CP says it has customer, shareholder support

CALGARY — Canadian Pacific’s enbattled CEO fired back at his detractors Friday, saying some of the railway’s biggest customers believe the company is on the right track despite a major shareholder’s highly public demand for his removal.

CALGARY — Canadian Pacific’s enbattled CEO fired back at his detractors Friday, saying some of the railway’s biggest customers believe the company is on the right track despite a major shareholder’s highly public demand for his removal.

In an internal memo to staff made public by the railway on Friday, Fred Green said coal miner Teck Resources Ltd. (TSX:TCK.B) and fertilizer maker Mosaic Co. (NYSE:MOS) are happy with the railway’s service.

“Our performance improvements have been well received and we continue to focus on strengthening our valuable partnerships with customers,” Green told employees.

A New York fund manager with a 14.2 per cent stake in CP (TSX:CP) has said repeatedly he wants Green out and is looking to shake up the company’s board of directors to achieve that goal.

Pershing Square’s Bill Ackman, who has a reputation as an activist shareholder, wants to replace Green with Hunter Harrison, the former boss of the railway’s main rival, Canadian National Railway Co. (TSX:CNR).

Teck — Canada’s largest publicly traded mining company — is CP’s biggest customer and recently increased the volume of business it gives to the company, which ships coal mined in southeastern B.C. to the Port of Vancouver for export.

Teck CEO Don Lindsay is quoted in Green’s memo as being “pleased” with the level of service Teck has received.

“Fred Green understands that to grow the economy, especially in Western Canada, we need to work together to get the most out of the rail network,” Lindsay said.

Marcia Smith, Teck’s senior vice president of sustainability and external affairs, said in an interview that the relationship with CP is “very positive,” and that the spat between Pershing Square and management has not appeared to be a distraction from Teck’s standpoint.

Pershing Square has not approached Teck to get its take on how the railway is performing, she said.

In the note, Mosaic CEO Jim Prokopanko said his company has had a “long and fruitful history” with CP.

“CP Rail, under the leadership of Fred Green and his team, has proven to be a key business partner by helping us strengthen our distribution network and our competitive position in conjunction with our multibillion-dollar potash expansion projects,” Prokopanko said.

Green also said chairman John Cleghorn, a retired chief executive of Royal Bank of Canada (TSX:RY), has been meeting with shareholders, who appreciate efforts the railway has made to make its operations run more smoothly.

“Specifically, shareholders have commended our improved customer confidence and our improved efficiency,” Green wrote.

He said it’s possible to achieve an operating ratio — operating expenses as a percentage of revenue — in the low 70 per cent range, from its current level of 78, over the next three years. The lower the operating ratio, the better a railroad is seen to be performing.

But he said a decrease in operating ratio to 65 isn’t achievable in such a short span, something Ackman contends would be possible if Harrison were at the helm.

“This pace of improvement, from this starting point, has never been achieved by any railway’s management team,” Green wrote.

“In fact, it took Hunter Harrison seven years to lower CN’s OR from 75 to 65 during a strong economic period and one in which CN significantly grew revenues through acquisitions.”

Cleghorn has made similar remarks in previous statements released to the press.

While Green said he’s encouraged by progress the railway has made to boost efficiency, he stressed the need for even greater improvements.

“We are determined to further accelerate the pace of change at CP and to safely deliver significantly improved operational and financial results,” Green said.

“Even though we did not choose to be the target of Pershing Square’s public demand, there is a silver lining. The situation shines a spotlight on CP as we continue with our efforts to achieve superior performance for the benefit of both our customers and shareholders.”

CP shares fell 1.4 per cent to $71.56 on the Toronto Stock Exchange.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Heather Buelow, owner of Aerial Edge Studio in Blackfalds, says she has spent ‘all of my saving keeping the studio going’ through government-mandated shutdowns during the COVID-19 pandemic. (Contributed photo)
Either open in-person or close permanently: Central Alberta yoga studio defying rules

A central Alberta woman is allowing clients back into her yoga and… Continue reading

Sandra Schmirler Foundation donates $10,000 to Red Deer hospital

Donation will go towards electronic fetal heart monitoring project

A sustainability audit for Westerner Park suggested 33 changes, including more city involvement. (Advocate file photo)
Westerner Park expands volunteer program

As Westerner Park refocuses the organization, they are reigniting their emphasis on… Continue reading

Ukraine’s leader requests a talk with Putin, gets no answer

Ukraine’s leader requests a talk with Putin, gets no answer

Madelyn Boyko poses along with a number of the bath bombs she makes with her mom, Jessica Boyko. Madelyn says she enjoys making the bath bombs with her mom as it is a special time for just the two of them. (Photo Submitted)
5-year-old Sylvan Lake girl selling bath bombs in support of younger brother

Madelyn Boyko is selling bath bombs for CdLS research in honour of her younger brother

Minister of Public Safety and Emergency Preparedness Bill Blair responds to a question during question period in the House of Commons on Parliament Hill in Ottawa on December 11, 2020. THE CANADIAN PRESS/Patrick Doyle
New regulator to stop sexual exploitation of children online: public safety minister

OTTAWA — Public Safety Minister Bill Blair says the government will introduce… Continue reading

Gordon Greenwood Elementary Grade 7 students were assigned to write about climate change. The Langley Advance Times is pleased to present a selection of their writings. (Sasha/Special to the Langley Advance Times)
Canada’s greenhouse gas emissions increased slightly in 2019: report

OTTAWA — A new report shows Canada’s greenhouse gas emissions increased slightly… Continue reading

Conservative leader Erin O'Toole holds a press conference on Parliament Hill in Ottawa on Tuesday, April 6, 2020. Top Tory leaders of past and present will speak with supporters today about what a conservative economic recovery from COVID-19 could look like. THE CANADIAN PRESS/Sean Kilpatrick
O’Toole to vote against Conservative MP’s private bill on ‘sex-selective abortion’

OTTAWA — Conservative Leader Erin O’Toole says he will vote against a… Continue reading

Eugene Kwon of Gratia Bakery and Cafe says the business will be relying on take out orders and a small patio. (Neil Corbett/The News)
Small business struggling amid COVID-19 pandemic looks for aid in Liberals’ budget

OTTAWA — A group representing thousands of the country’s small businesses says… Continue reading

Ron Howard is photographed at the "Inferno" film premiere on Oct. 25, 2016 in Los Angeles. (Buckner/Rex Shutterstock/Zuma Press/TNS)
Brothers Ron and Clint Howard have memoir coming in October

NEW YORK — Filmmaker-actor Ron Howard and actor Clint Howard, brothers, former… Continue reading

FILE - In this Saturday, March 27, 2021 file photo, Buffalo Sabres’ Taylor Hall plays against the Boston Bruins during the second period of an NHL hockey game, in Boston. The Buffalo Sabres could trade 2018 MVP Hall, who signed for just this season and is a pending free agent. (AP Photo/Michael Dwyer, File)
Boston Bruins acquire Taylor Hall to kick off NHL trade deadline day

Trade deadline day in the NHL has started with the Boston Bruins… Continue reading

Most Read