February 10, 2012 / 9:03 PM / in 6 years

Canadian National cancels former CEO's pension

TORONTO (Reuters) - Canadian National Railway (CNR.TO) said on Friday that its board had voted unanimously to cancel former chief executive Hunter Harrison’s pension and benefits in response to his campaign to take the top job at rival Canadian Pacific Railway (CP.TO).

Activist investor William Ackman’s Pershing Square Capital Management is waging a proxy battle to install Harrison at CP over the objections of its current board and management.

CN suspended the payments in January, noting that a non-compete provision that it says expires only at the end of 2014 is one condition of Harrison’s pension. <ID:L2E8CNF74>

“CN believes Mr. Harrison breached his non-compete and other employment obligations to the company,” said the statement, citing among other things Harrison’s participation in a Pershing town hall meeting for media and investors on Monday.

CN said it had amended court proceedings filed in January asking for a declaration confirming its right to both cancel the payments and “recover previously paid pension amounts.”

CP would likely cover losses if Harrison became chief executive, and Pershing promised to cover payments if its campaign is unsuccessful.

Reporting By Allison Martell; Additional reporting by Susan Taylor; Editing by Janet Guttsman

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