Norfolk Southern CEO Alan Shaw fired for inappropriate relationship with employee

Norfolk Southern CEO Alan Shaw was fired from his tenure at the railroad company when it launched an investigation into alleged misconduct by its boss, who had an “inappropriate” relationship with his subordinate and his most senior lawyer.

Shaw was found to have had a consensual relationship with Nabanita Nag, the company's Executive Vice President of Corporate Affairs, General Counsel and Company Secretary.

Norfolk Southern's board of directors voted unanimously to fire Shaw and Nag based on preliminary results, the Atlanta-based company announced Wednesday.

Shaw has held the top position since May 2022.

“This leadership change comes in connection with the preliminary findings of an ongoing investigation that found that Shaw violated company policy by entering into a consensual relationship with the company's chief legal officer,” Norfolk Southern said.

“Shaw’s departure has nothing to do with the company’s performance, financial reporting or operating results.”

The company added that Shaw, who is married and has four children, was terminated for cause, effective immediately.

The board of directors launched its investigation into Shaw on Sunday, citing allegations of possible conduct that was inconsistent with the company's code of ethics.

On Wednesday, CNBC reported that Shaw's relationship with Nag had been the focus of the investigation just hours before the two were fired.

Nag joined the company as Consul General in August 2020 before being promoted to Senior Vice President and Chief Legal Officer in March 2022.

In July 2022, she was appointed Executive VP.

According to her LinkedIn profile, she previously worked at Prudential Financial and Goldman Sachs.

Shaw oversaw Norfolk Southern during the environmentally devastating train derailment in East Palestine, Ohio, in February 2023.

The February 2023 train derailment in East Palestine, Ohio, was the largest rail disaster the country has seen in a decade.

Eleven of the 38 rail cars that derailed near the Pennsylvania border on February 3, 2023, were carrying hazardous materials.

Some residents were evacuated that night, but days later even more people had to leave their homes for fear of an impending explosion.

Despite potential health effects, authorities intentionally released and burned toxic vinyl chloride three days after the crash, sending flames and smoke into the air.

In addition to vinyl chloride, the derailed wagons contained the chemicals butyl acrylate, ethylhexyl acrylate, ethylene glycol monobutyl ether and isobutylene.

The National Transportation Safety Board accused Norfolk Southern of interfering in the investigation and abusing its status as a party to the investigation to assist in gathering information.

The NTSB concluded that the derailment was caused by a wheel bearing that had caught fire more than 20 miles earlier, but was not detected in time due to inaccurate detectors on the track.

Norfolk Southern later became a defendant in a class action lawsuit and agreed to a $600 million settlement.

The settlement included claims from residents and businesses in the city and impacted surrounding communities.

In addition, the law provides compensation “for past, present and future personal injuries resulting from exposure to the chemicals in question.”

In May, activist investor Ancora Holdings attempted to take control of the company, winning three seats on the board, but failed to remove Shaw as CEO.

Shaw received $13.4 million in compensation in his first full year last year and was eligible to receive nearly $9.6 million in retirement compensation if he left the company.

It was not immediately clear how the termination without notice would affect the $2.3 million severance package Norfolk Southern had previously promised him.

COO John Orr, one of the board members supported by Ancora, was considered a possible successor to Shaw.

Instead, the board appointed Executive VP and CFO Mark George as the next CEO.

“I am honored to take on this role and lead Norfolk Southern,” said George. “I look forward to continuing to work with John and the entire Thoroughbred team as we continue to optimize our operations and serve our customers while creating a safe and fulfilling workplace and creating value for our employees, customers, shareholders and communities.”

“The Board has full confidence in Mark and his ability to continue to meet our commitments to shareholders and other stakeholders,” said CEO Claude Mongeau.

Mongeau said George will “work closely with Orr” and “continue to improve NS's operating performance and close the margin gap with competitors.”

With post wires