By Jacquie McNish
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 18, 2017).
CSX Corp. Chief Executive Hunter Harrison died Saturday, a day
after the surprise announcement that he was placed on medical leave
caused the railroad company to lose $4 billion in market value.
At the time of his death at 73 years old, Mr. Harrison left
unfinished his most challenging assignment, the turnaround of
CSX.
He joined the Jacksonville, Fla., railway in March of this year
as CEO after he ignited a shareholder revolt by joining forces with
a Wall Street activist to replace CSX's long-serving boss and some
directors.
CSX said Saturday afternoon that Mr. Harrison died from
"unexpected severe complications from a recent illness."
The railroad's chairman, Edward Kelly, said the company "has
suffered a major loss," but the board was confident its acting CEO
and the rest of its leadership team would "capitalize on the
changes" introduced by Mr. Harrison.
Ever since he took the helm at troubled Illinois Central Railway
in the 1990s, Mr. Harrison earned a reputation as a driven and
disruptive force in a centuries-old industry struggling with high
operating costs and heightened competition from shipping
rivals.
His ability to rapidly pare railway budgets, speed up freight
deliveries and challenge union-backed work rules at Illinois
Central, Canadian National Railway Co. and Canadian Pacific Railway
Ltd. earned him many fans on Wall Street. Unions and customers
frequently challenged his harsh tactics.
The sting of his contrarian views were tempered with a
caramel-rich Southern drawl and folksy stories drawn from his
childhood in Tennessee, where his father, a one-time policeman,
earned a living as a traveling preacher.
Mr. Harrison said in an interview with The Wall Street Journal
in early 2017 that he hoped CSX would rank as his greatest triumph
because the railroad was bigger, its network more intricate and
investor support more substantial than any other challenge faced in
his career.
His past success with railroad turnarounds earned him such a
loyal investor following that news of his interest in running CSX
sparked a $10 billion surge in its market value in January.
Shareholders voted in June to approve a special $84 million payment
to cover lost compensation at his previous job, despite the onset
of health problems that required him to use an oxygen machine and
work mostly from his horse farm in Florida. He had threatened to
quit were they unwilling to OK it.
His initial moves to streamline CSX's operations were thwarted
by traffic congestion, customer complaints and opposition from some
of the railroad's top officials, people familiar with the matter
said.
After a series of board meetings in November, Chief Operating
Officer Cindy Sanborn and two other senior officials resigned,
leaving Mr. Harrison a shrunken executive team in the early stages
of his ambitious overhaul. By November, Mr. Harrison was largely
running the company from his home office, where he met with
executives and monitored train arrivals and departures from a
special bank of computer screens.
Investors saw his leadership at CSX as so integral to the
railroad's transformation that the company's stock value dropped
about $4 billion on Friday after the company announced his medical
leave.
Ewing Hunter Harrison was born in Memphis on Nov. 7, 1944. His
father's gift for sermons helped shape Mr. Harrison's management
style as he rose through the ranks at a variety of railroads. To
spread the gospel about his new approach, Mr. Harrison organized
retreats called Hunter Camps. At these pep talks he would ask
managers and employees to challenge longstanding industry practices
to strip away costs and speed up the trains.
He started his railroad career while still in college in 1963 as
a 19-year-old laborer squirting oil under train carriages for the
St. Louis-San Francisco Railway. He then moved to Burlington
Northern Railroad, reaching the position of vice president of
transportation and service design. In 1989, he joined Illinois
Central Railroad and was appointed chief executive in 1993. Mr.
Harrison was named chief operating officer of Canadian National
Railway after it acquired Illinois Central in 1998. He became CEO
in 2003.
When Mr. Harrison wanted to impress business associates, he
arranged meetings in the trophy room of his sprawling Double H
horse farm near Palm Beach. Rows of shelves are stuffed with
ribbons, medals and trophies earned by his jumping horses.
Scattered among the laurels are photographs of Mr. Harrison and
many of the executives who helped carry him to victory with his
controversial methods for shaking up laggard railroads. By the time
visitors left the room, Mr. Harrison had usually made his point. "I
want people to understand that I am accustomed to winning," he told
a reporter in 2015.
When he teamed up with activist Bill Ackman to mount a proxy
battle to change the leadership of Canadian Pacific in 2012, Mr.
Harrison told a crowded Toronto meeting of hundreds of investors
that they could "hang me in Times Square" if he failed to deliver a
more profitable railway.
"Hunter was the General Patton of CEOs," said Mr. Ackman, who
worked closely with Mr. Harrison. "He was a charismatic,
awe-inspiring leader and a wonderful family man."
Shortly after he was appointed Canadian Pacific's CEO in 2012,
Mr. Harrison set the tone for extensive changes at the railroad by
telling a reporter: "There is a new sheriff in town. ... He may be
mean and ugly, but he knows about railroading and he is going to
make this company successful."
At the time, Canadian Pacific ranked as one of the most
inefficiently operated major railroads in North America. In 2011
the railroad reported it had spent about $81 dollars for every $100
in revenue it earned, an operating ratio of 81% that lagged many of
its rivals. After years of cost cutting and operational changes
under Mr. Harrison, Canadian Pacific reported its operating ratio
had dropped to 56.2% in the fourth quarter of 2016. Shortly after,
Mr. Harrison resigned to join the proxy contest for the top job at
CSX.
Mr. Harrison is survived by his wife, Jeannie, and daughters
Elizabeth (Libby) Julo and Cayce Judge.
--David Benoit and Paul Ziobro contributed to this article.
Write to Jacquie McNish at Jacquie.McNish@wsj.com
Corrections & Amplifications Canadian Pacific Railway Ltd.,
under Hunter Harrison as chief executive, reported a drop in its
operating ratio, or dollars spent to revenue, to 56.2% for the
fourth quarter of 2016. An earlier version of this article stated
the year incorrectly as 2017. Also, Mr. Harrison joined Illinois
Central Railroad in 1989. An earlier version of this story stated
that date incorrectly as 1993. (Dec. 16, 2017)
(END) Dow Jones Newswires
December 18, 2017 02:47 ET (07:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
CSX (NASDAQ:CSX)
Historical Stock Chart
From Apr 2024 to May 2024
CSX (NASDAQ:CSX)
Historical Stock Chart
From May 2023 to May 2024