03:51 PM EDT, 05/10/2024 (MT Newswires) -- Norfolk Southern's ( NSC ) executive team or strategy is unlikely to change after the railway company's shareholders elected a majority of its director nominees, including Chief Executive Alan Shaw, who survived activist investor Ancora's attempt to oust him, UBS Securities said in a note e-mailed Friday.

A preliminary vote count showed Thursday that Norfolk Southern's ( NSC ) shareholders elected 10 of the company's director nominees, including reelecting Shaw, while three out of seven nominees proposed by Ancora managed to secure board representation. The investor previously sought to oust Shaw, citing what Ancora said was the company's poor financial performance and safety lapses.

Last month, Norfolk Southern ( NSC ) reported preliminary first-quarter results below analysts' expectations and struck a $600 million agreement in principle to settle a class-action lawsuit over the derailment of one of its trains in East Palestine, Ohio, last year.

The voting results indicated that Shaw "barely received support" from holders of 50% of Norfolk Southern's ( NSC ) outstanding shares, Ancora Holdings CEO Frederick DiSanto and Ancora Alternatives President James Chadwick said Thursday. "We will continue to hold Mr. Shaw to account and push for the appointment of a qualified operator who can actually drive shareholder value."

Considering Norfolk Southern's ( NSC ) current board's backing for Shaw, it "appears unlikely" that there would be changes in the company's executive team in the near term, UBS analysts Thomas Wadewitz, Michael Triano and Michael DiMattia said. "However, they have already changed course with the prior hiring of (Chief Operating Officer) John Orr and clearly moved down a path of focusing more aggressively on productivity."

UBS said investors were likely expecting Ancora to secure more board seats. The activist investor could continue to push for change at Norfolk Southern ( NSC ) in the future since it doesn't have an agreement with the company's management, the analysts said. Norfolk Southern's ( NSC ) new board could vote on a new chair within the next several weeks after Amy Miles lost her board seat in the proxy vote, along with two other directors, according to the note.

The National Transportation Safety Board plans to publish its report on the Ohio incident next month that is expected to include an assessment of the decisions made by Norfolk Southern's ( NSC ) leadership, the analysts said. "Depending on the outcome of the report, it could result in additional questions about performance of the (Norfolk Southern ( NSC )) team."

Norfolk shares were up 1.3% ahead of market close on Friday, but down 3% so far this year. Prior to the news on the proxy outcome, the company had underperformed other railroad stocks in 2024, according to UBS.

"While visibility may be limited on the pace of change at (Norfolk Southern ( NSC )), we believe (the company) is likely to deliver meaningful improvement in operating costs on a multi-quarter basis, and we view the pullback in the stock as presenting a further opportunity," the UBS analysts wrote. "We would buy (Norfolk Southern ( NSC )) stock today."

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