- Former Canadian Pacific Railway leader Hunter Harrison and activist investor Paul Hilal of Mantle Ridge LP are in talks with CSX to appoint the railway veteran chief executive, The Wall Street Journal reported last week.
- Harrison would replace Michael Ward, who has been CEO of CSX since 2003. Hilal, who previously worked with Pershing Square Capital Management LP, currently owns a stake in CSX, though how much is not known.
- Harrison and Hilal have pursued CSX since 2014, when the two suggested a merger between CSX and Canadian Pacific. Though rebuffed, the pair tried again in 2015 without success.
By hoping to lead CSX, Hunter Harrison may want to go out in style, which entails significant risk — $89 million dollars worth of risk.
Fortune reports Harrison sought early retirement from Canadian Pacific in order to purse other opportunities. Canadian Pacific approved his departure, though at significant cost: the forfeiture of $89 million worth of stock as well as a fully enforceable non-compete agreement with three Class I competitors. CSX was excluded from the non-compete clause. Harrison accepted the terms.
Meanwhile, the Florida-born CSX is due to appoint a new director on February 10. When news broke of Harrison's plans, CSX stock jumped 23% in 48 hours. Now, Harrison and his CSX shareholder partner Hilal are reportedly in talks with CSX, though the outcome remains unknown.
Only speculation can explain Harrison's motivation. Having been previously successful with other lines, it is possible he wants to go out with one more notch on his belt. Though CSX has survived its losses due to the drop in coal transport, Harrison may be convinced he can make it thrive in his final farewell to the industry. In addition, Harrison has previously expressed interest in the opportunities presented by the eastern U.S. company, although he has been reportedly rebuffed twice.
For a man twice retired, and twice recruited out of retirement, one more victory may be more than he can resist. If he does succeed, CSX may become a darling for investors looking for the freight industry to recover from a long slump, and an excellent case study for the role of leadership in transforming a company.