Freight railroad Norfolk Southern — no stranger to crises, including its disastrous accident in East Palestine, Ohio, last year that spilled toxic chemicals — is the latest company to fire its CEO over a romantic relationship with an employee. Its crisis comms concerning the scandal have been solid.

On Sept. 8 (a Sunday), Atlanta-based Norfolk Southern put out a statement revealing its board had hired a law firm to conduct “an investigation into allegations of potential conduct by CEO Alan Shaw that is inconsistent with the company’s code of ethics and company policy.”

The probe was quick. Three days later, Norfolk Southern issued a press release welcoming new CEO Mark George, who’d been CFO. Though the firm, as is typical in such situations, led the statement with the new boss, it didn’t bury the status of the old one.

“George’s appointment follows the Norfolk Southern board’s unanimous decision to terminate Alan H. Shaw for cause, effective immediately,” it wrote in the second paragraph (and it flagged the firing in the deck). The company went on to explain that the probe’s preliminary findings showed Shaw violated policy by engaging in a consensual relationship with Chief Legal Officer Nabanita C. Nag, also sacked.

Company Performance

Norfolk Southern smartly emphasized continuity, saying the changing of the guard “is unrelated to the company’s performance, financial reporting and results of operations.” It reaffirmed its 2024 guidance provided in July. Given the Ohio derailment and a recent unsuccessful proxy fight to remove Shaw, the company has had a tough year. In April, it agreed to pay area residents $600 million to settle a class action over the East Palestine incident.

The statement lauded George, emphasizing his role in the firm’s success, while offering not a nod or word of thanks to the outgoing Shaw, who’d been with the company 30 years, though CEO for only two. This is understandable. Organizations don’t like to be put into this position. It’s embarrassing. But Norfolk Southern handled it well.

Its agility was further shown through leaked internal memos. “While we are deeply troubled to learn of this situation, I am proud of our board for addressing it swiftly,” George wrote in a memo to employees, according to Trains magazine’s website. “Now we need to get this behind us. We have a lot of work ahead of us, and our focus remains unchanged.”

‘Immediate Action’

The company really did act fast. “As soon as the Norfolk Southern board was made aware of the allegations that led to the investigation, we took immediate action to retain an independent investigator,” board chair Claude Mongeau wrote in a separate memo, according to Trains. “Additionally, when sufficient evidence was uncovered from the investigation, the board did not hesitate to hold Alan and Nabanita accountable.”

The departure of CEOs over affairs is something of a trend. As we’ve noted, last year BP CEO Bernard Looney resigned after being “not fully transparent” about relationships with colleagues, according to the company, and Cboe Global Markets CEO Edward Tilly stepped down after an internal probe revealed he hadn’t disclosed such personal relationships. More well-known, in 2019 McDonald’s fired CEO Steve Easterbrook for engaging in a relationship with an employee that violated policy.

Photo Credit: Mitch Cox Photo/Shutterstock

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