The reduction of up to 1,000 management positions, announced last week, is expected to be complete by the middle of March, the railroad says. CSX will take a pre-tax charge of at least $160 million related to employee termination benefits, including severance, pension, and stock compensation costs.
The laid off employees will be eligible for severance pay that equals two times their base salary, plus their target bonus and a prorated bonus payment. They also will be credited with three additional years of age and two additional years of service under the company pension plan.
CEO Michael Ward said the layoffs are “essential to CSX’s ability to remain competitive in a challenging and changing market.” The railroad has lost $2 billion in coal revenue over the past five years.
Last year, when coal revenue plunged $470 million, CSX slashed costs by a record $430 million. Previously CSX executives said they expected efficiency and productivity savings of $150 million this year.
The management layoff savings of $175 million are on top of the $150 million originally envisioned, CSX spokesman Gary Sease says. That puts CSX on track to cut costs by more than $280 million this year.
“We expect a pro-rata share of the $175 million this year because two months of 2017 are almost complete,” Sease says.
The same regulatory filing also outlined CSX’s long-term incentive program for its executives. The program includes three components – performance units, restricted stock units, and stock options – which account for 50 percent, 25 percent, and 25 percent of the awards, respectively.
The filing also details the compensation package for former chief marketing officer Fredrik Eliasson, who was named the railroad’s president last week. Eliasson’s annual base salary was increased to $700,000; his short-term incentive opportunity was increased to 100 percent of annual base salary; and his target long-term equity incentive award value was increased to $2.5 million.
Eliasson succeeds Clarence Gooden as president. Gooden retires on May 31 along with Ward. CSX did not name a replacement for Ward, leaving the door open for E. Hunter Harrison, who has been negotiating a management shakeup at the railroad along with his activist investor partner, Mantle Ridge.
UPDATE: Comments from CSX Corp. communications VP. Feb. 28, 2017, 12:21 p.m. Central time.
took about a bonus $168,000,000.00 to E. H. H. and mantle ridge at a cost of thousands of jobs , yea that’s really smart , these bonuses need to be derailed for sure !
They will talk about the money saved and then several people will get a big bonus for coming up with the idea of getting rid of other people. Then again I see coal loadings are up.
How much of a cut in the accounting departments and the vaunted Chrissie Mafia?
Compare traffic
Compare 10 years of operating ratios.
A layoff of 1,000 employees: is traffic down that much? has anyone actually looked at what they do to see if at least some employees could be kept on. These employees have both technical knowledge and institutional knowledge. as an experienced accountant I believe that either the savings are substantially overstated or there was poor management. They’re going to layoff 1,000 employees? This does not look good for the railway. Note: if traffic is down substantially and is not expected to come back any times soon (e.g. coal) then one would expect layoffs. Is CSX that “oversaturated” with employees?
My experience in corporate America is that a lot of important equipment is sold, thrown out and the remainder of employees are told work free on the weekends or at night or you might follow them. At one CPA firm I worked at, one half of laser printers were discarded (none too old) and we got to work free on weekends. One tax return required over an hour to print. We sat around waiting to print our own returns so we could review and correct. However we spent literally hours in the print queue and nothing was accomplished, but the firm “saved money”. Is this another example?
UPROMISE.COM
They had plenty of fat to trim trust me I work there . They got rid of so many division and cut it back to 4 . This why they cut plus harrison comes in he has an obsession with cutting jobs there will be alot more to come
Gerald……With all do respect, you obviously don’t know what you are talking about. Supervising is one thing but management entails a lot more. Unless CSX was fat, cutting significant numbers of management will destroy the ability of the railroad to serve customers efficiently.
And Hunter wants to come in and take the credit. [roll eyes]
Were all the cuts in one department (like coal business development, perhaps?)
Management is all about managing people, it doesn’t take that many people to do it…your front line Leads and Supervisors should be doing most of the direct management anyways. Managers should be only managing Supervisors, this is simple Business 101…a single Manager should be able to manage 10 Supervisors easily, if not 15 – 20, and that Manager should be reporting directly to V.P..
Customer service? Yeah right. Hey Fred, ANSWER THE PHONE!
No one will notice any difference.
How can customer service not be adversely affected by these cutbacks? Were these employees not doing anything? Was CSX that “Fat”. I know what lean and efficient means. Can someone fill us in how the loss of 1000 management jobs (planning, organizing, leading and controlling) will affect the railroad’s performance? Thanks.