Bill Ackman (left) with ex-CEO Hunter Harrison at the Toronto town hall meeting - 6 Feb 2012 David Cooper.

10 February 2012

CN Cancels Harrison's Pension

Montreal Quebec - Canadian National Railway Co. cancelled outright all future pension payments and retirement benefits for its former chief executive, Hunter Harrison, on Friday, claiming he had violated agreements with the railway dating back to his retirement in 2009.
 
The Montreal-based railway had previously said it would suspend the benefits and launch a lawsuit seeking information from Harrison as to whether he had violated the terms of his non-compete and confidentiality agreements with the railway.
 
But CN's board of directors stepped up the suit Friday, saying it had voted unanimously to cancel Harrison's benefits as of Friday after he participated in an investor meeting led by Bill Ackman's New York-based hedge fund, Pershing Square Capital Management LP, held Monday in Toronto.
 
"CN believes Harrison breached his non-compete and other employment obligations to the company," the company said in a statement Friday.
 
Pershing Square has been seeking to replace the current chief executive of Canadian Pacific Railway Ltd., Fred Green, with Harrison, and brought their case to shareholders, analysts, and media during the investor presentation.
 
CN said in amended court filings it had warned Harrison that his participation in the investor meeting would force CN to cancel, rather than merely suspend, his pension, restricted stock-unit and other benefits amounting to nearly $40 million. It followed through on that promise Friday.
 
"Harrison in fact participated in the investor conference, at which Pershing unambiguously called for Harrison to be installed as CP's CEO and Harrison unabashedly spoke of his desire to accept the position and discussed his plans for CP once installed," the filing states.
 
"All Harrison had to do to get those payments was to provide discovery to confirm that he has not already breached his agreements and renounce his intention to breach in the future by accepting employment at, or other involvement with, CP," the CN lawsuit states. "Harrison, by ignoring CN's warnings and engaging in affirmative efforts to become the CEO of CP, has breached his agreements with CN and has thereby forfeited his rights."
 
Neither Harrison or his lawyers could be reached for comment. But they have called the lawsuit "frivolous" in the past.
 
In addition, Ackman has said Pershing Square has promised to indemnify Harrison against any claims by CN, including the $40 million he is owed in retirement benefits.
 
Scott Deveau.