Ex-Canadian Pacific CEO William Stinson - Date/Artist unknown.

20 February 2012

Ex-CP CEO Says He's Rooting for Current Boss Fred Green in Proxy Fight

Calgary Alberta - A former boss of Canadian Pacific says he's rooting for the company's current CEO, who is fighting to keep his job amid a dramatic fight with the company's biggest shareholder.
 
"I'm watching it with interest and I'm pulling for Fred Green and his team," Bill Stinson, who was CP's CEO until 1996, said in a recent interview.
 
"I think the current management under Green can get the job done."
 
Activist investor Bill Ackman, of New York hedge fund Pershing Square Capital Management, began building up a 14.2 percent stake in Canadian Pacific last fall and has since been pushing for Green's ouster.
 
Ackman wants to replace Green with Hunter Harrison, the highly regarded former CEO of CP's chief rival, Canadian National Railway. To do so, he aims to install five nominees in favour of the change, including himself and fellow Pershing partner Paul Hilal, to CP's board of directors at its May annual general meeting.
 
"I've got a lot of admiration for Hunter Harrison," said Stinson.
 
"I think he did a very good job both at Illinois Central and at CN, but there's a lot of differences between CN and CP."
 
Canadian Pacific badly lags other major North American railways, including CN, when it comes to its operating ratio, a key measurement of productivity in the railway industry that's calculated as costs as a percentage of revenues. The lower the operating ratio, the better.
 
Pershing Square says Harrison has what it takes to bring CP from 2011's operating ratio of 81.3 to 65 by 2015. Green and his team, however, believe so steep a drop in so little time is unreasonable, and that an operating ratio of 70 to 72 in 2014 is feasible.
 
"I think CP can certainly get their operating ratio into the low 70s and I think they've got a team of people there that can do that, and they've certainly got a fire lit under them now," said Stinson.
 
"I think it would be a stretch to think they can get it to 65."
 
There are big structural differences between CN and CP that date back decades, said Stinson.
 
For starters, CN was a Crown corporation until it was privatized in 1995, which gave it a "heck of an advantage" when it came to spending capital on yards, signalling, sidings, and other infrastructure.
 
Another edge CN has over CP has to do with geography, with the former historically having a stronger presence in major industrial centres like Ontario and Quebec.
 
"As it turned out, they've got a better industrial base in their trackage than CP does, and also they traditionally owned their own railroad into Chicago from the east, which CP never had," said Stinson.
 
When Stinson headed up CP, it was still part of a sprawling conglomerate, with interests in shipping, hotels, oil, gas, coal and rail transport. It was broken up into five separate companies 2001.
 
The 78-year-old is long retired from CP, but not from corporate life, he currently heads up Westshore Terminals, a big coal export facility near Vancouver.
 
CP railcars filled with coal from southeastern B.C. frequently come into Westshore's terminal for export, so Stinson still deals regularly with his former company.
 
"Certainly in the last couple of months their deliveries have really picked up," said Stinson.
 
"From that small slice of what I can see, I think they're doing better. So I'm a big fan of sticking with Green, and letting him carry out his plan."