CSX Transportation details Harrison’s compensation and agreement with Mantle Ridge

Former President Gooden out immediately; director resigns
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JACKSONVILLE, Fla. — With the Hunter Harrison era under way, CSX Transportation on March 7 detailed the new chief executive’s compensation package, additional executive changes, and elements of its agreement with activist investor Mantle Ridge.

Harrison will receive a base salary of $2.2 million and an annual target bonus opportunity of up to $2.8 million, with that amount as a guaranteed bonus this year, CSX said in a regulatory filing.

Harrison also was granted options on 9 million shares of CSX stock at $49.79 – a deal worth $448 million at the current price. The option will vest in equal annual installments over Harrison’s four-year contract. Half the option will be based on continued employment, with the other half hinging on the achievement of performance targets.

At the CSX annual meeting, shareholders will vote on whether to reimburse Mantle Ridge and Harrison for the $84 million in compensation and benefits Harrison left on the table by leaving five months early from the top job at Canadian Pacific.

If shareholders approve the “make-whole” arrangement, CSX will pay Mantle Ridge $55 million
and later would pay Harrison $29 million and pick up the tab for taxes on the deal.

The date of the annual meeting has not been set. It’s typically held in May, and CSX says it will be held by June 15. Harrison has indicated that he will resign after the annual meeting if investors reject the make-whole arrangement.

Former CEO Michael Ward, who resigned effective March 6, will remain as a consultant to CSX until May 31. CSX previously did not say when Ward would depart.

Clarence Gooden is out as vice chairman, effective immediately. Gooden, who had been CSX’s president, was elevated to vice chairman last month when CSX promoted Chief Marketing Officer Fredrik Eliasson to president. Previously, Gooden was set to retire on May 31.

Board member Timothy O’Toole resigned from the board, effective immediately. The former Conrail executive was added to the board a decade ago during a proxy contest launched by The Children’s Investment Fund.

CSX’s corporate bylaws were amended to separate the roles of CEO and chairman of the board. In addition, the board’s mandatory retirement age of 75 was eased in a nod to the 72-year-old Harrison.

Mantle Ridge, which currently holds just under 5 percent of CSX’s stock, must retain a 2 percent stake in the company if founder Paul Hilal is to retain his seat on the board. Hilal is the board’s vice chairman through the 2018 annual meeting.

Mantle Ridge also agreed to vote in favor of all nominees to the CSX board in its proxy statement for the upcoming annual meeting.

NEWSWIRETrains News Wire

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