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CSX freight lines run through center city Philadelphia
U.S. railroad operator CSX's chief executive, Michael Ward, will retire after more than 14 years in the role, as activist investor Mantle Ridge tries to shake up the company's board.
Mantle Ridge, which has a 4.9 percent stake in CSX, has been pushing the company to name Hunter Harrison, former CEO of Canadian Pacific Railway and a turnaround expert, to the top job.
Last week, CSX said its board had called for a special shareholder meeting on March 16 to vote on Harrison's proposed pay package, which is estimated to exceed $300 million, and discuss other demands made by the hedge fund.
Ward, who is also the company's chairman, would retire, effective May 31, CSX said on Tuesday. Ward had said in 2015 that he would serve as CEO for at least three more years.
Ward's decision to retire early is a signal that Harrison will fill the top seat at CSX, said John Risch, legislative director of the Sheet Metal, Air, Rail and Transportation Workers (SMART) union.
Harrison, who has previously clashed with unionized members at CP, where open grievances soared during his tenure from 400 in 2012 to 7,000 now, has organized labor at CSX worried.
"The members are concerned," said the director of the union, which represents the railway's conductors, engineers, trainmen and yardmasters.
"We think the $300 million is outrageous when you could buy 100 new locomotives which are needed more than Hunter Harrison."
CSX said on Tuesday President Clarence Gooden would also retire from the company, effective May 31.
Fredrik Eliasson, currently serving as chief sales and marketing officer, has been named as president.
CSX said the appointment of Eliasson as president was not intended to pre-empt or otherwise affect any discussions the company may continue to have with Harrison and Mantle Ridge.
Shares of CSX were little changed at $48.75 in afternoon trading on Tuesday. The stock has risen 31.6 percent since Jan. 18, following reports that Mantle Ridge was planning to make Harrison the company's CEO.