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CSX Corp. recently amended its bylaws to enable shareholders to request that the Class I's board call a special stockholders meeting. A positive step forward in the eyes of the Children's Investment Fund Management L.L.P. (TCI), a CSX stockholder that's been critical of the Class I's management and performance and had requested that bylaw change last year? Not quite.

A "close reading" of the new bylaw provision shows it's not a shareholder-friendly change but a "disingenuous effort" to appear to be shareholder friendly while preventing shareholders from nominating directors at a special meeting, TCI partner Snehal Amin said in a letter to CSX's board dated Feb. 7.

"The bylaw amendments say that special meetings may not be called to address issues that were on the agenda at an annual meeting in the past 12 months or will be on the agenda at an annual meeting in the next 90 days," he wrote. "Since the election of directors is on the agenda at every annual meeting, this means directors can never be proposed at a special meeting. Thus, the new shareholder 'right' eviscerates one of the most fundamental reasons a shareholder might want to call a special meeting."

CSX officials believe the bylaw amendments strike an appropriate balance between giving stockholders the ability to request special meetings, and protecting the company's resources and shareholders' interests.

However, TCI officials believe the amendments "validate our concern that CSX's board and management do not value corporate governance and do not respect its shareholders," Amin wrote. "As a shareholder, we find this unacceptable — the board is in need of change."

Late last year, TCI — which owns 17.8 million, or 4.1 percent, of CSX shares — teamed up with 3G Capital Partners Ltd. to form a group owning about 11.8 percent of the Class I's outstanding shares. The group plans to nominate five directors with railroad experience to CSX's board at the 2008 annual shareholders meeting.

TCI also plans to propose a bylaw amendment that would permit one or more shareholders that together hold at least 15 percent of all the shares to request a special shareholders meeting to address any issue, including the election of directors. In addition, TCI will seek to repeal all bylaw amendments enacted since Jan. 1, 2008, including the recent amendments, Amin wrote.

"The board does not need to wait for positive change to occur. If the board is truly interested in acting in shareholder interests, we urge you to repeal this restrictive language and adopt the bylaw amendment we have proposed — one that actually gives shareholders real rights, not one that merely appears to," he wrote.