CSX Corp. has extended the deadline to nominate directors as the Florida-based railway negotiates with an activist investor and former Canadian Pacific Railway Ltd. boss Hunter Harrison over boardroom representation.
CSX said on Friday that the Feb. 10 deadline for board members' nominations has been moved to Feb. 24, ahead of the vote at the annual meeting, a date for which has not yet been set. Paul Hilal's Mantle Ridge fund has been in talks with CSX about installing Mr. Harrison as chief executive officer. The talks have reportedly been hung up over how many boardroom-seat nominations Mantle Ridge will be offered.
Mr. Harrison left his job as CEO of CP in January to pursue the CSX role, forgoing $118-million in stock and other compensation.
CSX investors have driven up the share price by 29 per cent since Mr. Harrison left CP, betting the Memphis-born executive can wring cost savings out of the company. Mr. Harrison, 72, built his reputation improving three railways: CP, Canadian National Railway Co. and Illinois Central.
Mr. Harrison took the CEO job at CP in 2012 after a bitter proxy contest led by activist investor Bill Ackman's Pershing Square Capital. He set to work turning what was a laggard into one of North America's most efficient freight railways. Profit has almost tripled, and the share price has doubled under his watch.
His "precision" railroading model relies on stricter train scheduling and tight cost controls – fewer, longer trains and a streamlined rail network. Analysts have raised questions about his ability to cut costs and improve network velocity at CSX, given the railway operates in the congested eastern half of the United States. CP, CN and Illinois Central all have longer, straighter networks.
CP operating chief Keith Creel, a long-time understudy of Mr. Harrison, is CP's new CEO.
Mr. Harrison's time at CP was also notable for his attempts to spur North American railway consolidation. At different times, he engaged in talks to merge CP with CSX and Norfolk Southern Corp., which also operates in the eastern half of the United States.
The moves, eventually abandoned, roused the opposition of many U.S. shippers and lawmakers who feared rail service and competition would suffer. Mr. Harrison and Mr. Creel both say mergers among the remaining big seven North American railways are inevitable, and offer a solution to the congestion that plagues the main hub of Chicago.
CSX has said it is willing to listen to Mantle Ridge and other shareholders who have ideas to improve business and shareholder value. The company has not commented on Mr. Harrison's possible arrival. In its statement on Friday, the company gave no reasons for delaying the director nominations.
CSX's CEO, Michael Ward, has said he will retire in 2019. Analysts say the departure of operating chief Oscar Munoz two years ago leaves CSX without an obvious internal replacement.
Eric Atkins