• Norfolk Southern's board is examining allegations that CEO Alan Shaw engaged in an inappropriate workplace relationship, according to people familiar with the matter.
• Shaw has been CEO of Norfolk Southern since 2022 and has faced a toxic rail derailment and a contentious proxy fight in that time.
• The company is working with outside legal advisors on the probe, which is in its early stages.

Norfolk Southern's board is examining allegations that CEO Alan Shaw engaged in an inappropriate workplace relationship, according to three people familiar with the matter.

The company confirmed late Sunday evening it was probing Shaw over "possible conduct" that violated the company's code of ethics and that it had hired outside legal counsel to investigate.

The probe is in its early stages. The company is working with outside legal advisors on the probe, two of the people said.

Shaw did not return phone calls or text messages requesting comment. The board is chaired by former Canadian National Railway CEO Claude Mongeau, who also did not respond to requests for comment.

Norfolk Southern, a $57 billion company, is one of just a handful of Class 1 railroads left in the United States. Class 1 railroads haul huge amounts of commodities and freight, and are critical to the nation's economy. Norfolk Southern's operations span 22 states across the Eastern U.S.

Norfolk Southern's board has undergone dramatic change over the last few months.

An activist investor earlier this year sought to oust Shaw from the top job at the railroad over his handling of the toxic East Palestine derailment, the poor performance of Norfolk Southern's stock and what the activist described as a flawed operating strategy.

Activist Ancora did not manage to fire Shaw, although shareholders did elect three of its candidates to the board, and roughly 36% of shareholders voted against Shaw's reelection. A spokesperson for Ancora did not respond to a request for comment.

Shaw has been CEO since 2022. Were Shaw to step down, the two likeliest internal candidates to replace him on an interim basis would be COO John Orr or CFO Mark George.

Orr joined the company in the midst of the proxy fight and has spent a significant amount of time working in the field to turn around the company's operations. Orr is a longtime and respected railroad operator — he was previously an executive at Canadian Pacific Kansas City — but he has faced allegations of misconduct that Ancora resurfaced during its campaign. At the time, Norfolk Southern defended Orr's track record and accused the firm of trying to distract from the qualifications of its own executive candidates.

George has been Norfolk Southern's CFO for roughly five years, joining the railroad from HVAC maker Carrier.

The company could also look to tap board member Sameh Fahmy, who was previously Orr's boss and was most recently in charge of the former Kansas City Southern's precision-scheduled railroading program.

WATCH: Norfolk Southern CEO Alan Shaw on earnings, East Palestine