Norfolk Southern activist investor highlights past abusive behavior of new COO as proxy fight intensifies
A general view of the exterior of the headquarters of Norfolk Southern on April 1, 2023 in Atlanta, Georgia.
Icon Sportswire | Getty Images
Norfolk Southern is almost two months into a battle with activist investor Ancora, which is trying to shake up the railroad’s board and oust CEO Alan Shaw.
Now the firm is taking aim at Norfolk Southern’s new operating chief John Orr over what the activist calls an “excessive” buyout package and a career marred by allegations of racial and sexual discrimination.
Last month, Norfolk Southern hired Orr away from rival CPKC, paying tens of millions of dollars to buy him out of his contract. The move was widely seen as a response to Ancora’s operational criticisms and received praise from several Wall Street analysts.
In a letter to Norfolk Southern shareholders on Friday, Ancora highlighted past misconduct by Orr that raises questions about his hiring, even as the executive has overseen improvements in the railroad’s operations in his three weeks on the job.
Ancora documented both alleged and substantiated workplace misconduct by Orr, dating back to his time as a mid-level executive at Canadian National. An appointee of the Canadian Arbitration Board substantiated allegations that Orr used verbally abusive language toward a female employee in the early 2000s.
The employee and another witness told the employment tribunal at the time that Orr regularly cursed and shouted at the employee, and called her a “f—— b—-” and a “f—— idiot.” A witness told the arbitrator that, in one instance, Orr told the employee that she “was so f—— stupid it was embarrassing.”
The arbitrator found the claims credible.
Ancora also flagged a lawsuit filed in 2019 by a Black executive, who described Orr’s treatment of employees and subordinates as “abysmal.” The suit was filed against Canadian National, alleging racial discrimination.
Orr’s behavior was allegedly “so bad” that Canadian National was forced to provide executive coaching for him, according to a 2020 filing in the lawsuit. Orr’s deposition is sealed and the case was settled in 2022.
Prior to the announced hiring of Orr, Ancora drew attention to claims about his behavior in emails to two Norfolk Southern board members that CNBC obtained.
Ancora said in its statement on Friday that the hiring of Orr was a costly proposition that’s harming shareholders. As part of the agreement, Norfolk Southern said it would pay Orr’s prior employer $25 million in cash and provide additional unspecified concessions for a key rail hub and route in the southern U.S. Norfolk Southern values that particular part of the route at around 1% of its revenues.
When it announced Orr’s hiring, Norfolk Southern didn’t disclose the initial impact of the concessions or the estimated knock-on effects in the years to come.
‘Flawed premise’
Norfolk Southern told CNBC in a statement that Ancora’s analysis of the value of the route — the Meridian Speedway agreement — “is completely inaccurate and based on a flawed premise,” in that it assumes Norfolk Southern is forgoing more revenue than it actually is.
“As we previously stated, this revised agreement is by no means a consequential concession,” the company said.
Ancora is seeking to oust Norfolk Southern’s Shaw along with Orr in favor of former UPS CEO Jim Barber and former CSX Executive Vice President Jamie Boychuk, respectively. The activist has said that Norfolk Southern is dramatically underperforming its peers, and has laid the blame at the feet of Shaw and the board.
Regarding Orr, Norfolk Southern said he has a “track record of improving performance while operating safely and with integrity.”
“Ancora’s attempt to malign John by dredging up claims against his former employer, one of which is from over 20 years ago, is nothing more than an attempt to distract from the facts about their deeply flawed COO candidate, Jamie Boychuk,” a company spokesperson told CNBC. “Mr. Orr and Mr. Boychuk’s track records and industry reputations are simply not comparable.”
Jamie Boychuk and John Orr.
Courtesy: Longacre Square Partners and Norfolk Southern
In February 2023, a Norfolk Southern freight train derailed in East Palestine, Ohio, releasing toxic chemicals into the environment and prompting a political fight regarding railroad safety. Since then, the stock is roughly flat while the S&P 500 is up 26%.
Norfolk Southern’s shareholders meeting is scheduled for May 9.
Ancora has gained the backing of other stakeholders in its fight with the company. Neuberger Berman, which holds a small position in Norfolk Southern, said on Friday that it would support Ancora’s slate, citing a “history of poor governance that has long preceded” the railroad’s transformation efforts.
A settlement between the two sides appears unlikely, Gordon Haskett analyst Don Bilson said in a Friday note to clients. Shaw previously told CNBC that the company offered Ancora a “couple” of board seats in a settlement offer.
