Norfolk Southern CEO Alan Shaw was fired for having a “consensual relationship” with the railroad’s general counsel

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CNN
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Norfolk Southern CEO Alan Shaw was terminated without notice by the railroad company's board of directors because he “had a consensual relationship with the company's general counsel,” who was also fired, the railroad company announced Wednesday evening.

In a statement on Wednesday, the company said Shaw was fired “for cause,” which may prevent him from receiving the severance package that CEOs often receive when they are fired.

The company originally announced on Sunday that an investigation had been launched into Shaw.

Shaw had been CEO of one of the country's four largest freight railroads for just over two years, but his tenure was turbulent, including contentious labor negotiations that nearly led to a strike that shut down the economy; a major derailment in East Palestine, Ohio, in which tank cars full of toxic chemicals entered a small Ohio town, sparking health concerns and complaints of lingering symptoms among some residents; and a proxy war with a group of activists demanding Shaw's replacement.

Shaw survived the shareholder vote, but not the investigation into his personal conduct.

The company said that Nabanita Nag had been terminated from her positions as Executive Vice President Corporate Affairs, Chief Legal Officer and Corporate Secretary, effective immediately, based on the preliminary findings of the board's ongoing investigation. It announced that CFO Mark George had been appointed as the company's new CEO.

“The Board has full confidence in Mark and his ability to continue to meet our commitments to shareholders and other stakeholders,” said Claude Mongeau, Norfolk Southern’s CEO.

The company's statement did not thank Shaw for his 30 years of service, nor did Shaw himself provide a comment, as CNN could not immediately reach him for comment. Shaw joined the company in 1994 as a cost systems analyst and gradually rose to positions of increasing responsibility, according to his official company biography.

While the railroad's powerful Brotherhood of Locomotive Engineers and Trainmen union and the track maintenance workers' union opposed Shaw and Norfolk Southern management during the shareholder fight earlier this year, other unions supported Shaw. And he won praise from some of the railroad's former critics for the steps he took to improve railroad safety after the February 2023 derailment in East Palestine.

During the proxy war, Amit Bose, head of the Federal Railroad Administration, the nation's railroad regulator, wrote a letter praising improvements in railroad practices under Shaw. He said the actions were “important and showed that progress is possible when railroads make safety a priority.” And he said that last year, NS was the only Class I railroad to achieve a significant reduction in the derailment rate on main lines.

Ultimately, shareholders decided to support Shaw, who was re-elected to the board with 64% of the votes cast. The majority of the candidates on Norfolk's directors' slate were also elected, although three candidates proposed by Ancora, the activist investor group that had called for his ouster, were also elected to the board.

Still, Norfolk's actions related to the derailment were sharply criticized by Jennifer Homendy, chair of the National Transportation Safety Board, which investigated the accident. She said Norfolk Southern's actions after the derailment needlessly endangered first responders and neighbors at the derailment site. And she said Norfolk's actions during the investigation process were “unprecedented and reprehensible.”

The NTSB investigation found that the cause of the derailment was a broken axle in a railroad car, which started a fire and led to the derailment without adequate warning to crew members to stop the train in time.

While NS's actions in the run-up to the accident drew little criticism from the safety authorities, the company's actions in the hours and days that followed were sharply criticised. In particular, the inadequate information initially provided to the emergency services on site about the safety risks they faced and the decision to conduct a controlled burn of five tank cars full of vinyl chloride, a toxic chemical.

The burn was set three days after the derailment because of concerns that an unspecified explosion might occur. However, the NTSB investigation found that conditions at the time were unlikely to have led to such an explosion and that Norfolk Southern officials did not properly notify authorities when the decision was made to hold the controlled burn.

This story has been updated with additional reporting and context.