Norfolk Southern Dismisses CEO on Alleged Relationship with Legal Head
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Norfolk Southern Dismisses CEO on Alleged Relationship with Legal Head

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Norfolk Southern’s board fired CEO Alan Shaw after investigating his alleged relationship with the company’s chief legal officer. CFO Mark George will assume the CEO role effective immediately.

Railroad company Norfolk Southern (NSC) dismissed its President and CEO Alan Shaw, effective immediately, on an alleged consensual relationship with the company’s Chief Legal Officer (CLO). The company’s board started investigating his misdemeanor after receiving complaints earlier this week about violations of the ethics code and company policies. The initial probe found that Shaw engaged in a relationship with CLO Nabanita Nag, who was also fired from the company.

Norfolk’s CFO and executive VP, Mark George, will take up the CEO’s role. Meanwhile, Jason Zampi will be the acting CFO, until an apt candidate is found. Nag was also the Executive VP, Corporate Affairs and Corporate Secretary. Her roles will be assumed by the company’s other personnel.

Norfolk Southern’s Mounting Challenges

Responding to the CEO’s exit, Norfolk Southern stated that Shaw’s departure has no connection with the company’s performance, financial reporting, or results. In fact, NSC reaffirmed its full-year Fiscal 2024 guidance along with the news.

Shaw has been with Norfolk for nearly three decades, but his stint as a CEO, a role assumed in May 2022, was marred by several challenges. Shaw navigated the company through an ugly train derailment incident in East Palestine, Ohio, in February 2023 and an activist investor campaign by Ancora Holdings. Under his leadership, NSC reached a $600 million settlement with local residents impacted by the Ohio derailment. Meanwhile, Ancora was successful at ousting three of the 13-member board of Norfolk after a stiff fight.

Following the decision to oust Shaw, the company now faces the task of constructing a severance package for him.

Insights from TipRanks’ Bulls Say, Bears Say Tool

Amid the ongoing challenges, Norfolk has drawn contrasting views from analysts. According to TipRanks’ Bulls Say, Bears Say tool, some analysts view the board investigation of Shaw as positive. Bulls also highlighted the company’s strong Q2 results.

On the other hand, Bears are concerned about NSC’s updated 2024 outlook, class action lawsuits related to the derailment, and overall company performance.

Is NSC a Good Stock to Buy?

Wall Street remains divided on Norfolk Southern stock. On TipRanks, NSC stock has a Moderate Buy consensus rating based on ten Buys, six Holds, and one Sell rating. Also, the average Norfolk Southern price target of $263.59 implies 3.9% upside potential from current levels. Year-to-date, NSC shares have gained 9.2%.

See more NSC analyst ratings

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