CSX Fends Off Fight With Activist Over Board -- WSJ
February 11 2017 - 3:03AM
Dow Jones News
By Jacquie McNish and David Benoit
CSX Corp. on Friday pushed off a board fight with an activist
investor, buying more time to reach an agreement to install
railroad veteran Hunter Harrison as its chief executive.
The company extended the deadline for board nominations until
Feb. 24, giving Mr. Harrison and his partner, activist investor
Paul Hilal, until that date to nominate directors as they negotiate
a deal to gain board seats and replace CSX's long-serving Chairman
and CEO Michael Ward.
Mr. Harrison and CSX have discussed a three-year contract for
the 72-year-old to run the Jacksonville, Fla.-based railroad, but
Mr. Hilal's request for as many as six board seats has become a
sticking point in the talks, according to people familiar with the
matter.
The director discussions are still fluid, the people said. A
deal isn't a sure thing, as Messrs. Harrison and Hilal are seen as
a package deal, they added.
Mr. Hilal told CSX directors at meetings in Atlanta last week
that his goal is to avoid a board fight, the people said. His fund,
Mantle Ridge LP, raised more than $1 billion for its CSX
investment.
CSX is expected to announce a succession plan for Mr. Ward even
if the company doesn't reach a deal with Mr. Harrison, some of the
people said.
Mr. Ward, who took over as CEO in 2003, has spent nearly four
decades with CSX, and investors had previously questioned the
company's succession plan. His retirement was delayed two years ago
when CSX lost its No. 2 executive, Oscar Munoz, to United
Continental Holdings Inc., where he is now CEO.
CSX is under pressure to settle in part because its stock has
surged by roughly 30% since Mr. Harrison stepped down from CP's
board and The Wall Street Journal reported that he and Mantle Ridge
would mount a campaign at CSX. Mr. Harrison's track record of
improving efficiency at other railroads helps explain investor
enthusiasm for the prospect of a shakeup at CSX.
The move put a spotlight on the profitability of CSX, which
operates one of two major rail networks east of the Mississippi.
CSX has for years aimed to reach an operating ratio, a measure of
costs as a percentage of revenue, in the mid-60s. In its last
fiscal year, its ratio was just under 70%.
--Paul Ziobro contributed to this article.
Write to Jacquie McNish at Jacquie.McNish@wsj.com and David
Benoit at david.benoit@wsj.com
(END) Dow Jones Newswires
February 11, 2017 02:48 ET (07:48 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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