CSX pulled a fast one by moving slowly at its annual meeting. The nation's third largest freight railroad dragging it out for more than four hours on Wednesday.
Four hours that included a long-winded presentation about the company's recovery efforts post-Katrina, long-winded answers from the company's CEO Mike Ward to employee questions about the company's operations, and three breaks, including an hour long lunch break.
What it did not include was a resolution to the six month proxy fight that has been waged against CSX by two hedge funds, London-based TCI and New York based 3G.
If any of you have been to annual meetings, you would know this is unusual. I have been covering them for three years now and have never been to one like this. The meeting was not webcast, something highly unusual in the internet age, and it was held in the Gentilly Yard in New Orleans, a place that was hard to find even if you followed the directions posted on the company's website.
CSX wanted the meeting there to highlight what the company has done since Katrina. But given you could not look around the railyard unless you were accompanied by security I don't understand why CSX wanted to bring shareholders there unless they didn't want them to come in the first place. And in truth, talking about Katrina three years hence, well, it seems a little stale.
As for the length of the meeting, there are some companies that have meetings that go on for hours. Exxon Mobilis one firm that comes to mind. However, in the oil giant's case, it typically has more than ten proposals on its proxy. So between the presentation of the proposals, the company's presentation on its business, and the question and answer sessions that follow, a three to four hour meeting is understandable.
That is not to say this meeting was not important for CSX. Even though it only had five proposals on the proxy, one of those proposals was to replace five directors with a slate of dissident nominees. The hedge funds TCI and 3G had proposed this slate to the 12 member board saying new directors would accelerate improvements to the Jacksonville, Florida-based company's productivity and profitability.
CSX opposed the nominees' election, saying the current board had done a fine job, pointing to, among other things, the 200 percent increase in the firm's stock over the last three years and last quarter's record revenue. Both sides had lobbied hard in public and private to convince shareholders they had the company's best interests in mind, and from tone and time of Wednesday's meeting investors appear to have found the hedge funds argument more compelling.
In an unusual move, CSX kept the polls open throughout the four hour meeting, allowing investors additional time to vote their ballots electronically.
Again, companies typically close the polls after the proposals have been presented, usually within the first hour or so of the meeting. A representative from TCI protested the company's decision.
CSX's CEO Mike Ward retorted it was being done so all shareholders would have the time they needed to vote and said TCI was "out of line" for even questioning why the polls would remain open. Even with that extra time the company said the race was too close to call, and after keeping investors waiting for four hours, closed the meeting without giving out any results from the vote, unofficial or not.
TCI maintains an unofficial count suggests it won four seats on the board, though investors will not know the official results until July 25th when CSX releases them. And while Ward said he will work with any new directors to continue to create value for CSX's shareholders, one has to wonder how congenial both sides will be.
For a firm that prides itself on moving freight efficiently over 21,000 miles of track in 23 states east of the Mississippi River, it was moving at a snail's pace yesterday and that might not be the best way to convince investors it can move more quickly to improve the the company's performance.