CP Rail CEO resigns in victory for dissident Ackman

Thu May 17, 2012 3:22pm EDT
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By Nicole Mordant and Scott Haggett

CALGARY (Reuters) - Canadian Pacific Railway Ltd conceded defeat in a bitter proxy battle with New York activist shareholder William Ackman on Thursday, as top level resignations cleared the way for a management overhaul at the country's second-biggest railroad.

Chief Executive Fred Green and Chairman John Cleghorn both quit after a boardroom coup, a rarity in Canada's conservative corporate culture.

Victory burnishes Ackman's reputation as a tenacious activist investor and paves the way for Hunter Harrison, the hard-hitting former chief executive of rival Canadian National, to take the controls at CP.

"We came in peace, and I'm delighted to say that we are at peace once again," said Ackman to a crowd of about 300 people attending CP's very brief annual meeting in Calgary.

In a now-famous email to CP called "War and Peace," Ackman in January repeated a request for board seats and a new CEO. The message, which heralded a frosty turn in relations, said: "Let's avoid having a border skirmish turn into a nuclear winter. Life is too short."

In an early morning announcement that represented a big climb down from its previous position, CP said Cleghorn, Green and four other directors would not stand for re-election, opening the door to all seven nominees from Ackman's Pershing Square Capital Management to join its 16-member board.

The railroad had backed 55-year-old Green as CEO, arguing that customers would not like to see a change in management.

"It would be naive for Canadian boards not to look at this very carefully," said Paul Taylor, Chief Investment Officer of Fundamental Equities at BMO Asset Management Inc and CP shareholder.   Continued...

Fred Green, president and CEO of Canadian Pacific Railway, prepares for the company's annual general meeting in Calgary, Alberta, May 12, 2011. REUTERS/Todd Korol