JACKSONVILLE, Fla. – CSX Transportation’s board of directors next month will adopt a rule requiring the railroad’s CEO to undergo an annual physical exam that the board will review. The move, first reported in The Wall Street Journ…
Sort of a knee-jerk reaction, [2c] like “…closing the barn after the cattle have escaped…”, or looking for fire insurance, after the fire has taken place? [:-^]
You know what they say: A day late and $84 million short.[:-^]
At least, MAYBE it won’t happen again!
They don’t ‘need’ a rule - the had the power to require a physical when they negotiated EHH’s contract, but waived it. If the law wasn’t so deferential to business decisions by boards, I’d expect a shareholder’s suit against them. Who knows, maybe it’ll happen anyway.
- PDN.
The Board should RESIGN enmasse - they DID NOT perform their fiduciary duty in hiring Harrison without a physical and giving him $84M on top if it all. The Board has failed the company and the stockholders.
As a Stockholder - I want my money back.
With the Board in the pocket of a faction - anything can be waived.
I’d say that a shareholder’s lawsuit would have a pretty darn good chance in front of a jury.
Front-page article (lower right) about this in today’s print edition of the Wall Street Journal. It also mentions several similar situations in other companies, including when CEO Oscar Munoz of United Continental Holdings (airline) had a heart attack and transplant, and was out for about 6 months. Before that, Munoz was Chief Operating Officer of CSX . . . [:-,] . . . do you suppose there’s something in the CSX water in Jacksonville . . . ? [:-^]
- PDN.
This board is like a cathouse madam who leads the church choir on Sunday morning!
The horse has been stolen; now the barn door will be locked.
The ones that need examined and tested are the Board members for entertaining EHH in the first place.
And the examiners wear white coats and have a supply of nets with them?
As well as a supply of jackets whose sleves fasten in the back.
… and who put it there? Does Dmitri Kovtun have a position in CSX stock?
The plaintiffs could have a a steep hill to climb.
From January 25, 2013 through January 19, 2018, the market price of CSX common shares increased from $22.44 per share to $59.25 per share before falling back to $56.74. The increase was 164 percent, which was double the increase in the S&P 500 Index over the same period.
Not at all. The suit in question would have nothing whatsoever to do with ‘shareholder value’; it would have to do with fiduciary duty in authorizing a blanket $84 million in essentially extorted payments to someone in known ill health without an examination – even a rudimentary examination – indicating that the return on such a payment could be recovered over a reasonable period.
Now, if I recall correctly, this payment had to be confirmed with a stockholder vote, and was approved on that basis. And in my opinion a more appropriate ‘venue’ for corrective action for this board would be a proxy fight at the next meeting(s) for election of directors, rather than a civil action for ‘damages’ that, as indicated, might be difficult to substantiate sufficiently.
It will certainly be interesting to see what percentage of the stockholders who ‘followed the money’ into bringing EHH aboard are now going to ‘follow the money’ to try to get the eighty-odd millions back now that there’s no value from it all. I am not sure I really feel that sorry for them as they try.
If there is a suit brought against the board, it will further drain resources if the company defends them.
As a CSX shareholder, I voted NO! But what do I know?
I am not a lawyer, but I believe the plaintiffs would have to show that the board knew Harrison was in poor health and, therefore, probably would not be able to fulfill his duties. That would be a very steep hill to climb.
Equally difficult would be the need to show that Harrison’s compensation package was an outlier for similar experience in a like kind industry.
I have sat on 18 juries. Once the bell rings, facts tend to run for the exits and emotionalism runs rampant. Defense counsel would, I suspect, point out that the shareholders, at the end of the day, suffered no long term damage because of the board’s decisions and, in fact, seem to have benefited from Harrison’s presence albeit short as it was. &
Anyone that drags around a oxygen bottle to do their daily duties is in poor health! Not much of a hill.