CSX shareholders suing carrier’s board over Harrison hiring
A ruling is expected in January on whether a lawsuit by a trio of CSX shareholders who have sued the carrier’s board over the hiring of late CEO E. Hunter Harrison in 2017 can advance, the Florida Times-Union reports.
The 72-year-old Harrison sought an $84 million financial package when brought aboard from Canadian Pacific to lead the Jacksonville, Fla.,-based carrier in March 2017. Harrison began implementing his Precision Scheduled Railroad (PSR) strategy at CSX, resulting in reports of service disruption that led to a hearing before the federal Surface Transportation Board (STB).
Harrison died at age 73 in December, nine months after his hiring and just two days after the carrier had placed him on medical leave.
“CSX board failed to properly vet Harrison’s medical condition before agreeing to his demands involving compensation, reimbursement arrangements to be made with Mantle Ridge, and the addition of conflicted Board members,” the lawsuit claims. “Knowing that Harrison’s demands were extraordinary and outrageous, couple with their overriding fears concerning Harrison’s poor health, the Board resolved to see guidance from its shareholders and called a special meeting to do so.”
However, the lawsuit claims, after being influenced by CSX minority shareholder Mantle Ridge, the carrier’s board went ahead with the hiring and took the decision out of shareholders’ hands.
“Instead of taking proper steps to protect CSX and offload some of the financial risk of Harrison’s hiring, the board instead approved and disseminated false and misleading proxy statements to shareholders, and in doing so ensured that the outcome of the shareholder vote regarding the reimbursement arrangement was predetermined to favor Harrison and Mantle Ridge…” the lawsuit states.
More than 90 percent of CSX shareholders voted to support the reimbursements at the annual shareholder meeting in June.
“CSX’s Board knew about, hid and outright deceived shareholders about Harrison’s ill health and physical infirmities,” the lawsuit states.
The shareholders’ suit was originally filed in April 2018, dropped and then re-filed in mid-July. If Judge Kevin Blazs of Florida’s Fourth Judicial Circuit Court rules in favor of the shareholders, their lawsuit could move ahead to a jury trial, the Times-Union reported.
The lawsuit’s case number is 2018-CA-004625.