Western Railroad Discussion > Oberman lays it out plain that PSR is bad and NS should take note

https://www.progressiverailroading.com/federal_legislation_regulation/article/STB-Chair-Oberman-NS-takeover-could-be-a-huge-detriment-to-the-rail-industry--71323.
Oberman not pleased and has a warning to NS with activist investor vowing to install harsh PSR to lower OR.  

tomstp Wrote:
-------------------------------------------------------
> https://www.progressiverailroading.com/federal_leg
> islation_regulation/article/STB-Chair-Oberman-NS-t
> akeover-could-be-a-huge-detriment-to-the-rail-indu
> stry--71323.
> Oberman not pleased and has a warning to NS with
> activist investor vowing to install harsh PSR to
> lower OR.  

Not that I disagree with Oberman, but it won't matter as Wall Street runs class 1s now. Reduce the OR and squeeze the system for profit, then sell stock right before a system-wide meltdown.

Isn't Boardman aka Oberman retiring soon? Railroads might want to schedule his retirement
party, he's making entirely too much sense.

Out 

In our free market economy we cannot legislate how investors choose their purchases or what directors they elect so it is now as it has been in the past: speculative investors seek quick returns.
What we can do though is to make the bad outcomes of these investment/operations plans conform to public utility service performance, price equity, and environmental and safety standards.
Oberman, the FRA, and the STB can all weigh in on these effects.
Railroads have a long history of resisting safety legislation, all the way back to "power brakes" and "safety appliances".  Of course we now know that by adopting these things the industry became much more efficient and safe.
Now if the same level of safety expectations can be focused on autonomous highway vehicles.....

railstiesballast Wrote:
-------------------------------------------------------
> In our free market economy we cannot legislate how
> investors choose their purchases or what directors
> they elect so it is now as it has been in the
> past: speculative investors seek quick returns.
> What we can do though is to make the bad outcomes
> of these investment/operations plans conform to
> public utility service performance, price equity,
> and environmental and safety standards.
> Oberman, the FRA, and the STB can all weigh in on
> these effects.
> Railroads have a long history of resisting safety
> legislation, all the way back to "power brakes"
> and "safety appliances".  Of course we now know
> that by adopting these things the industry became
> much more efficient and safe.
> Now if the same level of safety expectations can
> be focused on autonomous highway vehicles.....


Yep....I'm sure the rail customers that are not getting their cars are remembering this...BRAHAHA....

Posted from Android



Edited 1 time(s). Last edit at 02/24/24 00:51 by ns1000.

It seems modest and well crafted rail regulation or re regulation if you will...is prudent. 

"Free market" means absence of regulations to many people.

As a veteran Chicago alderman, Mr Oberman is looking out for his constituents / common folk / rail workers.

Not Wall Street.

Posted from Android

engineerinvirginia Wrote:
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> It seems modest and well crafted rail regulation
> or re regulation if you will...is prudent. 

Having work in the industry both before and after deregulation, I can say that deregulation really made a world of difference in going after business. I would be careful to have any re-regulation that restricted contracting and rate making.

However certain reforms need to be placed on the railroad industry, and I can say that it earned them.

 

railstiesballast Wrote:
-------------------------------------------------------
> In our free market economy we cannot legislate how
> investors choose their purchases or what directors
> they elect so it is now as it has been in the

Not true.  We could lesgislate that the right of voting shares belongs to the beneficial owner of the shares and not to the investment management companies that hold the shares in trust.  The reason hedge funds and companies like Vanguard have so much power is that they are permitted by law to vote shares they do not own with their own capital.

This is of course labeled "shareholder democracy" even though its the exact opposite.

These large funds are not investors, they are investment managers.

abyler Wrote:
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> railstiesballast Wrote:
> --------------------------------------------------
> -----
> > In our free market economy we cannot legislate
> how
> > investors choose their purchases or what
> directors
> > they elect so it is now as it has been in the
>
> Not true.  We could lesgislate that the right of
> voting shares belongs to the beneficial owner of
> the shares and not to the investment management
> companies that hold the shares in trust.  The
> reason hedge funds and companies like Vanguard
> have so much power is that they are permitted by
> law to vote shares they do not own with their own
> capital.
>
> This is of course labeled "shareholder democracy"
> even though its the exact opposite.
>
> These large funds are not investors, they are
> investment managers.

You are correct, of course.  But, Vanguard is exploring a process whereby the plan participant (you and me) would be able to express our views on corporate matters.  But the practical issues of having share owners vote on each of 5-15 directors and 10-20 resolutions for each of thousands of companies owned is pretty daunting. A significant number of Americans won't even vote in a one against one contest for their local Congress member in an off year election

We saw exactly that situation unfold at CSX where four large investment managers collectively owned or managed shares for about 60% of the firm, and about 85% was owned by institutions like Vanguard, Fidelity, TIAA, CalPers, etc. If you are a fund manager measured against the S&P500, you have to own the companies in the S&P 500.

