U.S. Railroad operator CSX will cut 1,000 management employees and its chief executive will retire in May, a company spokesman said on Tuesday, as activist investor Mantle Ridge pushes to shake up the company’s board.
CSX Spokesman Gary Sease said the cuts and the CEO’s retirement were long planned, and not linked to Mantle Ridge, which has a 4.9% stake in CSX (CSX), and is pushing the railroad to name Hunter Harrison, former chief executive officer of Canadian Pacific Railway to the top job.
Harrison is considered by industry as a railroad turnaround expert and CSX stock has risen more than 31% since Jan. 18, with investors expecting Mantle Ridge’s efforts to lead to improved company performance.
The Jacksonville-headquartered railroad told workers on Tuesday that it would cut management employees, who would be let go by late March, Sease said in an emailed response to Reuters.
“While we have been making significant improvements in efficiency, including more than $400 million in productivity last year, we know we must accelerate our progress,” Sease wrote.
CSX’s board has called for a special shareholder meeting to vote on Harrison’s proposed pay package, which is estimated to exceed $300 million, and discuss other demands made by the hedge fund.
Shareholders as of March 16 are eligible to vote in the special meeting, which has not yet been scheduled.
Sease said, “We are looking at some time in the spring to hold that meeting.”
Chief Executive Officer Michael Ward would retire on May 31 after 14 years in the role, as part of a transition planned for more than a year, Sease said.
Ward, who is also CSX’s chairman, 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.
“The members are concerned,” said Risch, 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 Eliasson’s appointment was not intended to affect any discussions with Mantle Ridge.