CSX Names E. Hunter Harrison as CEO
Company announces agreement with mantle ridge to reconstitute its board, CSX shareholders to vote on proposed reimbursement in respect of foregone compensation of E. Hunter Harrison at upcoming annual meeting of shareholders.
2017 Supply Chain Trends
A pool of over 150 supply chain professionals were asked about their transportation plans, challenges and opportunities for growth in 2017, the results provide insight into a wide range of issues and shed light on what supply chain managers…
- Practical Steps for Highway to Intermodal Rail Conversion
- Your Guide to Upcoming Trucking Regulations
- The X’s and O’s of Intermodal Rail in Supply Chain Management
- Intermodal Rail Bracketology
- All Resources
CSX Corporation, together with its subsidiaries based in Jacksonville, Fla., is one of the nation’s leading transportation suppliers. The company’s rail and intermodal businesses provide rail-based transportation services including traditional rail service and the transport of intermodal containers…
- Company Quicklook
CSX Corporation announced the Company has named E. Hunter Harrison, a proven railroad executive with a well-regarded track record of producing market-leading operating results, as chief executive officer, effective immediately.
Mr. Harrison replaces Michael Ward, who announced his decision to retire as Chairman and CEO on February 21, 2017 and will become a consultant to CSX, effective immediately.
Under the terms of the agreement, CSX has appointed five new directors to its Board of Directors, mutually agreed upon by CSX and Mantle Ridge and effective immediately – Mr. Harrison, Mr. Hilal, Dennis Reilley, Linda Riefler and John Zillmer.
In addition, three incumbent CSX directors intend to complete their service for the Board at or before the conclusion of the 2017 annual meeting. As a result, the size of the Board will be 13 members. CSX’s current Presiding Director, Edward J. Kelly, III, will become Chairman of the Board and Mr. Hilal will become Vice Chairman.
"I am proud to join the dedicated and talented railroaders at CSX. Together, we will implement Precision Scheduled Railroading – a model proven to improve safety, create better service for customers, produce a proud and winning culture for employees, and generate exceptional, lasting value for shareholders.” Hunter Harrison
Paul Hilal, said, “I thank every CSX director, including those leaving the Board, for their constructive and skillful engagement that enabled this terrific outcome for CSX. The Board is united behind a shared goal – creating value for shareholders and all stakeholders by implementing the Precision Scheduled Railroading model at CSX. Together, we have created the conditions for success. Now the real work begins.”
As part of his compensation, Mr. Harrison will receive an award of incentive options to purchase nine million shares of CSX stock at its current trading price, eight million of which will be granted as an inducement award under the Nasdaq listing rules.
The options will vest over four years with half of the options vesting based on service and half vesting based on the achievement of designated performance goals over the four year period.
While CSX, Mr. Harrison and Mantle Ridge have agreed on the aforementioned conditions, the CSX Board continues to believe that it is appropriate to seek shareholder input with respect to certain proposals:
- The requested payment of the $84 million of the amount of compensation and benefits forfeited by Mr. Harrison as a result of his separation from Canadian Pacific Railway Limited. To facilitate Mr. Harrison’s separation from CP on terms that would permit him to work at CSX, Mantle Ridge agreed to protect Mr. Harrison on an interim basis with respect to this $84 million.
- The requested assumption of a related tax indemnity.
Mr. Harrison has informed CSX that his acceptance of the CEO position was subject to CSX ultimately providing this replacement protection initially offered by Mantle Ridge upon his departure from CP. Mr. Harrison has indicated that he will resign after the 2017 annual meeting if the reimbursement and tax indemnity are not provided by CSX, and return to Mantle Ridge to protect his reimbursements.
CSX will submit these matters to CSX shareholders for an advisory vote at the 2017 Annual Meeting of Shareholders. The proxy statement relating to the Annual Meeting will contain further details. Because these matters will now be considered at the Annual Meeting, the previously convened Special Meeting of Shareholders will not be held. The CSX Board does not intend to make a recommendation to shareholders on the matters being put forward for a vote, but does intend to act promptly following the meeting based on the outcome of the vote.
