Norfolk Southern and Ancora reach a settlement agreement to avoid a proxy fight.

• The railroad, Norfolk Southern, and activist investor Ancora reached an agreement to prevent a proxy battle.
• As part of the settlement, the railroad announced that Norfolk's board will increase from 13 to 14 members.

The railroad announced Thursday morning that activist Ancora had struck a deal to prevent a second proxy fight in two years.

The railroad announced that its board will expand from 13 to 14 members as part of the settlement, with an unspecified candidate joining the board after a search process. Ancora had initially nominated four candidates for Norfolk's board in preparation for a potential proxy fight but withdrew them as part of the cooperation agreement.

After former CEO Alan Shaw was removed from his position due to an inappropriate workplace relationship with the company's chief legal officer, it was anticipated that Ancora would launch a second proxy fight.

Mark George, Norfolk chief, expressed confidence that with Ancora's help, they would find the ideal independent director to join their board.

Despite obtaining three board seats at Norfolk's annual meeting, Ancora did not achieve its objectives.

According to Ancora president Fred DiSanto and activism chief Jim Chadwick, our perspective is that Norfolk Southern has begun a new era with the implementation of Board refreshment, management improvements, and new leadership's efforts to create a disciplined and operationally focused network.

Alan Shaw, the former CEO of Norfolk, was removed from his position after the board initiated an investigation into allegations of an inappropriate relationship with Nabanita Nag, the company's chief legal officer. Since their removal, Norfolk has been conducting an internal investigation into the nature of their relationship.

Ancora has managed $10 billion for its clients and has campaigned at C.H. Robinson, Forward Air, and Hasbro.