NORFOLK, Va. — Norfolk Southern Corp.’s Board of Directors has agreed to seek shareholder approval before offering certain executive severance packages, the Virginian-Pilot reported.
Shareholders voted at the railroad’s annual meeting in May in favor of a resolution that would require their support of any severance deal totaling at least three times an executive’s base salary and bonuses. Until now, such “golden parachutes” required no shareholder input.
Amalgamated Bank, a New York City-based investor of workers’ retirement funds, proposed the resolution — similar to proposals it has brought before shareholders of other corporations. The Norfolk Southern resolution was the first of those efforts to win the vote of a majority of shareholders.
Amalgamated Bank’s LongView Funds own more than 100,000 shares of Norfolk Southern common stock. LongView typically sponsors about 25 shareholder proposals each year, including efforts to add independent members to corporate boards and to rein in executive pay.
The bank proposed the oversight of golden parachutes at Norfolk Southern in response to a deal promised to David R. Goode, the company’s chairman, president and chief executive officer, that would amount to more than three times his base salary, bonuses and other benefits. Amalgamated’s economists said they considered that compensation high when measured against the declining value of the company’s stock in recent years.
Norfolk Southern stock closed at $21.15 in trading Friday on the New York Stock Exchange, up 95 cents. The share price has rebounded since falling from about $35 in early 1998 to less than $15 in late 2000.
Almost 56 percent of Norfolk Southern shares, voted either in person or by proxy at the time of the annual meeting, favored the resolution.
Shareholder support of the proposal didn’t guarantee that the board would implement it. The board originally opposed the proposal, arguing that the company needed the freedom to offer competitive packages to attract desired employees.
But with a majority of shareholders backing it, the board’s executive and governance committee decided to adopt the proposal on Oct. 22.