3 May 2012

CP Blasted by Proxy Adviser ISS

New York New York USA - Canadian Pacific Railway Ltd.'s shareholders are being urged to reject several of the company's nominees for the board at this year's annual general meeting, including its chairman John Cleghorn, chief executive Fred Green, and other board members, by proxy advisory firm Institutional Shareholder Services Inc.
 
"Shareholders may reasonably expect that the board's incumbent leadership, Cleghorn, as a long-serving CP director and current chairman, and Green, whose tenure as CEO now extends for more than half a decade, would have taken responsibility for steering the company closer to its true potential," the ISS report states.
 
"What shareholders appear to have witnessed over these directors' tenure, as a close examination of the evidence in this proxy contest makes plain, is an enduring failure of board leadership, and a bewildering lack of accountability for results," it adds.
 
Shareholders are instead being urged to elect the entire slate of seven nominees being presented by activist investor Bill Ackman and his Pershing Square Capital Management L.P., as well as nine of the fifteen proposed incumbent directors on the company's slate.
 
Pershing has been seeking to replace Green as chief executive with Hunter Harrison, the former chief executive of rival Canadian National Railway Co., a move that has been resisted by the board.
 
ISS said it based part of its decision on the smaller returns CP has given to its shareholders relative to its peers, noting that over the past five years it has only returned 19 percent to shareholders while its peers returned between 56 percent and 117 percent. ISS said that CP was "not on track to deliver even that" before Pershing Square took a position in the company last September and the stock jumped.
 
It noted that through 22 Sep 2011, when Pershing took its initial position, it had lost 29.1 percent for the five-year period.
 
In addition to Green and Cleghorn, ISS also recommended that shareholders withhold their votes for Tim Faithful, Ed Harris, Roger Phillips, and Michael Phelps.
 
Scott Deveau.