That and his attitude towards Seven. He doesn't do anything that inspires leadership. He sneers at everything sadly.
I already mentioned I didn't agree with how he acted toward Seven. But his evaluation at the end implies a possible reason why he was that way.
And he could have gone over their head to Fleet Admiral Shelby or Admiral Janeway and he didn't - probably because he knew that anyone senior to him would back Picard and Riker up. It was a power-trip.
He chewed Seven out in public for following the orders of an officer senior to them, and refused to accept her preferred name on multiple occasions.
Shaw was looking out for the safety of his crew, which Picard and Riker were not when they were trying to essentially hijack his ship. Shaw knew if this was a sanctioned mission, that entire scene wouldn't have been necessary. Picard and Riker, arrogantly, thought they could throw their weight around and that he'd just hand over the ship.
And I already agreed that I didn't like him not calling her Seven when she preferred it. And Seven was rightfully called out because Seven wasn't
ordered by Picard and Riker... she did it on her own. Which was also against Shaw's orders about not letting them go where they wanted.
And in doing so, Seven DID put the ship in actual danger and the ship
did get damaged hard and many of the crew were wounded. Including Shaw himself.
I think we tend to give Picard, Riker, Seven, and others a pass for disobeying orders and going off mission because we followed them for years and know them and like them.
But that stuff isn't supposed to fly in a chain of command structure. It's why Ro was put in prison before we met her. It's why Tom Paris got demoted. It's why
Kirk got demoted from Admiral.