For the time being at least, CSX Corp. will be led by recently named Chief Operating Officer James Foote, who was reunited with the late CEO Hunter Harrison in October at the Jacksonville-based railroad.
Less than two months into the job, Foote, 63, was named acting CEO on Thursday as Harrison took medical leave. Harrison, 73, died Saturday.
Foote played a key role in Canadian National Railroad while Harrison served as CEO of the company from 2003-09.
Foote joined CNR in 1995 as vice president of investor relations to assist its privatization. He was named executive vice president of sales and marketing in 2000, eventually becoming senior vice president of the department.
The two were integral in CNR’S implementation of what Harrison called “Precision Scheduled Railroading,” and were transforming CSX to the concept.
Foote was hired to lead CSX’s operations as well as sales and marketing in his role as COO.
His arrival at CSX coincided with the November departure of former COO Cindy Sanborn and Chief Marketing Officer Fredrik Eliasson. Only Chief Financial Officer Frank Lonegro remains from the previous management team.
How the unexpected death of Harrison affects that outcome will be determined by the CSX board of directors.
Bryan Tucker, CSX vice president of corporate communications, said Monday the board has a deliberative process to choose the next CEO.
“For the time being, Jim is very much in charge,” he said.
“I think it is important to point out that there is a lot of confidence in Jim,” he said, citing Foote’s 40 years of experience in the industry and the stock market’s reaction.
While CSX’s stock fell 7.6 percent Friday after Harrison’s medical leave was announced, it rose 1.2 percent Monday to close at $53.59 a share.
“It demonstrates the business community’s confidence in his leadership,” Tucker said.
Foote was not available for an interview Monday.
While it was widely believed Foote would become Harrison’s successor, his contract did not anticipate him becoming CEO.
Foote’s contract, contained in a Securities and Exchange Commission filing, does not have provisions for him taking on a new position, either temporarily or permanently.
The contract calls for him to have a base salary of $750,000, with the ability to earn additional bonus and incentive payments. He also received a sign-on bonus of $400,000 when he joined CSX.
Before joining CSX, Foote was president and CEO of Bright Rail Energy, a private technology company formed in 2012 to design, develop and sell products that allow railroads to switch locomotives to natural gas power.
According to Trains magazine, when Foote was promoted to CNR’s executive vice president of sales in 2000, then-CEO Paul Tellier credited him for his role in boosting traffic.
“Jim’s leadership has been key to the success of CN’s aggressive marketing strategy,” Tellier told Trains. “That strategy has seen a host of new intermodal and carload services unveiled this year, including new transcontinental intermodal schedules that cut almost 24 hours off transit times between Toronto and principal western Canadian cities. CN, year-to-date, leads all North American railroads in traffic growth.”
Trains reported that Wall Street analysts applauded the reunion of Foote and Harrison at CSX. “Foote could be the trusted, proven railroader that could be a solid backup for Hunter,” John Larkin, an analyst with Stifel Equity Research, told Trains.
Not all analysts were in agreement, Trains reported.
“Given Mr. Harrison’s focus on operations, and Ms. Sanborn’s operational acumen, her departure is a surprise move and creates further distance from the legacy of CSX, as Ms. Sanborn and Mr. Eliasson were part of the triumvirate that were considered to be potential CEO candidates,” Bank of America Merrill Lynch analyst Ken Hoexter wrote in a note to clients, according to Trains.
An attorney, Foote is a graduate of the University of Wisconsin-Superior and earned his law degree at the John Marshall Law School in Chicago and holds a master’s in law from the Chicago Kent College of Law.
Mark Basch contributed to this report
