Hunter Harrison, then CEO of Canadian Pacific Railway Ltd., listens during an interview in New York in November, 2015.Chris Goodney/Bloomberg
Hunter Harrison, the brash railroader who runs CSX Corp., says there's no truth to market speculation his ill health is behind the arrival of a new operating chief and the departure of three executives.
CSX last week said three top executives would leave the company and that Jim Foote, a former colleague of Mr. Harrison at Canadian National Railway Co., would become the COO. Florida-based CSX also cancelled its investor conference scheduled for Monday, Oct. 30.
The moves alarmed investors, who drove down CSX's share price by 3.3 per cent on the New York Stock Exchange.
"We think investors suspect there could be something else behind this," said Jason Seidl, a Cowen & Co. stock analyst, adding he received many calls and e-mails from concerned investors. "We do not think the departure of these three people, long-tenured executives at the firm, came on completely amicable terms."
The 72-year-old Mr. Harrison said the shakeup has "nothing to do with my health," and that he has no plans to quit.
"Am I leaving? No, I'm not planning on it," he said in a phone interview with The Globe and Mail.
"My health is no worse. In fact, it's marginally a little better," said Mr. Harrison, who left Canadian Pacific Railway Ltd. in January and became CSX's chief executive officer in March. "If there had been issues with health, we'd have disclosure issues or others that we would have dealt with."
Reports in January that Mr. Harrison was seeking the CSX job sent up CSX's stock price by 35 per cent to almost $50 (U.S.). Investors bet Mr. Harrison could do at CSX what he did at CP and CN – boost profits and the share prices by changing the freight haulers into lean, efficient companies.
CSX's transformation has not gone smoothly, and the stock price is little changed since he arrived.
Several CSX customers and industry groups complain service has deteriorated under Mr. Harrison, prompting the U.S. rail regulator to hold a public hearing on the matter. Shippers told the Surface Transportation Board members that late or missed pickups and deliveries were costing them customers and money.
Mr. Harrison apologized, pointing his finger at employee resistance to change, and the pace of transformation. He said the revamp would result in better service for customers while creating value for shareholders.
Mr. Harrison has a history of heart troubles and was sidelined for a few months in 2015 at CP to recover from complications related to leg surgery. He is frequently seen using an oxygen tank.
His comments in July that he was a "short timer" at CSX were interpreted by some that he would not complete his contract at CSX.
Mr. Harrison said his words were "totally misunderstood."
"When I signed up with the company, it was for a four-year contract. Four years to me is short time," the Memphis-born Mr. Harrison said. "Look, if you went to work and had 10 years ahead of you to manage the company, you might do it one way. If you have two or four years, there's some urgency."
On Oct. 25, CSX said three executives were leaving the company: chief operating officer Cindy Sanborn, chief marketing officer Fredrik Eliasson and general counsel Ellen Fitzsimmons.
The moves come amid a year in which CSX has shed more than 4,000 jobs and closed rail yards as it adopts Mr. Harrison's bare-bones operating model.
New CEOs typically install their own management teams; Mr. Harrison said he did not foresee more wholesale changes to the executive ranks. "I think they're generally done. That's not to say that there's not going to be a one-off here and there."
The new operating chief, Mr. Foote, is familiar with Mr. Harrison's operating model, and will be key in helping other CSX railroaders implement the system, Mr. Harrison said.
"I think it's going to go well, or he wouldn't be here," he said. "I think Jim and I had a nice run at Canadian National together and had a lot of fun. The team had success and created a lot of shareholder value. Jim is a very knowledgeable individual in the rail industry and I think there's a lot he can do for us in his strengths, right now and in his training and development of young talent. It's a perfect fit."
Mr. Harrison dismissed criticism his operating model does not apply well at CSX, whose network in the densely populated eastern half of the United States is very different from the wide-open Canadian Prairies.
"It's all railroading," he said by phone. "You know, you've got to look at what you've got structurally and deal with it. There's nothing that we can't deal with."
With a file from Reuters
Eric Atkins