Canadian Pacific CEO says Ackman has no plan
TORONTO (Reuters) - Canadian Pacific Railway (CP.TO: Quote) Chief Executive Fred Green struck back against activist investor William Ackman on Wednesday, insisting that Ackman has no concrete plan to make the rail operator more efficient.
Ackman's Pershing Square Capital Management wants to replace Green with former Canadian National Railway (CNR.TO: Quote) CEO Hunter Harrison. Pershing hosted a town hall-style meeting with investors and media in Toronto on Monday to build support for his proposals.
"Pershing Square continues to offer no plan or clear timetable for the improvement of CP's operations," Green wrote in a letter to employees posted on the company's website.
CP, Canada's No. 2 railway, has set slightly more ambitious performance targets in the months since Pershing launched its campaign, and now aims to bring its operating ratio down to 70 to 72 percent for 2014.
A lower ratio, which measures the percentage of revenue needed to run the railway, signals greater efficiency. At 81.3 percent, CP's operating ratio is the weakest of North America's six big railroads.
CP's board and management has been travelling to meet with shareholders since last week, and Green said investors had expressed support for the company's plan.
The letter quoted executives from two of CP's customers, both transport and logistics companies: Fastfrate chief executive Ron Tepper, who defended CP at the Pershing meeting, and Doug Tozer, chief executive of TSX Venture-listed Wheels Group Inc WGI.V.
"CP continuously demonstrates unwavering commitment to service, communication, and innovation. Fred and his team are trusted partners of ours," said Tozer.
Green also addressed Ackman's criticism of its 2008 acquisition of U.S. Class II railroad DM&E. Pershing called the deal a mistake, made at a high valuation with "irresponsible financing." Continued...