The board of Norfolk Southern is currently investigating allegations that CEO Alan Shaw may have engaged in an inappropriate workplace relationship, according to sources familiar with the situation.
On Sunday evening, the company confirmed that it is conducting a review of Shaw’s “possible conduct” which may have violated the organization’s code of ethics. External legal counsel has been retained to assist with the investigation.
At this early stage, no conclusions have been reached, and it remains possible that no misconduct will be uncovered, according to individuals close to the matter. Norfolk Southern is collaborating with outside legal advisors to ensure a thorough and impartial inquiry.
Neither Shaw nor Claude Mongeau, Chairman of the Norfolk Southern Board and former CEO of Canadian National Railway, responded to requests for comment.
Norfolk Southern, with a market value of $57 billion, is one of the remaining Class 1 railroads in the U.S., responsible for transporting substantial quantities of goods across 22 states in the Eastern United States.
The board has experienced notable changes in recent months. Earlier this year, an activist investor sought to remove Shaw from his role, citing dissatisfaction with his management of the East Palestine derailment, the underperformance of Norfolk Southern’s stock, and concerns regarding the company’s operational strategy. Though the activist group, Ancora, was unsuccessful in ousting Shaw, three of its nominees were elected to the board, and approximately 36% of shareholders voted against Shaw’s re-election. Ancora did not provide any comments when contacted.
Shaw, who has held the CEO position since 2022, could potentially be replaced if the investigation leads to his departure. Potential interim successors include COO John Orr or CFO Mark George.
Orr, who joined the company during the recent proxy contest, has extensive field experience and was previously an executive at Canadian Pacific Kansas City. However, he has faced his own allegations of misconduct, which Ancora brought to light during its campaign. Norfolk Southern has defended Orr’s professional record, accusing Ancora of attempting to divert attention from their own candidates.
George, who has served as the company’s CFO for five years, joined from Carrier, a leader in the HVAC industry. Another potential candidate for interim leadership is board member Sameh Fahmy, who previously oversaw precision-scheduled railroading at Kansas City Southern and had been Orr’s superior.
The outcome of the investigation remains uncertain as Norfolk Southern proceeds with its review.