Ancora told CNBC that it’s made repeated attempts to settle with the company, both directly and through advisors. Any settlement, from Ancora’s perspective, would be contingent on a board refresh and Shaw’s ouster. The board has repeatedly expressed confidence in Shaw and has said it isn’t interested in a settlement that would lead to his departure.
Technology
Cognition to buy AI startup Windsurf days after Google poached CEO in $2.4 billion licensing deal
In this photo illustration, a man seen holding a smartphone with the logo of US artificial intelligence company Cognition AI Inc. in front of website.
Timon Schneider | SOPA Images | Sipa USA | AP
Artificial intelligence startup Cognition announced it’s acquiring Windsurf, the AI coding company that lost its CEO and several other senior employees to Google just days earlier.
Cognition said on Monday that it will purchase Windsurf’s intellectual property, product, trademark, brand and talent, but didn’t disclose terms of the deal. It’s the latest development in an AI talent war, as companies like Meta, Google and OpenAI fiercely compete for top engineers and researchers.
OpenAI had been in talks to acquire Windsurf for about $3 billion in April, but the deal fell apart, and Google said on Friday that it hired Windsurf’s co-founder and CEO Varun Mohan. Google is paying $2.4 billion in licensing fees and for compensation, as CNBC previously reported.
“Every new employee of Cognition will be treated the same way as existing employees: with transparency, fairness, and deep respect for their abilities and value,” Cognition CEO Scott Wu wrote in a memo to employees on Monday. “After today, our efforts will be as a united and aligned team. There’s only one boat and we’re all in it together.”
Cognition didn’t immediately respond to CNBC’s request for comment. Windsurf directed CNBC to Cognition.
Cognition is best known for its AI coding agent named Devin, which is designed to help engineers build software faster. As of March, the startup had raised hundreds of millions of dollars at a valuation of close to $4 billion, according to a report from Bloomberg.
Both companies are backed by Peter Thiel’s Founders Fund. Other investors in Windsurf include Greenoaks, Kleiner Perkins and General Catalyst.
“I’m overwhelmed with excitement and optimism, but most of all, gratitude,” Jeff Wang, the interim CEO of Windsurf, wrote in a post on X on Monday. “Trying times reveal character, and I couldn’t be prouder of how every single person at Windsurf showed up these last three days for each other and for our users.”
Wu said that the acquisition ensures all Windsurf employees are “treated with respect and well taken care of in this transaction.” All employees will participate financially in the deal, have vesting cliffs waived for their work to date and receive fully accelerated vesting for their, according to the memo.
“There’s never been a more exciting time to build,” Wu wrote.
WATCH: Google snatches Windsurf CEO after OpenAI deal dissolves
Meta CEO Mark Zuckerberg looks on before the luncheon on the inauguration day of U.S. President Donald Trump’s second presidential term in Washington on Jan. 20, 2025.
Evelyn Hockstein | Reuters
Meta on Monday said it has removed about 10 million profiles for impersonating large content producers through the first half of 2025 as part of an effort by the company to combat “spammy content.”
The crackdown is part of Meta’s broader effort to make the Facebook feed more relevant and authentic by taking action against and removing accounts that engage in “spammy” behavior, such as content created using artificial intelligence tools.
As part of that initiative, Meta is also rolling out stricter measures to promote original posts from creators, the company said in a blog post.
Facebook also took action against approximately 500,000 accounts that it identified to be engaged in inauthentic behavior and spam. These actions included demoting comments and reducing distribution of content, which are intended to make it harder for these accounts to monetize their posts.
Meta said unoriginal content is when images or videos are reused without crediting the original creator. Meta said it now has technology that will detect duplicate videos and reduce the distribution of that content.
The action against spam and inauthentic content comes as Meta increases its investment in AI, with CEO Mark Zuckerberg on Monday announcing plans to spend “hundreds of billions of dollars” on AI compute infrastructure to bring the company’s first supercluster online next year.
This mandate comes at a time when AI is making it easier to mass-produce content across social media platforms. Other platforms are also taking action to combat the increase of spammy, low-quality content on social media, also known as “AI slop.”
Google’s YouTube announced a change in policy this month that prevents content that is mass-produced or repetitive from being eligible for being awarded revenue.
This announcement sparked confusion on social media, with many users believing this was a reversal on YouTube’s stance on AI content. However, YouTube clarified that the policy change is aimed at curbing unoriginal, spammy and repetitive videos.
“We welcome creators using AI tools to enhance their storytelling, and channels that use AI in their content remain eligible to monetize,” said a spokesperson for YouTube in a blog post to clarify the new policy.
YouTube’s new policy change will take effect on Tuesday.
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