Hunter Harrison speaks during an interview in New York, U.S., on Friday, Nov. 20, 2015.Chris Goodney/Bloomberg
CSX Corp. shareholders approved a proposal on Monday to reimburse an activist investor, Mantle Ridge Partners LP, $84-million (U.S.) for arranging the hiring of new chief executive officer Hunter Harrison.
Owners of CSX shares overwhelmingly approved the reimbursement, with at least 93 per cent voting in its favour, the company said in a statement, citing preliminary voting results.
Mr. Harrison has said he would resign if the company fails to reimburse Mantle Ridge, a new activist fund that partnered with Mr. Harrison in the effort to install him as CSX's CEO.
CSX, based in Jacksonville, Fla., is a $50-billion company that runs a 21,000-mile (33,796-kilometre) freight-rail network along the east coast of the United States.
Mantle Ridge, founded by ex-Pershing Square Capital Management LP partner Paul Hilal, is one of CSX Corp.'s biggest shareholders with a stake of 4.9 per cent. The New York-based hedge fund had made the payment to extract Mr. Harrison early from his previous employer, Canadian Pacific Railway Ltd., where he had led a turnaround as CEO.
CSX's management team did not recommend for or against the reimbursement, putting the matter in the hands of shareholders. The company has estimated that Mr. Harrison's overall pay could be worth around $300-million if he hits all targets.
The company named him chief executive in March, signing him to a four-year contract.
CSX's vote gained attention because of the unique circumstances around Mr. Harrison's hiring and the large pay package involved.
Shareholders who opposed the pay arrangement with Mantle Ridge risked seeing their shares sink if they rejected the repayment and Mr. Harrison resigned, as promised.
The shareholder approval is non-binding, and it is now up to the board to make the final decision on the $84-million reimbursement charge.