Newspaper article The Florida Times Union

CSX Offers No Details on Why CEO's on Leave; Acting Chief: Harrison Became Sick; No Return Date Scheduled

Newspaper article The Florida Times Union

CSX Offers No Details on Why CEO's on Leave; Acting Chief: Harrison Became Sick; No Return Date Scheduled

Article excerpt

Byline: Roger Bull

CSX Corp. officials are not saying exactly what's wrong with Chief Executive Officer Hunter Harrison or how long he might be away from the company. Acting CEO James Foote would only say Friday that Harrison became ill last week and is on medical leave.

The Jacksonville-based company, the nation's third-largest railroad, announced the news Thursday night that Foote, who had been chief operating officer, would take the top spot in Harrison's absence.

And that made investors a little skittish. The railroad's stock fell $4.38 a share (7.6 percent) Friday to close at $52.93.

"The importance of Harrison's influence is immense," wrote Benjamin Hartford of Baird Equity Research.

Foote, speaking to investors and reporters on a conference call early Friday morning, said that Harrison had taken part in the Credit Suisse investor conference two weeks ago. Last week, he held one of his multiday retreats called Hunter Camps with managers from the railroad.

"But some time after that he became ill and that led to complications and he is now on medical leave," Foote said. "Beyond that, out of respect for his family, that's all we can say at this time."

In May, it was disclosed that Harrison was often using oxygen to help him breathe and was working from home on some days. He reportedly refused the board's request for a medical exam when he took over the railroad.

Foote, who had worked with Harrison for 11 years at Canadian National Railway, came to CSX in October as the company announced that three of its executives were leaving. The same day that the railroad announced those changes, it said it would be canceling its planned Oct. 30 investor day.

Foote said Friday that it was canceled because he didn't have time at that point to learn everything he needed to meet with investors. That day will be held in early March, he said.

Harrison came from Canadian Pacific to take the top spot in CSX, bringing with him his plan for what's called precision scheduled railroading. In March, the board approved his four-year contract, which could be worth $300 million if he meets all his targets.

In a Friday morning newsletter, ABH Consulting railroad analyst Anthony Hatch called the CSX announcement "a press release that the industry has been dreading but almost expecting for a while."

When Foote joined the railroad, there was speculation that he was in place to perhaps take over the railroad at some point.

At the Credit Suisse conference two weeks ago, Harrison hinted at that succession plan, saying that he was stepping back and letting other executives take more control.

"I am there to help if they need me," Harrison said, according to news reports. "But at the same time ... this company's got to be ready to deal, and it is going to be ready to deal, without Hunter Harrison. And that's one of the steps in the succession."

Hatch said that without knowing Harrison's condition or how long he'll be out, discussion of the impacts is all speculation. …

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