That's one reason why I think it's important that American labor have seats at the Board table, and voting rights / oversight of management. Just like other Board members.  It's the law in Germany.

If Vanguard doesn't let you vote that's their policy....Both Empower and Merrill Lynch send me proxy statements for my account holdings...although my holdings are listed in some arcane number of 'units' you can translate that into number of shares and that is the number of shares you can vote. I hate to say after 27 years, while I have enough CSX shares for the dividends to be pleasant boost to my income, it still doesn't amount to a hill of beans as to what institutions hold. Nevertheless, if you don't vote you can't complain, so I vote my shares. 

This is another one of the best Trainorders threats I've ever seen.  I think Martin Oberman's right.  Basically railroads are not just any business, they're a critical public utility.  I think they have to be re-regulated to protect them from what basically amount to Wall Street raids.  This wouldn't be the old-style regulation that straightjacketed the industry and nearly broke it, but operational regulation to do things like eliminate two- and three-mile-long trains that work poorly.  And some financial re-regulation would be good too, like a return to no stock buybacks.  Also, no  more management bonuses.  I believe even the late Donald J. Russell was opposed to management bonuses, for the obvious reason that they tend to drive management attention to the financial welfare of managers and their families and away from the railroad.  I worked in a company like that once.  The results were chaotic operations and bad morale because there was obviously plenty of money to have better. 

AaronJ Wrote:
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> Not that I disagree with Oberman, but it won't
> matter as Wall Street runs class 1s now. Reduce
> the OR and squeeze the system for profit, then
> sell stock right before a system-wide meltdown.

And I say, let them meltdown. You can't fix stupid, and Wall St. is full of idiots who are unfixable.

"But we see the danger on the horizon and it's time to at least speak out and alert the industry and Wall Street to what could happen," he said.

Thank you Mr. Oberman, for speaking out. STB has a chance to catch more cheating (BNSF and UP running fewer and slower trains than promised to the coal and chicken customers) and I'm sure NS would be glad to join that exclusive club.

Lackawanna484 Wrote:
-------------------------------------------------------
> That's one reason why I think it's important that
> American labor have seats at the Board table, and
> voting rights / oversight of management. Just like
> other Board members.  It's the law in Germany.

Nice idea, but it won't work here. With huge money involved, labor friendly board member can easily be bought, and if not, blackmailed. Maybe several generations later after pain (Wall St. implosion, legitimate mass protests), there'd be similar laws here like in Germany that actually might work as intended.

Strike or threat of a strike is still the best hedge against lack of corporate oversight. It worked with UPS with their more recent contract - drivers got raises, desk jockeys got fired. Seems current UPS management got their priorities straight when their most important asset (delivery drivers) threatened to strike. Not totally their fault, as the quality of life was declining due to the mismanagement of the economy. If the cost of living wasn't so bad, management would have been in better position to negotiate.

And with ex-COO Jim Barber mentioned as Ancora Holdings' desire as the next CEO of NS, this isn't too far off topic. Several executives "retired" from UPS in 2019, and he was one of them. That's less than a year after the UPS contract was meddled with. My speculation is that the retired executives saw the handwriting on the wall, due to who was meddling, and how it was going to eat into the company's margins.

How can having a seat on a board work in an environment where an outside organization can meddle in your affairs? That's the same with Soroban and Ancora playing the laughable "activist shareholder" card with UP and NS.

engineerinvirginia Wrote:
-------------------------------------------------------
> If Vanguard doesn't let you vote that's their
> policy....Both Empower and Merrill Lynch send me
> proxy statements for my account
> holdings...although my holdings are listed in some
> arcane number of 'units' you can translate that
> into number of shares and that is the number of
> shares you can vote. I hate to say after 27 years,
> while I have enough CSX shares for the dividends
> to be pleasant boost to my income, it still
> doesn't amount to a hill of beans as to what
> institutions hold. Nevertheless, if you don't vote
> you can't complain, so I vote my shares. 

Right, voting your shares and principles is always a good idea.  If you have ESOP shares (employee stock ownership plan) in CSX UP etc, they are closer to directly held stock than, say, a mutual fund which owns shares in many of the S&P 500 index.  CSX has been just under 1% of the total value of the 500 stock capitalizations together.

Merrill Lynch would go crazy sending you and me proxies for all 500 companies in the S&P 500 index for out 0.000001%