Norfolk Southern Corp. has fired Chief Executive Alan Shaw after an investigation into allegations he engaged in an inappropriate relationship in the workplace, a stunning fall from grace just two years after he took the helm.
Shaw was fired for cause, effective immediately, after the railroad found he violated company policies by engaging in a consensual relationship with Norfolk’s chief legal officer, according to a statement Wednesday. Norfolk said it fired Nabanita Nag from her position as chief legal officer.
Chief Financial Officer Mark George has been named CEO and will join the board of directors, according to the statement. Jason Zambi will serve as acting CFO.
The stunning changes upend the leadership of one of the nation’s most prominent railroads. Norfolk, which has been dogged by activist campaigns and negative attention over the derailment of a toxic train over the past two years, has been looking to revamp its operations and improve service under Shaw.
Norfolk shares were unchanged in after-hours trading following the announcement.
Shaw’s dismissal comes just days after Norfolk announced that its board had hired a law firm to conduct an independent investigation into allegations of CEO behavior that was “inconsistent with the company’s code of ethics and company policy.” The investigation is ongoing.
Norfolk said Wednesday that the board’s decision to terminate Shaw’s services was unanimous.
Strategic transformation
Shaw, who started in Norfolk’s finance department in 1994, became CEO in May 2022 with a plan to move the company away from the strictly scheduled rail strategy pioneered by the late CEO Hunter Harrison and widely adopted across the company.
But his plans for change were derailed after a train derailed last year in East Palestine, Ohio, spilling toxic chemicals and sparking a wave of criticism from lawmakers and proposals for more safety regulations. The company agreed to a settlement with residents in May.
What had happened before? Sad In a campaign by Ankura Holdings, an activist shareholder, to replace him and other railroad leaders, the investor has criticized Norfolk’s response to the derailment and the company’s performance. While Shaw won a shareholder vote in May to keep his job, investors elected to replace three members of the company’s 13-member board with Ankura-backed candidates.
(Updates with additional details begin in the second paragraph.)