CSX Corp (CSX.O) has struck a deal with one of its largest investors to install veteran railroad executive Hunter Harrison as the company's chief executive, people familiar with the matter told Reuters on Monday.

The Jacksonville, Florida-based railroad company has agreed to sign Harrison to a four-year deal, the people said. Mantle Ridge LP, a new activist investment fund, was pressuring CSX to sign Harrison for four years and for Harrison and Mantle Ridge founder Paul Hilal to join CSX's board along with four new independent directors.

CSX and Mantle Ridge have agreed to add Harrison and Hilal to the board, plus three new directors, the people familiar said.

CSX and Mantle Ridge, which owns 4.9 per cent of the company, declined to comment.

Edward Kelly, the company's lead independent director on the board, will replace Michael Ward as chairman, the people said. The company had previously announced that Ward was stepping down as CEO effective in May.

Shares of CSX, which has a market value of more than US$42 billion, gained 1 per cent to US$49 on Monday. CSX's stock has risen by 35 per cent since mid-January, when news of Hilal's plans first broke.

Hilal will be named vice chairman, according to the people familiar with the matter, who wished to remain anonymous because the negotiations are still being finalized.

Harrison, 72, did not return a call seeking comment.