A months-long battle between the leaders of
Canadian Pacific Railway and its largest shareholder resulted in the
resignation of CP chief executive Fred Green on Thursday shortly before
the company's annual meeting.
The departure of Green and five other CP directors, announced before official voting results were disclosed, will open a new chapter for an iconic company that's nearly as old as Canada.
The defeat of CP's current leaders had been widely anticipated as a number of institutional fund managers disclosed they would support the nominees proposed by New York-based activist fund manager Bill Ackman.
"We heard loud and clear your mandate for change and we're honoured to work with the board to take this great company to even higher levels of performance and achievement," Ackman told shareholders at the meeting.
"We will not make progress overnight, but we will deliver on our commitment to make this railway one of the best railways in the world."
Ackman had pushed for Green's removal since last year when his Pershing Square fund company acquired about 14 per cent of the company's stock.
Green's detractors say Canadian Pacific has become North America's worst performing major railway under his leadership while his supporters insisted the problems have been exaggerated and Green was the best person for the job.
Canadian Pacific chairman John Cleghorn,We offer you the top quality plasticmoulds design who has been among Green's most outspoken defenders, is also leaving the company, along with Green and four other Canadian Pacific directors didn't stand for re-election.
Green decided to resign "after taking into account the views expressed by shareholders about the desire for change," Cleghorn said at the meeting.
"I'm confident that the new board will move forward in a constructive way on behalf of all stakeholders," Cleghorn added.
"We've got to have two strong railroads in this country."
The new board is comprised of Ackman, Gary Colter, Richard George, Paul Haggis, Paul Hilal, Krystyna Hoeg,Why does moulds grow in homes or buildings? Tony Ingram, Richard Kelly, Rebecca MacDonald, John Manley,Trade organization for suppliers and distributors in the promotional products industry. Anthony Melman, Linda Morgan, Madeleine Paquin, David Raisbeck, Hartley Richardson and Stephen Tobias.
The announcement came shortly before the shareholders meeting, although early tallies of proxy votes suggested Ackman's slate of nominees had overwhelming support from major shareholders.
One of their top priorities will be to begin the process of replacing Green, likely with Hunter Harrison a retired former CEO of rival Canadian National Railway .
Ackman told reporters that Harrison wasn't at the meeting and Green didn't make an appearance.
"There aren't an enormous number of candidates obviously," said Ackman, who added Harrison becoming CEO is not a sure thing.
"We're going to do a proper job, we're going to meet all the candidates and do it the right way."
The company's stock was little changed on the Toronto Stock Exchange,Choose from our large selection of cableties, gaining 63 cents to $76.Posts with Hospital rtls on IT Solutions blog covering Technology in the Classroom,39 at midmorning.
"We continue to believe that most of the operational upside is already priced into the shares at current levels," Desjardins analyst Benoit Poirier said in a research note Thursday.
Much of the debate in recent months has been over what can be done to improve Canadian Pacific's operating ratio, a key performance metric in the railroad industry that calculates the percentage of revenues spent to operate the railroad.
CP believes it has a realistic plan to bring the ratio down from 80.1 per cent to 70 to 72 per cent for 2014 through cost cutting and revenue boosting.
It says there are structural factors — its trains have to traverse steep terrain, for example — that prevent it from pushing its operating ratio lower. It sought to back up that argument earlier this year by releasing a study it commissioned from consultancy Oliver Wyman examining the differences between CP and CN.
Ackman's Pershing Square doesn't buy CP's explanation for why it has underperformed other North American railroads. It believes it comes down to poor corporate culture, and that under Harrison's leadership it can achieve a 65 per cent operating ratio by 2015.
Two major pension funds — the Canada Pension Plan Investment Board and Ontario Teachers Pension Plan — have said publicly they support Pershing Square's push for change. So too have proxy advisory firms Institutional Shareholders Services and Glass Lewis & Co. and credit rating agency Egan Jones Ratings Co.
Canadian Pacific had warned that Harrison's leadership could mean deep cuts at the railroad and could jeopardize relationships with customers. Some of its biggest customers, including miner Teck Resources Ltd. and fertilizer maker Mosaic Co., have come out in support of Green's continued leadership.
