US labor union backs Norfolk in proxy battle with Ancora

April 16 (Reuters) - A top federation of U.S. labor unions has urged Norfolk Southern shareholders to vote against Ancora's director candidates, arguing the hedge fund's plans for the railroad would compromise safety and improvements being considered.

"Ancora's proposed strategy for Norfolk Southern is "not fit for purpose" and the election of Ancora's proposed directors will derail the safety and service improvements that are currently underway at Norfolk Southern," the American Federation of Labor and Congress of Industrial Organizations said in a letter.

Ancora, in February, proposed the replacement of Norfolk Southern's top management, including its CEO, and nominated eight directors to the railroad operator's board in response to the company's negligence leading to a 2023 train derailment in East Palestine, Ohio. Norfolk Southern has offered to add two new directors to its board and rejected all eight of Ancora's candidates, saying none would bring fresh skills or experience.

"We believe that a change in leadership at Norfolk Southern would be highly disruptive to our operations, our workers, and the North American supply chain," a Norfolk Southern spokesman said in an emailed statement on Tuesday.

Meanwhile, Ancora criticized the move and said it did not expect much impact as "major institutional shareholders continue to support us."

Shareholders are scheduled to vote on the proposals at the annual meeting on May 9. (Reporting by Aatreyee Dasgupta in Bengaluru and Svea Herbst-Bayliss in New York; Editing by Sriraj Kalluvila)