RICHMOND, Va. - CSX Corp. shareholders approved CEO Hunter Harrison’s $84 million payment today.
That paves the way for the board to complete a deal for the railroad-turnaround veteran to steer the Jacksonville-based company for the next four years.
At least 93 percent of the shareholder votes cast supported the payment.
Harrison, 72, attended and used an oxygen tank during the meeting, but reassured a shareholder who questioned his health.
“My doctors have cleared me to work, and that’s good enough for me,” Harrison said.
About 70 shareholders attended Jacksonville-based CSX’s annual meeting at the Jefferson Hotel in downtown Richmond, Va.
Harrison took on the CEO role for the Jacksonville-based company March 6 after the company announced former CEO Michael Ward was planning to retire.
Harrison had threatened to step down if shareholders didn’t approve the money, which he said he forfeited after leaving the same position at Canadian Pacific Railway Ltd. to pursue CSX.
According to the company’s 2017 proxy statement, $55 million will be reimbursed to hedge fund Mantle Ridge, who “protected Mr. Harrison on a contingent basis,” during his resignation from Canadian Pacific.
Chairman of the CSX board, Edward Kelly said both Harrison and Mantle Ridge “had made a number of concessions during negotiations,” when asked by a shareholder if the payment was appropriate.
Harrison is expected to pay $55 million back to Mantle Ridge, while retaining $29 million as a one-time, upfront payment.
The terms of his annual compensation for his four-year contract with the railroad were not disclosed.
While the shareholder’s vote is a substantial show of support, the CSX board of directors has the final say on the payment.
CSX spokesman Rob Doolittle said the board will have 15 days to approve the payment, and other business discussed at the shareholders meeting.
“This was an advisory, non-binding vote by shareholders, but the board will absolutely take that into consideration,” Doolittle said.
Harrison’s health concerns were a topic for shareholders, amid some reports suggesting that he wasn’t healthy enough to take on the demanding job of CEO.
Before the meeting, Harrison declined to answer questions about his health as he walked through the hotel, breathing with the assistance of an oxygen tank.
While his spoke at a slow pace during the meeting, Harrison didn’t seem to have trouble answering shareholders’ questions or providing a brief statement on the operations of the company.
Kelly, who sat next to Harrison, said health was something “the board was focused on for some time” and that there were “no concerns moving forward.”
In an interview after the meeting, Cindy
Sanborn, CSX executive vice president and COO, said she wasn’t concerned with Harrison’s health.
“I spend as much time with him as anyone, as you can imagine being in an executive role,” she said. “He brings a lot of energy from nine o’clock in the morning to nine o’clock at night.”
Aside from health, Harrison spent about five minutes talking about the company’s operations during his short time there and what plans are ahead.
“I have been involved in turnarounds before, and in my 50 years of railroading, I don’t think I’ve been more excited about the opportunities that lay ahead,” said Harrison.
Harrison said that shareholders “should not expect the status quo” and that “we have to make some changes.”
Before Harrison came onboard, CSX announced it would cut about 1,000 people, including 500 Jacksonville-based management jobs. Those layoffs were completed.
While Harrison didn’t speak directly to those layoffs, Sanborn said that the company doesn’t have any immediate plans for more job cuts, saying only that CSX would “adjust as needed.”
Shareholders voted on five items during the meeting:
• Elected the 13 director nominees to the company’s board of directors
• Approved Ernst & Young LLP as the company’s independent registered public accounting firm in 2017
• Approved a non-binding vote to approve compensation for the company’s executive officers
• Voted to decide if executive compensation should be held every one, two or three years
• Approved Harrison’s reimbursement arrangement.
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