CSX Head Takes Medical Leave
December 14 2017 - 10:02PM
Dow Jones News
By Paul Ziobro
CSX Corp. Chief Executive Hunter Harrison has taken a medical
leave of absence due to unexpected complications from a recent
illness.
The railway has named Jim Foote, a confidant of Mr. Harrison who
was hired in October as chief operating officer, to serve as acting
CEO, the company said in a statement Thursday. CSX said it
scheduled a conference call for Friday morning to discuss the
switch.
Mr. Harrison, age 72, has faced questions about his health since
activist investors sought to install the railroad veteran atop CSX
earlier this year. Mr. Harrison, who became CEO in March, has a
medical condition that requires him to frequently use an oxygen
tank.
During the brief proxy fight, Mr. Harrison declined requests by
CSX's board to have an independent physician review his medical
record. But the board had said that it was satisfied that Mr.
Harrison could perform the job, even if his health problems meant
he only visited the company's Jacksonville, Fla., headquarters
occasionally. The board hasn't since disclosed details on his
medical condition.
Mr. Harrison's health problems are unique to CSX, as his
boosters during the proxy fight and other investors view his
presence alone at the railway as critical to turning around the
performance of the third-largest U.S. railroad. Mr. Harrison was
implementing his operating philosophy, referred to as
precision-scheduled railroading, which he has used to turn around
three railroads during his long career, including Canadian National
Railway Co. and Canadian Pacific Railway Ltd.
The philosophy broadly involves better utilization of assets,
which has led Mr. Harrison to idle thousands of railcars and
hundreds of locomotives at CSX, and running trains on tighter
schedules.
Mr. Harrison, who was working under a four-year contract at CSX,
moved quickly to enact change at CSX, including reducing the number
of hump yards that sort long trains. While it initially led to
faster trains and shorter wait times, CSX encountered delays and
longer wait times during the summer that led shippers to complain
and culminated in a hearing before federal regulators in October.
CSX has said the issues have been resolved and trains are running
faster and on time more recently.
Mr. Harrison has spoken of continued obstacles in fully
implementing his plan, including some internal resistance his
efforts to change how CSX is run. In October, days before a planned
investor conference, CSX overhauled its executive ranks, with three
top executives resigning and Mr. Foote, who worked with Mr.
Harrison during his turnaround at Canadian National, named to the
No. 2 position.
Late Thursday, Mr. Foote said in a statement that CSX was still
able to follow through on Mr. Harrison's turnaround plan.
"Because the team has implemented a foundation consistent with
Hunter's vision, I do not see any reason to diminish our
expectations concerning the pace and magnitude of our future
progress," he said.
Mr. Harrison has taken medical leave in the past. In 2015, as
CEO of Canadian Pacific, he stepped down temporarily after leg
surgery and a bout of pneumonia.
He has sharply curtailed business travel and trips to company
headquarters since then. During his final two years at CP, he used
the portable oxygen system and rarely traveled to the company's
head office in Calgary, Alberta, because the high altitude made
breathing difficult, people familiar with the company said.
For many years he has conducted most of his business from his
home office near West Palm Beach, Fla. While at CSX, he has been
monitoring the progress of new train schedules and cost-cutting at
rail yards and dispatch centers from computer screens.
Write to Paul Ziobro at Paul.Ziobro@wsj.com
(END) Dow Jones Newswires
December 14, 2017 21:47 ET (02:47 GMT)
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