Earlier today, the WSJ reported that railroad giant CSX Corp, currently embroiled in a protracted activist investor fight, said that Michael Ward, its chairman and CEO will retire in May as railroad veteran Hunter Harrison and an activist investor try to shake up the company and grab the top spot. Harrison, a railroad veteran who unexpectedly announced his early departure from Canadian Pacific Railway in January foregoing tens of millions in potential bonuses, has been working with Paul Hilal of the Mantle Ridge activist fund, to become the company’s next chief executive. Last week, the WSJ reported that CSX privately offered the chief executive position to the 72-year-old Harrison, but negotiations broke down when Hilal refused to back away from some compensation and governance demands.
However, in a separate report today, it appears that CSX is already preparing for full concessions, and as First Coast News reported earlier in the day, CSX employees learned Tuesday that the company will be eliminating about 1,000 management-level positions, out of a total 4,500 . The majority of cuts will be in Jacksonville, Florida, where CSX is based
The layoffs will include positions both in the field and at company headquarters, the company told employees in an e-mail. Impacted employees will be notified in mid-to-late March, the e-mail says. The spokesperson for the company, Gary Sease, says the layoffs are due to an "involuntary separation program." Currently, there are more than 2,500 management employees in Jacksonville.
The announcement came on the same day that the company announced the retirement of CEO/Chairman Michael Ward and president Clarence Gooden, effective at the end of May, effectively leaving the company without operation guidance.
The company said it was discussing the CEO positions with Hunter Harrison, a former head of Canadian Pacific Railway, who is backed by Mantle Ridge that owns nearly five percent of CSX's stock. Harrison is known in the railway business as a turnaround specialist who improves companies bottom lines by reducing workforce.
While CSX said the retirements are not "intended to preempt or otherwise affect any discussions" CSX is having with Harrison and Mantle Ridge, they certainly will achieved the desired effect of dramatically "streamlining" the company.
The e-mail says the company will implement a program to give impacted employees enhanced severance pay and pension benefits, along with outplacement services. The company also plans to implement a voluntary separation program.
CSX also said that Fredrik Eliasson, its current chief sales and marketing officer, has been named president, cementing that two of its top executives won’t be staying, regardless of whether a deal is struck. CSX said it has been considering the changes announced Tuesday for more than a year, and that the appointment of Mr. Eliasson isn't intended to “pre-empt or otherwise affect” discussions CSX is having with Mr. Harrison.
CSX employs nearly 36,000 people in the eastern U.S. in their railway, real estate and technology operations. The company is one of downtown Jacksonville's largest employers.