Norfolk Southern CEO Alan Shaw was sacked from his post days into the railroad operator’s investigation of alleged misconduct from its boss who had an “inappropriate” relationship with his subordinate and top-ranking lawyer.

Shaw was found to have engaged in a consensual relationship with Nabanita Nag, the company’s executive vice president corporate affairs, chief legal officer and corporate secretary.

The Norfolk Southern Board of Directors voted unanimously to terminate both Shaw and Nag based on preliminary findings, the Atlanta-based company announced Wednesday.

Shaw has been in the top position since May 2022.

“This change in leadership comes in connection with preliminary findings from an ongoing investigation that determined Shaw violated company policies by engaging in a consensual relationship with the company’s Chief Legal Officer,” Norfolk Southern said.

“Shaw’s departure is unrelated to the company’s performance, financial reporting and results of operations.”

The company added that Shaw, who is married and has four kids, had been fired for cause effective immediately.

The board opened its investigation into Shaw on Sunday citing allegations of potential conduct inconsistent with the company’s Code of Ethics.

On Wednesday, CNBC reported that Shaw’s relationship with Nag was the focus of the investigation, hours before the two’s termination.

Nag had joined the company in Aug. 2020 as general consul before she was promoted to Senior Vice President and Chief Legal Officer in March 2022.

She was named executive VP in July 2022.

She had previously worked at Prudential Financial and Goldman Sachs, according to her LinkedIn profile.

Shaw oversaw Norfolk Southern during the environmentally devastating train derailment in East Palestine, Ohio in Feb. 2023.

The Feb. 2023 East Palestine, Ohio train derailment, the largest railroad disaster the country has seen in a decade.

Eleven of the 38 cars derailed were carrying hazardous materials on Feb. 3, 2023, near the Pennsylvania border.

Some residents were evacuated that night, but days later more had to leave their homes amid fears of an imminent explosion.

Despite potential health effects, officials intentionally released and burned toxic vinyl chloride three days after the crash, sending flames and smoke into the air.

In addition to vinyl chloride, the derailed train cars contained the chemicals butyl acrylate, ethylhexyl acrylate, ethylene glycol monobutyl ether and isobutylene.

The National Transportation Safety Board accused Norfolk Southern of interfering with the investigation and abusing its status as a party to the probe to help gather information.

The NTSB found that the derailment was caused by a wheel bearing that was on fire for more than 20 miles beforehand but wasn’t caught in time by inaccurate trackside detectors.

Norfolk Southern later became the defendant in a class action lawsuit where they agreed to settle for $600 million.

The settlement covered claims from residents and businesses in the city and impacted surrounding communities.

It also provided compensation “for past, present and future personal injuries resulting from exposure to the chemicals involved.” 

In May, activist investor Ancora Holdings attempted to take control of the company, winning three board seats but failed to fire Shaw as CEO.

Shaw received $13.4 million compensation last year in his first full year was entitled to nearly $9.6 million in retirement compensation if he left the company.

It wasn’t immediately clear how being fired for cause will affect the $2.3 million severance pay Norfolk Southern had previously promised him.

COO John Orr, one of the board members backed by Ancora, was seen as a possible successor to Shaw.

The board instead named Executive VP and CFO Mark George as the next CEO.

“I am honored to take on this role and lead Norfolk Southern,” said George. “I look forward to my continued partnership with John and the entire Thoroughbred team as we further our progress on optimizing operations and serving our customers, while creating a safe and satisfying workplace and delivering enhanced value for our employees, customers, shareholders, and communities.”

“The Board has full confidence in Mark and his ability to continue delivering on our commitments to shareholders and other stakeholders,” Board Chairman Claude Mongeau said.

Mongeau said George would work “in close partnership” with Orr, and “will continue to improve NS’ operating performance and close the margin gap with peers.”

With Post wires