Ackman Plans Proxy Fight to Name New Canadian Pacific CEO
Canadian Pacific Railway Ltd.’s largest shareholder, William Ackman, said he will wage a proxy fight to oust Chief Executive Officer Fred Green after the board rebuffed a call to bring in a new CEO.
“We intend to replace directors of CP with those who are supportive of a change in leadership,” sacoche louis vuitton Ackman, founder of Pershing Square Capital Management LP, said today in a telephone interview. Former Canadian National Railway Co. CEO Hunter Harrison would be installed “once we are successful,” he said.
The shareholder was responding to Canadian Pacific’s rejection of his plan to hire Harrison, 67, to improve operations. Ackman, who has a 14 percent stake in Canadian Pacific, invests in companies he deems undervalued and seeks changes to improve shareholder returns.
Canadian Pacific’s board “carefully considered” and unanimously turned down Ackman’s proposal, Board Chairman John Cleghorn said today in a letter to investors before the Ackman interview. Ed Greenberg, a railroad spokesman, declined to comment further.
Cleghorn said switching CEOs now would jeopardize a multiyear plan to strengthen the Calgary-based railroad’s performance, and neither Pershing Square nor Harrison has a detailed strategy to attain Ackman’s goal of improving the operating ratio, a measure of operating costs against sales.
‘Team Player’
“We are fully, we are unanimously behind our CEO Fred Green and his management team,” Cleghorn said in a telephone interview. Green, who became CEO in May 2006, has “been in the company for a long time. He grew up in the company, and he’s a real team player. He’s been a great recruiter.”
The shareholder letter sharpened the carrier’s position in its tug of war with Ackman. Last week, the chairman wrote Ackman to dispute news media accounts that Canadian Pacific’s board was interested in Harrison and described the railroad’s management as “strong” without mentioning Green, 55, by name.
Ackman, 45, responded by saying that after he recommended the CEO switch on Nov. 2, Canadian Pacific’s board sought a meeting with Harrison. Profit at Canadian National, the country’s largest railroad, tripled during Harrison’s tenure running the company, from 2003 through 2009.
Cleghorn said he called Ackman’s office on Friday, Nov. 4, to request a copy of Pershing’s presentation to Canadian Pacific, so that a member of the senior management team could review it.
Canadian Pacific climbed 0.8 percent to $67.74 at the close in New York trading. The shares have risen 9.4 percent since Oct. 27, the day before Ackman disclosed his initial stake.
Structural Differences
Ackman has advocated cutting Canadian Pacific’s operating ratio to 65 by 2015 from 78 in 2010. No railroad has ever posted that rapid an improvement from a starting ratio of 78, and the New York-based hedge fund failed “to take into account the structural differences that exist between CP and its peers,” Cleghorn said.
Canadian Pacific’s own plan to lower its operating ratio to the low 70s in the next three years is “a solid plan and the management is committed to it, and we think it would be highly disruptive to change all that, to just change at the top for the sake of it, given our unique railroad and circumstances,” Cleghorn said in a telephone interview.
Canadian Pacific shareholders, customers and employees have made comments supporting the company’s current strategy and its management, Cleghorn said.
Processing your request, Please wait....
