Dive Brief:
- CSX will soon be requiring future CEOs to undergo annual independent medical evaluations, thanks to a shareholder's demand soon after Hunter Harrison’s death, Transport Topics reported Tuesday. Hired in March 2017, Harrison received an $84 million payout on a four-year contract.
- Though requested, Harrison refused the Board of Director's request for a physical at the time of his appointment, despite a record of idiopathic pulmonary fibrosis (IPF) and other ailments.
- Shareholder John Fishwick, who previously held public office in the Obama administration, lobbied for the new resolution, stating that any leaders of publicly-held companies should submit willingly to the exam.
Dive Insight:
Since Harrison suddenly died after barely six months on the job, CSX seems determined not to repeat such an episode.
CSX's stock value skyrocketed when the company hired Harrison, though the company lost $4 billion in market value when Harrison went on medical leave. Not only that, but during his short tenure, Harrison began to completely restructure CSX and implement his infamous Precision Scheduled Railroading plan.
CSX hired him to do just that, so to lose him so soon after hiring and in the midst of controversy over closing hump yards and late shipments was not just a financial blow to the company, but a visionary one as well.
To avoid losing so much with another CEO, it's a natural next step for CSX to demand physical examinations of its future CEOs — especially if it reassures stakeholders.
