Norfolk Southern CEO Alan Shaw He was sacked just days after the railway operator launched an investigation into alleged misconduct by his boss, who had an “inappropriate” relationship with a subordinate and a top-level lawyer.
Shaw was found to have had consensual relations with Navneeta Nag, the company's executive vice president (corporate affairs), chief legal officer and corporate secretary.
Norfolk Southern's board of directors voted unanimously to fire both Shaw and Nagy based on a preliminary investigation, the Atlanta-based company announced Wednesday.
Shaw has held the top spot since May 2022.
Norfolk Southern said “This change in leadership is in connection with the preliminary findings of an ongoing investigation that found Shaw violated company policies by engaging in a consensual relationship with the company's chief legal officer.”
“Shaw's departure is unrelated to the company's performance, financial reporting and results of operations.”
The company said Shaw, who is married and has four children, has been fired with immediate effect.
The board launched an investigation against Shaw on Sunday, alleging that he violated the company's code of conduct.
On Wednesday, CNBC reported The relationship between Shaw and Nag, hours before both were sacked, was a focus of the investigation.
Nag joined the company in August 2020 as General Counsel, before being promoted as Senior Vice President and Chief Legal Officer in March 2022.
In July 2022, he was appointed Executive Vice President.
According to his LinkedIn profile, he previously worked at Prudential Financial and Goldman Sachs.
Shaw oversaw Norfolk Southern during the environmentally devastating train accident in East Palestine, Ohio, in February 2023.
February 2023 Eastern Palestine, Train derails in OhioIt was the biggest rail accident the country had seen in a decade.
Eleven of the 38 trains that derailed near the Pennsylvania border on February 3, 2023, were carrying hazardous materials.
Some residents were evacuated that night, but more were forced to leave their homes a few days later due to fears of an imminent explosion.
Despite the potential health effects, officials intentionally released and burned toxic vinyl chloride three days after the accident, sending flames and smoke into the air.
In addition to vinyl chloride, the derailed trains contained chemicals called butyl acrylate, ethylhexyl acrylate, ethylene glycol monobutyl ether, and isobutylene.
The National Transportation Safety Board accused Norfolk Southern of interfering with the investigation and abusing its position as a party to the investigation to help gather information.
The NTSB found that the derailment was caused by a wheel bearing that had been burning for more than 20 miles beforehand but was not caught in time by trackside detectors.
Norfolk Southern later became Defendant in a class action lawsuit Where they agreed to settle for $600 million.
The settlement covered claims about the impact on the city's residents and businesses and surrounding communities.
It also provided compensation for “past, present and future personal injuries caused by exposure to the relevant chemicals”.
In May, activist investor Ancora Holdings attempted to take control of the company, winning three seats on the board, but failed to oust Shaw as CEO.
Shaw received $13.4 million in compensation last year in his first full year, and would have received retirement compensation of about $9.6 million had he left the company.
It wasn't immediately clear how the termination for cause would affect the $2.3 million severance pay previously paid by Norfolk Southern.
One of the board members backed by Ancora, COO John Orr, was being viewed as a possible successor to Shaw.
The board instead named Executive Vice President and Chief Financial Officer Mark George as the next CEO.
“I am honored to take on this role and lead Norfolk Southern,” George said. “I look forward to my continued partnership with John and the entire Thoroughbred team as we move forward to optimize operations and serve our customers, while creating a safe and satisfying workplace and delivering greater value for our employees, customers, shareholders and communities.”
“The Board has full confidence in Marc and his ability to deliver on our commitments to shareholders and other stakeholders,” said Claude Monjeau, Chairman of the Board.
Mongeau said George would work in “close partnership” with Orr, and “continue to improve NS's operating performance and reduce the margin gap with competitors.”
post with wires
