CSX Loses $6 Billion in Value After CEO Harrison Takes Medical Leave
By Paul Ziobro and Jacquie McNishCSX Corp. shares fell 12% early Friday, erasing nearly $6 billion in market value, after Chief Executive Hunter Harrison was placed on medical leave, highlighting the risk the railroad's board took when it agreed to hire the 73-year-old railroad veteran despite the emergence of unspecified medical problems earlier in the year.
Jim Foote, who was appointed acting CEO by CSX's board on Thursday, told investors in a call Friday morning that Mr. Harrison became ill last week after one of his regular multiday pep-talks with management, known as Hunter Camps. The illness 'led to medical complications," Mr. Foote said.
Mr. Foote declined to discuss details of Mr. Harrison's condition, but said there are "improvements every single day" to the railroad's operations. He didn't say when Mr. Harrison, who has been using an oxygen tank in recent months and largely working from his home in Wellington, Fla., might return.
Mr. Harrison's absence leaves an executive team that is rebuilding after the exodus last month of three senior executives including chief operating officer Cindy Sanborn. Mr. Foote, who was recently hired as operating chief, was a marketing executive at Canadian National Railway Co. when Mr. Harrison led a turnaround of the Canadian company.
No CSX board members participated in Friday's conference call. The board was revamped earlier this year after activist investor Mantle Ridge led a successful campaign to replace five of CSX's directors and install Mr. Harrison as the company's CEO.
CSX's board initially resisted the change, citing in part concerns about Mr. Harrison's health, but ultimately reached a deal with the activist group after CSX shares surged 30% on Mr. Harrison's potential appointment. The company awarded -- and investors approved -- Mr. Harrison a four-year contract, which included an $84 million payment.
Write to Paul Ziobro at Paul.Ziobro@wsj.com and Jacquie McNish at Jacquie.McNish@wsj.com
