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UPDATE 1-CSX shareholders OK $84 mln reimbursement to investor for new CEO -source

Published 2017-06-05, 11:18 a/m
© Reuters.  UPDATE 1-CSX shareholders OK $84 mln reimbursement to investor for new CEO -source
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(Adds details, background, share price and stock gain since January)

By Michael Flaherty

NEW YORK, June 5 (Reuters) - CSX Corp. CSX.O shareholders have approved a proposal to reimburse an activist investor, Mantle Ridge Partners LP, $84 million for arranging the hiring of new Chief Executive Hunter Harrison, according to a person familiar with the matter.

Mantle Ridge had made the payment to extract Harrison early from his previous employer, Canadian Pacific Railway CP.TO , where he had led a turnaround as CEO.

Mantle Ridge is one of CSX Corp's biggest shareholders with a stake of 4.9 percent.

The proposal passed with around 93 percent of the shareholders voting in favor of the reimbursement, said the source, who was not allowed to be identified because the results are not yet final.

The resolution is non-binding, and it is now up to the board to make a final decision on whether the company should reimburse Mantle Ridge.

Harrison is a respected railroad veteran known for leading the turnarounds of several struggling rail companies. News in January of Harrison's plans to leave Canadian Pacific early for CSX sent the latter's stock soaring.

CSX shares have jumped 50 percent since Jan. 18, when news of Harrison's early departure from Canadian Pacific broke. On Monday, shares were up 0.2 percent at $54.64.

CSX shareholders on Monday were also voting on new directors to join the board, including Mantle Ridge founder Paul Hilal. Reuters could not confirm immediately with the company if Hilal had been elected.

Harrison had threatened to resign as chief executive if shareholders failed to approve the reimbursement for Mantle Ridge.

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