News Wire: Hedge fund urges CSX investors to back Harrison reimbursement package

[Brian Schmidt]

Mantle Ridge website explains rationale for $84 million request

http://trn.trains.com/news/news-wire/2017/04/24-csx-website

[Dakguy201]

I believe it has been reported that if CSX doesn't pay Harrison the $84 million, then Mantle Ridge is obligated to do so.  I doubt you will find that rationale on their website. 

 

[BaltACD]

Doesn't have my vote!

[Norm48327]

Dakguy201

I believe it has been reported that if CSX doesn't pay Harrison the $84 million, then Mantle Ridge is obligated to do so.  I doubt you will find that rationale on their website.

Pretty well explains Mantle Ridge's position, doesn't it?

[BaltACD]

Norm48327

Dakguy201

I believe it has been reported that if CSX doesn't pay Harrison the $84 million, then Mantle Ridge is obligated to do so.  I doubt you will find that rationale on their website.

Pretty well explains Mantle Ridge's position, doesn't it?

No economic reason for CSX to pick up the tab!

[wanswheel]

Excerpt from CSX press release, March 6

https://www.csx.com/index.cfm/about-us/media/press-releases/csx-names-e-hunter-harrison-as-chief-executive-officer/

While CSX, Mr. Harrison and Mantle Ridge have agreed on the aforementioned 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. 
• The requested assumption of a related tax indemnity.

Mr. 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.  Mr. 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.

[samfp1943]

wanswheel

Excerpt from CSX press release, March 6

https://www.csx.com/index.cfm/about-us/media/press-releases/csx-names-e-hunter-harrison-as-chief-executive-officer/

While CSX, Mr. Harrison and Mantle Ridge have agreed on the aforementioned 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. 
• The requested assumption of a related tax indemnity.

"...Mr. 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.  Mr. 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..."

 

Looks like the "Fat" may be in the fire? EHH makes his position pretty clear in the above, posted  by Wanswheel (Mike).

Be interesting to see how the stockholders feel about the 'situation'. THe B.O.D. may have found a convenient way out of 'their 'prickly' situation, and as for EHH, his path if the stockholders rebell, his may be a similar case of what happened when the cleaning customer lost their laundry ticket: "....No tickee, no laundry..." 

[Electroliner 1935]

I have sent a letter to both Vanguard and Fidelity (where I have much of my money invested) requesting a NO vote on EHH hiring/compensation. Don't know whether it will be honored and whether they will consider it but to cost the company and therefore the shareholders $300,000,000.00 for not doing anything is beyond greed. He did not do anything to "EARN" it. Sends a bad message to investers.

[Norm48327]

The ultimate question, as I see it, is whether Harrison is actually worth what he and Mantle Ridge are demanding and can he/they perform and meet expectations of the stockholders or will they leave CSX destitute in the long run but with a stock value that investors favor. If the latter happens it will be a blow to the railroad and the economy in general. This sincerely smacks of corporate raiding ala Carl Ichan's hostile takeover moves in the nineteen sixties. (I think that time-frame is right.)

  The amount of money and terms and conditions are far above current CEO compensation standards. Will Harrison get what he and Mantle Ridge want? Remains to be seen, but if they succeed it will set a precedent for future negotiations that may leave the stockholders "holding the bag". How much should a CEO get to take Sears into the ground and leave the stockholders broke?

There is a limit to what value a CEO can be to an industry/company. I think Harrison and Mantle Ridge have asked for far above that.

Bottom line in my opinion is there is substantial greed involved by both the hedge fund and Harrison. What resulst remains to be seen.

 

[Norm48327]

Electroliner,

Just my opinon, but Harrison's ego precedes his performance record.

[cprtrain]

This is all about one man's GREED! CSX shareholders would be crazy to pay wghat the hedge fund wants. VOTE NO!!!!!

[CMStPnP]

I would not vote for this as a shareholder, if I still was one.     Harrison says the deal is off unless this passes......another sign they should walk away from it.     You shouldn't have a CEO making that kind of demand from what should be a independent Board of Directors.     This is another reason why I think this is going to turn into the next Penn Central fiasco, if they approve this.    They are blinded by his past record and are not thinking rationally about his arrogance increasing exponentially as he bounces from company to company.

This should be a large yellow warning flare to the Board of Directors.    Harrison is asking to be compensated before he has done anything for the railroad and additionally he breached his last two contracts with his last two railroads.    No indication he will abide by his contract at CSX.

[Paul_D_North_Jr]

CMStPnP

. . . additionally he breached his last two contracts with his last two railroads.    No indication he will abide by his contract at CSX.

Excellent, objective point which indicates a troublesome trend - even if the $ amount wasn't an issue.- PDN. 

[Murphy Siding]

Two thoughts:

 

1) How much does $84 million work out to per share?

2) When our boys were little, we figured out that if they threatened to hold their breath until they were blue in the face to get their way, it was best to let them. As it turns out, neither of the 3 turned blue and neither of the 3 got their way by being a big baby. I can't see this tactic working in the CSX situation either. Mr. Hunter- please take your ball and go home now.

[tree68]

CMStPnP

...he breached his last two contracts with his last two railroads.

I would opine that he stayed long enough to satisfy the investors, and bailed before things fell apart.  But that's just me...

[Cotton Belt MP104]

Interesting how stock holders and the future of a company get dicey. Are the stockholders interested in longevity and a good sound company or quick returns? Why do stockholders invest in the first place? Why do companies seek stockholder money? Stockholders that want a quick return on money seem to be a detriment to the long-term health of a company. This is, to me, VERY evident in the CSX/EHH situation. Wow, stock prices jumped, simply at the suggestion of EHH on board. What does this have to do w/long term? This seems to suggest that the “quick turn crowd” would want him there. Whereas the long-term investor would not what this “train robbery” to take place. Since I know nothing about investments etc. it seems that someone said that a 5% stockholder is “calling the shots here” (kinda like a robbery with a gun and it has no bullets). Majority stockholders need to call the bluff. Whatever happens this is educational to watch. Endmrw0426171116

[BaltACD]

tree68

CMStPnP

...he breached his last two contracts with his last two railroads.

I would opine that he stayed long enough to satisfy the investors, and bailed before things fell apart.  But that's just me...

That is the way of the 'ass kissing position climber' - formulate change that will fail in the long run and bug out before reality strikes the changes.