CSX Appoints Hunter Harrison As CEO

(RTTNews) - CSX Corp. (CSX) said that it has appointed Hunter Harrison as chief executive officer, effective immediately. Harrison replaces Michael Ward, who announced his decision to retire as Chairman and CEO on February 21, 2017 and will become a consultant to CSX, effective immediately.

The company also announced that it has reached an agreement with Mantle Ridge LP, an investment firm formed by Paul Hilal, to reconstitute the Company's Board of Directors.

Under the terms of the agreement, CSX has appointed five new directors to its Board of Directors, mutually agreed upon by CSX and Mantle Ridge and effective immediately - Harrison, Mr. Hilal, Dennis Reilley, Linda Riefler and John Zillmer. In addition, three incumbent CSX directors intend to complete their service for the Board at or before the conclusion of the 2017 annual meeting. As a result, the size of the Board will be 13 members. CSX's current Presiding Director, Edward Kelly, III, will become Chairman of the Board and Mr. Hilal will become Vice Chairman.

As part of his compensation, Harrison will receive an award of incentive options to purchase nine million shares of CSX stock at its current trading price, eight million of which will be granted as an inducement award under the Nasdaq listing rules. The options will vest over four years with half of the options vesting based on service and half vesting based on the achievement of designated performance goals over the four year period.

While CSX, Mr. Harrison and Mantle Ridge have agreed on the conditions, the CSX Board continues to believe that it is appropriate to seek shareholder input with respect to certain proposals: The requested payment of the $84 million of the amount of compensation and benefits forfeited by Mr. Harrison as a result of his separation from Canadian Pacific Railway Limited. To facilitate Mr. Harrison's separation from CP on terms that would permit him to work at CSX, Mantle Ridge agreed to protect Mr. Harrison on an interim basis with respect to this $84 million.

Harrison has informed CSX that his acceptance of the CEO position was subject to CSX ultimately providing this replacement protection initially offered by Mantle Ridge upon his departure from CP. Harrison has indicated that he will resign after the 2017 annual meeting if the reimbursement and tax indemnity are not provided by CSX, and return to Mantle Ridge to protect his reimbursements.

CSX will submit these matters to CSX shareholders for an advisory vote at the 2017 Annual Meeting of Shareholders.