An affair cost Alan Shaw his job and allowance. Will Norfolk Southern also try to recoup his salary?

Even when a Fortune 500 CEO is fired, there’s usually a golden farewell on the way out. That, however, does not apply to former Norfolk Southern Chief Executive Alan Shaw, whom the railroad fired Wednesday after an investigation found he and Chief Legal Officer Nabanita C. Nag engaged in a consensual romantic relationship , in violation of company policy. Norfolk terminated Shaw for cause, disqualifying him from receiving benefits under the company’s executive compensation plan.

Shaw largely weathered the storm when a Norfolk train carrying toxic chemicals derailed in eastern Ohio last year. Then, earlier this year, it survived an activist attempt to dismantle it. However, he’s out the door now, and his alleged fling could prove costly.

Under Norfolk’s severance plan, Shaw would have been entitled to twice his base salary, which was $1.1 million in 2023. More importantly, he would also have been eligible for cash payments representing the total value of his restricted stock and outstanding option awards. Stock and option awards accounted for more than $10 million of Shaw’s $13.4 million compensation package last year, according to the company’s most recent proxy statement.

It also remains to be seen whether the company will seek to recoup some of Shaw’s past wages, a move that is becoming increasingly common.

The Securities and Exchange Commission recently updated rules that require companies to have so-called clawback policies, which allow them to recoup pay from current and former executives after a financial restatement. However, recently, major companies – often pushed by institutional investors and proxy advisory firms – have also adopted similar measures where executives engage in misconduct or reputational damage.

This includes Norfolk Southern, one of America’s four largest freight railroads.

When reached for comment, Norfolk Southern did not provide clarification on whether the company would seek to recover payment from Shaw. Shaw and Nag did not respond to requests for comment when The Wall Street Journal first reported the news of their respective terminations.

RBC sets precedent for clawback fight

Another high-profile clawback fight is currently being waged by Royal Bank of Canada, with the bank trying to recoup about $3.2 million after it fired CFO Nadine Ahn and CFO Ken Mason. The bank claims the pair had an undisclosed relationship for about 10 years, during which time RBC says Ahn pushed for promotions and raises for Mason.

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Both Ahn and Mason sued RBC for wrongful termination, saying they were close friends and the investigation was mishandled.

According to the data provided to wealth from analyst firm Esgauge last month, 16 companies have tried to recover from 19 executives since the start of 2023, the year the SEC’s new rules take effect.

Seven clawbacks are pending, eight resulted in repayment, and two were unsuccessful. One company did not disclose the result, according to Esgauge.

This story was originally published on Fortune.com