(The following story by Ruthie Ackerman appeared at Forbes.com on February 14.)
JACKSONVILLE, Fla. — CSX had some harsh words for the children.
After a months-long proxy war at CSX, the railroad company announced it was standing by its recent bylaw amendments against the wishes of the Children’s Investment Fund, a British activist investor.
On Thursday, CSX wrote a letter to the managing partner at the hedge fund defending its decision last week to amend its bylaws and calling the investor’s interest in pushing change “not in good corporate governance, but in achieving effective control of the company.”
CSX’s shares fell 1.2%, or 62 cents, to $49.29, in afternoon trading.
On Feb. 6, CSX had amended its bylaws to provide that a special meeting would be called only after the company received a written request from shareholders representing at least 15% of its voting power, according to a document filed with the Securities and Exchange Commission.
The next day, the Children’s Investment Fund, which holds an 11.8% stake in the railroad, wrote a letter accusing CSX of making a “disingenuous” change to its corporate bylaws that would hamper shareholders from nominating company directors.
In December, the fund said it planned to run a minority slate of five candidates for the CSX board at its upcoming annual meeting.
The fund has been pushing for the railroad to shake up management and improve performance, including separating its chairman and chief executive roles, which are both currently held by Michael Ward; to add independent directors to its board; and to link management compensation to the company’s performance.
The Children’s Fund has a record of shareholder activism that has produced results. It sent a similar letter to the Dutch bank ABN Amro in February 2007. It accused management of doing a “terrible” job for shareholders and urged the bank be broken up or sold. A consortium led by Royal Bank of Scotland agreed to buy ABN Amro in October.
The fund is linked to a foundation that aids children in developing countries.
(Reuters contributed to this article.)