CSX fires back at Children's Investment Trust following bylaws change

By Lisa Kerner

Charlotte, N.C., Feb. 14 - The CSX Corp. board of directors responded to a shareholder's proposal that would give shareholders the right to request special meetings for the purpose of electing directors throughout the year.

In a letter to the Children's Investment Trust, CSX explained that special meetings were intended as a place for shareholders to consider extraordinary matters, not the regular annual business of director elections.

CSX cited its recent bylaw amendments aimed an avoiding the disruption and cost of potential multiple director elections each year.

The company called Children's Investment Trust's criticism of the amendments "unwarranted and disingenuous."

On Feb. 6, CSX announced the approval of amendments to the company's bylaw that become effective immediately.

Article I, section 2(b) was amended to provide that a special meeting of shareholders will be called by a majority of the board upon written request of holders of at least 15% of the company's shares. The 15% represents the combined voting power of the then outstanding shares of all classes of capital stock entitled to vote on the matter proposed to be voted on at the special meeting.

Article VIII, subsection (b) was amended to require the approval of shareholders to repeal article I, section 2(b) or amend certain of its provisions.

It was previously reported that the investor wanted to remove language from the bylaws that gives the CSX board authority to decide that directors will be elected at a special meeting as a prerequisite for a shareholder to nominate persons to be elected to the board at the special meeting.

Children's Investment Fund has a 4.2% ownership interest in the Jacksonville, Fla.-based railroad and transportation company.

In November, CSX took issue with the demands made by the Children's Investment Fund over a 10-month period. The fund wanted CSX to seek a leveraged buyout and freeze capital spending.

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