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Law firm investigating allegations Shaw had relationship

with

direct report

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Shaw discussing exit terms, including severance -sources

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Potential interim CEOs include CFO, COO and directors

-sources

By Svea Herbst-Bayliss

NEW YORK, Sept 11 (Reuters) - Norfolk Southern ( NSC )

is negotiating CEO Alan Shaw's exit, and the board is

considering interim replacements, including the current chief

financial officer, after finding the executive had a

relationship with a subordinate, three sources familiar with the

matter said on Wednesday.

The railway's board, with the help of a law firm, has been

probing allegations that Shaw had a relationship with a direct

report, violating the railway's ethics policy.

Shaw could not be reached for comment, while Norfolk

Southern ( NSC ) declined to comment.

The sources spoke on the condition of anonymity to discuss

sensitive personnel matters.

Executives and lawyers are currently discussing terms of a

potential exit package for Shaw, including severance, two of the

sources said.

Shaw has been with the company for decades and was promoted

to the top job in 2022. He led the company during a disastrous

2023 derailment in East Palestine, Ohio that is expected to cost

the company more than $1 billion to settle claims.

The investigation into Shaw's conduct comes months

after the CEO survived a bitter proxy contest with activist

hedge fund Ancora Holdings that saw investors vote in three new

directors to the company's 13-member board.

Mark George, Norfolk Southern's ( NSC ) chief financial officer who

had been in the running for the top job when Shaw got it, is one

of the possible candidates to become interim CEO, one of the

sources said.

Another potential candidate is John Orr, the company's chief

operating officer. Orr joined Norfolk Southern ( NSC ) in March after

engineering the turnaround of Canadian Pacific Kansas City's ( CP )

Mexico operations, the source said.

The board might also consider Richard Anderson, who was

appointed to the board this year and previously ran Delta Air

Lines ( DAL ) and passenger railroad Amtrak, one of the sources

said.

Claude Mongeau, executive chair of the board who has been a

director since 2019 and has considerable railway experience,

could be another candidate, the source said.

The men could not be reached for comment.