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.
Artificial intelligence robot looking at futuristic digital data display.
Yuichiro Chino | Moment | Getty Images
Businesses are turning to artificial intelligence tools to help them navigate real-world turbulence in global trade.
Several tech firms told CNBC say they’re deploying the nascent technology to visualize businesses’ global supply chains — from the materials that are used to form products, to where those goods are being shipped from — and understand how they’re affected by U.S. President Donald Trump’s reciprocal tariffs.
Last week, Salesforce said it had developed a new import specialist AI agent that can “instantly process changes for all 20,000 product categories in the U.S. customs system and then take action on them” as needed, to help navigate changes to tariff systems.
Engineers at the U.S. software giant used the Harmonized Tariff Schedule, a 4,400-page document of tariffs on goods imported to the U.S., to inform answers generated by the agent.
“The sheer pace and complexity of global tariff changes make it nearly impossible for most businesses to keep up manually,” Eric Loeb, executive vice president of government affairs at Salesforce, told CNBC. “In the past, companies might have relied on small teams of in-house experts to keep pace.”
Firms say that AI systems are enabling them to take decisions on adjustments to their global supply chains much faster.
Andrew Bell, chief product officer of supply chain management software firm Kinaxis, said that manufacturers and distributors looking to inform their response to tariffs are using his firm’s machine learning technology to assess their products and the materials that go into them, as well as external signals like news articles and macroeconomic data.
“With that information, we can start doing some of those simulations of, here is a particular part that is in your build material that has a significant tariff. If you switched to using this other part instead, what would the impact be overall?” Bell told CNBC.
‘AI’s moment to shine’
Trump’s tariffs list — which covers dozens of countries — has forced companies to rethink their supply chains and pricing, with the likes of Walmart and Nike already raising prices on some products. The U.S. imported about $3.3 trillion of goods in 2024, according to census data.
Uncertainty from the U.S. tariff measures “actually probably presents AI’s moment to shine,” Zack Kass, a futurist and former head of OpenAI’s go-to-market strategy, told CNBC’s Silvia Amaro at the Ambrosetti Forum in Italy last month.
“If you wonder how hard things could get without AI vis-a-vis automation, and what would happen in a world where you can’t just employ a bunch of people overnight, AI presents this alternative proposal,” he added.
Nagendra Bandaru, managing partner and global head of technology services at Indian IT giant Wipro, said clients are using the company’s agentic AI solutions “to pivot supplier strategies, adjust trade lanes, and manage duty exposure dynamically as policy landscapes evolve.”
Wipro says it uses a range of AI systems — both proprietary and supplied by third parties — from large language models to traditional machine learning and computer vision techniques to inspect physical assets in cross-border transit.
‘Not a silver bullet’
While it preferred to keep company names confidential, Wipro said that firms using its AI products to navigate Trump’s tariffs range from a Fortune 500 electronics manufacturer with factories in Asia to an automotive parts supplier exporting to Europe and North America.
“AI is a powerful enabler — but not a silver bullet,” Bandaru told CNBC. “It doesn’t replace trade policy strategy, it enhances it by transforming global trade from a reactive challenge into a proactive, data-driven advantage.”
AI was already a key investment priority for global firms prior to Trump’s sweeping tariff announcements on April. Nearly three-quarters of business leaders ranked AI and generative AI in their top three technologies for investment in 2025, according to a report by Capgemini published in January.
“There are a number of ways AI can assist companies dealing with the tariffs and resulting uncertainty. But any AI solution’s success will be predicated on the quality of the data it has access to,” Ajay Agarwal, partner at Bain Capital Ventures, told CNBC.
The venture capitalist said that one of his portfolio companies, FourKites, uses supply chain network data with AI to help firms understand the logistics impacts of adjusting suppliers due to tariffs.
“They are working with a number of Fortune 500 companies to leverage their agents for freight and ocean to provide this level of visibility and intelligence,” Agarwal said.
“Switching suppliers may reduce tariffs costs, but might increase lead times and transportation costs,” he added. “In addition, the volatility of the tariffs [has] severely impacted the rates and capacity available in both the ocean and the domestic freight networks.”
WATCH: Former OpenAI exec says tariffs ‘present AI’s moment to shine’
Technology
Amazon’s Zoox robotaxi unit issues second software recall in a month after San Francisco crash
A Zoox autonomous robotaxi in San Francisco, California, US, on Wednesday, Dec. 4, 2024.
David Paul Morris | Bloomberg | Getty Images
Amazon‘s Zoox robotaxi unit issued a voluntary recall of its software for the second time in a month following a recent crash in San Francisco.
On May 8, an unoccupied Zoox robotaxi was turning at low speed when it was struck by an electric scooter rider after braking to yield at an intersection. The person on the scooter declined medical attention after sustaining minor injuries as a result of the collision, Zoox said.
“The Zoox vehicle was stopped at the time of contact,” the company said in a blog post. “The e-scooterist fell to the ground directly next to the vehicle. The robotaxi then began to move and stopped after completing the turn, but did not make further contact with the e-scooterist.”
Zoox said it submitted a voluntary software recall report to the National Highway Traffic Safety Administration on Thursday.
A Zoox spokesperson said the notice should be published on the NHTSA website early next week. The recall affected 270 vehicles, the spokesperson said.
The NHTSA said in a statement it had received the recall notice and that the agency “advises road users to be cautious in the vicinity of vehicles because drivers may incorrectly predict the travel path of a cyclist or scooter rider or come to an unexpected stop.”
If an autonomous vehicle continues to move after contact with any nearby vulnerable road user, it risks causing harm or further harm. In the AV industry, General Motors-backed Cruise exited the robotaxi business after a collision in which one of its vehicles injured a pedestrian who had been struck by a human-driven car and was then rolled over by the Cruise AV.
Zoox’s May incident comes roughly two weeks after the company announced a separate voluntary software recall following a recent Las Vegas crash. In that incident, an unoccupied Zoox robotaxi collided with a passenger vehicle, resulting in minor damage to both vehicles.
The company issued a software recall for 270 of its robotaxis in order to address a defect with its automated driving system that could cause it to inaccurately predict the movement of another car, increasing the “risk of a crash.”
Amazon acquired Zoox in 2020 for more than $1 billion, announcing at the time that the deal would help bring the self-driving technology company’s “vision for autonomous ride-hailing to reality.”
While Zoox is in a testing and development stage with its AVs on public roads in the U.S., Alphabet’s Waymo is already operating commercial, driverless ride-hailing services in Phoenix, San Francisco, Los Angeles and Austin, Texas, and is ramping up in Atlanta.
Tesla is promising it will launch its long-delayed robotaxis in Austin next month, and, if all goes well, plans to expand after that to San Francisco, Los Angeles and San Antonio, Texas.
— CNBC’s Lora Kolodny contributed to this report.
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