CSX » Topics » The SEC filing fails to mention that these “conditions” render the bylaw amendment useless as it pertains to the nomination of directors

This excerpt taken from the CSX DEFA14A filed Jun 20, 2008.
The SEC filing fails to mention that these “conditions” render the bylaw amendment useless as it pertains to the nomination of directors. One must go to the bylaws themselves attached as an exhibit to realize the deception. This “Catch 22” approach to corporate governance should be an embarrassment to the CSX Board.
 
We feel this action validates our concern that CSX’s Board and management do not value corporate governance and do not respect its shareholders. As a shareholder we find this unacceptable - the Board is in need of change. To this end, we have informed you and CSX shareholders that we intend to nominate a slate of directors with significant railroad experience at the 2008 annual meeting who will work hard to improve the Company’s operating performance as well as its corporate governance.
 
In addition, we will also propose a bylaw amendment that permits one or more shareholders that together hold at least 15% of all the shares of CSX capital stock to request a special meeting of shareholders to address ANY AND ALL issues - including the election of directors. We will also seek to repeal all bylaw amendments enacted since January 1, 2008, including the amendment CSX disclosed yesterday.
 
However, the Board does not need to wait for positive change to occur. If the Board is truly interested in acting in shareholder interests, we urge you to repeal this restrictive language and adopt the bylaw amendment we have proposed - one that actually gives shareholders REAL rights, not one that merely appears to.
 
(emphases added).
 
40.           On the same date, the CSX Board issued a statement with a responsive letter to the Dissident Shareholders’ February 7, 2008 letter:
The CSX Corporation Board of Directors has received the letter from The Children’s Investment Fund (“TCI) dated February 7, 2008. The Board takes its responsibilities to CSX shareholders seriously and has reviewed the letter and
 

 

 
9

 

considered your proposal to allow shareholders the right to request special meetings for the purpose of electing directors throughout the year.
 
CSX’s recent Bylaw amendments reflect the Board’s commitment to high standards of corporate governance. These Bylaw amendments enable 15 percent of shareholders to request special meetings, well below the 25-33 percent level in similar bylaw provisions recently implemented by a number of other public companies. This new right for CSX shareholders is in addition to the strong rights CSX shareholders already have with respect to governance and director elections.
 
Every CSX director stands for election every year and is subject to a majority voting standard that empowers shareholders to “vote out” a director, even in an uncontested election year. As the term implies, “special” meetings are the place for shareholders to consider extraordinary matters,
This excerpt taken from the CSX 8-K filed Jun 20, 2008.
The SEC filing fails to mention that these “conditions” render the bylaw amendment useless as it pertains to the nomination of directors. One must go to the bylaws themselves attached as an exhibit to realize the deception. This “Catch 22” approach to corporate governance should be an embarrassment to the CSX Board.
 
We feel this action validates our concern that CSX’s Board and management do not value corporate governance and do not respect its shareholders. As a shareholder we find this unacceptable - the Board is in need of change. To this end, we have informed you and CSX shareholders that we intend to nominate a slate of directors with significant railroad experience at the 2008 annual meeting who will work hard to improve the Company’s operating performance as well as its corporate governance.
 
In addition, we will also propose a bylaw amendment that permits one or more shareholders that together hold at least 15% of all the shares of CSX capital stock to request a special meeting of shareholders to address ANY AND ALL issues - including the election of directors. We will also seek to repeal all bylaw amendments enacted since January 1, 2008, including the amendment CSX disclosed yesterday.
 
However, the Board does not need to wait for positive change to occur. If the Board is truly interested in acting in shareholder interests, we urge you to repeal this restrictive language and adopt the bylaw amendment we have proposed - one that actually gives shareholders REAL rights, not one that merely appears to.
 
(emphases added).
 
40.           On the same date, the CSX Board issued a statement with a responsive letter to the Dissident Shareholders’ February 7, 2008 letter:
The CSX Corporation Board of Directors has received the letter from The Children’s Investment Fund (“TCI) dated February 7, 2008. The Board takes its responsibilities to CSX shareholders seriously and has reviewed the letter and
 

 

 
9

 

considered your proposal to allow shareholders the right to request special meetings for the purpose of electing directors throughout the year.
 
CSX’s recent Bylaw amendments reflect the Board’s commitment to high standards of corporate governance. These Bylaw amendments enable 15 percent of shareholders to request special meetings, well below the 25-33 percent level in similar bylaw provisions recently implemented by a number of other public companies. This new right for CSX shareholders is in addition to the strong rights CSX shareholders already have with respect to governance and director elections.
 
Every CSX director stands for election every year and is subject to a majority voting standard that empowers shareholders to “vote out” a director, even in an uncontested election year. As the term implies, “special” meetings are the place for shareholders to consider extraordinary matters,
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