to Ancora,” Bell said. “I think these three board members will not do anything other than trying to help us succeed.”
All the turmoil at Norfolk Southern will not impact the company’s presence in Atlanta, Bell said. If anything, the reverse is true.
“Norfolk Southern has been in Atlanta for a very long time,” Bell said. “We had more people in Atlanta than in any other place — even before we moved our headquarters to Atlanta. Our headquarters is in Atlanta, and it will stay in Atlanta.”
Bell said Norfolk Southern’s executives are becoming engaged in Atlanta’s civic leadership.
“It’s the Atlanta Way is to reach out to newcomers and bring them into the community and ask them to be involved,” Bell said. “That’s how Norfolk Southern has been accepted.”
But Bell added it’s important for the Atlanta community to rally behind Shaw.
“Alan has had a tough time, and it’s unfortunate,” said Bell, adding that East Palestine rightfully demanded a lot of Shaw’s attention. “Just as we were digging out of that hole, then came the challenge from Ancora. But Alan has done a brilliant job. He never shirked his responsibility when it comes to our shareholders, our customers, our employees and our communities.”
Now that Norfolk Southern has survived the proxy challenge, Bell is confident the company will rebound.
“I will be shocked if we don’t see a significant improvement in the second half of the year, “Bell said. “ I think Alan will be CEO for a very, very long time. He is laser-focused in improving the operational and financial performance of the railroad. He and John Orr are committed to these improvements, and they are working together.”
Bell also reiterated how important it was for Norfolk Southern to move its headquarters to Atlanta.
“It was the right thing to do for the right reasons,” said Bell, who said before the move, the railroad had its main offices in three different cities. “Consolidating our headquarters in one place was the right thing to do from a productivity standpoint. It has benefited us tremendously. Our recruitment has been remarkable since we moved to Atlanta.”
Before going off Norfolk Southern’s board, Bell was instrumental in getting Richard Anderson, the former CEO of Delta Air Lines and Amtrak, to be nominated as director.
“One of the nice things about Richard Anderson, he knows Atlanta,” Bell said. “Richard Anderson is a friend of mine. He’s one of the most capable people I have ever met. I called Richard initially to see if he would be willing to join the board. His reaction was immediate. He was interested. He said: ‘There are a lot of similarities between airlines and railroads. I like Atlanta, and I like the people at Norfolk Southern.’ He’ll be a terrific director for Norfolk Southern. And he has many Atlanta relationships.”
Anderson’s election to Norfolk Southern’s board also highlights the unique relationships between Atlanta, Norfolk Southern, Delta, Georgia-Pacific and Amtrak — relationships that go back decades.
For example, Bell’s civic partner in the saving of Grady Hospital was the late Pete Correll, who served as CEO of Georgia-Pacific from 1993 to 2005.
“I was on the board of Georgia-Pacific, and Pete recruited me to go on Norfolk [Southern’s board],” said Bell, “At the time, he was the lead director of Norfolk Southern.”
Meanwhile, Norfolk Southern now is the 10th largest Fortune 500 company based in Atlanta, solidifying its historic relationship to Georgia’s capital city. On June 1, 1982, Norfolk Southern acquired Southern Railway, which had been based in Atlanta since 1894. Even though Norfolk Southern’s headquarters were based in Norfolk, Atlanta has always been the major hub of the railroad’s operations.
“We are lucky to have Norfolk Southern in Atlanta,” said Bell, admitting he was helpful in getting the railroad to move its headquarters. “Norfolk Southern is a great community partner.”
Relationships between Atlanta, Norfolk Southern, Georgia-Pacific, Delta and Amtrak:
T. Marshall Hahn, CEO of Georgia Pacific who moved the company to Atlanta (CEO from 1984 to 1993), was a director of Norfolk Southern.
David Goode, CEO of Norfolk Southern from 1992 to 2005, was a director of Georgia-Pacific and Delta Air Lines.
Charles “Wick” Moorman, CEO of Norfolk Southern from 2005/2006 to2015. He became CEO of Amtrak from 2016 to 2017.
James Squires, CEO of Norfolk Southern from 2013 to 2021, was leading the railroad when it decided to move the headquarters from Norfolk to Atlanta.
Pete Correll, CEO of Georgia-Pacific from 1993 to 2005, was lead director of Norfolk Southern’s board until he retired in 2013. Correll and Tom Bell were co-conspirators in Atlanta civic causes – namely the saving of Grady Hospital.
Tom Bell, former CEO of Cousins Properties, served on both the boards of Georgia-Pacific and Norfolk Southern. Pete Correll recruited Tom Bell to join Norfolk Southern’s board in 2010, and Bell just went off the board in May 2024.
Richard Anderson, CEO of Delta Air Lines from 2007 to 2016, became CEO of Amtrak in 2017, succeeding Wick Moorman, former CEO of Norfolk Southern.
Alan Shaw, Norfolk Southern CEO since December 2021.
Election results of Norfolk Southern’s directors at 2024 annual meeting
ok