Railway CEO Hunter Harrison on medical leave from CSX Corp.
Shares in Florida-based railroad CSX Corp. plunged by as much as 9.9 per cent Friday morning after it announced president and CEO Hunter Harrison is on medical leave due to what it calls “unexpected complications from a recent illness.”
The Nasdaq-listed company fell as low as US$51.63 in early trading, down $5.68, after the company said chief operating officer Jim Foote would fill in as CEO on an interim basis. Shares recovered later, closing at US$52.93, down 7.6 per cent on the day.
CSX wouldn’t disclose the nature of the illness that had afflicted Harrison, 73, who was hired in March after several years leading Canada’s two biggest railways — Montreal-based Canadian National and Calgary-based Canadian Pacific.
Foote — who worked with Harrison for 11 years at CN Rail and joined him at CSX a few months ago — said he fell ill after a multiday training exercise for the company’s managers.
In a statement, he said he expects Harrison’s positive influence on CSX’s performance will continue.
“I believe that the battleship has turned ... Because the team has implemented a foundation consistent with Hunter’s vision, I do not see any reason to diminish our expectations concerning the pace and magnitude of our future progress.”
Questions about Harrison’s health were raised earlier this year when the Wall Street Journal reported that he often works from home and occasionally uses oxygen.
Harrison did have medical issues while employed at CP Rail, transportation analyst Walter Spracklin of RBC Dominion Securities pointed out in a report on Friday.
“However, it did not require him to step down ... which means from a risk perspective, we believe it appropriate at this point to assume for now that Mr. Harrison will not be returning to his post,” he said, adding that suggests efficiency improvements at CSX will likely take place more slowly.
When Harrison left CP Rail to join CSX, CP Rail chairman Andrew Reardon said his time at CP Rail would be recalled by some as “the greatest corporate turnaround in history.”
He was credited with generating significant profits at both CP Rail and CN by employing tighter train schedules and leaner expenses through a management philosophy known as “precision scheduled railroading.”
But he enraged CP railway’s unions by cutting 6,000 jobs over four years. His use of managers to run trains was criticized by unions as unsafe and was cited by the Transportation Safety Board as a factor in a 2015 incident where a train operated by managers made an unauthorized eight-kilometre trip near Cranbrook, B.C.
Harrison’s compensation package was criticized by shareholders and soon after he left, the railway announced it would cut perks for its top executives and change the way they’re paid.
Harrison’s compensation in 2016 was $18.8 million, including $719,000 for unlimited personal use of the company jet.
The company restricted incoming CEO Keith Creel’s use of the jet to business commuting and family visits within North America.