Norfolk Southern Railway chief executive Alan Shaw was fired at a time when the rail operator was investigating allegations of misconduct by a boss who had “inappropriate” relationships with subordinates and a top lawyer.
Shaw was found to have had a consensual relationship with Navaneeta Nag, the company's executive vice president of corporate affairs, chief legal officer and corporate secretary.
Atlanta-based Norfolk Southern Railway said Wednesday that its board of directors voted unanimously to fire both Shaw and Nag based on the preliminary findings.
The show has held the top spot since May 2022.
“These leadership changes relate to the preliminary findings of an ongoing investigation which found that Mr. Shaw violated company policy by entering into a consensual relationship with the company's chief legal officer,” Norfolk Southern said.
“Mr. Shaw's departure is unrelated to our business performance, financial reporting or operating results.”
The company added that Shaw, who is married and has four children, was fired with immediate effect and for cause.
The board launched an investigation into Shaw on Sunday, citing allegations of conduct that may have violated the company's ethics code.
on wednesday, CNBC reported: Shaw's relationship with Nag had been a focus of the investigation in the hours before the pair were fired.
Nag joined the company as consul general in August 2020 and was promoted to senior vice president and chief legal officer in March 2022.
She was appointed Executive VP in July 2022.
According to her LinkedIn profile, she previously worked at Prudential Financial and Goldman Sachs.
Shaw was overseeing Norfolk Southern Railroad at the time of the environmentally catastrophic train derailment in East Palestine, Ohio, in February 2023.
The train derailment in East Palestine, Ohio, in February 2023 was the deadliest rail accident in the United States in the past decade.
Eleven of the 38 cars that derailed were carrying hazardous materials on Feb. 3, 2023, near the Pennsylvania state line.
Some residents were evacuated that night, but fears of an imminent explosion forced many more to leave their homes a few days later.
Despite the possible health effects, authorities deliberately released and burned toxic polyvinyl chloride three days after the crash, spewing flames and smoke into the air.
The derailed train cars contained vinyl chloride as well as other chemicals, including 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 occurred when a wheel bearing had been burning for more than 20 miles, but was not detected in time by inaccurate trackside detection devices.
Norfolk Southern later became a defendant in a class action lawsuit and agreed to settle for $600 million.
The settlement covered claims from residents and businesses in the city and affected the surrounding areas.
The company also offered compensation for “past, present and future personal injuries resulting from exposure to the chemicals involved.”
In May, activist investor Ancora Holdings tried to take control of the company and gained three seats on the board, but was unable to remove Shaw as CEO.
Shaw was paid $13.4 million in compensation in his first year on the job last year and was eligible to receive about $9.6 million in severance pay if he left the company.
It was not immediately clear how the termination for cause would affect the $2.3 million in severance pay that Norfolk Southern previously promised him.
Chief Operating Officer John Orr, one of Ancora's backed directors, was seen as a possible successor to Mr. 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 Railway,” said George. “I look forward to continuing to work with John and the entire Thoroughbred Railway team to further optimize operations and improve customer service while creating a safe and satisfying work environment and delivering increased value to our employees, customers, shareholders and communities.”
“The board has the utmost confidence in Mark and his ability to continue delivering on the company's commitments to shareholders and other stakeholders,” said Claude Mongeau, chairman of the board.
Mongeau said George would work “closely” with Orr to “continue to improve NS's performance and close the margin gap with its peers.”
With post wire
