Ackman's CP Rail slate endorsed by advisory firm
By Euan Rocha and Svea Herbst-Bayliss
TORONTO/BOSTON (Reuters) - Hedge fund manager William Ackman just got more ammunition in his battle to shake up Canada's No. 2 railroad.
Institutional Shareholder Services Inc., a leading advisory firm on proxy contests, on Thursday endorsed the activist investor's entire slate of seven nominees to sit on Canadian Pacific Railway Ltd's (CP.TO: Quote) board.
It also recommended to withhold votes from the railroad's chief executive and its board chairman, saying they failed to provide effective leadership and accountability to shareholders.
The recommendation is noteworthy because proxy advisers rarely support an entire slate and because it gives Ackman and his New York-based Pershing Square Capital Management new power to oust the railroad's current chief executive.
Ackman has long argued that Canadian Pacific's CEO, Fred Green, should be replaced by Hunter Harrison, who used to run the railroad's more successful rival, Canadian National Railway (CNR.TO: Quote).
"There could not have been a stronger endorsement of Pershing Square," said Ken Squire, founder of proxy research firm 13D Monitor. "I cannot remember another time where a dissident group nominated seven directors at a large cap company and got all seven directors recommended by ISS," Squire added.
ISS said Ackman and Pershing Square, who own a 14.1 percent stake in CP, showed that the board has let the company lag its peers and fail to live up to its potential. "It seems clear that change on the board is needed," ISS wrote in the report.
A recommendation from Glass Lewis, another advisory firm, is expected shortly. Continued...