Ex-Canadian National CEO Hunter Harrison - Date unknown Christinne Muschi.

18 January 2012

"I don't know why they don't like me":  Harrison

Wellington Florida USA - Hunter Harrison says he would be willing to present a more detailed proposal to Canadian Pacific Railway Ltd.'s board for improving the railway's operations, he just needs to be asked.
 
"You can't get a [detailed] proposal if you don't ask," he said in a telephone interview Wednesday from his home in Wellington, Florida.
 
Mr. Harrison, who retired as chief executive from CP's larger rival, Canadian National Railway Co. in 2009, has been put forth as a potential successor to CP's current chief executive, Fred Green, by activist shareholder William Ackman, whose New York-based hedge fund, Pershing Square Capital Management, has been pushing for a change at the top of the company.
 
CP's board has refused to meet with Mr. Harrison to hear his ideas, despite CP under performing its peers in recent years.
 
In a letter to shareholders last week, John Cleghorn, CP chairman, said the board decided unanimously to support Mr. Green and his multi-year plan for improving the operating performance of the railway setting the stage for a proxy battle in May.
 
Mr. Cleghorn said the board based its decision on the lack of a "credible, detailed" plan from Mr. Harrison or Pershing Square other than to propose a management change and set a goal of reducing CP's operating ratio, an important gauge of the its profitability, measuring operating costs as a percentage of revenue, to 65 percent from 82.4 percent at the end of the third quarter.
 
The lower the number, the better. "This pace of improvement, from this starting point, has never been achieved by any railway management team," Mr. Cleghorn wrote in the letter.
 
But Mr. Harrison said 65 percent "wasn't just jerked out of the air" and is based on his experience of achieving similar results at CN and Illinois Central before that through his strategy of "precision railroading." While he admitted he has no detailed knowledge of CP outside of public records, he said he would be willing to put together a more detailed proposal for the board, if asked.
 
"What I would present, once again as an outsider looking in, is the model that I've developed that has had a pretty good track record. I would say until somebody proves otherwise [that] there's a better model, here's philosophically what I think it takes to run a good railroad," he said.
 
Mr. Harrison admitted he was a little perplexed why no one from CP has taken the time to meet with him.
 
"I'm amazed, but I've talked to no one at CP," he said. "I don't know why they don't like me, number one. But I thought they would have said, look, if somebody is trying to push Harrison, maybe we ought to sit down and talk to him and learn a little bit about him." If it's not a match, move on, he said.
 
Mr. Harrison, 67, said he is in good health and would be willing to relocate to Calgary if he were to be offered the position.
 
He noted that while CP is the only position he is currently considering, other railroads have approached him to gauge his interest in returning to work.
 
"When other opportunities had come up, or even been discussed, and it got to the point where it was asked, Hunter, would you consider it? Two of the key people in my life said you ought to be working, and that is my wife and my doctor," he said.
 
While his non-compete agreement with CN expired at the end of 2011, he would still be in a non-solicit position with CN executives until the end of 2012, and there are other penalties he might incur on his pension and retirement benefits if he does either by the end of 2014. But he said that wouldn't prevent him from taking the position of CEO, and the loss of benefits would be something that might need to be addressed in contract talks. But he said neither arrangement would prevent him from performing his duties as CEO, if he were hired, or from working with CP's management team.
 
"All I would say that I can do at this point is stand on my track record," he said.
 
Scott Deveau.