Ending days of speculation, Norfolk Southern announced Wednesday that it has fired chief executive Alan Shaw for engaging in an inappropriate relationship with the company's chief legal officer, Nabanita Nag, which violated the company's ethics policies.
The company said in a press release that it has appointed finance chief Mark George as the new president and chief executive, and also dismissed Nag from her position. Jason Zampi will serve as interim CFO.
Norfolk acknowledged Sunday that the railroad board is investigating Shaw for allegedly engaging in a consensual relationship with Nag, who reported to him. The company said that Shaw had been fired for cause.
"Shaw's departure is unrelated to the company's performance, financial reporting and results of operations," the company said in the statement, adding that the board's decision to terminate Shaw was unanimous.
George, who has been Norfolk Southern's CFO for almost five years, said, "I am honored to take on this role and lead Norfolk Southern." He will join the board, the company stated.
With decades-long experience at Norfolk, Shaw beat George to be appointed CEO in 2022. He joined the finance department in 1994.
When Shaw was elevated, he aimed at shifting the company away from the precision scheduled railroading strategy, introduced by his predecessor, late executive Hunter Harrison.
The leadership changes at Norfolk Southern mark a significant turning point for the company, which had been looking to revamp its operations under Shaw following backlash from a train derailment in an Ohio town last year that spilled toxic chemicals. The incident led to lawsuits, government probes, and widespread criticism from lawmakers, along with calls for stricter safety regulations.
The company later agreed to a settlement with the town's residents. Recently, Shaw also overcame attempts by activist hedge fund and shareholder, Ancora Holdings Group, to replace him and several others in the company, as Ancora held Norfolk responsible for the train derailment. Shaw managed to win a shareholder vote in May, allowing him to retain his job.
However, Ancora proceeded to vote to replace three members of the company's 13-person board with its own candidates.
Following the latest development, Norfolk Southern chairman Claude Mongeau said in the statement that "the Board has full confidence in Mark and his ability to continue delivering on our commitments to shareholders and other stakeholders."
"He embodies our corporate values and is a champion of our safety culture. In close partnership with our accomplished chief operating officer, John Orr, they will continue to improve Norfolk Southern's operating performance," Mongeau added.
