Hunter Harrison named Canadian Pacific's new boss
Canadian Pacific has named Hunter Harrison to be the next occupant of its CEO's office, the end result of a bitter proxy battle launched by the railway's largest shareholder.
Harrison used to be CN Rail's CEO and was widely credited with turning CN into one of the most efficient railways in the world.
Canadian Pacific, on the other hand, has badly lagged its peers in terms of performance as well as stock price.
That prompted major shareholder Pershing Square, a New York-based hedge fund, to start actively lobbying to replace that railway's current leadership and replace CEO Fred Green.
CP had countered that a turnaround was underway and had set a target to bring the railway's operating ratio — a key measure of efficiency — down from 80 per cent to 70 to 72 per cent by 2014. Harrison and Pershing said they could bring it down to 65 per cent by 2015.
CP said that would mean huge spending cuts. But in the end, Pershing got enough support from other major shareholders and Green eventually stepped down along with the board chairman and several directors.
Paul Haggis, who became Canadian Pacific's new chairman, said Harrison is the best person for the job.
"The board welcomes Mr. Harrison's experience and leadership to CP," Haggis said in a statement. "We look forward to benefiting from his strong track record of service reliability, efficient asset utilization and strategic capital expenditure."
The 67-year-old Harrison, who retired from CN in 2009 after six years in the top job, said he was delighted to be heading back to work — this time at the country's second-largest railway.
"CP is an incredible franchise with significant market opportunity, solid infrastructure and innovative and hard-working employees," he said in a statement.
CN watching closely
Harrison had signed a non-compete clause while at CN that prohibited him from working for a competitor for two years. But since that expired in January, he had become more vocal about his interest in the top job at his former rival.
CN fired back, moving to end Harrison's pension payouts and a series of other payments worth roughly $45 million.
CN issued a statement Friday congratulating Harrison on his appointment. But it warned it would be watching developments closely.
"CN is concerned that it will be difficult, if not impossible, for Mr. Harrison to perform his new duties for CP without drawing upon his broad knowledge of CN's confidential information, which he is not permitted to do," the CN statement said.
"So CN intends to monitor events, and, if it appears that Mr. Harrison is using confidential CN information, CN might seek injunctive relief at that time."
Canadian Pacific shares closed with a gain of $1.20 at $74.72 on the TSX. CN shares were down 16 cents to $86.10.
With files from The Canadian Press