Mark Szakonyi, Associate Editor | Mar 16, 2012 11:00PM EDT
An activist investor’s campaign to drive profitability at Canadian Pacific Railroads is gaining steam, according to a recent report showing 91 percent of polled shareholders want a change in railroad management.
The poll of shareholders who control about one-third of the railroad’s shares found 73 percent of participants backed Pershing Square Capital Management, according to a Brendan Wood International report.
William Ackman, Pershing Square principal, is waging a proxy war with CP management by pushing a slate of six directors and trying to replace current CEO Fred Green with E. Hunter Harrison, former CEO of rival Canadian National Railway.
“We feel that the next round of issues will include shareholder perception of the loyalty of both groups, opinion of Mr. Harrison, executive compensation, who’s got real skin in the game and a host of newer concerns which attach to CP stock in the $70s as opposed to the $40s,” said Stewart Borden, managing director of Brendan Wood Canada.
He said CP management has become more active in courting shareholders, noting CP Chairman John Cleghorn and his team must “convince shareholders they are not fighting the tape.” “I feel for Mr. Cleghorn, his board and Mr. Green in particular. They are exceptional professionals, simply the first to experience the end of a culture of privacy, if not invisibility of boards. What we call the ‘age of full disclosure’ makes the longstanding traditions of board aloofness totally untenable,” Chairman Brendan Wood said.
Pershing Square, which owns 14 percent of the railroad, wants to drive CP’s operating ratio to 65 percent by 2015, while CP management says a ratio of 70 to 72 percent within the same period is more realistic.
The proxy vote is slated for May 17 at the annual shareholder meeting.
Contact Mark Szakonyi at mszakonyi@joc.com. Follow him on Twitter @mszakonyi_joc.
