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US railroad operator CSX announced on Tuesday that its chief executive Michael Ward would retire on May 31, after 14 years at the helm, as talks with activist investor Mantle Ridge continue about installing rail veteran Hunter Harrison at the helm.
The company also said that Clarence Gooden would retire as president from the company at the same time and that Fredrik Eliasson has been appointed as president effective February 15. Mr Eliasson is a 22-year veteran at the company who currently serves as chief sales and marketing officer.
“Michael has helped build CSX into one of the nation’s leading transportation and logistics companies, and Clarence has similarly provided valuable leadership across CSX’s sales, marketing and operations teams,” Edward Kelly presiding director at CSX, said. “We wish both the best in their retirements.”
The move comes as New York hedge fund Mantle Ridge, which has an approximate 4.9 per cent stake in the company, has been laying plans to shake up the company alongside Hunter Harrison who stepped down as chief executive at rival Canadian Pacific earlier this year.
Mr Harrison is known in the industry as an advocate of “precision railroading,” or moving trains to their destinations as quickly as possible rather than waiting for them to fill. Under Mr Harrison, CP unsuccessfully pursued mergers with CSX and Norfolk Southern, the other main network in the east. He was brought to CP by Paul Hilal, Mantle Ridge’s founder, when Mr Hilal worked at Bill Ackman’s hedge fund Pershing Square.
Mr Hilal said in a letter to CSX last week that he was looking to be the sole Mantle Ridge representative on the board. At the time he added that Mr Harrison would seek a compensation package of about $32m per year for four years if he took the helm at CSX and that the move would include a one-time cost of between $84m to $103m to release him from his non-compete agreement with CP.
CSX said on Tuesday that Mr Eliasson’s appointment was part of a “an orderly transition” that its board has been considering “for more than a year”. It added:
The appointment of Mr. Eliasson as President is not intended to preempt or otherwise affect any discussions CSX may continue to have with Mr. Hunter Harrison and Mantle Ridge regarding Mr. Harrison becoming the CEO at CSX.
CSX shares, which have advanced more than 35 per cent this year on hopes of a shake-up, were little changed.
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