Biographies of new CSX Board members follow:
E. HUNTER HARRISON
E. Hunter Harrison is the most effective and successful railroad leader of our times, having successfully led the turnaround of three major railroads over the last 25 years. In his last two undertakings at Canadian National and Canadian Pacific, he delivered 321% and 350% total shareholder return, respectively.
Mr. Harrison created and refined Precision Scheduled Railroading over the recent decades, and is the acknowledged leader in implementing it at Class I railroads. He has been recognized by every major railroading publication, and he has twice been honored as Railroader of the Year.
Paul Hilal is the founder and CEO of Mantle Ridge LP. Mr. Hilal is a leading engaged or activist investor, as well as a well-respected expert on value investing and corporate governance. Mr. Hilal played a leading role in the historic 2012 proxy campaign at Canadian Pacific, which resulted in a reconfigured board and the hiring of Hunter Harrison as CEO.
Mr. Hilal currently serves on the Board of Overseers of Columbia Business School and served until 2016 on the Board of the Grameen Foundation – an umbrella organization that helps microlending and microfranchise institutions empower the world’s poorest through financial inclusion and entrepreneurship. He is also a Trustee of the Supreme Court Historical Society, a non-profit organization dedicated to the collection and preservation of the history of the Supreme Court of the United States.
DENNIS H. REILLEY
Dennis Reilley is an experienced executive with a demonstrated track record of driving improvements in operations, financial results and shareholder value as Chairman, President and Chief Executive Officer of Praxair, Inc. He was named one of the best CEOs in America in 2004, 2005, and 2007 by Institutional Investor.
Since retiring as CEO of Praxair, he has brought his expertise in finance, operations and leadership to the boards of leading Fortune 500 companies. Mr. Reilley currently serves as Non-Executive Chairman of Marathon Oil Corporation, and as a director of Dow Chemical Company. Mr. Reilley is a founding member and partner of Trian Advisory Partners (an advisory group for Trian Fund Management, L.P.).
LINDA H. RIEFLER
Linda Riefler is a 25-year veteran of Morgan Stanley where she served on the Executive and Management Committees. She is an expert on talent management, having served as Chief Talent Officer for the bank. She also served as Chairman and Global Head of Morgan Stanley’s Research franchise as well as Chairman of MS where she oversaw the commercialization of Modelware, a knowledge management platform she had incubated as Head of Morgan Stanley’s renowned Global Research Strategy Team.
Ms. Riefler currently serves as a director of MSCI, and as a strategic advisor to numerous start-ups, for-profits and non-profits, with an expertise in building adaptive capacity to help them navigate rapidly changing environments.
JOHN J. ZILLMER
John Zillmer has led successful transformations at large, complex enterprises. He is the former chief executive of Univar, a Fortune 500 company, where he doubled EBITDA over three years. He is an expert in strategies for business optimization and process improvement. His operational transformation of Allied Waste Industries became an industry benchmark. Mr. Zillmer has deep expertise in labor relations, environmental safety, logistics, corporate governance and talent management.
Intermodal Rail White Papers & Guides
2017 Supply Chain Trends
A pool of over 150 supply chain professionals were asked about their transportation plans, challenges and opportunities for growth in 2017, the results provide insight into a wide range of issues and shed light on what supply chain managers plan to focus on in the coming year. Download Now!
Your Guide to Upcoming Trucking Regulations
As increased over-the-road regulations are set to go into effect in 2017, supply chain managers should take steps to prepare today in order to protect their organizations from negative impact. Download Now!
The X’s and O’s of Intermodal Rail in Supply Chain Management
As the coach of your supply chain, you have the opportunity to turn to your playbook and choose from multiple transportation modes to maximize the efficiency of your freight network. Download Now!
Transportation Management Systems & Intermodal Rail
An interactive, personalized guide to learn more about the combined benefits of a TMS and intermodal rail. Download Now!
Highway to Intermodal Rail (H2R) Conversions Deliver Bottom Line Results
CSX Transportation has found that 96% of shippers have sub-optimized freight in their network. Does your organization? Find out and learn how to address sub-optimized freight in your supply chain. Download Now!