CP Rail dissident gaining support, poll shows

Thu Apr 26, 2012 3:00pm EDT
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TORONTO (Reuters) - A poll of Canadian Pacific Railway Ltd (CP.TO: Quote) institutional shareholders, representing about 45 percent of the shares in Canada's second-largest railroad, found that 75 percent favor a dissident shareholder's slate of directors.

The survey, released on Thursday by consulting firm Brendan Wood International, shows a slight increase from 73 percent support for Pershing Square Capital Management' s slate in a March 16 poll and 72 percent support on Feb 23.

Pershing Square, a hedge fund that is CP's largest shareholder with a 14.1 percent stake, has nominated a slate of seven new directors and wants to replace CP Chief Executive Fred Green with former Canadian National Railway Co (CNR.TO: Quote) CEO Hunter Harrison.

The poll also found growing support from shareholders who want a change, but not Harrison. That increased to 19 percent in the most recent poll, which is up to April 17, from 18 percent in March 16 and 4 percent in February.

Pershing has promised to improve CP's worst-in-class operating ratio, which measures a railroad's efficiency, to 65 percent by 2015.

CP has promised to reach a 70-72 percent ratio in 2014 and 68.5-70.5 percent in 2016. The lower the number the better.

In its first-quarter results, CP said its operating ratio had improved to 80.1 percent from 90.6 percent in the winter weather ravaged period the year before.

The survey also said polled shareholders supporting CP's board have declined to 6 percent from 9 percent in March and 14 percent in February.

The poll is not commissioned, but represents data from nearly 2,000 companies that Brendan Wood surveys on shareholder confidence, said Brendan Wood Canada partner Stewart Borden.   Continued...