Investor to launch proxy battle versus Canadian Pacific
TORONTO (Reuters) - William Ackman's Pershing Square Capital Management is putting together a slate of proposed directors to replace the board of Canadian Pacific Railway Ltd, the activist investor said on Monday.
Ackman's plan to launch a proxy battle to replace CP's board was revealed hours after CP's chairman publicly threw the firm's full weight behind Chief Executive Fred Green and his plan to improve its operating performance.
Ackman has tapped Hunter Harrison, a former Canadian National Railway chief executive as his pick to replace Green, saying Harrison is "excited" about the possibility of running the railway.
Pershing Square built up what is now a 14.2 percent stake in CP last year and is looking at ways to turn around Canada's second biggest railway, which has underperformed its North American peers on various operating metrics.
CP's goal and their plan "is to be the worst-performing railroad in North America," Ackman said, pointing to CP's intention to reduce its operating ratio, an important measure of a railway's productivity.
"A low 70s operating ratio will make it the worst performing railroad in North America. We do not think that is a particularly ambitious goal, nor do we think senior management is capable of achieving their own target," he told Reuters in an interview.
In the third quarter, CP's operating ratio was at 75.8 percent, a level the company is confident it can reduce to the low 70s in the next three years.
The lower the ratio, which measures operating costs as a percentage of revenue, the more efficient the railway.
By comparison, the larger CN reported an operating ratio of 59.3 percent. Continued...