Directors Who Fail To Obtain A Majority Vote | Interfaith Center on Corporate Responsibility

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<h4>Resolution Details</h4>
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<strong>Company:</strong>
<p>CSX Corp.</p>
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<strong>Year:</strong>
<p>2026 </p>
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<strong>Issue Area:</strong>
<p>Corporate Governance </p>
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<strong>Focus Area:</strong>
<p>Majority Vote </p>
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<strong>Status:</strong>
<p>Filed</p>
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<h2>Resolution Text</h2>
<p><strong>RESOLVED</strong>: Shareholders request that the Board of Directors take the necessary steps to ensure that directors who fail to obtain a majority vote in a future uncontested shall leave the board as soon as possible but in no case shall such directors serve more than 9-months on the Board after such failed election.</p>
<p><strong>SUPPORTING STATEMENT</strong>:</p>
<p dir=”ltr”>Shareholders request that the Board of Directors take the necessary steps to ensure that directors who fail to obtain a majority vote in a future uncontested shall leave the board as soon as possible but in no case shall such directors serve more than 9-months on the Board after such failed election.</p>
<p dir=”ltr”>A vote of rejection by CSX shareholders needs to be respected. CSX shareholders often only vote on 3 Company items a year. The least that CSX can do is to respect all shareholder votes. If CSX accepts shareholder approval of its executive pay then CSX should be prepared to accept shareholder rejection of a director.</p>
<p dir=”ltr”>9-months is adequate time for CSX to find a highly qualified replacement director. This proposal will give CSX directors more of an incentive to perform.</p>
<p dir=”ltr”>Now is a good time to improve shareholder oversight of CSX. CSX stock was at $37 in 2021 and was only at $34 in late 2025 despite a robust stock market. </p>
<p dir=”ltr”>CSX faces challenges and CSX shareholders may believe that board refreshment is a way to address challenges. CSX shareholder efforts at board refreshment could be thwarted if CSX can ignore CSX shareholders when shareholders reject a director.</p>
<p dir=”ltr”>These are some of the challenges facing CSX:</p>
<p dir=”ltr”>CSX reported year-over-year declines in revenue and net earnings in Q1, Q2, and Q3 2025. CSX consistently missed analyst revenue forecasts in all three quarters. A significant factor was an 11% to 27% drop in coal revenue and lower volumes, primarily due to reduced production, mine outages, and softer market fundamentals.</p>
<p dir=”ltr”>Operating expenses increased due to severance costs, network disruptions and inflation, which eroded operating margins. CSX’s current ratio, a measure of liquidity, steadily declined over several years and remained below the preferred threshold of 1.0 in Q1 2025, signaling mounting liquidity pressures.</p>
<p dir=”ltr”>The stock’s price performance was dim relative to the industry, and analysts revised earnings expectations downward for the year, with some assigning a “Sell” rank to the stock. </p>
<p dir=”ltr”>CSX faced challenges, including temporary rail network issues, crew shortages, and service disruptions, which reduced operating efficiency.<br>Management projected a high capital expenditure of $2.5 billion for 2025, adding to financial pressure.</p>
<p dir=”ltr”>A persistently soft trucking market made it difficult for CSX to raise prices and retain market share for certain commodities.</p>
<p dir=”ltr”>The potential merger of competitors Union Pacific and Norfolk Southern raised concerns about increased competition, which could put pressure on CSX to find its own merger partner to remain competitive. </p>

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<h3>Lead Filer</h3>
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<div class=”views-field views-field-nothing”><span class=”field-content”> John Chevedden</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Chevedden Corporate Governance</span></div>
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