The departure of Green and five other CP directors, announced before official voting results were disclosed, will open a new chapter for an iconic company that's nearly as old as Canada.
The defeat of CP's current leaders had been widely anticipated as a number of institutional fund managers disclosed they would support the nominees proposed by New York-based activist fund manager Bill Ackman.
"We heard loud and clear your mandate for change and we're honoured to work with the board to take this great company to even higher levels of performance and achievement," Ackman told shareholders at the meeting.
"We will not make progress overnight, but we will deliver on our commitment to make this railway one of the best railways in the world."
Ackman had pushed for Green's removal since last year when his Pershing Square fund company acquired about 14 per cent of the company's stock.
Green's detractors say Canadian Pacific has become North America's worst performing major railway under his leadership while his supporters insisted the problems have been exaggerated and Green was the best person for the job.
Canadian Pacific chairman John Cleghorn,We offer you the top quality plasticmoulds design who has been among Green's most outspoken defenders, is also leaving the company, along with Green and four other Canadian Pacific directors didn't stand for re-election.
Green decided to resign "after taking into account the views expressed by shareholders about the desire for change," Cleghorn said at the meeting.
"I'm confident that the new board will move forward in a constructive way on behalf of all stakeholders," Cleghorn added.
"We've got to have two strong railroads in this country."
The new board is comprised of Ackman, Gary Colter, Richard George, Paul Haggis, Paul Hilal, Krystyna Hoeg,Why does moulds grow in homes or buildings? Tony Ingram, Richard Kelly, Rebecca MacDonald, John Manley,Trade organization for suppliers and distributors in the promotional products industry. Anthony Melman, Linda Morgan, Madeleine Paquin, David Raisbeck, Hartley Richardson and Stephen Tobias.
The announcement came shortly before the shareholders meeting, although early tallies of proxy votes suggested Ackman's slate of nominees had overwhelming support from major shareholders.
One of their top priorities will be to begin the process of replacing Green, likely with Hunter Harrison a retired former CEO of rival Canadian National Railway .
Ackman told reporters that Harrison wasn't at the meeting and Green didn't make an appearance.
"There aren't an enormous number of candidates obviously," said Ackman, who added Harrison becoming CEO is not a sure thing.
"We're going to do a proper job, we're going to meet all the candidates and do it the right way."
The company's stock was little changed on the Toronto Stock Exchange,Choose from our large selection of cableties, gaining 63 cents to $76.Posts with Hospital rtls on IT Solutions blog covering Technology in the Classroom,39 at midmorning.
"We continue to believe that most of the operational upside is already priced into the shares at current levels," Desjardins analyst Benoit Poirier said in a research note Thursday.
Much of the debate in recent months has been over what can be done to improve Canadian Pacific's operating ratio, a key performance metric in the railroad industry that calculates the percentage of revenues spent to operate the railroad.
CP believes it has a realistic plan to bring the ratio down from 80.1 per cent to 70 to 72 per cent for 2014 through cost cutting and revenue boosting.
It says there are structural factors — its trains have to traverse steep terrain, for example — that prevent it from pushing its operating ratio lower. It sought to back up that argument earlier this year by releasing a study it commissioned from consultancy Oliver Wyman examining the differences between CP and CN.
Ackman's Pershing Square doesn't buy CP's explanation for why it has underperformed other North American railroads. It believes it comes down to poor corporate culture, and that under Harrison's leadership it can achieve a 65 per cent operating ratio by 2015.
Two major pension funds — the Canada Pension Plan Investment Board and Ontario Teachers Pension Plan — have said publicly they support Pershing Square's push for change. So too have proxy advisory firms Institutional Shareholders Services and Glass Lewis & Co. and credit rating agency Egan Jones Ratings Co.
Canadian Pacific had warned that Harrison's leadership could mean deep cuts at the railroad and could jeopardize relationships with customers. Some of its biggest customers, including miner Teck Resources Ltd. and fertilizer maker Mosaic Co., have come out in support of Green's continued leadership.
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