The vast majority of shareholders of CSX (CSX) on Monday supported an unusual and controversial one-time $84 million payment related to the recent appointment of the railroad giant's chief executive, Hunter Harrison.
CSX shares were down about 1% after the news.
The vote comes after the two major proxy advisory firms, Institutional Shareholder Services Inc., and Glass Lewis, urged shareholders to back the payment, which was partly fronted by activist fund Mantle Ridge, as part of an effort to convince Harrison to leave his previous employer, Canadian Pacific Railway Ltd. (CP) , and join the insurgent fund's efforts to shake up the board and management of CSX.
In March, Mantle Ridge and its founder, Paul Hilal, reached a deal with CSX to install Harrison as the railroad's new CEO, with a four-year contract. As part of the deal, CSX agreed to bring on five new directors, including Harrison and Hilal, while three incumbent directors agreed to step down.
On Monday, 93% of shareholder votes cast at CSX's annual meeting approved a non-binding proposal on the payment.
Harrison has indicated that he would resign from the CSX top position if the proposal would fail to receive approval from investors, a move that would have driven the company's share price down significantly. The stock price spiked up significantly, and traded recently at $52.33 a share, as it became clear that Harrison, a veteran railroad executive, would become the CEO.
In its report, ISS said "cautious support is warranted" for the non-binding proposal reimbursing Mantle Ridge and Harrison "as the failure to approve the payment will likely result in an immediate and significant loss of shareholder value."