Asserts the Board Should Immediately Announce the Formal Retention of an Investment Bank and Plan to Vigorously Explore Mergers as Rail Consolidation Persists
Believes CSX Should be Conducting Ongoing Conversations with BNSF Railway Company and Canadian Pacific Kansas City Limited
Notes the Company’s Current Standalone Future is Bleak Based on Anemic TSR, Excessive Spending, Poor Recruitment and the Deterioration of Operations
Urges the Board to Terminate Joe Hinrichs, a Seemingly Failed CEO, if a Merger Cannot be Consummated in a Timely Manner
CLEVELAND–(BUSINESS WIRE)–Ancora Holdings Group, LLC (together with its affiliates, “Ancora” or “we”) today disclosed the below letter sent to the Board of Directors (the “Board”) of CSX Corporation (NASDAQ: CSX) (“CSX” or the “Company”) on August 6, 2025. Since sending this letter via private channels, CSX has ignored us and not even confirmed receipt of our correspondence. As this occurred, trusted sources informed us that the Company’s advisors appeared to be breaching their ethical obligations by talking to members of the media – without attribution – about Ancora and what was intended to be a private letter. Perhaps we should not be surprised given that the Company’s reported investment bank remains undisclosed, even though the bank has been marketing its representation of CSX in pitch decks disseminated as recently as this week. All of this leads us to fear that the Company’s Board is exhibiting poor judgment, insufficient oversight and undermining shareholders’ best interests.
August 6, 2025
CSX Corporation
500 Water Street
Jacksonville, FL 32202
Independent Members of the Board of Directors (the “Board”),
Ancora Holdings Group, LLC (together with its affiliates, “Ancora” or “we”) is a growing shareholder of CSX Corporation (“CSX” or the “Company”). As a firm with more than $10 billion in assets under management and a strong focus on investing in the Class I rail sector, we have closely followed CSX’s sustained operational deterioration under CEO Joe Hinrichs. Unfortunately, aside from bolstering employee engagement, making use of the Company’s private planes and manicuring his social media footprint, we are hard pressed to find any real accomplishments tied to Mr. Hinrichs. His time at CSX is best encapsulated by this anecdote: on the very day Jim Vena and Mark George were announcing the largest merger in industry history, Mr. Hinrichs was out promoting his involvement with the Company’s internship program on his tidily managed LinkedIn profile.
Our recent discussions with analysts, customers, former industry executives, retired regulators, and an array of current and prospective shareholders suggest they have an equally low opinion of Mr. Hinrichs, who has now put CSX in the difficult position of playing catch-up in the wake of the announced merger of Union Pacific Corporation (“Union Pacific”) and Norfolk Southern Corporation (“Norfolk Southern”). It is truly confounding that CSX did not establish a fruitful dialogue with Union Pacific in the first half of 2025, when public momentum was building for a transcontinental railroad. This seems to be the type of mistake a railroad would make when it has an inexperienced and insecure CEO.
We are writing to you today to ensure you understand the current consensus among investors: the Board needs to announce in the near term that it is working with identified third-party advisors to explore a range of merger options. Time is of the essence because inaction risks impairing the long-term value of CSX. Once Norfolk Southern and Union Pacific start operating as a unified transcontinental railroad, no railroad has more to lose than CSX.
To stress why we want the Board to act with urgency, consider how CSX has performed under Mr. Hinrichs. Shareholders cannot afford more missteps as CSX plays catch-up in the rail consolidation race. His automotive background and “experience building global businesses through investment in people and culture” has already translated to the following over the course of his tenure:
- Anemic Shareholder Returns – Mr. Hinrichs inherited the best-run railroad in North America in 2022, yet he failed to use that as a springboard for meaningful value creation. The single-digit total shareholder returns during his tenure pales in comparison to the billions of dollars in value generated by his predecessors from 2015 through early 2022, not to mention the significant underperformance of CSX’s stock price relative to the S&P 500.1
- Disastrous Operational Performance – CSX has seen a massive increase in Operating Ratio, from 58% when Mr. Hinrichs joined in 2022 to approximately 67% year to date 2025. He has literally overseen CSX going from first to worst in terms of operational performance among Class I rails. Currently, CSX has no viable plan for meaningfully improving its Operating Ratio. Perhaps Mr. Hinrichs should not have been allowed to alienate railroad operations superstar Jamie Boychuk and other excellent talent mentored by E. Hunter Harrison.
