DERAILED: Disaster in East Palestine

Congressman: Norfolk Southern exec 'should have disclosed' cash awards

Days after Scripps News revealed top railroad leaders got cash for lengthening trains and cutting costs, CEO Alan Shaw pledged to donate stock.

Congressman: Norfolk Southern exec 'should have disclosed' cash awards
Gene J. Puskar / AP
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As the chief executive officer of the Norfolk Southern railroad prepares to appear before a Senate committee Thursday to answer questions about the train derailment in East Palestine, Ohio, multiple members of Congress are speaking out about what a Scripps News investigation revealed last week: The CEO, along with other executives, received millions of dollars in cash awards after the company cut costs and began running longer trains. Scripps News learned that the train's length, which spanned nearly 2 miles, is being investigated as a potential contributing factor in the toxic disaster. 

"I want to see performance incentives for driving safety, not just for driving profits for Wall Street," said U.S. Rep. Seth Moulton. 

Scripps News previously reported that Norfolk Southern, which owns the train that derailed, overhauled its operations in 2019, saying in its annual report that it had begun intentionally "running fewer, heavier trains" — something critics say places cost-cutting above safety. 

"This is basic physics. If you have really long trains, you have bigger forces in those trains," said Moulton. "It makes the derailments more spectacular. Not in a good way."

The Scripps News investigation found that Norfolk Southern told the Securities and Exchange Commission (SEC) in a proxy filing that one reason top executives were given large cash awards was because of the company’s "record performance on train length and weight" in 2021. They also told shareholders they had achieved a new "record" low operating ratio, a Wall Street metric that compares a railroad's operating expenses to its operating revenues.

That same year, Norfolk Southern’s then-CEO James Squires landed nearly $3.5 million in cash, and at least four other executives got more than one million dollars each, including Norfolk Southern’s current chief executive officer, Alan Shaw, who was executive vice president at the time.

Jared Cassity, the safety director for SMART Union, the nation’s largest railroad union, expressed concerns in the initial Scripps News report last week.  

"You have these executives that are getting rewarded, and so the instructions keep coming down no matter what happens. I want more. I want more. I want more, and that is why you see the railroads saying that the train length is going to continue to grow no matter what," Cassity said. "The railroads are going to keep flirting with danger, keep flirting with disaster as long as people are getting rich."

In June 2022, Norfolk Southern’s chief operating officer at the time, Cindy Sanborn, appeared before the U.S. House Transportation and Infrastructure Committee and defended the company's newer practice of running long trains. 

"Running longer trains is allowing us to more efficiently move what we can move, and safely. I do not think the evidence supports that longer trains drive derailments," Sanborn told members of Congress.  

NTSB launches special investigation into Norfolk Southern safety
NTSB launches special investigation into Norfolk Southern safety

NTSB launches special investigation into Norfolk Southern safety

Citing six “significant accidents” involving Norfolk Southern since December 2021, the NTSB said it will probe the company's safety issues.

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At the time, Congressman Moulton challenged that claim.  

"Mr. Chairman, I hope we can examine that last question further because I think the exact opposite, that we are seeing more derailments, more train breaks, because they are so long," he said.   

But when Moulton talked to Scripps News this week, he went further.

"I think that this official lied to me," Moulton said. 

Scripps News discovered that just 10 weeks before Sanborn's appearance before the Transportation and Infrastructure Committee, which Moulton sits on, Norfolk Southern filed a disclosure with the SEC, reporting it had paid Sanborn $1.13 million in cash awards in 2021, in part, for record train length.

"I mean, frankly, she should have disclosed that before she even showed up to testify in front of Congress," Moulton said. "This is a great credit to you and your investigation that we know about this now. And we're going to be zeroing in on this much more closely."

Sanborn retired from Norfolk Southern in December. Multiple attempts by Scripps News to reach her for comment were unsuccessful. An administrative assistant for a board Sanborn currently sits on told us that she sent Sanborn our request to speak with her, but that request went unanswered. 

We also reached out to Norfolk Southern multiple times, but the company did not respond to specific questions about Moulton's comments.  

The findings from the Scripps News investigation also drew scrutiny from U.S. Sen. J.D. Vance, who represents the East Palestine, Ohio, community.  

"You want people to be paid for performance. Unfortunately, you have way too many train derailments in our country," Vance told Scripps News. "Instead of paying, you know, massive bonuses to railway CEOs I think we should be asking some tough questions about why we lag behind the rest of the world when it comes to safety," Vance said. 

Last week, just three days after the Scripps News investigation revealed that Norfolk Southern president and CEO Alan Shaw personally received cash awards related, in part, to making the company’s trains longer, the railroad issued a press release saying, "Shaw announced today that he will donate the entirety of his pre-scheduled stock sale of $445,000 to fund scholarships for East Palestine students." 

Company spokesperson Katelyn Byrd later wrote Scripps News, "Alan Shaw made this decision... without having factored in media coverage." 

When asked if other executives would also donate any of their own personal cash awards or stock sales, Byrd replied, "Unable to make a forward-looking statement at this time."

Scripps News also asked if the company planned to change the performance metrics that trigger cash and other awards. In response, Byrd restated, "Unable to make a forward-looking statement at this time."

"It looks like we need to have more hearings to get into this in more detail," Rep. Moulton said.  "I know that the next time any railroad official comes before me in Congress, I'm going to ask: 'What are you being paid to tell me?'"

Nathaniel Reed contributed reporting to this story. 

Contact the lead reporters on this story at mark.greenblatt@scripps.com and carrie.cochran@scripps.com.