(Reuters) - U.S. rail operator CSX Corp (O:CSX) said its board has called for a special meeting of its shareholders to discuss requests made by hedge fund Mantle Ridge LP, which is trying to install Hunter Harrison, outgoing chief executive of Canadian Pacific Railway Ltd (TO:CP) as the company's chief executive.
CSX said the meeting will allow shareholders to vote on Harrison's proposed pay package, which is estimated to exceed $300 million. Shareholders will also be allowed to vote on Mantle Ridge's proposal for substantial representation on the company's board.
Shareholders as of March 16 are eligible to vote in the special meeting, which has not yet been scheduled.
"We are pleased that CSX agrees that change is needed," Mantle Ridge said in a statement. The hedge fund added that they have been in constructive dialogue with CSX's board for several weeks.
Activist investor Paul Hilal's Mantle Ridge is seeking six seats on the board, with Hilal as chairman and Harrison as chief executive officer.
The hedge fund also proposes that three incumbent CSX directors in addition to current CEO Michael Ward would retire from the board as of the company's 2017 annual meeting.
CSX's board is made up of 12 members, which include Ward who also serves as chairman. Ward has previously signaled he plans to step down.
Last week, CSX extended the director nomination deadline for its board, giving it more time to reach an agreement with Hilal and Harrison.
Mantle Ridge LP recently became a CSX shareholder owning less than 5 percent of the company's stock, CSX said on Tuesday.
News of the Hilal-Harrison partnership broke on Jan. 18, when Canadian Pacific announced Harrison was leaving his CEO post early.
(This version of the story corrects 2nd paragraph to remove date of meeting, which has not yet been scheduled. Inserts 3rd paragraph to explain that shareholders as of March 16 are eligible to vote in the special meeting.)