CSX Corporation (NYSE:CSX) directors may be in for a battle after two long-standing foes nominated their own slate of candidates to the company’s board. The Children’s Investment Fund teamed up with 3G Capital Management to strengthen the railroad operator’s board by adding strong independent directors with a shareholder orientation, a broad range of railroad and other relevant experience, and a firm commitment to improving operating performance and corporate governance.

The hostile move comes after two months of feuding between the company and its dissident shareholders. Children’s Investment Fund sent a public letter to CSX two months ago raising concerns over the fact that they have been unable to hold substantive discussions about the company’s spending. The hedge fund also requested that the chairman and chief executive roles be split up, more independent directors with experience be added, and operating expenses be trimmed.

Last month, CSX’s board responded by stating that it maintained confidence in its chairman and chief executive. After all, the stock price has tripled over the last three years and shareholders have seen better returns than the rest of the railroad industry and 89 percent of all S&P companies. Obviously, any changes may be a hard sell to average shareholders who do not understand the additional value that can be unlocked through independence.

Shareholders can expect to see a heated proxy battle at the CSX’s next annual meeting. Combined, these two hedge funds hold around 11 percent of the company’s outstanding shares which makes them a viable contender. Many common shareholders, however, will need to receive more information detailing exactly how they plan on improving a stock that has already seen such great success under current leadership. After all, the saying goes: “If it ain’t broke, don’t fix it!”

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