Activist Hedge Funds Win Four CSX Board Seats

Jul 16 2008 | 12:12pm ET

CSX Corp. shareholders elected four of five nominees proffered by a pair of activist hedge funds to the railway giant’s board of directors, the company said today.

The Children’s Investment Fund’s Christopher Hohn and 3G Capital Management’s Alexandre Behring were among those elected, CSX said, based on preliminary results. CSX CEO Michael Ward—who, along with seven other incumbents was reelected to the CSX board—said that final results may not be available for a month, allowing for a review and challenge period and the continuing legal battle between CSX and the hedge funds.

“Until we fully work through all of that… I don’t know we will know the final results of that election,” Ward said during a conference call.

TCI and 3G nominees Gilbert Lamphere, a former director at Canadian National Railway, and Timothy O’Toole, managing director of the London Underground, were also elected to the board. Among the hedge fund nominees, only Gary Wilson, former chairman of Northwest Airlines, failed to win election.

CSX is appealing a June decision by U.S. District Judge Lewis Kaplan, who ruled that he could not stop TCI and 3G from voting their combined 8.7% stake in CSX in spite of their securities law violations.

Hearings on the appeal are scheduled for Aug. 25.

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