CSX railroad replaces CEO after investor pressure and poor performance as Union Pacific merger looms

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CSX railroad announced Monday that it had replaced its CEO less than two months after an investment fund urged it to either find another railroad to merge with to better compete with the proposed transcontinental Union Pacific railroad or fire outgoing CEO Joe Hinrichs.

The outgoing CEO, who came to the railroad in 2022 after a long career with Ford, focused on repairing CSX's relationship with its workers and labor unions and unifying the team after a bitter contract fight. But Ancora Holdings, which helped spur major changes at Norfolk Southern, said CSX's operating performance deteriorated significantly under Hinrichs' leadership. Hinrichs resigned to clear the way for Steve Angel to become CEO effective Sunday.

Angel, 70, also comes from outside the rail industry although earlier in his career he oversaw GE's locomotive building unit, so he does have that experience. CSX said he has 45 years experience leading large public companies, including most recently as CEO of Linde and Praxair that provide industrial gasses to other companies.

“We are excited to welcome Steve as our new CEO. He is a visionary in creating long-term value and an expert in guiding companies through significant transformation," the railroad's board Chairman John Zillmer said.

CSX has been under pressure from Ancora and other investors since Union Pacific announced its $85 billion deal to acquire Norfolk Southern, which is CSX's rival in the eastern United States. But both BNSF and CPKC railroads said they aren't interested in a merger right now.

Ancora said CSX has delivered disappointing shareholder returns and poor financial performance during Hinrichs' tenure. But over the past year, CSX was working on two major construction projects — repairs from Hurricane Helene and a major tunnel renovation in Baltimore — that disrupted the railroad. Both those projects were just completed this month, so CSX's performance was expected to improve in the fourth quarter.

Even though he's not a railroader, Ancora praised Angel's hiring because of his experience with mergers and acquisitions. The top executives at Ancora, Frederick D. DiSanto and James Chadwick, said in their statement that they believe Hinrichs “botched the opportunity” to merge with another railroad and may have even fought the idea. They said Angel is expected to be more aggressive at pursuing a deal and that he will re-evaluate the railroad's leadership team.

“With President Donald Trump and other policymakers recently expressing enthusiasm for the benefits of a transcontinental railroad, CSX and other Class I railroads have no choice but to embrace the industry’s new realities,” the Ancora executives said. “Although Steve Angel is not a railroader by trade, his M&A pedigree and value creation record indicate his appointment is an initial step in the right direction for CSX.”

Angel promised to make improvements at the Jacksonville, Florida-based company, which is one of the six largest railroads in North America.

“My top priorities will be to ensure the safety of the railroad and our employees, deliver reliable service to our customers, and increase value for our shareholders,” Angel said in a statement.

Angel will earn a $1.5 million salary, but he will also be eligible for a performance stock grant targeted at $13.5 million next year if CSX hits certain performance goals. He will also receive a separate $10 million stock grant that will vest after three years based on performance. Angel will also be eligible to collect retirement from the railroad after three years. CSX also outlined a separate agreement that would pay Angel triple his salary and target bonus in the event of another railroad taking control of CSX.

Ancora said it continues to buy more CSX shares and hopes to develop a better relationship with the railroad. Ancora holds three seats on Norfolk Southern's board after running a proxy campaign there to oust the previous CEO at that railroad, so the investment fund had input on the Union Pacific-Norfolk Southern merger.

CFRA Research analyst Emily Nasseff Mitsch said Angel’s experience overseeing the complex merger of Linde and Praxair should give CSX a strategic edge in any potential rail consolidation.

Most observers believe CSX and BNSF will be at a disadvantage if the Union Pacific-Norfolk Southern merger gets approved. That transcontinental railroad will be able to shave more than a day off delivery times because it won’t have to hand off shipments between railroads in the middle of the country. So far, those railroads have said they believe they could achieve most of the benefits of a merger through cooperative agreements.

“Angel brings exceptional credentials from 22 years at GE’s locomotive operations and demonstrated value creation, generating over 200% returns at Linde and Praxair while executing major industrial mergers. We believe this positions CSX for its next growth phase,” Mitsch said.

CSX shares gained more than 5% Monday after the new CEO was announced.