Market Data 
By Svea Herbst-Bayliss
NEW YORK (Reuters) – Ancora Holdings scored a second victory in its battle with Norfolk Southern (NYSE:) when prominent proxy advisory firm Institutional Shareholder Services (ISS) recommended on Tuesday that shareholders elect five of the activist hedge fund’s director candidates.
ISS said the Atlanta-based railway, which has faced regulatory and legal questions after a derailment last year in Ohio, needs new directors with deeper and more balanced industry experience.
The ISS recommendation, which often guides how shareholders vote on hot-button issues such as board elections and mergers, was made one day after Glass Lewis, another proxy advisory firm, backed six of Ancora’s candidates. Ancora wants shareholders to elect seven new directors.
Shareholders will vote at the company’s annual meeting on May 9 unless the two sides reach a settlement beforehand.
Norfolk Southern, which is valued at $52.5 billion, said replacing its board members with Ancora’s candidates would “introduce significant risk, and ultimately destroy long-term shareholder value.”
The company’s stock price fell nearly 4% on Tuesday to trade at $232.37 in a broader market that was also weak.
ISS backed William Clyburn, who served on the U.S. Surface Transportation Board, railroad executive Sameh Fahmy, former Ohio governor John Kasich, former Illinois Central Railway chairman Gilbert Lamphere, and former banker Allison Landry, who ISS said could help strengthen communication with shareholders.
Ancora is trying to replace Norfolk Southern CEO Alan Shaw with Jim Barber, a former United Parcel Service (NYSE:) executive. ISS endorsed Shaw for election while Glass Lewis endorsed Barber for election.
But ISS called Barber a credible director candidate and CEO candidate and wrote that even though the firm was not endorsing him “he appears to a be a capable candidate with experience and skills that should be transferable to the railroad industry.”
The hedge fund did not comment on the report.
In its report, ISS said there was a “clear case for change” and noted “it appears that safety had been deteriorating for several years” even before the East Palestine derailment in 2023.
ISS noted that Ancora had received support from labor unions and at least one large Norfolk Southern customer, signaling that its “arguments have broad appeal.”
The report said it would be “justifiable for shareholders who have already lost faith in the current management team to support the entire dissident slate.”
Norfolk Southern has added new board members in the past year and appointed a new chief operating officer, John Orr, last month.
