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The resignations prompted concerns over the health of
72-year-old Chief Executive Hunter Harrison, and fears of deeper
turmoil as CSX undergoes a major overhaul.
"We think investors suspect there could be something else behind
this," said Cowan & Co analyst Jason Seidl, adding that he
received many calls and emails from concerned investors. "We do
not think the departure of these three people, long-tenured
executives at the firm, came on completely amicable terms."
Jim Foote, who worked for Harrison at Canadian National Railway
Co <CNR.TO> and is well-versed in his "precision scheduled
railroading" model for driving efficiency, will replace Chief
Operating Officer Cindy Sanborn and Chief Sales and Marketing
Officer Fredrik Eliasson, who both plan to resign next month.
CSX said the decision to postpone the investor conference was
"to allow Mr. Foote to familiarize himself with the company’s
operations and the teams he is now leading, so he would be in a
better position speak to CSX’s future opportunities."
Sanborn, and corporate counsel Ellen Fitzsimmons, who will
retire, were likely the two highest-ranking women in the rail
industry, said independent rail analyst Anthony Hatch.
Harrison praised the departing executives in an internal e-mail
seen by Reuters.
"Although we will miss the talents of these valued leaders, we
are pleased to welcome another highly capable leader to our
executive team," he said.
One senior CSX manager who spoke to Reuters on condition of
anonymity said Sanborn's resignation was deeply unsettling.
Sanborn joined CSX in 1987, is the daughter of a former
president of Conrail, acquired by CSX and Norfolk Southern
<NSC.N> in 1997, and holds $6.47 million in CSX shares.
"She is not the kind of person who would automatically resign
unless she was forced to," the manager said.
Another Midwest-based employee said the departures suggested
Harrison was removing executives who disagreed with his
operating philosophy.
"Sanborn is a major stockholder, she has a lot of influence with
big customers, a lot of influence in Washington," the employee
said.
Morningstar analyst Keith Schoonmaker wrote in a client note
that changes matched Harrison's record at Canadian railroads he
turned around before taking the helm at CSX in March.
"It's hard to argue with his results at Canadian National and
Canadian Pacific <CP.TO>," Schoonmaker wrote.
CSX shares closed down just over 1 percent at $52.35 on
Thursday, but are up nearly 46 percent so far this year.
(Reporting by Eric M. Johnson in Seattle; Editing by Dan
Grebler)
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