Canadian Pacific dismisses reports on CEO change

Tue Jan 3, 2012 6:09pm EST
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TORONTO (Reuters) - William Ackman's behind-the-scenes talks with Canadian Pacific Railway Ltd turned public on Tuesday, as the activist investor and the company chairman exchanged jabs on Ackman's plan to replace the chief executive.

Ackman, whose Pershing Square Capital Management owns a 14.2 percent stake in CP, wants it to replace Chief Executive Fred Green with Hunter Harrison, who led Canadian National Railway, the country's largest railroad, before retiring in 2009.

CP Chairman John Cleghorn wrote on Tuesday that no member of the board had expressed enthusiasm for the proposal, as media reports stated last week.

Later in the day, Ackman struck back in a letter to Cleghorn obtained by Reuters.

"Contrary to your statement in the letter that no one at Canadian Pacific expressed an interest in meeting with Mr. Harrison ... you called me at home and asked that I arrange a meeting with him," he wrote.

Ackman went on to outline his plan to turn around Canada's No. 2 railway.

"Our plan is to transform Canadian Pacific from the worst performing railroad in North America into one of the best by effectuating cultural and operational transformation of Canadian Pacific which begins with a new leader," wrote Ackman.

For his part, Cleghorn wrote that the board is willing to continue discussions with Ackman, and that Ackman had been invited to join the board of CP, which operates a 14,000-mile network across Canada and into the United States.

Ackman said he had refused to join the board because CP would have made him sign a standstill agreement, requiring him to vote all of Pershing's shares in favor of the board's nominees and recommendations.   Continued...