Activist investor Mantle Ridge's Paul Hilal may be closing in on a deal to put railroad veteran Hunter Harrison in as CSX (CSX) CEO.
The insurgent investor, who's been hounding CSX for weeks, offered a compromise proposal late Thursday that he hopes will eliminate the need for a soon-to-be-scheduled shareholder vote on the matter.
"We are close," said Hilal in a note to the CSX board. "We owe it to the shareholders to get a deal done promptly."
Hilal, an ex-partner at activist fund Pershing Square Capital Management, recently joined forces with Harrison, who last month quit from his position as Canadian Pacific Railway (CP) CEO. The duo, together with Pershing Square's Bill Ackman, are well known for engineering a spectacularly successful insurgency in 2012 that led to Harrison's installation as CP CEO and a turnaround that led CP's Toronto-based shares to climb nearly 190% during his tenure.
Now, Mantle Ridge and Harrison have been negotiating with CSX to bring Harrison in as its CEO. However, the two sides had been squabbling over the length of Harrison's contract, his compensation and the number of new dissident directors that would be installed on the railroad giant's board.
With the latest proposal, it looks increasingly likely that Harrison will become the next CEO of the Jacksonville, Fla.-based railroad. The only big questions that remain involve ones around the length of his contract and how many dissident directors will join him.
"Of course Harrison will become CEO," said Jeffrey Kauffman, research analyst at Aegis Capital Corp. and a 27-year-veteran of covering the railroad sector. "The letter shows Mantle Ridge are willing to be flexible but they are also laying the rationale for why they want a longer tenure for Hunter to make sure he has the time and support to do what he wants to do. They are willing to give a bit on the number of directors they are seeking."