Bill Ackman at a poker table - Date/Photographer unknown.

11 January 2012

Ackman Won't Try to Oust Entire CP Board

New York New York USA - Activist investor William Ackman plans to propose a minority slate of alternate directors as he seeks to install a new boss to engineer a turnaround at Canadian Pacific Railway Ltd, the country's second biggest railway.
 
The Globe and Mail newspaper on Wednesday quoted Ackman as saying he would propose no more than two new directors to represent Ackman's Pershing Square Capital Management on the 15-member board, plus two to three directors who will be independent of both the hedge fund and the railway.
 
CP declined to comment on the report, which indicates that Ackman believes he can win support from other board members to push through change.
 
"We are confident we can work with the remaining directors once we have the shareholders' proxy. We will also benefit from the continuity and knowledge transfer from the legacy directors," Ackman told the newspaper.
 
Ackman has built up a 14.2 percent stake in CP and is looking at ways to turn around Canada's second-biggest railway. He said he wants directors to campaign for shareholder support to oust Chief Executive Fred Green.
 
By seeking to replace a minority of directors, Ackman may want to avoid a change of control provision that would be triggered by a majority change in the board.
 
Green would be entitled to payments estimated at $27.4 million should he be terminated without cause after a change of control, according to the company's 2011 proxy circular.
 
The battle between the New York activist and hedge fund manager and CP heated up this week when CP chairman John Cleghorn threw the company's full weight behind Green and his plan to improve its operating performance.
 
Ackman has tapped Hunter Harrison, a former Canadian National Railway chief executive as his pick to replace Green, saying Harrison is "excited" about the possibility of running the railway.
 
"We don't intend to replace a majority of directors, but we want shareholders to give our nominees a mandate to replace Fred Green," Ackman told the newspaper.
 
The newspaper said legal experts have suggested CP will likely put the alternate slate to a shareholder vote at its annual meeting this spring.
 
Andrea Hopkins and Allison Martell.