Ex-Canadian National CEO Hunter Harrison - Date unknown Shaun Best.

24 January 2012

Proposed Head of Canadian Pacific Hunter Harrison Pledges Dramatic Turnaround at Railway

Wellington Florida USA - Canadian Pacific can become a leading North American railway with the right leadership, the man being touted as its new leader says.
 
"With the right board and executive leadership, I believe Canadian Pacific can achieve just as dramatic a turnaround and enjoy its rightful position as a leader in the North American rail industry," retired Canadian National CEO Hunter Harrison said in statement Tuesday, comparing CP to the company he made the most efficient on the continent during his tenure.
 
"I would be proud to help lead CP to that victory. Should the board determine that I am the best candidate to lead the company, I would be honoured to serve."
 
Harrison is being championed by CP's largest shareholder to replace the Calgary-based railway's current CEO Fred Green.
 
CP's board is backing Green.
 
Tuesday, Bill Ackman, whose Pershing Square owns 14.2 percent of the company, released the names of five directors he wants to see on the 15-member board, which he believes will be enough to install Harrison as CEO.
 
The directors include Ackman, his Pershing Square partner Paul Hilal, Gary Colter president of Toronto corporate restructuring and strategy management consulting company CRS Inc., and a board member of CIBC Anthony Melman partner at Nevele Partners a Toronto strategic and financial advisory services company, and Rebecca MacDonald, executive chair of Toronto's Just Energy Group.
 
Ackman said in a statement the three Canadian nominees, who will be considered at CP's annual general meeting on 17 May 2012, are independent of Pershing Square and have no personal or business relationship with him or his company.
 
"We believe Canadian Pacific has a unique opportunity to benefit from the leadership of one of Canada's great railroad executives, Hunter Harrison," he stated. "As transportation experts and analysts have said in recent days, there is no executive who is as qualified to lead a turnaround at CP."
 
Ackman contends that Harrison can reduce CP's operating ratio, a key measure of a railway's efficiency, where the lower the number, the better, more quickly than the plan Green has in place.
 
Green and the CP board disagree, pointing out last week it took Harrison longer to reduce CN's operating ratio than is being promised with CP, which has different operating constraints.
 
Harrison, who retired in 2009, is credited with a turnaround at CN that saw a tripling of its net income during his seven years as CEO.
 
CN, concerned about confidential information Harrison had access to during that time, has suspended pension and other benefits worth $40 million, and Monday filed a lawsuit in Illinois.
 
"CN has a reasonable basis to believe... that Harrison was in breach of his non-disclosure and non-compete undertakings sometime in 2011," CN's complaint to the U.S. District Court stated. "If Harrison were to accept a position at CP, he would be in unquestionable breach of his non-compete undertakings, and his disclosure of CN confidential information in breach of his non-disclosure undertakings would be inevitable."
 
Gregory Joseph, Harrison's lawyer, calls the lawsuit frivolous.
 
"Hunter Harrison had a two-year non-compete with CN. He honoured it scrupulously. It expired. That is the end of this lawsuit," Joseph said.
 
Ackman is confident there has been no breach of Harrison's retirement agreement, having had lawyers review it before proposing him as CEO. He has agreed to indemnify Harrison against any losses suffered.
 
"I don't expect to pay anything," he said. "I'm surprised a company of CN's stature would stoop so low as to sue its former CEO."
 
CN says that Harrison, as part of his retirement agreement, had a non-compete that ended 31 Dec 2011, couldn't solicit CN employees for jobs for a period that ends 31 Dec 2012, and as part of his pension arrangements couldn't compete with CN or try to hire CN employees until 31 Dec 2014.
 
There was also "a condition that he not disclose CN's confidential information in perpetuity," a statement from CN said.
 
Harrison is due a share payment of almost $18 million in late January, the filing states.
 
Kim Guttormson.