Calgary — Canadian Pacific (CP) Railway’s CEO, Fred Green, was replaced on May 17 in a hostile takeover led by activist investor William Ackman of Pershing Square Capital Management LP, which had become CP’s largest investor. As a result of Ackman’s victory in the proxy fight, six other members of CP’s board of directors will not stand for re-election, including the chairman of the board, John Cleghorn, allowing a slate of seven new directors proposed by Ackman to join the railroad’s 16-member board. Following the proxy fight, the new board named Stephen Tobias, the former operating chief of Norfolk Southern Corp., as interim CEO. First on the agenda for CP’s new management will be selecting a permanent CEO, and a top contender is reportedly Hunter Harrison, the 67-year-old former CEO of rival Canadian National Railway Co (CNR). Harrison has said he can improve CP’s returns and cut operating expenses to 65 percent of sales by 2015. CP has a low operating ratio and has lagged behind CNR and its peers on profitability measures since Green became CEO in 2006. Another concern is the looming strike by the Teamsters Canada Rail Conference, which represents 5,000 conductors, trainmen, yardmen, locomotive engineers, and rail traffic controllers. CP has been in contract negotiations with the union since early October, and a strike is planned if terms are not reached by May 22.
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