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6 March 2017
Hunter Harrison to Join CSX as CEO


Florida USA - Veteran railroader and cost-cutter Hunter Harrison is taking charge as CEO at CSX Corporation (CSX), according to reports.
 
Backed by investor Paul Hilal's Mantle Ridge fund, the Memphis-born Mr. Harrison, 72, had been in talks with Florida-based CSX since shortly after leaving his CEO job at Calgary-based Canadian Pacific Railway Ltd. (CP) in late January.
 
CSX had said Mr. Harrison was seeking a four-year deal worth US$300 million.
 
CSX's share price has risen by 32 percent since Mr. Harrison's plans were reported in January.
 
The Wall Street Journal reported on Monday afternoon Mr. Hilal will nominate five directors to the board, including Mr. Harrison and Mr. Hilal, but provided few financial details.
 
CSX did not immediately respond to an interview request.
 
Mantle Ridge had no comment.
 
Reuters also reported the deal to appoint Mr. Harrison at CSX.
 
CSX recently said its CEO and chairman, Michael Ward, will retire on 31 May 2017, after 39 years at the company.
 
The move ramped up speculation Mr. Harrison would take over, implementing his strategy of parking locomotives and combining rail yards to improve efficiency.
 
Walter Spracklin, a stock analyst at Royal Bank of Canada, said under Mr. Harrison's so-called precision railroading model, CSX's operating ratio, a comparison of costs versus sales, should improve by 12 percentage points to 58 percent by 2020.
 
He expects the CSX's stock price will rise to $65 in 12 months, aided by "meaningful" share buy backs of about $3 billion a year.
 
In late January, CP said Mr. Harrison was leaving CP five months earlier than planned, foregoing $118 million in stock and benefits.
 
Keith Creel, CP operating chief and a long-time understudy of Mr. Harrison, was named CEO.
 
Mr. Harrison began his railroad career as a car oiler in 1964 while in university.
 
He worked his way up through the ranks and is credited with turning around three major railways, CP, CN, and Illinois Central.
 
He arrived at CP in 2012 after a battle for boardroom control led by Bill Ackman's U.S. hedge fund, Pershing Square Capital, of which Mr. Hilal is a former partner.
 
At CP, he turned what was the worst-performing railway in North America into one of the most efficient.
 
Profits nearly tripled and the share price rose by 150 percent on his watch, as he slashed costs.
 
However, CP's unionized train crews complain the gains came at their expense.
 
They point to soaring numbers of dismissals for seemingly minor things, most of which were rejected by arbitrators.
 
Doug Finnson, president of Teamsters Canada Rail Conference (TCRC), the union that represents CP's 3,000 engineers, conductors, and traffic controllers, said Mr. Harrison's departure from CP offered Mr. Creel a chance to put an end to the "bullying" of his members by management.
 
He has one message for CSX work force, "Thank god that you're unionized."
 
Eric Atkins.

Quoted under the provisions in Section 29
of the Canadian Copyright Modernization Act.
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