Canadian Pacific CEO Fred Green - Date/Photographer unknown.

8 February 2012

CP Rail's CEO Fires Back at Critics

Calgary Alberta - Canadian Pacific Railway Ltd.'s CEO Fred Green shot back Wednesday at attacks levelled this week by Pershing Square Capital Management LP, defending a major U.S. railway division and standing up for CP directors.
 
On Monday, Pershing Square chief executive officer Bill Ackman described CP's 2008 acquisition of Dakota Minnesota & Eastern Railroad Corp. as a mistake, charging that CP "irresponsibly financed" the $1.48-billion (U.S.) takeover of DM&E.
 
"The acquisition of the DM&E brought in a team of top-level railroaders and, most importantly, further extended the reach of CP into the U.S. Midwest, a vital part of our network," Mr. Green said in a letter to employees.
 
The U.S. operation has almost tripled its shipments of ethanol since CP completed the DM&E purchase in 2008, he said.
 
Mr. Green also responded to Mr. Ackman's criticism that CP's board of directors has set lax performance targets for management.
 
"Contrary to Pershing Square's assertions, the board holds CP's senior management team accountable for the financial results of the business," Mr. Green said. "Over 92 percent of the compensation provided to our independent directors in 2010 was provided in deferred share units, and compensation in 2011 is consistent with that."
 
Mr. Green's letter to staff also contained testimonials from Ron Tepper, CEO of transport logistics firm Consolidated FastFrate Inc., and Doug Tozer, CEO of Wheels Group. a supply-chain company.
 
New York-based Pershing Square, CP's largest shareholder, is waging a proxy contest against the freight carrier in an effort to oust Mr. Green and replace him with Hunter Harrison, who retired at the end of 2009 from rival Canadian National Railway Co.
 
"It is important that we not get distracted but remain focused on our responsibilities and objectives," Mr. Green said. His remarks came after Mr. Ackman delivered a stinging public attack of Calgary-based CP on Monday at a town hall, with hundreds in attendance and listening on a webcast.
 
The railway's shares have jumped by more than 50 percent since Pershing Square began accumulating its 14.2 percent CP stake in late September.
 
CP chairman John Cleghorn, Mr. Green, and some directors, including former Westcoast Energy Inc. chief Michael Phelps, have been travelling to a number of U.S. and Canadian cities to meet with investors.
 
If Mr. Ackman continues to attract support, CP's board will come under increased pressure to strike a settlement with the activist, or face the prospect of a defeat at the ballot box.
 
Mr. Ackman has said he is prepared to meet with CP's board, but the company said as a first step it wants the activist to accept a seat on the company's board, which is bound by law to act in best interests of the company.
 
Brent Jang and Jacquie Mcnish.