Norfolk Southern CEO Alan Shaw has been terminated by the railroad’s board of directors for cause after an investigation determined he violated policies by engaging in a relationship with the company’s top lawyer.
The board unanimously voted vice president and chief financial officer Mark George as Norfolk Southern’s new president and CEO, effective immediately. George will also join the Norfolk Southern board.
“The Board has full confidence in Mark and his ability to continue delivering on our commitments to shareholders and other stakeholders. Mark has played an integral role in our recent progress and brings decades of financial experience and strong operational expertise. He embodies our corporate values and is a champion of our safety culture,” said Claude Mongeau, chairman of the Norfolk Southern board, in a statement. “In close partnership with our accomplished COO, John Orr, they will continue to improve NS’ operating performance and close the margin gap with peers.”
Nabanita Nag, who had been in the relationship with Shaw, has been terminated from her roles as executive vice president corporate affairs, chief legal officer and corporate secretary, effective immediately.
The Class I railroad first confirmed the probe Sunday night, with numerous news outlets reporting afterward that Shaw was expected to step down from his role due to the alleged relationship.
At the time, the railroad said Shaw’s potential conduct was inconsistent with its code of ethics and company policy.
In the Wednesday statement, Norfolk Southern said Shaw’s departure was unrelated to the company’s performance, financial reporting and results of operations.
Having worked at the company since 1994, Shaw was appointed CEO of Norfolk Southern in May 2022. Shaw’s tenure was put under the microscope less than a year after when a Norfolk Southern train derailed in East Palestine, Ohio in February 2023. That accident resulted in the spillage of hazardous chemicals that forced town residents to evacuate for days and posed environmental risks to the area.
The company has to pay $600 million to impacted residents in a 20-mile radius as part of a class action complaint, as well as $310 million more for federal-related claims—both of which are part of $1.7 billion in total costs Norfolk Southern has incurred as part of the derailment.
While the accident was the public crisis that grabbed national headlines, a board battle posed the most danger to Shaw’s standing as CEO. Shaw survived a three-month proxy fight in early 2024 from activist investor Ancora Holdings, which resulted in the ousting of then chair Amy Miles and the installation of three new board members.
At the time, Ancora sought to replace Shaw with former UPS chief operating officer Jim Barber and wanted to change the company’s operating infrastructure to support precision scheduled railroading (PSR).
After the board fight concluded, Norfolk Southern said it planned to reach a sub-60 percent operating ratio—an industry measure for profitability of a railroad company—within three to four years. As of the second quarter ended June 31, operating ratio was 62.8 percent.
For the quarter, Norfolk Southern generated $3 billion in revenue, up 2 percent from the year prior, while net income more than doubled to $737 million.
In the announcement of Shaw’s termination, Norfolk Southern reaffirmed its full-year 2024 guidance provided on July 25.
The board’s audit committee had retained a law firm to conduct an independent investigation of the allegations, Norfolk Southern said Sunday.
Along with Shaw’s firing, Norfolk Southern also announced that Jason Zampi will serve as acting chief financial officer, while Jason Morris will serve as acting corporate secretary.
The executive shakeup comes as the railway is ironing out union contracts ahead of time.
In recent weeks, Norfolk Southern has reached early tentative contract agreements with nearly 65 percent of its total union workforce. Most recently, the railroad struck a pending deal with SMART-TD, ensuring coverage for all Norfolk Southern conductors.
The agreement, which is subject to ratification, comes four months before the opening of the next collective bargaining round and provides a 3.5 percent average wage increase per year over the next five years.
Since late August, Norfolk Southern has reached tentative agreements with nine of its 13 unions.
Norfolk Southern is one of the largest railroads in the U.S., delivering more than 7 million carloads annually. It serves most of the country’s population and manufacturing base, with connections to every major container port on the Atlantic coast as well as major ports in the Gulf of Mexico and Great Lakes.
Editor’s Note: This story was updated on Thurs. Sept. 12.