By Svea Herbst-Bayliss
(Reuters) -Activist hedge fund Ancora Holdings has secured enough support from Norfolk Southern (NYSE:NSC) shareholders to win some seats on the U.S. railway operator's board of directors, people familiar with the matter said on Thursday.
Investor votes are still being counted ahead of Norfolk Southern's annual meeting of shareholders on Thursday, and the final number of board seats that Ancora will get has not yet been determined, the sources said.
Ancora has nominated 7 candidates to Norfolk Southern's 13-member board.
The sources requested anonymity ahead of an official announcement. Norfolk Southern and Ancora were not immediately available for comment.
Ancora assembled a director slate that includes former Kansas City Southern (NYSE:KSU) executive Sameh Fahmy, Gilbert Lamphere, a former chairman of the Illinois Central Railway, and William Clyburn who served on the U.S. Surface Transportation board.
It has argued new directors are needed to improve Norfolk Southern's financial performance and reach operational targets.
Three proxy advisory firms -- Institutional Investor Services, Glass Lewis and Egan-Jones -- recommended that Norfolk Southern investors elect at least a handful of Ancora's nominees. They said the company's board should be refreshed after a string of safety problems including a derailment in East Palestine, Ohio in 2023.
Ancora also argued that Norfolk Southern's chief executive Alan Shaw should be ousted.
Norfolk Southern has told investors it has taken appropriate action by refreshing its board and hiring a new chief operating officer.
Among the new board directors Norfolk Southern tapped are Richard Anderson, a former head of passenger railway Amtrak, and former U.S. Senator Heidi Heitkamp. The company also hired John Orr from Canadian Pacific (NYSE:CP) Kansas City as its chief operating officer. Norfolk Southern paid the rival railroad $25 million to buy Orr out of his non-competition agreement.
Ancora won the support of large railroad unions and steel maker Cleveland-Cliffs (NYSE:CLF), a big Norfolk Southern client.