Alan Shaw’s tenure as the chief executive of Norfolk Southern was marked by a series of inquiries into the railroad company’s operations.
Credit...Pete Marovich for The New York Times

Norfolk Southern Fires C.E.O. After Ethics Investigation

The railroad company’s board said it dismissed Alan Shaw and an executive he had a consensual relationship with.

by · NY Times

Norfolk Southern, the beleaguered freight railroad giant, said on Wednesday that it had fired its chief executive, Alan H. Shaw, for having an affair with the company’s chief legal officer.

In a news release, Norfolk Southern said Mr. Shaw, who became chief executive in May 2022, had a consensual relationship with its top lawyer, Nabanita C. Nag, who was also fired.

Mark R. George, the company’s chief financial officer, was named president and chief executive officer, Norfolk Southern said.

“This change in leadership comes in connection with preliminary findings from an ongoing investigation that determined Shaw violated company policies” by engaging in a relationship with Ms. Nag, the company said. “Shaw’s departure is unrelated to the company’s performance, financial reporting and results of operations.”

Mr. Shaw’s departure ends a troubled tenure at the top of Norfolk Southern. After one of its trains derailed in an Ohio town last year, spilling hazardous materials, Norfolk Southern faced lawsuits, government investigations and scrutiny from Congress. This year, an activist investment firm tried to take control of Norfolk Southern, and though it failed to dethrone Mr. Shaw, shareholders voted to place three of the firm’s directors on the company’s board.

Mr. Shaw, who was at Norfolk Southern for 30 years, is the latest of a number of corporate executives who have lost their jobs over violations of company policies.

Norfolk Southern said Thursday in a securities filing that Mr. Shaw was ineligible for severance benefits or outstanding stock-based compensation, because he was terminated for “cause.” His pay totaled $13.4 million last year, including stock and stock options.

The company said on Sunday that its board of directors had hired a law firm to independently investigate Mr. Shaw’s potential ethical lapses.

Mr. Shaw and Ms. Nag did not respond to requests for comment.

Mr. Shaw steered Norfolk Southern’s response to the derailment in February 2023 of a freight train carrying hazardous materials in East Palestine, Ohio, which prompted questions about the rail industry’s safety practices. In May, the company reached an agreement with the federal government to settle claims and cover costs stemming from the accident. It also settled a class-action lawsuit filed by residents and business owners in the East Palestine area, agreeing to pay $600 million.

But Mr. Shaw faced criticism for how Norfolk Southern responded to the accident, including from the activist investor Ancora, a Cleveland investment firm, which pushed for Mr. Shaw to step down. Ancora also criticized the company’s financial performance during Mr. Shaw’s tenure as chief executive.

Mr. Shaw managed to keep his job in part because shareholders and rail analysts believed he was building a railroad that would better weather economic ups and down and was not excessively focused on cutting costs.

Tony Hatch, a longtime rail industry analyst, said Mr. Shaw's supporters were disappointed by the way his tenure ended. “How could he go through all this and do that?” he said.

After the East Palestine accident, Norfolk Southern’s safety performance improved. When asked how the company had reduced accidents, Mr. Shaw told The Times this year that it had changed how it assembled trains to try to make them less likely to have accidents, introduced new technology and focused on improving its safety culture.

“It is a continual process — there’s no silver bullet,” he said. “It’s a bunch of different initiatives all pulling together.”

Norfolk Southern’s legal challenges mounted in July when the Justice Department filed a complaint in federal court accusing the company of delaying Amtrak passenger trains along the route between New Orleans and New York, in violation of federal law. Norfolk Southern’s dispatchers failed to give Amtrak passenger trains preference over freight trains, the complaint said.

Other chief executives who have similarly been pressured to step down in recent years over allegations of ethical lapses include the former heads of McDonald’s and the oil giant BP; both lost millions of dollars in compensation.

Mr. George, the new chief executive, joined Norfolk Southern in 2019. In a news release Wednesday, he said he wanted to “further our progress on optimizing operations and serving our customers, while creating a safe and satisfying workplace.”

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