CSX Head Takes Medical Leave

CSX Corp. Chief Executive Hunter Harrison has taken a medical leave of absence due to unexpected complications from a recent illness.

The railway has named Jim Foote, a confidant of Mr. Harrison who was hired in October as chief operating officer, to serve as acting CEO, the company said in a statement. CSX said it scheduled a conference call for Friday morning to discuss the switch.

Mr. Harrison has faced questions about his health since activist investors sought to install the railroad veteran atop CSX earlier this year. Mr. Harrison has an undisclosed medical condition that requires him to frequently use an oxygen tank.

Write to Paul Ziobro at Paul.Ziobro@wsj.com

CSX Corp. Chief Executive Hunter Harrison has taken a medical leave of absence due to unexpected complications from a recent illness.

The railway has named Jim Foote, a confidant of Mr. Harrison who was hired in October as chief operating officer, to serve as acting CEO, the company said in a statement Thursday. CSX said it scheduled a conference call for Friday morning to discuss the switch.

Mr. Harrison, age 72, has faced questions about his health since activist investors sought to install the railroad veteran atop CSX earlier this year. Mr. Harrison, who became CEO in March, has a medical condition that requires him to frequently use an oxygen tank.

During the brief proxy fight, Mr. Harrison declined requests by CSX's board to have an independent physician review his medical record. But the board had said that it was satisfied that Mr. Harrison could perform the job, even if his health problems meant he only visited the company's Jacksonville, Fla., headquarters occasionally. The board hasn't since disclosed details on his medical condition.

Mr. Harrison's health problems are unique to CSX, as his boosters during the proxy fight and other investors view his presence alone at the railway as critical to turning around the performance of the third-largest U.S. railroad. Mr. Harrison was implementing his operating philosophy, referred to as precision-scheduled railroading, which he has used to turn around three railroads during his long career, including Canadian National Railway Co. and Canadian Pacific Railway Ltd.

The philosophy broadly involves better utilization of assets, which has led Mr. Harrison to idle thousands of railcars and hundreds of locomotives at CSX, and running trains on tighter schedules.

Mr. Harrison, who was working under a four-year contract at CSX, moved quickly to enact change at CSX, including reducing the number of hump yards that sort long trains. While it initially led to faster trains and shorter wait times, CSX encountered delays and longer wait times during the summer that led shippers to complain and culminated in a hearing before federal regulators in October. CSX has said the issues have been resolved and trains are running faster and on time more recently.

Mr. Harrison has spoken of continued obstacles in fully implementing his plan, including some internal resistance his efforts to change how CSX is run. In October, days before a planned investor conference, CSX overhauled its executive ranks, with three top executives resigning and Mr. Foote, who worked with Mr. Harrison during his turnaround at Canadian National, named to the No. 2 position.

Late Thursday, Mr. Foote said in a statement that CSX was still able to follow through on Mr. Harrison's turnaround plan.

"Because the team has implemented a foundation consistent with Hunter's vision, I do not see any reason to diminish our expectations concerning the pace and magnitude of our future progress," he said.

Mr. Harrison has taken medical leave in the past. In 2015, as CEO of Canadian Pacific, he stepped down temporarily after leg surgery and a bout of pneumonia.

He has sharply curtailed business travel and trips to company headquarters since then. During his final two years at CP, he used the portable oxygen system and rarely traveled to the company's head office in Calgary, Alberta, because the high altitude made breathing difficult, people familiar with the company said.

For many years he has conducted most of his business from his home office near West Palm Beach, Fla. While at CSX, he has been monitoring the progress of new train schedules and cost-cutting at rail yards and dispatch centers from computer screens.

Write to Paul Ziobro at Paul.Ziobro@wsj.com

(END) Dow Jones Newswires

December 14, 2017 21:47 ET (02:47 GMT)