CSX Transportation board votes to reimburse Harrison, Mantle Ridge

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JACKSONVILLE, Fla. – CSX Transportation’s board of directors has agreed to reimburse CEO E. Hunter Harrison and his hedge fund partner $84 million for salary and benefits Harrison forfeited by leaving early from the top job at Canadian Pacific.

The board was expected to approve the reimbursement request, especially after shareholders overwhelmingly approved a non-binding resolution at the company’s annual meeting on June 5. CSX had put the matter before shareholders due to the unusual size and scope of the request.

Harrison had said he would resign if shareholders did not approve the reimbursement request.

In a regulatory filing on June 16, CSX said it will pay the Mantle Ridge hedge fund $55 million and provide Harrison with a lump-sum payment of $29 million. The railroad also will pick up the tab for Harrison’s taxes related to the payment.

The CSX board said it considered many factors in making the decision. Chief among them was Harrison’s track record at Illinois Central, Canadian National, and CP, where his system of precision scheduled railroading dramatically reduced operating ratio and increased profitability and share prices at each railroad.

The board also cited the operational improvements made at CSX since Harrison took over on March 6.

And it said it considered the risks associated with Harrison’s health. The 72-year-old CEO has an undisclosed medical condition that sometimes requires him to use supplemental oxygen. CSX executives have said that Harrison remains as hard-driving as ever and that concerns about his health are overblown.

Harrison left CP on Jan. 18, five months ahead of schedule, so that he could join forces with Mantle Ridge to pursue a management shakeup at CSX.

NEWSWIRETrains News Wire

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