Norfolk Southern says investigating CEO over alleged misconduct

(Reuters) - Norfolk Southern said late on Sunday it has opened an investigation into allegations of potential misconduct by Chief Executive Alan Shaw.

The company said that its audit committee is working with a law firm "to conduct an independent investigation of the allegations."

CNBC had first reported, citing people familiar with the matter, that Shaw engaged in an inappropriate workplace relationship.

Shaw did not immediately respond to a request for comment on the investigation.

In May, activist investor Ancora won three board seats at the railroad operator but failed to oust the railway's chief executive.

Ancora had proposed investors push Alan Shaw off the board and elect Jim Barber, a former chief operating officer at UPS, so that he could eventually replace Shaw as CEO. They also proposed Jamie Boychuk to become the chief operating officer.

Shaw was appointed as the CEO in May 2022, replacing Jim Squires.

The hedge fund argued new blood was needed to improve financial and operational metrics and said it would continue to hold the company accountable for any future railway accidents or underperformance.

The Atlanta, Georgia-based company reported operating revenue of $3 billion in the second quarter, up 2% from last year, narrowly missing analysts' estimates of $3.04 billion.

(This story has been corrected to say that Shaw was appointed CEO in May 2022, not that he joined Norfolk Southern in May 2022, in paragraph 7)

(Reporting by Urvi Dugar and Rishabh Jaiswal; Editing by Diane Craft and Christopher Cushing)