CSX reportedly eliminated 86 management jobs last week.
Most of the job cuts occurred at the company’s headquarters in Jacksonville, Florida.
A CSX statement said the cut were the result of a review of the company’s management ranks.
The statement said the review considered whether existing positions were in the right place within the organization.
CSX has announced changes the management of its sales and marketing division, promoting Farrukh Bezar to Senior Vice President Marketing and Arthur Adams to Vice President Merchandise Sales.
The carrier also said Vice President Industrial Products Dean Piacente and Vice President Food and Agricultural Products Tim McNulty are retiring following more than 30 years of service.
Bezar, who joined CSX in May as SVP and Chief Strategy Officer with 25 years’ experience in transportation and logistics, will now lead the railroad’s merchandise marketing groups, in addition to continuing his corporate strategy role.
Adams will be responsible for leading all sales portfolios within the industrial products, food and agriculture, fertilizers and regional sales segments. He will also continue to oversee customer engagement and TRANSFLO services. Adams has been with CSX for 12 years.
Vice President Intermodal and Automotive Maryclare Kenney, Vice President Energy Adam Longson and Vice President Real Estate and Facilities Management Shantel Daviswill continue in their current roles.
CSX has announced the appointment of two high-ranking executives.
It has named Kevin Boone as its full-time chief financial officer and appointed Jamie Boychuk as executive vice president of operations.
Ed Harris, who had held the operations position, will serve as executive vice president with a combination of operating and general executive responsibilities.
Boone has served as interim chief financial officer of CSX since May. He joined CSX in 2017 as vice president of corporate affairs and chief investor relations officer, and also has served as vice president of marketing and strategy.
He had previously worked in research and analysis positions at Janus Capital, Morgan Stanley, and Merrill Lynch.
Boychuk joined CSX in 2017 after 20 years at Canadian National. At CSX he has served as assistant vice president of transportation support, vice president of scheduled railroading and senior vice president of network operations, mechanical, engineering, and intermodal operations.
Harris joined CSX in January 2018 as executive vice president of operations.
In a news release CSX said Harris will “continue to train, coach, and mentor operations leadership while maintaining oversight of several key functional areas, including safety, performance metrics, and operational planning.”
CSX has shuffled the leadership of its merchandise and intermodal sales and marketing teams by appointing Dean Piacente as vice president of industrial products and naming Maryclare Kenney as VP of intermodal and automotive.
Piacente previously served as VP of intermodal. He now is responsible for the Class I’s chemicals, metals, paper and forest product businesses. He has more than 30 years of experience across different segments at CSX.
Kenney, who has led CSX’s automotive business, will oversee intermodal sales and marketing, as well as continuing to lead automotive. She joined CSX in 2011 and has held roles of increasing responsibility, including five years in intermodal.
Tim McNulty, vice president of agricultural and mineral products, will continue to lead the balance of the merchandise portfolio.
CSX has reorganized its management structure in a bid, the company said, to decentralize operational and support functions.
In a statement, CSX said the changes are in keeping with its transition to scheduled railroading.
“This is a proven model that pushes decision making closer to the day-to-day field operations and eliminates bureaucracy and long-standing silos within our business,” said CEO James Foote. “This new structure highlights the strength of CSX’s extremely talented operating leadership team, and will enable the company to continue driving performance improvements in a more effective and efficient way.”
CSX announced the following leadership appointments, all of whom will report to Executive Vice President of Operations Ed Harris:
• Bob Frulla becomes senior VP of operations East. Most recently, Frulla was SVP of network operations.
• Jermaine Swafford becomes SVP of operations West. Most recently, he was SVP and chief transportation officer.
• Jamie Boychuk becomes SVP of network operations. Previously, he was VP of precision scheduled railroading implementation and intermodal operations.
• Amy Rice becomes VP of intermodal operations. Rice most recently served as VP of strategic planning.
The operating management structure changes will include:
• Creation of an East and West structure, with leaders responsible for the three major operations functions of transportation, mechanical and engineering.
• Embedding support functions — human resources, labor relations, claims and finance employees — in the day-to-day field operations of the railroad.
