Norfolk Southern to Add Operating Ratio to Bonus Considerations
By Ben Glickman
Norfolk Southern said it would consider another operating metric when determining executives' bonuses and make operational changes as a proxy battle at the rail operator heats up.
The Atlanta-based company said that targets for operating ratio, or expenses as a percentage of revenue, would now determine 30% of executives' annual incentives in 2024. The percentage of bonuses determined by operating income and revenue were both reduced under the new plan.
Norfolk Southern also said that intermodal and automative operations would now report directly to recently-appointed Chief Operating Officer John Orr. The segment was previously within Norfolk Southern's marketing division.
The company said that the change would allow for more improvements to productivity and coordination across the business.
Orr, an industry veteran, was hired in late March as the company faces a proxy fight with Ancora Holdings. The activist investor is looking to oust the board due to claims of inefficiency and missing financial targets.
Norfolk Southern said that since Orr's appointment, he has already streamlined operations with initiatives such as a "safety blitz," a task force on network operations and a network heat map. The company said terminal dwell had improved by 8% and active train count was down 8% since Orr stepped in.
Chair of the company's compensation committee John Thompson said the addition of operating ratio in 2024 compensation plans was made after "extensive shareholder feedback."
Write to Ben Glickman at ben.glickman@wsj.com
(END) Dow Jones Newswires
April 04, 2024 19:07 ET (23:07 GMT)
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