Norfolk Southern Railway announced Wednesday that it had fired CEO Alan Shaw after he was accused of having an inappropriate relationship with a subordinate.
His firing comes just days after the company’s board announced it was investigating him for possible ethics violations after a difficult two years as chief executive.
The Atlanta-based railroad said Shaw had an improper consensual relationship with Norfolk Southern’s chief legal officer, who was also fired after the railroad promoted its chief financial officer, Mark George, to be the railroad’s next chief executive officer.
Shaw was leading Norfolk Southern Railroad when a train derailed in East Palestine, Ohio, in February 2023, spilling toxic chemicals and catching fire — the worst railroad accident in a decade — after activist investor Ancora Holdings took control of the railroad earlier this year and tried to fire Shaw.
He weathered congressional hearings and difficult community meetings after the East Palestine derailment, pledged to make Norfolk Southern the industry’s “gold standard of safety,” and persuaded investors not to support a majority of Ancora’s board nominees, three of whom served on the railroad’s board, but that alone was not enough to gain control.
The derailment near the Ohio-Pennsylvania border prompted a national reexamination of rail safety, prompting lawmakers and regulators to call for reforms. But those proposals have largely stalled, and the industry has made only minimal reforms since the derailment, such as installing more trackside detectors to spot overheated bearings like the one that caused the East Palestine disaster.
Disappointing financial results Norfolk Southern reported after the derailment, combined with questions about Shaw’s strategy to keep employees on the payroll during the downturn, have put the company under pressure from investors like Ancora. Norfolk Southern’s profits have consistently lagged behind other large railroads that have more aggressively adopted a lean operating model that has become the industry standard.
The company said Shaw’s firing was unrelated to Norfolk Southern’s performance and that its board of directors reaffirmed its financial outlook. The company said it expects to improve productivity and margins by about $550 million over the next two years.
Shaw received $13.4 million in compensation last year in his first year as CEO. The company said earlier this year that Shaw would be entitled to about $9.6 million in severance if he left the company. It was not immediately clear how the termination for cause would affect the $2.3 million severance package Norfolk Southern previously promised him. Details about his final compensation are expected to be announced on Thursday.
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The railroad’s chairman, Claude Mongeau, said the board “has the utmost confidence in Mark and his ability to continue to deliver on the company’s commitments to shareholders and other stakeholders,” even though Mark has only been with the railroad since 2019. He previously served as chief financial officer for air-conditioning maker Carrier Corp. and Otis Elevator Co.
Mongeau said George will work with Chief Operating Officer John Orr, who was hired in the midst of the dispute with Ancora, to continue to improve the railroad’s profitability through cost-cutting and efficiency measures.
“I look forward to my continued collaboration with John and the entire (Norfolk Southern) team as we further optimize our operations and improve customer service while creating a safe and satisfying work environment and delivering increased value to our employees, customers, shareholders and communities,” George said in a statement.
Norfolk Southern Railway is one of North America’s six largest railroads, with tracks crisscrossing the eastern United States.