• Oversight of safety programs, policies and practices will fall under the leadership of VP and Chief Safety Officer Jim Schwichtenberg, with resources also embedded in the field.
• Network-focused functions — including service design, dispatching, crew management, positive train control and locomotive and car management — will remain centralized.
• System engineering and mechanical — including locomotive shops, capital projects, back shop maintenance, communications and signals, design and construction, and regulatory compliance — will fall under Brian Barr, SVP, engineering and mechanical.
CSX has named two new executives whose appointments are effective immediately.
They include Mark Wallace, executive vice president sales and marketing, and Diana Sorfleet, executive vice president and chief administrative officer.
Wallace joined CSX in March 2017 as executive VP corporate affairs and chief of staff, and was named executive VP and CAO in January.
He previously worked with the late E. Hunter Harrison for 20 years and began his railroad career at Canadian National in 1995 as an analyst in the taxation and treasury function to assist on CN’s initial public offering.
Wallace also worked at Canadian Pacific between July 2012 and January 2017.
Currently serving as CSX’s chief human resources officer, Sorfleet will succeed Wallace. She will be responsible for information technology, human resources, labor relations, executive compensation and aviation.
She joined CSX in June 2011 after serving in human resources at Exelon, most recently as VP of diversity and development.
CSX also announced that Kevin Boone, who previously reported to Wallace, will continue as executive VP corporate affairs. He will become responsible for corporate communications and report to CEO James Foote.
When CSX holds its annual meeting on May 18 executive compensation will be on the agenda.
However, the issue is not the pay of current CEO James M. Foote or his management team but rather that of the late E. Hunter Harrison.
Harrison, who died late last year, was awarded a compensation package that a shareholder advisory firm wants CSX shareholders to renounce during the annual meeting.
Institutional Shareholder Services said CSX should have imposed a clawback on the $84 million reimbursement agreement with Harrison and hedge fund Mantle Ridge, which was instrumental in luring Harrison away from Canadian Pacific and overseeing his selection in spring 2017 to replace then CEO Michael Ward.
ISS contends that a clawback provision would have enabled CSX to recover a portion of the payment it made to Mantle Ridge after Harrison died.
Those payments were designed to compensate Mantle Ridge for money it paid Harrison for giving up some of his CP compensation by resigning as CEO before his term ended in order to join CSX.
The shareholder advisory firm also said Harrison’s pay should have been completely based on performance and that the operating operating income target for the management incentive plan should have been higher.
It was instead set below the operating income level CSX reported in 2016.
CSX shareholders approved by a wide margin Harrison’s compensation package last June.
Management of CSX is opposed to the ISS proposals and has urged shareholders to consider that CSX stock value has increased 53 percent over the past year.
It also noted that Harrison’s stock options of $115 million were forfeited upon his death and had been evenly divided between performance vesting and time vesting over four years, which CSX said “was not atypical for equity incentives.”
CSX also said it operating income incentive target had been based on the railroad’s outlook in January 2017 and also hinged on hitting certain strategic goals.
Once Harrison arrived at CSX, its board of directors replaced those goals with what it termed an “aggressive” 66.2-percent operating ratio target.
This includes incentives for 2018 and long-term incentives for executives through 2020 that CSX said are “challenging targets to support our pursuit of exceptional returns for our shareholders.”
The ISS resolution on Harrison’s compensation package is non-binding and CSX management has pointed out that a year ago ISS favored the compensation package.
During his short time with CSX before his death, Harrison earned a base salary of $1.8 million last year, plus non-equity incentive plan compensation of $3.4 million, and $600,339 in non-qualified deferred compensation. He also received the one-time reimbursement payment of $29 million.
The long-awaited CSX investor’s conference has been set for March 1 in New York City.
CSX said in a news release that the conference will be held at the InterContinental New York Barclay hotel.
In a news release, CSX said that President and CEO James M. Foote and members of his senior management team will describe how the railroad is using the precision scheduled railroading business model to transform CSX operations and customer service.
Those presentations will be webcast for those unable to attend the event in person.
