CP Rail still seeks turnaround as proxy battle ends
By Allison Martell and Nicole Mordant
TORONTO/VANCOUVER (Reuters) - Storied Canadian Pacific Railway Ltd faces tough challenges as a grueling proxy battle nears its end, and a likely new boss must meet investors' high expectations as well as keeping staff and employees happy after a four-month battle for control.
With sweeping board changes all but inevitable, current chief executive, Fred Green, appears to be headed for an embarrassing defeat at the hands of William Ackman and his Pershing Square Capital Management, CP's biggest shareholder with a 14.1 percent stake.
Ackman, who has nominated seven candidates to the CP board, wants to replace Green with Hunter Harrison, the tough former CEO at rival Canadian National Railway Co.
Ackman says he is ready to conduct a search for the best candidate. But he has built his turnaround strategy for CP around Harrison, and industry watchers are hard-pressed to put forward other names.
"The dissident shareholders have created such an expectation that they are going to have to deliver something in fairly quick order," said Ian MacKay, a transportation lawyer based in Ottawa.
With many votes already in for Thursday's shareholder meeting, it is likely that Pershing's slate of nominees will supplant just under half of the current directors. Their first priority will be to turf Green, a lifetime employee of CP and its CEO since 2006.
At stake is the future of a Canadian institution. CP, built in the 1880s to link the young country from east to west, moved some 2.6 million carloads of freight in 2011, employs more than 15,000 people and has a market capitalization of $12.5 billion.