John P. Fishwick, Jr., grew up in a railroading family. His father, after whom he was named, was president of the Norfolk & Western Railway before it merged with the Southern Railway to become Norfolk Southern. The younger Fishwick established a law career in Roanoke, working as U.S. Attorney for the Western District of Virginia in the Obama administration and then starting his own law firm.
But he never lost his fascination with railroads. He has taken up a new cause, blocking the out-sized compensation package of Hunter Harrison, a 72-year-old executive hired by CSX Corp. As a CSX shareholder, Fishwick objects to the company reimbursing Harrison $84 million in compensation he forfeited by leaving Canadian Pacific.
Harrison’s claim to fame is implementing the concept of “precision railroading” to boost profitability of Canadian Pacific. In precision railroading, a railway company monitors, tracks and optimizes rail car and locomotive utilization, allowing more efficient deployment of assets and enabling customers to better plan for shipment arrivals and departures. In merger talks with Norfolk Southern last year, Canadian Pacific dangled the prospect of improved investment returns by implementing precision railroading throughout Norfolk Southern’s rail system. Harrison dropped the Norfolk Southern bid in the face of stiff resistance. Then a few months later, with the backing of outside financiers, he took over as CEO at CSX, Norfolk Southern’s main rival for railroad traffic in the eastern U.S.
Fishwick has created a Facebook page and launched an effort to block Harrison’s compensation package. “By forcing the resignation and termination of long-term employees, while at the same time paying a new CEO exorbitant pay which he voluntarily forfeited by leaving his previous job, CSX is crushing the morale of CSX employees,” he wrote in a letter addressed to other shareholders.
Furthermore, he argues, CSX could be liable for Harrison’s back taxes, which could amount to “a few tens of millions of dollars,” and could expose itself to a Canadian Pacific lawsuit. “We the shareholders deserve to know that someone at CSX has fully reviewed Mr. Harrison’s contract with Canadian Pacific and can explain the non-compete clause in this contract.”
Finally, Fishwick charges, CSX over-estimates the value of Harrison’s expertise in precision railroading.
Precision railroading is Mr. Harrison’s calling card and it seems to focus on running the trains on time and getting better routes. This does not appear to be that unusual a strategy and is not patented. Surely someone else could execute this strategy just as well and far more cheaply.”
The CSX annual shareholders meeting is scheduled to be held June 5 in Richmond. It should be interesting.There are currently no comments highlighted.