JACKSONVILLE, Fla. — E. Hunter Harrison was named the CEO of CSX Transportation today, less than seven weeks after stepping down early from the top job at Canadian Pacific.
Harrison, 72 — widely regarded as the industry’s best operations CEO — will begin immediately, CSX said today. He transformed Illinois Central, Canadian National, and CP into ultra-efficient and highly profitable railroads over the past three decades.
“I am proud to join the dedicated and talented railroaders at CSX,” Harrison says. “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.”
The deal with CSX was a coup for Harrison and his activist investor partner, Mantle Ridge founder Paul Hilal. Harrison on Jan. 18 announced his departure as CP CEO — five months earlier than planned — so he and Hilal could pursue a management shakeup at CSX.
Hilal and Harrison will gain seats on the CSX board, with Hilal becoming its vice chairman. In addition, CSX appointed three other directors as part of a deal with Mantle Ridge, which owns just under 5 percent of CSX’s stock.
CSX said that at the annual shareholder meeting, typically held in May, investors will vote on two elements of Harrison’s compensation package. These include reimbursing Mantle Ridge for the $84 million in compensation and benefits Harrison left on the table at CP by retiring early, as well as tax liabilities that could reach $23 million.
Under the deal with Mantle Ridge, Harrison can resign after the shareholder meeting if shareholders reject these items. CSX scrapped plans for a special shareholder meeting to consider Mantle Ridge’s proposals.
“I thank every CSX director, including those leaving the board, for their constructive and skillful engagement that enabled this terrific outcome for CSX,” Hilal says. “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.”
Hilal helped lead Pershing Square’s successful 2012 proxy battle that ousted CP management and installed Harrison as CEO. Harrison quickly implemented his precision railroading system at CP, slashing costs and raising revenue. CP’s operating ratio fell more than 20 points in less than three years. And its stock price doubled during Harrison’s tenure.
Word that Harrison was eyeing CSX sent the company’s stock soaring 30 percent, boosting its overall value by $10.4 billion. This put pressure on CSX’s board to respond.
By reaching a friendly deal with Harrison and Mantle Ridge, CSX avoids a costly and potentially nasty proxy battle. A decade ago, CSX fought — and lost — a proxy contest launched by The Children’s Investment Fund and 3G Capital Partners. The railroad spent $22 million in the effort, but four of the activist investor’s five candidates were elected to its board.
Harrison replaces Michael Ward, who has led CSX since 2003. CSX on Feb. 21 announced Ward would retire, effective May 31. Ward will now stay on as a consultant, although CSX did not say for how long.
Three CSX board members will retire at or before the conclusion of the annual shareholders meeting, CSX said. The board’s current presiding director, Edward Kelly III, will become chairman of the 13-member board.
The new directors include Dennis Reilley, the retired CEO of Praxair; Linda Riefler, a 25-year veteran of investment bank Morgan Stanley; and John Zillmer, the former CEO of Univar.
UPDATE: Confirmation on Hunter Harrison’s election as CSX CEO. Details on new board members. March 6, 2017, 10:06 p.m. Central time.
Cripe, how many more years are we going to have to put up with seeing that cheesy photo of EHH?!
not the smartest idea on the stock holders part , so bad so wrong so sad , get the big butcher block ready chop chop chop ,
And the sticking of Norfolk Southern has begun.This is unsaid here,E Hurricane got his revenge by taking on CSX.And now he can & will stick to Norfolk Southern again,again,again for Roanoke rebuffing this individual in 2016.Noticed how Canadian National took business away from E Hurricane according to the March Trains Magazine pages 50-59.Hoping local & only CSX yard will not be closed down as a result of this tyrant taking something that doesn ot belong to him
God bless the employees at CSX. You know who’s hide the $84 + $23 million is going to come out of.
Bad! How sad!
NYC Citywide Ferry Service will create 200 jobs.
Oh Boy, CSX might end up like the MILWAUKEE ROAD! Lets see, who could join up and take over CSX? Union Pacific, NS, Oh no, could it be CP Rail! I smell a dead fish.
What will the NAME BE after amalgamation – as CN became NORTH AMERICAS’ RAILROAD
CSX likely will disappear.
Lets see what names we come up with.
My lame guess Is just CANADIAN PACIFIC
AUSTIN
Please enlighten those of us who do not have access to THE JOURNAL,are the comments
NEGATIVE OR POSITIVE
I think EHH wanted to get legacy Masters Tournament tickets. Could not get Southern’s via NS, so now he has Georgia RR/ACL/CSX. It will be interesting to see both business trains parked in Augusta for the Masters, a few miles apart. Wonder what will be discussed in those dinner meetings! Better take CSX photos now, before it changes to something else.
Might be a good idea to read the relevant article in today’s Wall St. Journal.
TIM
I was service rep at CN < I would have fixed your concerns and made you HAPPY !
I also experienced customers that were impossible to satisfy no matter what I offered;
in the end CN was better of without them , and finally I told them to ship by TRUCK.
YOU FOOLS. You know that CSX has been Disgraced already, Now you made it worse. Harrison is the Worst CEO imaginable
Earl
Some of the negative comments come from shippers such as my company who have been the victims of EHH idea of “service”. A healthy railroad has happy customers. Harrison has no clue on how to accomplish that, so in the real world, not everyone is happier.
JON
Of course HE will !
By the way I would guess 80% of he negative comments come from union people and should not blemish HIS accomplishments at CN & CP –if it had not been for HIM at CN HUNDEDS OF JOBS WOULD HAVE DSAPPEARED – he CLEANED HOUSE – Officers & Troops – included.
CN & CP are much healthier and on better footing today because of him.
I have shares in both companies and as a result of HIM everyone is happier including the troops
Same will happen a CSX -so keep your shares !
Many people cannot see the forest for the trees !
I wonder if he will try to merge CSX with Canadian Pacific?
Harrison just wanted an excuse to move to a warmer climate!
BUCKLE UP, EVERYONE! 🙂
A BNSF/NS merger becomes more of a possibility in the not to distant future, IMO.
I think we all need to say a prayer for those who work at CSXT.
Why will it be a good day for Truckers?? They are already whipping both CSX and NS and that was well before Hunter Harrison.
..
I take a different take. CSX might finally might aggressively pursue a way to extend its reach and expand its market beyond coal whether it might be CP or KCS.
A good day for Norfolk Southern and for truckers. My condolences for CSX employees. Just run.
Welp, it was a good run, CSX. Nice knowing ya.
This will not end well for CSX employees and customers. Greed and ego will run CSX into the ground. It will take CP a few years to recover from Harrison’s cost cutting.
and so it begins…..fasten your seat belts it may be a bumpy ride