Following the conference, an Internet replay of the presentations will be archived on the CSX website.
The conference had originally been set to be held last fall in Florida, but was postponed in the wake of a high-level management shakeup.
News reports on Friday indicated the CSX and E. Hunter Harrison are closed to reaching a deal for the former Canadian Pacific head to become CEO of CSX.
Bloomberg News reported that an announcement could be made as early as next week although the talks between CSX and hedge fund Mantle Ridge over the composition of the CSX board of directors could still collapse.
The reports indicated the two sides were close to reaching an agreement whereby Harrison would begin work immediately for CSX and receive a four-year contract.
CSX shareholders would vote on whether to reimburse Mantle Ridge the $84 million that it paid Harrison to walk away early from CP.
Back in January, several news reports indicated that Harrison agreed to forego tens of millions of dollars to get CP to grant him a limited waiver of a non-compete clause.
CSX and Mantle Ridge have refused to comment on the report.
When E. Hunter Harrison retired early from Canadian Pacific, news accounts noted that he left millions of dollars on the table in exchange for a limited waiver of a non-compete clause so he could pursue the CSX CEO job.
As it turned out, Harrison did no such thing.
The hedge fund Mantle Ridge agreed to pay Harrison the money he gave up at CP.
Mantle Ridge in turn wants CSX to reimburse it for the cash it guaranteed Harrison for walking away early from CP.
CSX claims that Harrison is seeking a four-year contract worth $300 million. That $75 million a year would make him not just the highest paid North American Class 1 railroad executive but also place him among the highest-paid CEOs in America.
By comparison, the man Harrison wants to replace, Michael Ward, earned $2.9 million in 2015. Another retired Class 1 CEO, Charles “Wick” Moorman, who agreed to take Amtrak’s top job for $1 a year, although he is also eligible for performance-based bonuses of up to $500,000 a year.
But Mantle Ridge counters that Harrison’s compensation package would actually be worth $200 million of which $120 million are stock options.
Such is life in the rare air of the corporate suite where eye-popping salaries are justified by saying a CEO brings a “unique skill set” to the job.
Executive compensation experts interviewed by Trains magazine said Harrison’s pay demands are at the high end of the scale, but not unreasonable by CEO pay standards.
Once the news broke that Harrison was seeking the top CSX job, the value of CSX stock jumped $10.4 billion, an increase of 30 percent.
Ben Branch, a finance professor at the Isenberg School of Management at the University of Massachusetts, told Trains that CSX stockholders might think Harrison has a “dramatic plan” for improving the company.
“It’s rare,” Branch said. “You don’t have many situations where a CEO almost single-handedly is expected to deliver dramatic improvement.”
Jason Shiel, a managing director of finance firm Cowen and Company, told Railway Age the pay demanded by Harrison is a negotiating point and he is likely to receive less, although not necessarily much less.
Harrison is known for his scheduled precision railroading operating philosophy, which some railroad industry analysts say is similar to what CSX practices now.
Ultimately, some think Harrison’s long game is to engineer a merger that creates North America’s first transcontinental railroad. It is an idea he been peddling for years and failed to pull off last year when he proposed a merger between CP and Norfolk Southern.
For us mere mortals whose primary connection with CSX is watching its trains pass by, all of this talk about eight- and nine-figure executive compensation is nothing more than a parlor game.
The numbers baffle ordinary people who have no chance in their lifetime of ever earning a salary exceeding five figures a year. Most of us can’t fathom how you become a CEO of a Fortune 500 company.
For most CSX employees, having Harrison rather than Ward at the top will make little difference.
They will continue doing what they have been doing even if there may be some changes in how they do it.
Yet it is likely that some may find themselves victims of Harrison’s expected cost cutting.
In the eyes of Harrison and other high-ranking and well-paid railroad executives, labor costs are just another number to be reduced in order to please Wall Street.
How those reductions affect individual CSX employees financially and emotionally won’t be a subject of discussion at the special CSX board meeting. It never is.
All they talk about are numbers and for most of us that is all Harrison’s pay demands are.
akronrrclub.wordpress.com 