- Poor Personnel Selection – Rather than compensate for his inexperience as a railroader by surrounding himself with “A” players, Mr. Hinrichs seems to have built a leadership team of junior varsity executives. For example, we believe COO Mike Cory is a mediocre operator and was likely pushed out of his prior role at The Canadian National Railway Company. The Company’s Chief Commercial Officer comes from a corporate affairs, investor relations and equity research background, and has failed to achieve any material improvements in carload growth. Based on his failure to recruit talent and retain high-performing executives, investors are left to assume that Mr. Hinrichs has been insulating himself from potential successors that may outshine him. Regardless of the reasons, we see no way that Mr. Hinrichs and his team of “C” players can compete as the Class I sector rapidly transforms.
- Blown Opportunities – As noted earlier, we believe rail executives have been discussing opportunities pertaining to a transcontinental railroad since the time of President Donald Trump’s second inauguration. We suspect that Mr. Hinrichs was reluctant to engage in substantive discussions because he would be out of a job and have no role at a combined railroad. Although we have no way of knowing for sure right now, the Class I rail space is a highly talkative one – and we will do everything in our power to find out if CSX’s management avoided or stalled merger discussions. If the Board was unaware of Union Pacific’s interest in CSX, it should look into any and all communications between Messrs. Vena and Hinrichs relative to what was actually reported back.
In addition to properly announcing the retention of a bank to explore transaction opportunities, it is imperative that CSX pursues discussions with both BNSF Railway Company (“BNSF”) and Canadian Pacific Kansas City Limited (“CPKC”) to explore all options for maximizing shareholder value. The reality is that BNSF is a cash buyer that would bring a highly disciplined approach to any negotiations, rendering CSX in a vulnerable position if it does not have alternative parties to speak with. We believe CPKC, under the leadership of Keith Creel, represents a compelling partner for CSX as it looks to compete in a new railroading environment. Although one could suggest that the U.S. government could have difficulty approving an acquisition by a Canadian railroad, a transaction could be structured as a reverse merger under which CSX acquires CPKC. Regardless, because of the importance of time here and moving quickly, engaging with CPKC may be the best way to create competitive tension that accelerates a path to an excellent deal.
In closing, keep in mind that regulators will have a much easier time reviewing multiple rail mergers at once. From a practical perspective, they will be able to compare competitive considerations and the impact on customers on a side-by-side basis to determine how the respective combinations benefit all stakeholders. From a timeline perspective, getting something done as early as possible during the pro-business Trump Administration should also be a priority.
At this point, we intend to keep this letter private. We have great respect for Paul C. Hilal and those of you who have been attentive to value creation over the years. We hope that you will take control of this situation and promptly disclose that CSX is working to identify the best merger partner. If a deal cannot be struck, we assume it will not take us running a proxy contest to ensure a qualified operator, like Mr. Boychuk or someone with similar credentials, replaces Mr. Hinrichs.
Regards,
| Fredrick D. DiSanto Chairman and Chief Executive Officer Ancora Holdings Group LLC | James Chadwick President Ancora Alternatives LLC |
About Ancora
Founded in 2003, Ancora Holdings Group, LLC offers integrated investment advisory, wealth management, retirement plan services and insurance solutions to individuals and institutions across the United States. The firm is a long-term supporter of union labor and has a history of working with union groups and public pension plans to deliver long-term value. Ancora’s comprehensive service offering is complemented by a dedicated team that has the breadth of expertise and operational structure of a global institution, with the responsiveness and flexibility of a boutique firm. Ancora Alternatives is the alternative asset management division of Ancora Holdings Group, investing across three primary strategies: activism, multi-strategy and commodities. For more information about Ancora Alternatives, please visit www.ancoraalts.com.
1 Total shareholder return data, which accounted for reinvested dividends, runs from the date of Mr. Hinrichs’ appointment as CEO through the close of trading on May 9, 2025, after which Union Pacific made initial public statements about merging with a partner to form a transcontinental railroad.
Contacts
Longacre Square Partners LLC
Greg Marose / Rebecca Kral, 646-386-0091
gmarose@longacresquare.com / rkral@longacresquare.com
