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Winnipeg Free Press - PRINT EDITION
Pension fund gives backing to shakeup at CPR
ACTIVIST investor William Ackman has found a new ally in the Ontario Teachers Pension Plan to elect his nominees to the board of directors of Canadian Pacific Railway (TSX:CP) and replace the railway's current CEO.
Teachers said Monday it's backing the seven board nominees of Ackman's Pershing Square Capital Management and the move to replace CP chief executive Fred Green with Hunter Harrison, former head of rival Canadian National Railway (TSX:CNR).
Ackman said support from one of Canada's largest pension-fund managers sends a strong signal for change.
"A loud and clear message from shareholders will enable the reconstituted board to put the past behind it, have a fresh start, and work most efficiently and effectively toward our shared goal."
Canadian Pacific urged the pension fund to reconsider its decision and support the railway's board nominees.
Teachers said CP isn't meeting expectations.
"We note CP's performance has been below its peers during Mr. Green's tenure as CEO and are not convinced that the most recent results provide irrefutable evidence that CP is performing better than its peers," said Teachers, which became a shareholder Dec. 31.
Ackman issued another letter to Canadian Pacific shareholders on Monday calling for the election of his nominees to the railway's board at its annual meeting on May 17.
Ackman, whose fund is the railway's largest shareholder with 14.2 per cent of its stock, has been manoeuvring to get Harrison as the CEO of CP Rail.
The crux of CP's plan, as well as Pershing's criticism, revolves around how the railway will improve its operating ratio -- the percentage of revenue required to pay for operations -- to boost profitability.
CP's target is to bring the ratio down from 80.1 per cent to 70 to 72 per cent for 2014, but Pershing says it can do better and achieve 65 per cent by 2015.
-- The Canadian Press
Republished from the Winnipeg Free Press print edition May 8, 2012 B4
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