(Reuters circulated the following on July 31.)
CHICAGO — U.S. railroad CSX Corp. said on Thursday that four nominees on a dissident slate had been elected to its board of directors, but said two of the seats remain the subject of a court appeal.
The Children’s Investment Fund (TCI) and 3G Capital Partners, the two hedge funds that proposed the slate, welcomed the news. The two funds and CSX have been engaged in a lengthy and acrimonious proxy battle over the funds’ dissident slate since last December.
“We thank our fellow shareholders for their patience during this lengthy process and expect all newly elected board members to be seated without further delay,” TCI and 3G said in a statement.
The hedge funds proposed the dissident slate claiming that CSX has been underperforming.
For instance, while CSX has indicated its profits should double within the next five years, the hedge funds argue that earnings could quadruple in that time with improved network performance and cost savings.
The hedge funds also say they could achieve $2.2 billion in annual productivity gains within five years, compared with the $400 million the company has targeted by 2010.
The shareholder vote was held in late June, but CSX did not announce the result immediately, saying it was too close to call.
CSX on Thursday confirmed earlier reports that Gilbert Lamphere and Alexandre Behring have both been elected to its board and said final results from the election showed that Christopher Hohn and Timothy O’Toole had also won more votes than the railroad’s nominees.
The Jacksonville, Florida-based railroad said the result of the election to those two seats is the subject of an appeal to the Second Circuit Court of Appeals.
The appeal relates to a federal judge’s ruling in June that while TCI and 3G had violated securities law by evading disclosure obligations, they were allowed to vote all their shares.