On January 18, 2017, Mantle Ridge advised CSX that Mantle Ridge had recently become a CSX shareholder owning less than 5 percent of the Company’s stock.
Mantle Ridge also advised CSX that Mr. Harrison had terminated his employment with Canadian Pacific that day, was working with Mantle Ridge on an exclusive basis and would be eager to become CEO of CSX.
CSX had been engaged in CEO succession discussions and was planning to make an announcement.
In light of Mr. Harrison’s notable experience and accomplishments, however, the CSX Board quickly engaged in extensive discussions with Mr. Harrison and Mantle Ridge, including by inviting Mr. Harrison and Mantle Ridge to present to and engage in dialogue with the full CSX Board during a meeting which lasted more than five hours.
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In the course of these discussions, Mantle Ridge consistently requested first, that it receive substantial representation on the CSX Board, and second, that Mr. Harrison be engaged immediately as CEO of CSX on terms dictated by Mantle Ridge and Mr. Harrison.
It became apparent that CSX would be unable to retain Mr. Harrison unless it acceded to Mantle Ridge’s requests with respect to the composition of the CSX Board and the governance of CSX, in addition to agreeing to Mr. Harrison’s terms of employment at a total cost which CSX estimates to exceed $300 million.
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Since engaging in discussions, CSX has made several proposals to Mr. Harrison and Mantle Ridge, including proposing the following in February 6 letters to Mr. Harrison and Mantle Ridge, which letters are reproduced herein and summarized below:
CSX’s proposals have not been accepted by Mr. Harrison and Mantle Ridge.
Based on subsequent discussions and receipt of a proposed employment agreement for Mr. Harrison, CSX believes that the following represent Mantle Ridge’s and Mr. Harrison’s current demands.
With respect to matters relating to Mr. Harrison’s employment:
With respect to governance matters, Mantle Ridge has insisted that:
CSX’s Board has concerns with Mr. Harrison’s and Mantle Ridge’s proposals.
The CSX Board is committed to being responsive to the interests of its shareholders and has closely observed the market reaction to Mr. Harrison’s possible employment.
Accordingly, in light of the unusual circumstances surrounding Mantle Ridge’s approach the CSX Board has decided to seek guidance from shareholders on whether CSX should agree to Mr. Harrison’s and Mantle Ridge’s proposals.
To accomplish this and to ensure that all shareholders are heard, the CSX Board has called a special meeting of shareholders.
At the special meeting, and as will be described in further detail in CSX’s proxy statement relating to the special meeting, each shareholder will be asked to vote on whether the shareholder approves of:
(a) the employment arrangements proposed by Mr. Harrison and Mantle Ridge (including the requested reimbursement) and
(b) if Mr. Harrison is hired as CEO, the governance arrangements proposed by Mr. Harrison and Mantle Ridge.
The CSX Board does not intend to recommend for or against either item of business.
The record date for the special meeting will be March 16, 2017, and the meeting will be held at a time and place to be announced. CSX’s shareholders are not required to take any action at this time.
The CSX Board is deferring scheduling the CSX annual meeting of shareholders, which the CSX Board anticipates will occur after the special meeting.
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2017 Supply Chain Trends White Paper
CSX Transportation conducted a comprehensive survey of the factors and trends impacting transportation networks and supply chains going into 2017.
The majority of the supply chain and transportation professionals surveyed have a favorable economic outlook for 2017.
Respondents are optimistic for 2017, but also realistic. They understand they must balance conflicting supply chain priorities and goals with ongoing optimization strategies and tactics if they are to take full advantage of 2017. Supply chain managers are looking for ways to maximize productivity while minimizing risk to their supply chains and bottom lines.
Reducing supply chain costs is a top priority. In addition, companies are looking to improve service, streamline processes and increase their transportation footprints – all of which can be difficult when trying to cut costs simultaneously. These challenges are especially pronounced for freight decision makers, who must worry about both price and service.
Supply chain leaders are looking to leverage automation, explore emerging technologies and incorporate multiple modes of transportation into their freight mix to gain an edge for their organizations in 2017.
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