CSX Replaces CEO Amid Merger Pressure from Activist Investor

CSX CEO and president Joseph Hinrichs is out at the Class I railroad weeks after an activist investor called on the company to either change leadership or consider a merger.

The railroad’s board of directors named Steve Angel its new president and CEO, effective Sunday.

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Angel, like Hinrichs, was hired from outside the railroad industry, most recently serving as CEO of industrial gas and equipment provider Linde. CSX’s new chief exec has some industry background, having worked directly with locomotive and rail operations at the start of his career at General Electric.

After Union Pacific and Norfolk Southern announced a planned merger in late July, CSX’s minority shareholder Ancora Holdings prodded the company to either hire third-party advisors to find a merger partner, or replace Hinrichs.

If neither option was selected, the wealth management firm suggested it could launch a proxy fight—a move Ancora made against Norfolk Southern last year, which ousted the railroad’s boardchair.

The UP-NS tie up raised speculation across the industry that the two other Class I competitors, CSX and BNSF Railway, will need to combine to effectively compete with the merged company.

The merger still needs to be approved by the Surface Transportation Board (STB), but has the endorsement of President Donald Trump, indicating that a deal is more likely to be finalized before its anticipated early 2027 closing date.

But Warren Buffett, the chairman of BNSF parent company Berkshire Hathaway, swatted away the rumors, indicating that the railroad would not make a buyout offer for CSX. Instead, both railroads entered in a partnership that would introduce two coast-to-coast intermodal rail services. This would help both railroads expand their service offerings without undergoing structural changes, at put the firms in position to rival the anticipated transcontinental railroad at UP-NS.

CSX chairman John Zillmer seemed to suggest in a statement that the CEO switch has larger implications for a wider transformation at the company, saying the board is “laser-focused on advancing CSX’s strategic priorities and maximizing shareholder value.”

Ancora lauded the move, and wasn’t shy about its desire to see CSX enter a merger.

“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,” said Fredrick DiSanto, chairman and CEO of Ancora Holdings, and James Chadwick, president of Ancora Alternatives, in a statement. “We expect the board and Mr. Angel to be far more proactive when it comes to pursuing multiple opportunities to increase shareholder value and identifying a willing partner to merge with.”

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It is unclear which company CSX would approach a merger with, with Canadian Pacific Kansas City (CPKC) saying last month that it is not interested in participating in immediate consolidation.

CPKC itself is the result of the merger of Canadian Pacific and Kansas City Southern in 2023, but said in a statement it “does not believe that further rail consolidation is necessary for the industry as currently structured.”

And with Canadian National Railway (CN) recently teaming with CSX on an intermodal service line between Nashville and Vancouver, CN CEO Tracy Robinson said interline partnerships are a better alternative than mergers.

In a research note, TD Cowen analyst Jason Seidl said “the incoming CEO may position the rail more strategically, though don’t expect this to suggest any near-term deal activity.”

Hinrichs’ ouster comes despite CSX saying its operating performance “remains strong,” with the railroad still expecting to deliver full-year volume growth.

In a post shared on LinkedIn, Hinrichs noted that over the past three quarters, CSX had the best net promoter scores it has ever had, and that the Jacksonville, Fla.-based railroad was the only of the Class Is in 2024 to grow volumes over 2019.

“There is a very strong connection between service and volume growth,” said Hinrichs. “Please don’t lose sight of that.”

When accounting for the stock price, Hinrichs called out that CSX has the second-best performing stock both year-to-date and over the past three years—only surpassed by Norfolk Southern due to the premium in the stock once it got acquired.

Investors were in favor of the announcement, with CSX stock spiking more than 5 percent Monday.

On the surface, the move to replace Hinrichs appeared abrupt, even after Ancora’s pressure.

Last Friday, CSX reopened an expanded Howard Street Tunnel in Baltimore, with Hinrichs taking part in the ceremony. The tunnel expansion, part of a wider $450 million infrastructure project, was completed this month and is designed to allow taller, double-stacked intermodal trains to move through the area.

The day marked Hinrichs’ third anniversary as CEO and president.

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