In 2017, CSX Corporation, a leading railroad company, paid or committed to pay (subject to certain conditions) over $200 million (including grant-date value of a stock option discussed below) to attract E. Hunter Harrison as its new chief executive officer.

On Jan. 18, 2017, Canadian Pacific Railway Limited announced that Harrison was resigning as its CEO. The Wall Street Journal reported (after regular trading hours ended) that Harrison, who is age 72, was “joining with an activist investor in an attempt to shake up management at rival railroad CSX Corp. They are expected to try to put Harrison in a senior management position at CSX … .”¹ The following day, January 19, the price of CSX shares on the Nasdaq Stock Market jumped approximately $8 billion to $42 billion—an increase of 23 percent from $34 billion. As of June 30, CSX's stock market value had increased over $16 billion to $50 billion, an increase of 47 percent, since the day before the public announcement.

Harrison, before becoming employed by CSX as its CEO on March 6, had compiled an extraordinary record in leading three major companies in the railroad industry: Illinois Central Railroad Co., Canadian National Railway Company and Canadian Pacific Railway Limited. In each case he applied what is described as “precision railroading” or “precision scheduled railroading.” “Precision railroading” includes, among other things, keeping trains running as close to schedule as possible and making major reductions in “down-time” of rail equipment. Table 1 (below), based on a presentation to shareholders of CSX by the activist investor involved, Mantle Ridge LP, shows the reduction in operating costs as a ratio of operating revenues over the periods of time that Harrison served as an executive of the three railroads noted.²