Dec. 12, 2002
Public Citizen Seeks Government Records on Treasury Secretary Nominee
CSX Executive’s Involvement in Questionable Corporate Practices Raises Serious Doubts About His Suitability for Cabinet Post
WASHINGTON, D.C. – Concerned about the prospect of a corporate executive involved in questionable business practices joining the Bush Cabinet, Public Citizen today filed records requests to obtain information about loans, stock sales, safety compliance and other matters involving John W. Snow, the Treasury Secretary nominee who for years headed CSX Corp.
The requests, filed with the Securities and Exchange Commission (SEC) and the Federal Railroad Administration (FRA), are an attempt to learn more about Snow’s policies as chairman and chief executive officer of CSX.
“As head of CSX, Mr. Snow apparently was involved in some of the same questionable practices that have come under scrutiny recently and even been outlawed by Congress,” said Joan Claybrook, Public Citizen president. “We question whether a top corporate executive who abused his position by benefiting from insider deals will be a good public servant. We are filing this request so that before Congress votes on Mr. Snow, the public record can be clear and complete as to his ethical and safety performance as CEO of a major transportation company.”
In the request to the SEC, filed under the Freedom of Information Act, Public Citizen seeks all records concerning loans from CSX to Snow and the forgiveness of those loans, sales of CSX stock by Snow, any SEC investigation into CSX matters, and all transactions between CSX and members of the company’s compensation committee. From the FRA, Public Citizen seeks all records concerning Snow’s role as a CSX executive, Snow’s involvement with the company’s lack of compliance with federal track safety standards, any enforcement actions against CSX since 1991, and Snow’s role in the negotiation and implementation of an April 2000 Safety Compliance Agreement between the company and the FRA, which came about after an FRA review of CSX tracks uncovered a number of safety problems.
Snow has been a beneficiary of many of the questionable corporate practices that came to light after the Enron scandal, according to news reports. CSX loaned Snow $24.5 million to purchase company stock valued at $32.3 million, but after the stock price dropped, the company forgave the loan. During his tenure, Snow received more than $50 million in compensation over 12 years even though profits fell and the stock didn’t do as well as the average U.S. company. Last year, he made $10.1 million in cash and stock grants and received stock options valued at $8 million. According to a Corporate Library survey, Snow is the third highest–paid chief executive among 37 transportation company CEOs.
Further, according to media reports, Snow sold 120,000 shares of CSX stock this year, less than a month before the company announced that its third-quarter outlook was not as rosy as it had first predicted. The stock price dropped, but Snow dumped the stock just in time to avoid losing approximately $750,000.
Additionally, Snow served on five other corporate boards, including NationsBank, where he helped set compensation for one of CSX’s outside directors.
“It would appear that Mr. Snow misused his position as CEO to gain benefits available to few others,” Claybrook said. “How many CSX workers were able to obtain multimillion-dollar loans for stock purchases and have the loans forgiven?”