(Adds details on recommendation, background)
By Michael Flaherty
NEW YORK May 22 Proxy adviser Institutional
Shareholder Services (ISS) has recommended that owners of CSX
Corp stock vote in favor of an $84 million payment
related to the appointment of new Chief Executive Officer Hunter
The recommendation is a boon for activist hedge fund Mantle
Ridge, which is trying to convince shareholders to agree to the
Mantle Ridge fronted the $84 million payment to extract
Harrison early from his previous employer, fellow rail company
Canadian Pacific Railway, where as CEO he led a
turnaround. Harrison has said he will resign from CSX if
shareholders fail to approve the reimbursement. His total pay
package, including the reimbursement, is estimated by the
company to be around $300 million if he hits all of his targets.
"The company's failure to make the reimbursement will likely
lead to Harrison's exit and the loss of the market value that
accompanied his arrival," ISS said in its recommendation.
Harrison is a respected rail operator known for engineering
the turnarounds of several struggling rail companies. News in
January of Harrison's plans to leave Canadian Pacific early for
CSX sent the company's stock soaring.
Shares of the Jacksonville, Florida-based company have held
up ever since, closing at $51.46 on Monday, up 35 percent since
ISS offered plenty of caution with its recommendation,
however, saying the decision on whether to reimburse Mantle
Ridge ultimately rested with the board.
Harrison, 72, took a medical leave in 2015 to recover from a
surgery after a bout with pneumonia. Concerns of how strong he
will remain throughout his four-year contract with CSX have
remained at the forefront, however.
"Shareholders should also consider the risks, including
lingering questions about Harrison's health, and the lack of
recoupment provisions in the event of his unexpected departure
from service," ISS said.
ISS also recommended that shareholders vote against the
election of Mantle Ridge's founder, Paul Hilal, to the company's
(Reporting by Michael Flaherty; Editing by Sandra Maler and