Under pressure from a former rival CEO and unable to reach an agreement with him, CSX Corp. is going to let shareholders decide who should run the Jacksonville-based railroad company.
CSX announced late Tuesday it will hold a special meeting of shareholders on March 16 to let them vote on proposals made by former Canadian Pacific Railway Ltd. CEO Hunter Harrison to become CEO and install several new directors to the company’s board.
The company’s stock price has jumped 30 percent since Harrison retired from Canadian Pacific a month ago and expressed interest in taking over.
CSX said in a news release it has “closely observed the market reaction” to rumors about Harrison, who has a reputation for cutting costs and improving operations at railroads. Because of that, the company is calling the special meeting to be responsive to shareholders.
The company has had discussions with Harrison and representatives of hedge fund Mantle Ridge, which is working with Harrison. CSX said it would consider bringing in Harrison, with current Chairman and CEO Michael Ward retiring.
However, CSX officials objected to some of Harrison and Mantle Ridge’s demands, including a compensation package for Harrison that CSX estimates would exceed $300 million.
CSX also said Mantle Ridge wants six of 14 seats on the company’s board of directors, even though Mantle Ridge controls less than 5 percent of CSX’s stock.
The company said it proposed a compensation package “that fully reflects Mr. Harrison's experience and accomplishments,” without saying the amount.
It also proposed giving board seats to Harrison, Mantle Ridge CEO Paul Hilal and three other new members selected by “mutual agreement.”
CSX said at the special meeting, shareholders will be asked to vote on the compensation package and the board makeup proposed by Harrison and Mantle Ridge.