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Two TCI/3G nominees join CSX's board; two board seats still in play


Two in, two on hold and another potential meeting date extension. That's the gist of the latest developments in the ongoing proxy fight between CSX Corp. and the Children's Investment Fund Management L.L.P. (TCI) and partner 3G Capital Partners Ltd.

On Friday — the date CSX reconvened its annual shareholders meeting from June 25 — the Class I announced it invited CSX nominee John McPherson and TCI/3G nominees Gilbert Lamphere and Alexandre Behring to join the board immediately. They will succeed Southwood Morcott, Robert Kunisch and Elizabeth Bailey, who will resign.

However, the status of two remaining board seats remains uncertain, CSX said. Preliminary results from board elections held June 25 showed TCI/3G nominees Behring, Lamphere, Christopher Hohn and Timothy O'Toole were among the 12 candidates who received the most votes. Behring is 3G's managing director; Lamphere is managing director of Lamphere Capital Management; Hohn is TCI's founder; and O'Toole is managing director of the London Underground.

One of the seats is the subject of questions in a vote review, which remains too close to call, CSX said. The most recent preliminary draft report from an independent election inspector shows the candidates competing for the seat have a difference in votes that's less than one-fifth of 1 percent of the shares entitled to vote at the June 25 meeting, and the status of a number of votes is still unclear, the Class I said. The vote review process is expected to be completed sometime this week.

Both of the seats still are the subject of an appeal pending before the U.S. Court of Appeals for the Second Circuit that is on an expedited hearing schedule, CSX said. The Class I expects the issues to be resolved in the next 60 days.

Last week, TCI and 3G officials accused CSX officials of going to "extraordinary lengths" to prevent their nominees from taking seats on the board. In a statement released Friday, they said they're "deeply troubled" CSX does not intend to seat all elected directors upon certification.

"We believe the certification process will confirm that shareholders have elected four of our nominees to the CSX board. This latest tactic should be seen for what it is — a cynical attempt to thwart the expressed will of CSX shareholders," TCI and 3G officials said. "We urge the company to respect the law and the will of its shareholders by seating the elected board of directors immediately after the election results are certified — and to stop unnecessarily delaying the certification process."

Pending the outcome of the vote review and appeal, the annual meeting has been adjourned, but will reconvene Sept. 24 at 10 a.m. (EDT) in Jacksonville, Fla., CSX said.

Contact Progressive Railroading editorial staff.

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