CHICAGO — Norfolk Southern shareholders have approved a proposal urging the board of directors to get stockholder approval for future severance agreements, so-called golden parachutes, for senior executives, the Roanoke Times reported.
Amalgamated Bank Longview Collective Investment Fund, which owns 114,715 shares of NS stock, spearheaded the proposal at the company’s annual shareholders meeting in Chicago on Thursday.
Officers of the Amalgamated fund argued shareholders have the right to oversee future severance agreements for senior executives who stand to receive benefits that exceed three times the sum of their salary plus bonus. NS officials, in the company’s proxy statement, argued the proposal would put the company “at a competitive disadvantage in attracting, retaining and rewarding qualified executives.”
“We are very pleased the majority of shareholders supported the proposal, and we look forward to the response from the board,” said Melissa Moye, chief economist with Trust and Investment Services Amalgamated Bank in Washington . NS’ board of directors would have to make the proposal company policy.
“At this time, we don’t have these issues before the company,” said NS spokeswoman Susan Bland.
Also on Thursday, NS Chairman and President David Goode emphasized the company’s continual improvements in customer service, productivity and financial performance. In 23 days, NS will celebrate its 20th anniversary.
“Your company has faced the tough challenges of the past two decades. … NS is prepared to enter the next decade and beyond with a finely tuned transportation network fully capable of handling the traffic growth that will be generated when the economy rebounds,” Goode said.
Goode did not comment on a suggestion by two shareholders, including Edward Nemetz of Downers Grove, Ill., that NS merge with another railroad. Instead, he said a small number of big players in the market makes it possible for the operation of super-fast transcontinental freight trains. The crucial factor in marketing railroad service, however, is delivering consistency to customers, he said.
“We greatly improved our operations to where we have a scheduled, reliable service network. Performance is getting better and better, Goode said.
Last year, NS was in the top quartile of S&P stock performance, even though its values are not yet where they ought to be, Goode said.
NS has revamped its freight network with the goal of improving customer service and bolstering its bottom line.
“Just as one incident or injury is too many, one service failure is too many,” Goode said.
Responding to a shareholder’s question about NS’ thoughts on the Amtrak debate concerning public versus private funds, Goode said it’s important that policymakers do not confuse freight service with passenger rail.
“Our focus at NS is the operation of freight and taking trucks off congested highways,” Goode said.
As for passenger rail service through Roanoke, NS’ senior vice president of planning, Jim McClellan, said it would cost about $120 million to upgrade the tracks that would serve a passenger train, money that NS will not fund. “The state has to come up with the money,” McClellan said. “Our game plan is to go after trucks. We will not accept any degradation with our freight service.”