CSX CEO Ward retiring, 1,000 jobs to be eliminated

On Tuesday, Feb. 21, CSX Corp. announced that Chairman and Chief Executive Officer Michael Ward and President Clarence Gooden will retire, effective May 31.

At the same time, the railroad said it was eliminating 1,000 management jobs in the coming weeks, at its headquarters in Jacksonville and throughout its network.

“CSX [Tuesday] morning announced to its employees the reduction of 1,000 management employees through an involuntary separation program, which will be completed by mid to late March,” the company said in an email to Railway Age. “Enhanced separation benefits are being extended to those impacted employees. A majority of those impacted employees are in Jacksonville across multiple locations and subsidiaries but affected employees also are in our field organization. Upon further study and evaluation, we will know both the Jacksonville and field management employee impact.”

Currently, CSX has approximately 36,000 employees.

Fredrik Eliasson, a 22-year veteran of the company and current Chief Sales and Marketing Officer, has been appointed as President effective Feb. 15.

The Jacksonville, Fla.-based railroad in a statement described the changes as an “orderly transition” of senior leadership that the board has been considering for more than a year,” adding it is continuing discussions with Hunter Harrison and activist investor Mantle Ridge regarding Harrison becoming CEO at CSX.

“On behalf of CSX’s Board of Directors, I want to thank Michael and Clarence for their many years of dedicated service and contributions to our company,” said Edward J. Kelly III, Presiding Director. “Michael has helped build CSX into one of the nation’s leading transportation and logistics companies, and Clarence has similarly provided valuable leadership across CSX’s sales, marketing and operations teams. We wish both the best in their retirements.”

Eliasson, 46, will maintain his current responsibilities in his new position. He has served as Executive Vice President and Chief Sales and Marketing Officer since September 2015, and prior to that was Chief Financial Officer from 2012-15. He joined CSX in 1995.

CSX’s claim that Ward’s and Gooden’s retirement and the layoff of 1,000 management staff are unrelated to the company’s dealings with Mantle Ridge and Hunter Harrison is being met with strong skepticism among some industry observers.

“The news of the firings came out on the same day the two top executives of Jacksonville’s largest Fortune 500 company officially announced their plans to retire this spring,” noted one. “It also came as the railroad is in discussions with a hedge fund that wants to install the executive who led Canadian Pacific’s turnaround. This isn’t much of a ‘good job, thanks for your support, farewell’ message to the general management staff from its two senior executives who are ‘retiring,’ as 1,000 of the management team will be removed before the ‘farewell retirement party.’

“I’m not sure I can recall this kind of a management slaughter under such conditions of high railroad profitability. In terrible financial times, sure. But CSX is not Penn Central or the Rock Island. CSX claims that Eliasson’s appointment isn’t meant to pre-empt discussions with Paul Hilal’s Mantle Ridge hedge fund about Hunter Harrison becoming CSX’s next CEO. But the hedge fund is not an operating company, so this cannot be part of an advance merger/general and administrative budget strategy by the current board. It has to be a bold attempt to say, ‘We can slash G&A costs as well as a hedge fund group can.’

“While a senior female Executive Vice President might have been considered for the head spot, apparently the existing CSX board—which might soon be replaced—decided to place a marketing person in charge of the ship of state. So far, there is no announcement as to how the existing CSX board and its president-elect will change the 2016-2020 strategic market traffic growth plans, intermodal expansion plans, or the bigger/longer trains and two-part network operating plans. This is now an ‘in-limbo’ strategic plan. That information hasn’t been publicly addressed by either the Board’s current action or by the hedge fund group. It remains a void to shippers, regulators, investors, and joint parties engaged in PPP projects like the most recent Crete, Ill., project.

“Somewhat at risk (or not) are capital projects from Atlanta/Florida to Chicago/Detroit, and along the I-95 corridor between Florida and Baltimore/Philadelphia. The scale of such engineering might well be in the range of more than $6 billion in estimated calculated capital projects on the CSX drawing boards, with various stages of unpublished commitments that the involved multi-state parties and customers don’t know.

“This uncertainty might continue until late in 2017, when CSX capital budgets are internally decided by whatever board will by then be in charge.”

Railway Age Editor-in-Chief William C. Vantuono contributed to this story.