Canadian National (TSX:CNR)chief executive E. Hunter Harrison saw his total compensation package excluding shares rise by almost 90 per cent in 2003, according to a company filing.

Excluding equity elements, Harrison earned a total of almost $2.88 million US in 2003. This figure includes a base salary of $1.1 million US and a bonus of $1.43 million US.

This compares with compensation in 2002 of almost $1.53 million US, comprising salary of $935,000 US and a bonus of $238,600 US.

CN Rail's logo
CN Rail's logo

"Other" compensation totalling almost $350,000 in 2003 included $22,200 for club membership fees.

The proxy circular also showed that an interest-free $653,250 US loan Harrison received in 2001, is due to be forgiven on June 30 of this year, if he is still at CN at the time. Harrison was already forgiven a $1.5 million US interest-free loan in 2001.

In 2003, Harrison also received 540,000 share options, compared with 337,500 in the previous year. The 2003 options vest in January 2013 at a price of $29.14.

CN said the rise in Harrison's package was due to the company meeting all the internal performance targets in 2003, which included revenues, operating income, earnings per share, free cash flow and return on invested capital.

Harrison's pay also rose because of his promotion to the CEO position in January 2003.

CN does not disclose the specific targets, but stated: "For the year 2003, the board [of directors] assessed the company's financial performance as having met objectives".

CN says its shares have strongly outperformed leading indices including the S&P/TSX Composite since December 1998. $100 invested in CN in December 1998 would have turned into $205, as compared with $137 if invested in an S&P/TSX index tracker.

CN's shares, which rose from just over $40 Cdn to above $50 over the past 12 months, were 80 cents lower at $50.41 Cdn in afternoon trading in Toronto.

On Tuesday, CN said a four-week strike that ended March 20 would shave about 8 to 10 cents per share of first-quarter profits in 2004.

CN is due to report Q1 earnings on April 22. Last year, CN made 69 Cdn cents a share in Q1, and the company hopes to match that this year, even after the impact of the strike and the dollar, according to Claude Mongeau, CN's chief financial officer. The forecast is below the 74 cent a share average previously expected by analysts, according to Thomson First Call.

Harrison was promoted from chief operating officer to president and chief executice officer on January 1, 2003. He became part of CN after the Canadian company bought Illinois Central for $2.4 billion in July 1999.

Harrison's compensation details were released by CN as a part of the company's proxy circular, issued March 22.

The proxy circular is a regulatory filing a company makes available to shareholders ahead of an annual general meeting, which in CN's case is scheduled to take place on April 22 in Edmonton.