(CSX issued the following on June 16.)
JACKSONVILLE, Fla. — CSX Corporation NYSE: CSX today announced that it has sent a letter to all CSX shareholders in connection with the Company’s annual meeting of shareholders on Wednesday, June 25, 2008.
The CSX Board of Directors recommends shareholders re-elect its experienced and highly qualified directors and support the Board’s efforts to create additional value by promptly voting the WHITE proxy card by telephone, Internet or mail. CSX also strongly urges shareholders to disregard any blue proxy card sent by The Children’s Investment Fund (“TCI”) or other members of TCI’s group, including 3G Capital Partners.
Michael J. Ward, CSX chairman, president and chief executive officer, today sent the following letter to shareholders:
June 16, 2008
Dear CSX Shareholder:
Time is short, but you can still vote the WHITE proxy card to support the CSX Board at the June 25th Annual Meeting. In taking this important action with regard to your investment, we urge you to consider CSX’s proven track-record and clearly articulated plan for the future. We think you should be aware that last week, a Federal Court determined that the TCI Group violated securities laws and two of its principals testified falsely to the court under oath.
FEDERAL COURT FINDS THAT THE TCI GROUP VIOLATED SECURITIES LAWS IN CONNECTION WITH ITS INVESTMENT IN CSX
A Federal Court found last week that the TCI Group testified falsely under oath and violated federal securities laws in connection with its investment in CSX. We believe you should carefully consider the TCI Group’s motivations and credibility as you make your important voting decision.
What the TCI Group said…
“The accusation that we seek control of the company. That’s nonsense.”
Chris Hohn (TCI Group Board Nominee), June 9, 2008 RiskMetrics
Investor Forum
“TCI is not seeking and has never sought control of CSX.”
Snehal Amin (TCI Partner), March 5, 2008 U.S. House of
Representatives Railroad Subcommittee
What the Court found…
“[TCI and 3G] have sought to control CSX for over a year. As obstacles to control surfaced, they adapted their strategy for achieving control, making disclosures only when convenient to their strategy.”
Findings of U.S. District Court for the Southern District of New
York, June 11, 2008
What the TCI Group said…
DAVID FABER: “If you win five seats on the Board are you going to seek the removal of Mr. Ward as Chairman and CEO?”
SNEHAL AMIN: “No – absolutely not.”
Excerpt from Snehal Amin’s June 2008 interview with David Faber
of CNBC
“We haven’t called for a management change.”
Snehal Amin, March 5, 2008 U.S. House of Representatives Railroad
Subcommittee
What the Court found…
In early April 2007, TCI reached out to another railroad CEO, “to inquire whether ‘he would be interested in coming in as CEO of CSX.'”
Findings of U.S. District Court for the Southern District of New York,
June 11, 2008
What the TCI Group said…
“The truth is, we never seriously pursued any LBO.”
Chris Hohn, June 9, 2008 RiskMetrics Investor Forum
“We did not want a sale of CSX and we have said publicly that we don’t want the company to be sold.”
Snehal Amin, March 5, 2008 U.S. House of Representatives Railroad
Subcommittee
What the Court found…
“[D]uring December 2006, [TCI] began to investigate the possibility of a leveraged buyout (‘LBO’)” of CSX.
“[TCI] subsequently enlisted Deutsche Bank to analyze its LBO proposal, and Deutsche Bank concluded that CSX was a ‘terrific LBO candidate’.”
Findings of U.S. District Court for the Southern District of New York,
June 11, 2008
What the TCI Group said…
“I actually don’t know when…3G acquired stock, and we’ve never had any agreement to work together until December [2007], when we’d agreed to work together…”
Snehal Amin, March 5, 2008 U.S. House of Representatives
Railroad Subcommittee
What the Court found…
“These circumstances – including…3G’s striking patterns of share
repurchases immediately following meetings with Hohn and Amin…all suggest that [TCI and 3G’s] activities from at least as early as February 13, 2007, were the products of concerted action notwithstanding the defendants’ denials.”
Findings of U.S. District Court for the Southern District of New York,
June 11, 2008
What the TCI Group said…
“What’s the big deal? We didn’t do anything wrong.”
Gilbert Lamphere, (TCI Group Nominee), as quoted on June 12, 2008 in The Wall Street Journal in reaction to the Court’s findings
What the Court found…
The TCI Group’s principals “testified falsely in many respects,” engaged in a “plan or scheme to evade the reporting requirements,” and violated federal securities laws.
Findings of U.S. District Court for the Southern District of New York,
June 11, 2008
CSX HAS A PROVEN TRACK RECORD OF BUILDING SHAREHOLDER VALUE AND WILL CONTINUE
BUILDING VALUE FOR ITS INVESTORS
Since 2003, under the stewardship of this Board, CSX has been implementing its carefully designed, balanced approach to shareholder value creation. As a result of the successful execution of this strategy, we achieved $500 million in real productivity gains from 2004 though 2007 and delivered market and industry leading shareholder returns over the last one, three and five years of 56%, 244% and 347%*, respectively. In other words, if you bought CSX stock five years ago, your investment would have returned approximately three and a half times its original value to you!
The CSX Board and management team have a proven plan to continue creating shareholder value. We are confident that we can achieve compound annual growth in EPS of 18% to 21% (before the impact of share repurchases) through 2010 over the 2007 base**.
In contrast to CSX’s industry-leading results and successful strategic plan, the TCI Group has admitted it has “no detailed operating plan” for CSX. The TCI Group has offered only unsubstantiated criticisms, misleading analyses, distortions of the truth and unlawful behavior including false testimony under oath.
Ask yourself who is best suited to represent your interests on the CSX Board?
Board members who have a proven track-record of creating value and a plan for building the value of your investment?
– or –
A group that has violated securities laws, testified falsely in Federal Court and made numerous suggestions that could have destroyed value in CSX?
Protect your investment: please vote your WHITE proxy card TODAY-by telephone, Internet, or by signing, dating and returning your WHITE proxy card in the enclosed postage-paid envelope. It is important to remember that only the latest dated proxy card counts. If you previously voted a blue card to register a protest against the TCI nominees, it cancelled any earlier vote you submitted on the WHITE card. Therefore, we urge you to please take the time today to vote again — using the WHITE proxy card — FOR the CSX nominees.
Thank you for your support,
/s/ Michael J. Ward