Proxy Blog

Norfolk Southern Corporation

May 3, 2019

The annual proxy for this railroad company had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Shareholder proposal on simple majority voting 

Magni voted as follows: 

  1. For proforma proposals.
    -Directors – The board has a majority of independent directors and some have CEO/CFO experience with other companies. The compensation of directors is disclosed with a meaningful portion in equity where the equity has restrictions to align director incentives with long-term value creation. 
    -Auditors – There appear to be no controversies with the financial statements of the company.
    -“Say-on-pay” – The company discusses shareholder engagement and provides clarity on how it uses the feedback, though the level of activity is not disclosed. The peer group is listed and is constructed using the standard industry definition of competition. Magni voted for this proposal, though future proxy statements should clarify the level of engagement activity. 
  2. Against the shareholder proposal on simple majority. The shareholder proposal is an important topic related to good governance. That said, the proposal is vague and poorly worded. The company response contains some good points about the limited use of supermajorities and the value to shareholders of supermajorities in specific circumstances. The company was, perhaps intentionally, vague about where supermajorities exist within the bylaws and/or governance principlesGiven the aforementioned challenges in the proposal, Magni voted against it. Generally, supermajorities are inconsistent with good governance, so a clearer and more focused proposal would likely get Magni’s support.