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By Jeff Stagl, Managing Editor
CSX President and Chief Executive Officer E. Hunter Harrison has taken medical leave due to unexpected complications from a recent illness, the Class I announced last night.
To replace him as top officer on a temporary basis, CSX’s board has named Chief Operating Officer James Foote acting CEO. Foote joined CSX in late October and assumed the responsibilities of former COO Cindy Sanborn and Chief Sales and Marketing Officer Fredrik Eliasson, who both resigned. President and CEO of Bright Rail Energy just prior to joining CSX, Foote previously worked with Harrison at CN as a senior officer for 11 years.
“Hunter is a good friend and has been a colleague of mine for many years. He is an icon in the industry and we pray for his speedy recovery,” said Foote in a press release.
Harrison took the reins as CSX’s top executive in March after serving as Canadian Pacific’s leader and instituting a turnaround via a scheduled railroading model. Harrison and CSX’s management team have made a lot of progress in implementing precision scheduled railroading (PSR), the operating model he’s now driving at CSX, said Foote. It replicates the scheduled railroading transformation they effected at CN a number of years ago, he said.
“I believe that the battleship has turned, the PSR framework has been put into place, and the company has amassed the critical talent — through education of the internal team and supplementation with a complement of strong PSR operating veterans and a strongly supportive board — sufficient to follow through and execute on [this] operating plan,” he said. “Because the team has implemented a foundation consistent with Hunter’s vision, I do not see any reason to diminish our expectations concerning the pace and magnitude of our future progress.”
However, the importance of Harrison's influence at CSX and on the PSR implementation “is immense,” and his absence likely will be a concern to stockholders, said Baird Equity Research analyst Benjamin Hartford in a report issued last night.
“We expect that the announcement of his leave pressures the stock,” he wrote. “Harrison's health has been an ongoing concern among investors since his hiring. His implementation of his PSR model has been the fundamental catalyst to CSX this year.”
Hartford also noted that stockholders recognize Foote's credibility as a leader and his familiarity with PSR in prior engagements.
Yesterday, the Surface Transportation Board sent a letter to CSX inviting Foote to meet with board members and requesting a detailed update on the ongoing PSR implementation and service restoration. The board also asked for information concerning the current state of the railroad’s network and key performance measures in light of continued reports regarding service challenges.To learn more about CSX’s efforts to implement PSR — and some of the resulting operational difficulties — read this cover story from Progressive Railroading’s October issue.
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