CSX ousts CEO after investor pressure and poor performance
CSX railroad announced Monday that it had replaced its CEO less than two months after an investment fund urged it to either find another railroad to merge with to better compete with the proposed transcontinental Union Pacific railroad or fire outgoing CEO Joe Hinrichs.The outgoing CEO, who came to the railroad in 2022 after a long career with Ford, focused on repairing CSX’s relationship with its workers and labor unions and unifying the team after a bitter contract fight. But Ancora Holdings, which helped spur major changes at Norfolk Southern, said CSX’s operating performance deteriorated significantly under Hinrichs’ leadership. Hinrichs resigned to clear the way for Steve Angel to become CEO effective Sunday.Angel, 70, also comes from outside the rail industry although earlier in his career he oversaw GE’s locomotive building unit, so he does have that experience. CSX said he has 45 years experience leading large public companies, including most recently as CEO of Linde and Praxair.“We are excited to welcome Steve as our new CEO. He is a visionary in creating long-term value and an expert in guiding companies through significant transformation,” the railroad’s board Chairman John Zillmer said.CSX has been under pressure from Ancora and other investors since Union Pacific announced its $85 billion deal to acquire Norfolk Southern, which is CSX’s rival in the eastern United States. But both BNSF and CPKC railroads said they aren’t interested in a merger right now.Ancora said CSX has delivered disappointing shareholder returns and poor financial performance during Hinrichs’ tenure. But over the past year, CSX was working on two major construction projects — repairs from Hurricane Helene and a major tunnel renovation in Baltimore — that disrupted the railroad. Both those projects were just completed this month, so CSX’s performance was expected to improve in the fourth quarter.Angel promised to make improvements at the Jacksonville, Florida-based company, which is one of the six largest railroads in North America.“My top priorities will be to ensure the safety of the railroad and our employees, deliver reliable service to our customers, and increase value for our shareholders,” Angel said in a statement.—Josh Funk, AP transportation writer
Hinrichs, who joined CSX in 2022 following a career at Ford, focused his efforts on mending relationships with CSX's workforce and labor unions, aiming to unify the team after a period of contentious contract negotiations. However, Ancora Holdings, known for its influence in prompting changes at Norfolk Southern, argued that CSX's operational performance had declined noticeably during Hinrichs' tenure.
The pressure on CSX intensified following Union Pacific's announcement of its $85 billion acquisition of Norfolk Southern, CSX's primary competitor in the eastern United States. Ancora suggested that CSX explore a merger with another railroad to better compete with the potential transcontinental giant, or replace Hinrichs. While both BNSF and CPKC railroads have expressed disinterest in a merger at this time, the call for change at CSX resonated with other investors.
Ancora cited disappointing shareholder returns and subpar financial performance as key reasons for their dissatisfaction. While CSX was working on two major construction projects, repairs from Hurricane Helene and a tunnel renovation in Baltimore, which disrupted the rail network, the projects were recently completed this month. As a result, CSX expected its performance to improve in the fourth quarter.
The newly appointed CEO, Steve Angel, brings a wealth of experience leading large public companies, including his most recent role as CEO of Linde and Praxair. Although not directly from the rail industry, Angel previously oversaw GE's locomotive building unit, providing him with relevant industry knowledge.
"We are excited to welcome Steve as our new CEO. He is a visionary in creating long-term value and an expert in guiding companies through significant transformation," said John Zillmer, Chairman of the CSX board.
Angel, 70, has outlined his priorities for the Jacksonville, Florida-based company, emphasizing safety, reliable customer service, and increased shareholder value. "My top priorities will be to ensure the safety of the railroad and our employees, deliver reliable service to our customers, and increase value for our shareholders," Angel stated.