Norfolk Southern Negotiating CEO's Exit, Looks for Interim Chief, Sources Say
Norfolk Southern Corp is in talks to negotiate the departure of Chief Executive James Squires and is searching for an interim CEO while it looks for a permanent replacement, according to people familiar with the matter.
Squires, who has led Norfolk Southern since 2015, has been under growing pressure from the railroad's largest shareholder, activist investor Inclusive Capital Partners, to improve the company's operating performance.
Norfolk Southern has been struggling with service problems that have angered customers and led to a decline in its stock price. The company's operating ratio, a measure of efficiency, has also been rising.
The talks with Squires are at an early stage and could still fall apart, the sources said. The company has not yet decided on an interim CEO, but it is considering several candidates, including some from within the company.
Norfolk Southern declined to comment.
Squires' Departure Would Mark a Major Shift for Norfolk Southern
If Squires departs, it would mark a major shift for Norfolk Southern. He has been with the company for more than 40 years and is well-respected in the railroad industry.
However, Norfolk Southern has been facing increasing pressure from Inclusive Capital Partners, which owns about 4% of the company's shares.
Inclusive Capital Partners has been critical of Norfolk Southern's operating performance and has pushed for Squires' removal.
Norfolk Southern Looking for Interim CEO While it Searches for Permanent Replacement
While Norfolk Southern searches for a permanent replacement for Squires, it is looking for an interim CEO. The company is considering several candidates, including some from within the company's ranks.
The interim CEO will be responsible for overseeing Norfolk Southern's day-to-day operations and helping to improve the company's performance.
It is not clear how long the search for a permanent CEO will take.
Norfolk Southern's Struggles
Norfolk Southern has been struggling with several issues in recent years, including service problems and rising costs.
The company's operating ratio has increased from 68.3% in 2015 to 72.8% in 2022. The higher operating ratio means that Norfolk Southern is spending more money to operate its trains.
Norfolk Southern has also been facing pressure from customers who have complained about poor service.
In 2022, the Surface Transportation Board, which regulates railroads, fined Norfolk Southern $2.9 million for service failures.
Squires' Potential Departure Would Come at a Critical Time
Squires' potential departure would come at a critical time for Norfolk Southern. The company is facing a number of challenges, including the need to improve its operating performance and deal with the demands of Inclusive Capital Partners.
It is not clear who will replace Squires if he leaves. However, the company has a number of experienced executives who could step into the role.
The search for a permanent CEO could also provide Norfolk Southern with an opportunity to bring in new ideas and perspectives.
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