As CSX Corp. filed a proxy statement Monday for its annual shareholders meeting on June 5, hedge fund Mantle Ridge filed a companion proxy urging shareholders to vote for the five items on the agenda – including an $84 million reimbursement payment for new CEO Hunter Harrison.
Harrison was hired March 6 as Jacksonville-based CSX’s new chief executive. His agreement included a provision that shareholders would be asked to vote on the reimbursement for money Harrison forfeited when he left his previous job as CEO of Canadian Pacific Railway Ltd.
Harrison has said he will resign if he doesn’t get that money, but the shareholder vote at the annual meeting is only an advisory vote and the board of directors can still decide to award him the $84 million anyway.
Mantle Ridge and its CEO, Paul Hilal, worked with Harrison to push for the CSX job.
Besides giving Harrison the CEO position, the board also agreed to allow Hilal, Harrison and three other nominees supported by Mantle Ridge to join the board.
In a letter in the proxy statement urging shareholders to support the $84 million payment, Hilal said Harrison “is the most effective and successful railroad leader of our times, having led the dramatic turnaround of three major railroads over the last 25 years.”
“As CEO, Mr. Harrison intends to effect the same transformation at CSX,” he said.
The proxy filed by CSX does not shed any more light on Harrison’s total compensation package.
As previously disclosed, the proxy said Harrison will receive an annual base salary of $2.2 million for four years and an opportunity to earn $2.8 million in bonuses. He also is getting options to purchase 9 million shares of CSX stock.
Harrison also will receive “certain perquisites and benefits” which were not specified.
CSX had said in February Harrison was seeking a total compensation package of more than $300 million before he was hired.
“The negotiation of Mr. Harrison’s compensation terms occurred in extraordinary circumstances, which warranted making compensation decisions in light of such circumstances instead of in accordance with the Company’s usual compensation decision making practices,” CSX’s proxy said.
Michael Ward, who retired as chairman and CEO when Harrison took over, received $13.6 million in compensation last year, the proxy showed. His package included a base salary of $1.2 million and $8.6 million in stock and option awards.
CSX, which moves its annual meeting to different cities every year, will hold its June meeting in Richmond, Va.
Richmond was the company’s headquarters before Ward succeeded John Snow as chief executive in 2003.
The bulk of CSX’s railroad operations were always in Jacksonville and the Richmond headquarters was a relatively small office that only had about 50 people.
When Snow left, the company decided it made more sense to move the headquarters operation to Jacksonville.