Alan Shaw Norfolk Southern CEO Receives Controversial Raise Amidst Derailment Fallout

Business

February 27, 2024 - Reading time: 2 minutes

New York CNN — Norfolk Southern CEO Alan Shaw received a staggering 37% increase in compensation last year, even after the company’s railroad was involved in an ecologically and financially disastrous derailment in East Palestine, Ohio.

Shaw's total compensation amounted to $13.4 million in 2023, up from $9.8 million in 2022. His base salary rose by $200,000 to $1.1 million and his stock and option awards increased by $2.2 million to $10 million.

This increase can be partly attributed to Shaw working more months on the job last year than he did in 2022. However, it should also be noted that his compensation had already doubled in 2022 compared to 2021 when he was promoted to president of the company. The accident on February 3, 2023, caused a massive fire fueled by toxic chemicals and led to the evacuation of much of East Palestine, Ohio. It cost Norfolk Southern $1.1 billion according to its most recent estimate.

The company's overall net income fell by 44% last year to $1.8 billion. Shares of Norfolk Southern (NSC) dropped by 22% in the two months following the accident, but have since recovered and are now slightly above their pre-derailment levels. Shaw’s changes in railroad procedures have won the support of the Brotherhood of Locomotive Engineers, the union that represents Norfolk Southern's engineers.

However, a proxy battle has emerged as an investor group led by Ohio-based Ancora Holdings is seeking to elect an alternative slate of candidates to the company’s board of directors with the goal of replacing Shaw. The shareholder group wants to replace him with Jim Barber Jr., a former chief operating officer at UPS.

In response, Norfolk Southern stated that its board has unanimous support for the company's strategy under CEO Alan Shaw and claims that electing Ancora’s nominees would hinder progress on safety, commitment to East Palestine, and improved relationships with regulators and other stakeholders. The opposition investor group argues that Shaw and his allies have no credible plan or viable record to run on.

Norfolk Southern also announced the names of two of its 13 board member nominees: Richard H. Anderson, a former CEO of Amtrak and Delta Air Lines, and Mary Kathryn “Heidi” Heitkamp, the former US senator from North Dakota. The investor group vowed to continue pushing for their slate of eight candidates despite Norfolk Southern's announcement.

In conclusion, while Shaw has seen a significant increase in his compensation following the derailment incident, questions are being raised about the company’s leadership and direction, leading to a proxy battle between shareholders and the board of directors.

DW Staff

David Lintott is the Editor-in-Chief, leading our team of talented freelance journalists. He specializes in covering culture, sport, and society. Originally from the decaying seaside town of Eastbourne, he attributes his insightful world-weariness to his roots in this unique setting.

Alan Shaw East Palestine Ohio Jim Barber Jr. Richard H. Anderson Mary Kathryn “Heidi” Heitkamp Amtrak Delta Air Lines

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