For about 10 years, the historical railroad has endured attacks by Shareholder Pirates.
This Author likes to start any discussions about CSX and the attacks against it by shareholder pirates with a very pointed phrase: If CSX were a building, it would be a national historical monument. This phrase reflects the fact that the CSX here today is a kind of container for 200 years of American Railroading history. Around 1827, the people of Baltimore looked north and saw New York getting richer and threatening their prosperity. With hard resolve, Baltimoreans decided to bring England’s “rail road” concept to America, and in 1827 the Baltimore and Ohio (B&O) received a charter as the first common carrier railroad in America. That charter would last until 1986, when the B&O was folded into CSX Transportation. CSX is not Praxair. Praxiar does not have the level of national historical significance that CSX has today. CSX is the poster child of the American Railroads’ struggles with shareholder activist-pirates and their imposition of the failed and destructive Shareholder Primacy ideology and cooperate governance model.
Mantle Ridge pirates and E. Hunter Harrison’s “genius.”
In the Golden Age of Piracy, the Pirates would give the crew of a target ship an opportunity to surrender, but if they fought back, their captain would certainly be killed. For shareholder pirates like Mantle Ridge and Ancora Holdings, getting CSX’s board or directors to surrender their CEO while holding just 5% of CSX stock appears to be easy-peasy. In 2017, Paul Hilal and his Mantle Ridge not only got Hunter Harrison installed as CEO, but got him about $100 million and seats for his fellow pirates on CSX’s Board of Directors. Harrison would not live the full year, but his brand of PSR would cost CSX dearly in terms of reputation and angry customers. The “railroading genius” of Harrison was so bad that STB hearings were held on October 11th because CSX had failed miserably in its common carrier obligations. Many CSX customers filed complaints with governmental regulators and they packed the hearings to give their testimony. These were CSX’s forgotten stakeholders, and they were angry, and a couple were almost in tears because CSX’s failure in service had affected their businesses so badly and even cost them customers. Hunter Harrison, besides trying to blame customers, stated that CSX “was doing very well.
Yikes! What genius! So, when your house is burning down around you, everything’s fine, just turn on the air conditioning?!
See: Books Schatschneider and Jonathan Broder. The Barbarians are Still at the Gate. The Temple 10-Q.
Freightwaves Staff. Mantle Ridge fires back at CSX. Freightwaves. February 17, 2017
Ancora pirates and the surrender of CSX’s Board of Directors…or Board of Cowards!
Another group of shareholder pirates is Ancora Holdings Group. They now represent a sword over the heads of CSX and other railroads that try to govern with a Stakeholder Inclusion model. Joe Hinrichs was the CEO who recognized CSX’s many stakeholders. Under the governance of Mr. Hinrichs, CSX adopted the OneCSX workplace culture, where employees are valued, their work respected, and celebrated through Family Days for entire families. CSX gained the respect of customers and their industry representative organizations and was a top intermodal transport company. This past September, just before the Ancora pirates began their raid, Hinrichs spoke of cooperation and partnership between railroads at a Morgan Stanley conference. Hinrichs was turning CSX into a company for all of CSX’s stakeholders and starting to see returns and positive progress, but the pirates were watching.
Mr. Hinrichs spoke of cooperation and partnership between railroads three weeks after the Ancora pirates “dropped their rusty anchor” on his doorstep. Like the pirates of old, the Ancora pirates will lure the crew into surrendering the captain of their ship. On September 29th, 2025, CSX’s Board of Directors made the less-than-honorable (chickenshit) decision to surrender Joe Hinrichs to Ancora pirates. CSX’s Board of Directors, or Board of Cowards, did not have to surrender Mr. Hinrichs because the Ancora pirates have a losing record after their loss to Norfolk Southern last year. CSX’s board could have used better business judgment said NO!, and could have had protections from further hostile actions of the pirates.
| The Business Judgment Rule : It protects corporate directors from legal liability for their business decisions made in good faith and in the best interests of the corporation. Code of Virginia: A. A director shall discharge his duties as a director, including his duties as a member of a committee, in accordance with his good faith business judgment of the best interests of the corporation. § 13.1-870. General standards of conduct for directors. |
The Ancora pirates would have probably lost a proxy fight! The truth is that CSX’s Board of Cowards has a habit of surrendering to shareholder pirates. There is nothing in law or loyalty to the Company that forced CSX’s Board of Cowards to surrender its beloved CEO. Mr. Hinrichs was doing good things at CSX and will probably go down in history as the best CEO that CSX has ever had and probably one of the best that American Railroading has ever seen. CSX’s board did not have to surrender, but use the Business Judgment Rule, as above, which includes the Code of Virginia, where CSX was incorporated, and Norfolk Southern too.
“Hinrichs has spent the past 11 months trying to turn those and other weaknesses into strengths. And he’s pursued what he believes are the key objectives — bolstering service, execution, safety, teamwork and business relationships — by stressing that CSXers need to work smarter to benefit both themselves and others rather than just work harder to better serve the company. That’s quite the nontraditional approach for a Class I CEO.” Jeff Stagl, Progressive Railroading, August 2023.
Yo, ho, ho…argh! There will be more and more on these scoundrel shareholder pirates later.
Over the past 10 years, these shareholder pirates have had a sword over CSX and other railroads, but CSX’s has been especially hit hard. If these shareholder pirates are allowed to bash CSX into pieces for their selfish money interests, it will be the equivalent of bashing Maryland’s Tribute to Washington into pieces. CSX has a 200-year long purpose of serving Maryland’s and America’s economy, its customers, its many constituents. CSX’s Board of Cowards did not have to jump to Ancora’s demands and could have said NO and that NO would have been in the best interests of CSX, its future, its independence and its many other stakeholders. The proxy fight that would have come would have seen Ancora lose like it did to Norfolk Southern. Apparently, this did not stop the Ancora pirates, who are said to have looted Norfolk Southern anyway. What a sad thing for Norfolk Southern.
TO ARMS, FRIENDS! TO ARMS!
As Friends of the Railroads, we must oppose the sword of hedge fund activist-pirates over the heads of our railroads. Our railroads are the backbone of our economy, bringing goods to every corner of our country. Railroads that have been stripped down by shareholder pirates lose a lot of market share to trucks. From 2010 to 2022, our railroads lost 48% to 36% of the freight market share to trucks. We need to understand the culture created by Shareholder Primacy, especially the notion that the only purpose of a railroad corporation is to generate profits for shareholders, the company’s only stakeholders. We need to fully understand what E Hunter Harrison’s “railroading genius” is actually about with “precision scheduled railroading,” or PSR. PSR, Dear Reader, is actually a Shareholder Primacy model of railroad governance that gives the middle finger to the railroads’ other very, very important stakeholders. The employees, communities, customers, and the American economy itself can just go to Hell. We, the Friends of the Railroads, must stand up and fight the shareholder pirates!
