The Scoop: Norfolk Southern axes CEO after inappropriate relationship

Norfolk Southern fired its CEO after an investigation by its board found he’d violated the company’s policies by engaging in a romantic relationship with a subordinate.

Alan Shaw’s relationship with the company’s general counsel, Nabanita Chaterjee Nag, came to light this week after activist investor Ancora Holdings caught wind of the board’s investigation into the situation. A personal relation between a superior and a staff member is a violation of Norfolk Southern employee handbook.

Ancora Holdings requested shareholder records, a possible step ahead of calling a special meeting or launching a second proxy fight, according to the Wall Street Journal. But before that could take place, both Shaw and nag were fired.

Ancora has been trying to oust Shaw since the Norfolk Southern derailment in East Palestine, Ohio in February 2023.

Why it matters: In communications there are few things worse than a surprise. But that’s what Norfolk Southern’s PR team was left to deal with after the story involving Shaw’s inappropriate relationship began to make headlines earlier this week.

In its public announcement, Norfolk Southern spoke strongly about George’s 35 years of experience, saying he “embodies our corporate values and is a champion of our safety culture. “It also stressed the change had to do with Shaw’s behavior and his violation of company policies, not the company’s business performance. It made no mention of activist investors.

The relationship with Nag wasn’t new, apparently. The Wall Street Journal reported employees noted his behavior with Nag during work trips. But at the same time, Norfolk Southern was struggling to recover from the derailment from a business standpoint. Investors expects high ethical standards from corporate leaders, especially in a time of increased scrutiny on corporate behavior.

When the allegations about Shaw’s relationship with Nag surfaced, it provided Ancora with an opportunity to make its move to try to oust Shaw. But Norfolk Southern moved before they did. 

In response to the headlines, Norfolk Southern’s comms team moved quickly to announce its board moved swiftly to investigate the allegations. It also emphasized that the decision to fire Shaw was unanimous. The company also named its finance chief, Mark George, as its interim CEO to help instill a sense of confidence in investors.

The comms team, already beleagured from years of controversy and crisis, did the best it could to handle this sordid new story. But the activist investors continue to prowl, a new CEO search is in the offing and more change is set to come.

Good luck.

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Casey Weldon is a reporter for PR Daily. Follow him on LinkedIn.