Pershing polishes CP Rail slate with railroader

Mon Apr 2, 2012 4:08pm EDT
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By Nicole Mordant and Allison Martell

(Reuters) - Pershing Square Capital Management on Monday named a railroad veteran to its slate of nominees for Canadian Pacific Railway's board, in what analysts said was a mostly cosmetic response to criticism that none of its candidates had hands-on industry experience.

Pershing, a U.S.-based hedge fund that is trying to oust CP's chief executive, added Stephen Tobias, a former chief operating officer and vice chairman of Norfolk Southern Corp, to its slate.

Tobias, 67, who worked for 40 years at Norfolk Southern, is the first and only of the seven nominees announced by Pershing with railroading experience. The fund, run by activist investor, William Ackman had been criticized for this omission.

"This was just to dress up Pershing Square's nominees right now," said Dahlman Rose & Co analyst Jason Seidl.

"It's going to boil down to one thing. Who are the longtime shareholders going to vote for?" Seidl said.

CP's board has thrown its weight behind its CEO Fred Green. Pershing, CP's biggest shareholder, wants to replace with Hunter Harrison, the former CEO of Canadian National Railway Co.

Pershing argues that CP's performance under Green has been sluggish and will be turned around under Harrison, who is credited for transforming CN Rail into North America's most efficient railroad .

Shareholders will elect a new board at CP's annual meeting on May 17. Pershing owns a 14.2 percent stake in CP, Canada's second biggest railroad after CN Rail.   Continued...