Florida-based CSX Corporation, the third-largest rail company in the United States, has brought Hunter Harrison in as CEO. Certain aspects of Mr. Harrison’s pay package are being put to a shareholder vote, by the board.
Paul Gryglewicz, Senior Partner, Global Governance Advisors in a recent interview with BNN shared his views on corporate governance, including the fairness of putting the decision to shareholders and whether this could set a precedent.
“Reputation-wise, I don’t think it was a solid move on Hunter Harrison’s part to make this claim to say that if you (shareholders) don’t vote in favour of this $84-million (USD) and special tax indemnity, I am walking away,” he said.
Speaking to the potential payout from the 9 million options granted to Mr. Harrison that are not up for a shareholder vote, Paul indicates:
“If he repeats his performance at CP and improves the stock price 3 times again… he is going to be on a realizable income basis earning close to $900 million before tax.” That said, Paul also noted that the stock option package will be worth nothing if the current share price drops over Mr. Harrison’s tenure, making it more of a “hit or miss” plan than has been provided at CSX in recent years.
Watch full interview here.