After shareholder approval at the company's June 5 annual meeting, CSX Corp. said Friday its board of directors approved an $84 million payment to new President and Chief Executive Officer Hunter Harrison.
Harrison was seeking the payment as reimbursement for compensation he forfeited when he left his previous position as CEO of Canadian Pacific Railway Ltd. to pursue the CSX job.
The shareholder measure was only an advisory vote for the board, and the directors were expected to approve the $84 million payment regardless of the outcome.
When Harrison was hired as CEO in March, his agreement said he could resign if he didn't get the payment.
In a letter to Harrison on Friday, CSX board Chairman Edward Kelly said by accepting the payment, Harrison is not entitled to resign.
However, in a Securities and Exchange Commission filing Friday about the payment, CSX said the board is concerned about Harrison's health.
Although Harrison needed the assistance of a portable oxygen machine at the annual meeting, he insisted it is not interfering with his work.
“Continued availability and service can never be guaranteed for any individual and is a particular risk in the case of Mr. Harrison, who is 72 years old and has experienced medical issues at various times, including a respiratory condition that requires him to use supplemental oxygen,” the SEC filing said.
“An extended or permanent loss of the services of Mr. Harrison, due to death, disability or any other reason, could adversely disrupt the pace of implementing the company’s Precision Scheduled Railroading, or otherwise adversely affect the company or the market price of the company’s securities,” it said.
Precision Scheduled Railroading is Harrison's philosophy of improving railroad operations, which he has implemented at other major railroad companies.