Norfolk Southern's board of directors is currently conducting an investigation into allegations that CEO Alan Shaw engaged in an inappropriate workplace relationship, according to sources familiar with the matter. Shaw, who has been serving as the CEO since 2022, has faced various challenges during his tenure, including a major rail derailment and a contentious proxy fight. The company is collaborating with external legal advisors to conduct the probe, which is still in its early stages and may not reveal any misconduct.

The investigation into Shaw's alleged inappropriate workplace relationship comes as Norfolk Southern's board undergoes significant changes in recent months. Earlier this year, an activist investor attempted to remove Shaw from his position due to concerns over his handling of the toxic East Palestine derailment, the poor performance of the company's stocks, and what the investor described as a flawed operating strategy.

Although the activist investor, Ancora, did not succeed in removing Shaw, they did manage to have three of their candidates elected to the board. Furthermore, approximately 36% of shareholders voted against Shaw's re-election, indicating dissatisfaction with his leadership. Ancora, the activist investor, did not provide a comment on the matter.

At this time, Shaw has not responded to requests for comment regarding the allegations. In addition, several directors of Norfolk Southern, including board chair Claude Mongeau and company spokespeople, have also refrained from providing comments on the ongoing investigation.

In the event that Shaw steps down from his position, it is speculated that either COO John Orr or CFO Mark George could serve as interim CEO. Orr, who joined Norfolk Southern during the proxy fight, has a track record of implementing changes to improve the company's operations. However, he has faced allegations of misconduct that were surfaced by Ancora during their campaign. Norfolk Southern defended Orr's reputation, stating that the allegations were an attempt to deflect attention from their own executive candidates. George, the current CFO, has been with Norfolk Southern for five years, joining the company from HVAC maker Carrier.

Another potential candidate for the interim CEO role is board member Sameh Fahmy, who previously oversaw the precision-scheduled railroading program of the former Kansas City Southern and has prior experience working with Orr. Fahmy's expertise and familiarity with the company's operations could make him a strong contender for the position.

The investigation into the allegations against CEO Alan Shaw is ongoing, and it remains to be seen what the board's findings will reveal. As the inquiry progresses, Norfolk Southern will continue to work with external legal advisors to ensure a thorough examination of the situation.