CSX Urges Support in Proxy Battle

CSX Corp. today sent a letter to shareholders urging them to re-elect its directors on a white proxy card and ignoring a blue proxy card sent by The Children's Investment Fund (TCI) or other members of TCI's group, including 3G Capital Partners, according to the Wall Street Journal.

The British hedge fund wants changes in corporate governance at CSX that include splitting the role of chairman and CEO, the election of new independent directors, and allowing shareholders to call for special meetings. 

According to Directorship, the battle began last fall when The Children’s Investment Fund (TCI), a London-based asset management firm with a history of activism, sent two letters to CSX’s board questioning the transportation company’s corporate governance.

Michael J. Ward, CSX chairman, president, and CEO, argued in the letter to shareholders that claims made by the London-based asset management group are misguided. The railroad's annual meeting is scheduled for this week.

The TCI Group has said that the CSX Board and management would not engage with them or listen to their ideas. CSX claims that is not true and spelled out the "facts."

• In the same month that TCI claims to have purchased its first actual share of CSX stock, March 2007, CSX wrote to TCI offering a face-to-face meeting with CEO Michael Ward that TCI did not accept.
• In March 2007, Oscar Munoz, CSX's CFO, had a face-to-face meeting with Snehal Amin, a founding partner of TCI.
• In June 2007, CSX's Chief Financial Officer had a face-to-face meeting with Alex Behring, a 3G founding partner.
• In June 2007, 3G had another face-to-face meeting, this time with both CSX's CFO and CEO.
• In response to a request by TCI to meet with the CSX board, the board asked TCI twice to submit a written overview of its views and ideas. TCI said twice said that it would, but did not.
•  In August 2007, CSX had a lengthy one-on-one call with TCI founder Chris Hohn.
•  These discussions, and others, were in addition to numerous, e-mails and document exchanges between CSX, its financial advisors, and TCI Group representatives.
• During 2007 alone, the board considered TCI's public and private demands and statements with respect to CSX and the railroad industry during more than a dozen board and committee meetings.