It's enough to ruin even a hardy C.E.O.'s day: Being publicly challenged to defend your performance—and, worse, your paycheck—to champions of needy children around the globe.

The Children's Investment Master Fund (known as T.C.I.) sent a scathing letter to the board of CSX, urging the U.S.'s third largest railroad to get its house in order.

T.C.I., which owns about 4.1 percent of CSX, presented a laundry list of demands centered around retooling management and reversing the company's abysmal financial performance.

Among the helpful hints: "Refreshing" the board's directors, allowing shareholders to call special meetings, requiring executives to justify capital spending, requiring a plan to streamline operations, and improving relations with labor, shippers, and shareholders.

But the kickers: Aligning management compensation with shareholder interests, and separating the chairman and C.E.O. roles.

At a time when the public is railing in outrage against executive comp, CSX chief exec Michael J. Ward just got an X painted on his back.

You might be thinking, who's ever heard of T.C.I.? One angry investor—what's the big deal?

That's what Deutsche Borse thought in 2005, and then T.C.I. assembled a coalition of shareholders powerful enough to block the Germans' pursuit of the London Stock Exchange and lead chief exec Werner Seifert to resign.

The London hedge fund has also been credited with catalyzing ABN Amro's sale, after the fund sent the Dutch bank a letter in February calling for breakup or sale.

T.C.I. is a "venture philanthropy" fund, meaning it gives a portion of its profits to charity. It is just four years old and nine investment professionals strong, but with $10 billion under management, the hedgie with a heart is already one of Europe's larger funds.

Yet T.C.I. says CSX has ignored repeated attempts to engage on improving its lackluster performance and living up to investor expectations.

So now the silent killer has its sites trained on Ward, who has served as C.E.O. since 2002 and chairman since 2003 and over the past two years sucked up $36 million in pay.

This means he's led the rail industry in compensation, despite CSX lagging its peers in performance and failing to meet what T.S.I. considers as key performance metrics.

But it wasn't only the chief exec's competence that T.C.I.'s letter called into question. The fund carried on cleaning CSX's clock with claims that management:

• "Does not fully understand the economics of the business;
• "Is cavalier about potential risks;
• "Is undisciplined about spending;
• "Is unrealistic about future prospects;
• "Is complacent about operational underperformance; and
• "Is unnecessarily adversarial towards labor, shippers and shareholders."

The moral of the story: Don't let the name of the fund fool you—these guys definitely have their adult teeth.

by Liz Gunnison