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2/17/2017 8:15:00 AM Write a Letter to the Editor Write a letter to the Editor

CSX Shareholders Seen Likely to Make Harrison a $300 Million Man


Norm Betts/Bloomberg News

CSX Corp. shareholders are likely to approve turnaround veteran Hunter Harrison’s demand for a $300 million pay package that the railroad derided as “exceptionally unusual,” according to analysts.

Investors will be asked to vote on an employment deal and board representation sought by activist investor Paul Hilal and Harrison, who is seeking to become CEO. CSX’s directors welcomed Harrison’s bid to become CEO but balked at the board and compensation demands.

“Odds remain in favor of a change that would usher in the leadership of Hunter Harrison,” Fadi Chamoun, a BMO Capital Markets analyst, said Feb. 15 in a note to clients. “It seems to us that shareholders have already voted for this change and stand to see significant downside in the absence of a deal.”

Harrison, 72, and Hilal last month targeted CSX, the least-efficient North American railroad, for a shakeup, taking a page out of the playbook they used with hedge-fund billionaire Bill Ackman to turn around Canadian Pacific Railway Ltd. Harrison stepped down as CEO of the Canadian carrier ahead of schedule, forfeiting more than $80 million in compensation and revising a noncompete agreement so he could run CSX.

CSX’s board “believes that the governance requests would grant effective control of CSX to a less than 5% shareholder,” the Jacksonville, Florida-based company said Feb. 14 in a statement. As for Harrison’s compensation proposal, it said, the “extraordinary” request would be “exceptionally unusual, if not unprecedented” for an incoming CEO.

Hilal said he is “fully confident’’ in a favorable outcome for the company. Optimism that Harrison will become CEO has fueled an increase of about $10 billion in the railroad’s market value, Hilal said.

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By Frederic Tomesco and Thomas Black
Bloomberg News


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