Mark Szakonyi, Associate Editor | May 02, 2012 12:37PM EDT
Activist investor William Ackman said shareholders should determine Canadian Pacific Railway management amid reports that some railroad directors are floating a compromise.
The two forces — CP management and Pershing Square Capital Management — have been waging a war for months not just over directors, but who should lead the railroad as CEO. CP has signaled it’s willing to look for a new CEO other than the current chief Fred Green, but has rejected Ackman’s choice of E. Hunter Harrison, the former Canadian National Railway chief, according to the Globe & Mail.
Ackman told the Canadian newspaper that he is “absolutely willing” to look beyond Harrison to fill the CEO position.
CP spokesman Ed Greenberg said the railroad is willing “to have discussions toward a constructive resolution that would be in the best interests of CP and all its shareholders," according to G&M. He said most investors would like a compromise before the proxy vote at the annual shareholder meeting on May 17.
Ackman said Harrison, who helped make CN the most profitable North American railroad, and new directors are needed to drive CP’s operating ratio to 65 percent by 2015. The smaller of the two large Canadian railroads is the least profitable of the seven North American Class I railroads.
CP management argues replacing Green would threaten the multiyear plan, and the Pershing Square operating ratio goal is unrealistic. The battle between CP management and Pershing Square has heated up in recent months, with both sides accusing the other of providing shareholders with misleading information.
Contact Mark Szakonyi at mszakonyi@joc.com. Follow him on Twitter @szakonyi_joc.
