Dow Jones Newswire circulated the following story by Kathy Shwiff on November 16.)
NEW YORK — The board of CSX Corp. (CSX), in a letter to activist shareholder The Children’s Investment Fund, defended the company’s management and financial performance.
The shareholder, known as TCI, wrote to the railroad’s board in October urging a number of corporate governance and business changes and complaining that CSX trails its peers “on virtually every major metric of operational and financial performance.” London-based TCI owns about a 4.1% stake in CSX.
TCI had proposed several ideas, including a leveraged buyout with management, taking on more debt to fund more share buybacks and doubling prices over the next 10 years.
CSX, Jacksonville, Fla., disputed TCI’s statements in its letter Friday, saying the stock price has increased nearly 150% since current management took control in 2004. It noted that operating income for CSX Surface Transportation has nearly doubled in that time, while productivity and revenue initiatives have improved the operating ratio to its best level in a decade.
The board also said safety and customer service levels have improved dramatically, cutting personal injuries by 50% and train accidents by 45% in the past three years.
“The board believes this performance record demonstrates unequivocally that CSX is a well-run company with continuously improving results,” the letter said.
“The board respects TCI’s right as a shareholder to express its opinions regarding CSX and will continue to keep an open mind. However, the board believes that the approaches TCI has offered are not in the best interest of CSX shareholders and, in some cases, have damaged the industry,” the letter concluded.
In October, CSX reported net income of $407 million, or 91 cents a share, compared with $328 million, or 71 cents a share, a year earlier. Revenue climbed 3% to $2.5 billion. Though volume was down overall, pricing and productivity gains helped the bottom line.
CSX’s shares closed at $43.59 on Thursday. There was no premarket trading.