Norfolk Southern fires CEO Alan Shaw for an inappropriate relationship with an employee
Norfolk Southern said Wednesday it fired a gun CEO Alan Shaw because he had an inappropriate relationship with a subordinate.
His resignation comes after two difficult years at the top and just days after the company’s board announced that it to research him for alleged ethical lapses.
The Atlanta-based railroad said Shaw had an inappropriate consensual relationship with Norfolk Southern’s chief legal officer, who was also fired. Norfolk Southern promoted Chief Financial Officer Mark George to become the railroad’s next CEO.
Shaw was leading Norfolk Southern in February 2023 when one of his trains derailedleaked toxic chemicals and caught fire in East Palestine, Ohio, the worst rail disaster in a decade. Then activist investor Ancora Holdings tried take over control from the railroad earlier this year and fired Shaw.
He got through it congressional hearings and difficult community meetings after the East Palestine derailment, while promising to make Norfolk Southern the “gold standard for safety” in the industry. He also succeeded in convince investors not to support the majority of Ancora’s nominees for the board. Three of her nominees has won seats in the board of the railway company, but that was not enough to give the railway company power.
The derailment at the Ohio-Pennsylvania border prompted the nation to reexamine rail safety and led lawmakers and regulators to call for reforms. But those proposals have largely come to a standstilland the industry has only minimal changes since the derailment, such as installing more detectors along the track to detect overheated bearings, such as those that caused the crash in East Palestine.
The disappointing financial results Norfolk Southern performed well after the derailment, and that, combined with questions about Shaw’s strategy for keeping more workers available during a recession, left the railroad susceptible to pressure from an investor like Ancora.
The railroad’s chairman, Claude Mongeau, said: “The board has full confidence in Mark and his ability to continue to deliver on our commitments to shareholders and other stakeholders,” despite only having been with the railroad since 2019. Previously, George was CFO for air conditioning manufacturer Carrier Corporation and Otis Elevator Company.
Mongeau said George will work with John Orr, the chief operating officer hired during the battle with Ancora, to continue improving the railroad’s bottom line by cutting costs and becoming more efficient.
“I look forward to my continued partnership with John and the entire (Norfolk Southern) team as we continue our progress in optimizing our operations and serving our customers, while creating a safe and fulfilling workplace and delivering greater value for our employees, customers, shareholders and communities,” George said in a statement.
Norfolk Southern is one of the six largest railroads in North America and crosses the eastern United States.