CSX said Monday afternoon it has reached an agreement to hire E. Hunter Harrison as its CEO effective immediately.
Current CEO Michael Ward, who had announced on Feb. 21 that he would retire on May 31, will become a consultant to CSX.
In a news release, CSX said it would appoint five new directors agreed upon by Mantle Ridge and current CSX management.
They are Paul Hilal, who founded Mantle Ridge, Harrison, Dennis Reilley, Linda Riefler and John Zillmer.
Three incumbent directors will complete their terms at or before the conclusion of the CSX 2017 annual meeting. The CSX board will then have 13 members.
Edward J. Kelly, III, the current presiding director, will become chairman of the board and Hilal will become vice chairman.
Harrison will receive an award of incentive options to purchase nine million shares of CSX stock at its current trading price, eight million of which will be granted as an inducement award under the Nasdaq listing rules, CSX said in its news release.
The options will vest over four years with half of the options vesting based on service and half vesting based on the achievement of designated performance goals over the four-year period.
However, the CSX board will still seek shareholder direction with regard to an $84 million payment to cover compensation and benefits that Harrison forfeited by retiring early from Canadian Pacific.
CSX said that Harrison, 72, has said that his acceptance of the CEO position is subject to CSX ultimately providing this replacement protection initially offered by Mantle Ridge upon his departure from CP.
If he does not receive the reimbursement and tax indemnity that he is seeking, Harrison will resign after the 2017 CSX annual meeting.
CSX said it will ask CSX shareholders to conduct an advisory vote during the annual meeting.
A previously announced special stockholders meeting will not be conducted.
The news that CSX, Harrison and Mantle Ridge has reached an agreement was reported in various news outlets, including the Wall Street Journal, before it was formally announced by CSX.