Hunter Harrison and CSX agreed to a base salary of $2.2 million, the railroad said this week in a regulatory filing.
Harrison will receive options on 9 million shares of CSX stock, which is valued at $448 million at its current price of $49.79 per share.
Half of those options will hinge on his continued employment and the other half are tied to his meeting a series of performance targets.
The agreement to hire Harrison as its CEO also came with a number of changes in the CSX board of directors.
Clarence Gooden is no longer vice chairman and board member Timothy O’Toole has resigned immediately.
CSX’ has amended its corporate bylaws to separate the roles of CEO and chairman of the board as well as to change the mandatory retirement age of 75. Harrison is 72.
Although it remains to be seen how Harrison’s management philosophy will play out at CSX, analysts expect that he will further thin the number of managers and employees at the company, close yards and shops, and sell off some rail routes.
These measures will be aimed at improving operations, reducing expenses and boosting profitability.
Some have noted that CSX is far different than were Canadian National and Canadian Pacific when he took over as CEO at those railroads.
The Canadian roads were linear systems whereas CSX has a more complex route network.
That will challenge Harrison to impose his precision scheduled railroading philosophy, which he developed as CEO of the Illinois Central Railroad in the 1990s.
One decision Harrison will need to make will be whether to continue the CSX of Tomorrow strategy, which emphasized intermodal and merchandise traffic while focusing on its major routes operating in a triangle operating from Chicago to New Jersey to Florida and then back to Chicago.