Ward will serve CSX as a consultant until he retires on May 31.
Apart from the change at its helm, CSX Corp. has appointed five new mutually agreed upon directors to its board as part of its reconstruction drive. The board seeks shareholder input on repayment of $84 million of benefits Harrison forfeited by leaving his previous gig as CEO of Canadian Pacific in order to approach CSX.
Three board members are expected to step down before the company's annual 2017 meeting bringing the number of directors on the board to 13.
"I am proud to join the dedicated and talented railroaders at CSX", Harrison says. The current, presiding director, Edward J. Kelly III, will become the chairman of the board, while Hilal will become vice chairman.
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Investors flocked to CSX shares when news of Harrison's interest first broke, adding $US 10bn in equity to CSX in a matter of weeks.
Harrison's compensation will include an award of incentive options to purchase 9 million shares of CSX stock at its current trading price, 8 million of which will be granted as an inducement award under Nasdaq listing rules. CSX will submit this to shareholders for an advisory vote at the company's 2017 annual meeting. In an interview with the Wall Street Journal last month, Harrison had lamented an earlier breakdown in negotiations over compensation and board seat disagreements as "chest pounding", calling for the two sides to stop going "through these games which create nothing but further anxiety for the shareholders". Mantle Ridge LP, a new activist investment fund, was pressuring CSX to sign Harrison for four years and for Harrison and Mantle Ridge founder Paul Hilal to join CSX's board along with four new independent directors.
Harrison developed the concept of so-called precision railroading while at Illinois Central, running shipments and carloads on fixed timetables to ensure reliable deliveries. "Together, we will implement Precision Scheduled Railroading - a model proven to improve safety, create better service for customers, produce a proud and winning culture for employees, and generate exceptional, lasting value for shareholders". To facilitate Harrison's separation from CP on terms that would permit him to work at CSX, Mantle Ridge agreed to protect Harrison on an interim basis with respect to the $84 million. Harrison's CP reported a 58.6% operating ratio in 2016, which has improved from 81.3% in the year preceding his appointment.