Canadian Pacific CEO Green Defends Railway's Record, Assails Hunter Harrison: Canadian Pacific CEO Defends Railway's Record

By Freeman, Sunny | The Canadian Press, March 27, 2012 | Go to article overview

Canadian Pacific CEO Green Defends Railway's Record, Assails Hunter Harrison: Canadian Pacific CEO Defends Railway's Record


Freeman, Sunny, The Canadian Press


TORONTO - The CEO of Canadian Pacific Railway Ltd. took direct aim Tuesday at Hunter Harrison, his erstwhile counterpart at the railroad's biggest rival and the man an activist investor wants to install in his place.

Fred Green said the future of his company (TSX:CP) would be put in jeopardy if New York hedge fund Pershing Square Capital Management succeeds in replacing him with Harrison, who retired from Montreal-based Canadian National Railway Co. (TSX:CNR) in 2009.

Harrison's successor at CN, Claude Mongeau, and his team "have been doing all they can to de-Hunter CN" since his departure, Green said at CP's investor day.

"They have moved and migrated away from the style that seemed to be appropriate in the world when Mr. Harrison was there."

The investor open house in downtown Toronto was held six weeks before CP's annual general meeting in Calgary, which could be a critical turning point in the company's 131-year-old history.

At the meeting, Pershing Square aims to have six nominees elected to the board of directors that are in favour of replacing Green with Harrison.

While much has been made of Harrison's reputation as a strong operator during his tenure at CN, Green said his relationship with customers left a lot to be desired.

"What the shipper community is telling me is that the thought of imposing what they experienced for that period of time when Mr. Harrison led CN upon this franchise is not a welcome thought. And they will vote with their market share," he said.

John Cleghorn, chairman of CP's board of directors said the board fully endorses current management and its multi-year plan to improve results. Any shift in strategy -- such as a management shakeup -- could result in customers fleeing to its rival, he said.

"Speaking on behalf of the board, we've had direct communication unsolicited by major customers telling us exactly the same thing. That their experience at CN under Hunter Harrison was unsatisfactory and it's a better railroad today to deal with."

Meanwhile, Green said his company is one of the smallest railway operators in North America and needs strong customer relationships in order to grow.

He said cost-cutting and revenue-boosting initiatives currently underway are paying off, as is the company's push to build stronger relationships with its key customers -- such as No. 1 client miner Teck Resources (TSX:TCK.B).

He noted CP is "surrounded by much larger competitors to the north, south and east. Our customers have alternatives. They can and they will vote with their business."

Pershing Square managing partner Bill Ackman retorted that CN had a better customer service record than CP during Harrison's tenure.

"Under Fred Green's leadership, CP lost market share to CN. As Mr. Green reminds us, customers vote with their feet. …

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