Norfolk Southern fires CEO Alan Shaw over inappropriate relationship with employee

Norfolk Southern said Wednesday it had fired CEO Alan Shaw For having an inappropriate relationship with a subordinate.

He was ousted after two tough years in the top job and just days after the company's board announced investigation He was accused of moral 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 has promoted Chief Financial Officer Mark George as the railroad's next CEO.

Shaw was leading Norfolk Southern in February 2023 when one of its trains derailedToxic chemicals spilled and caught fire in East Palestine, Ohio, the worst railroad disaster in decades. Then, active investors tried Ancora Holdings take control Earlier this year, railways and Agni Sh.

He is the weather Congressional hearings After the East Palestine derailment and difficult community meetings, while Norfolk promises to make the South the “gold standard for security” in the industry. He also managed Attract investors Ancora's board does not support the majority of nominees. Its nominees are three Won the seat on the railroad board, but it was not enough to give control.

The derailment near the Ohio-Pennsylvania border prompted the nation to reexamine railroad safety and prompted lawmakers and regulators to call for reforms. But those proposals are there largely stagnantAnd art only made Minimal change Since derailments, such as installing more trackside detectors to spot overheating bearings East Palestine is the cause of disaster.

D Disappointing financial results Norfolk Southern delivered after the derailment, coupled with questions about Shaw's strategy for keeping more workers on hand during the recession, made the railroad ripe for pressure from an investor like Ancora. Norfolk Southern's profits have consistently lagged those of other major railroads, which adopted more aggressively. Lean operating model That has become the industry standard.

The railroad said Shaw's firing was unrelated to Norfolk Southern's financial performance and the board reaffirmed its financial guidance. The railroad said it will improve productivity by about $550 million and increase its profit margins over the next two years.

Shaw received $13.4 million in compensation last year in his first full year as CEO. The railroad said earlier this year that Shaw would be entitled to about $9.6 million in severance pay if he leaves the company. It was not immediately clear how the dismissal would affect the $2.3 million severance pay Norfolk Southern had previously promised him. More details about his final compensation are expected to be released Thursday.

“The board has full confidence in Mark and our ability to deliver on our commitments to shareholders and other stakeholders,” said railroad chairman Claude Mongeau, despite only working on the railroad since 2019. Previously, George was CFO of air conditioner manufacturer Carrier Corporation and Otis Elevator Company.

Mongeau said George will work with John Orr — who was hired during the fight with Ancora — to continue improving the railroad's profitability 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 to optimize our operations and serve our customers, create a safe and satisfying workplace, and deliver enhanced 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 whose tracks cross the eastern United States.