NEW YORK — Hedge fund Pershing Square, which is making a push for the replacement of Canadian Pacific Railway Ltd.’s chief executive, has added a railway veteran to a slate of potential board members it will be nominating at the company’s annual meeting next month.
New York-based Pershing Square said Monday that former Norfolk Southern vice-chairman Stephen Tobias will become its seventh nominee to vie for a seat on the railway’s board.
Pershing Square, which has been locked in a bitter war of words with the top brass of Canada’s second-largest railway for months, holds a 14.2 per cent interest in Canadian Pacific (TSX:CP). The hedge fund and other investors have long been frustrated with CP’s share price performance versus its peers.
Among its top goals is the replacement of current chief executive Fred Green with Hunter Harrison, former CEO of rival Canadian National Railway Co. (TSX:CNR).
“My nearly 40 years of railroad operations experience enable me to make a real contribution to this project,” Tobias said in a statement.
“I am excited about this opportunity to help unlock the enormous potential of a railroad as historic and iconic as the Canadian Pacific Railway.”
Tobias worked for U.S.-based Norfolk Southern for 40 years, most recently as chief operating officer and vice-chairman.
Pershing Square’s nominees, now include Bill Ackman — chief executive of the hedge fund — Gary Colter, Paul Haggis, Paul Hilal, Rebecca MacDonald, Anthony Melman and Tobias.
Tobias was quick to add his endorsement for the instalment of Harrison as CEO.
“I’ve worked in rail operations my entire career and can say unequivocally there is no better choice than Hunter to turn around CP,” he said.
“Hunter has studied Canadian Pacific, CN’s only Canadian competitor, since 1997. He understands exactly what’s needed and will deliver results.”
In a statement issued Monday, CP spokesman Ed Greenberg said the railway believes that “the best interests of shareholders are served by the continued execution of the multi-year plan, which is already producing results under the oversight of an engaged and qualified board.”
He noted that Ackman is included as part of the current CP board’s list of nominees.
“We are confident that once Mr. Ackman joins the board and understands the facts and how this team is executing, he will endorse our plan,” Greenberg added.
Canaccord Genuity analyst David Tyerman said the decision by Pershing to bring on another railway veteran clearly further strengthens its slate.
“It’s something that is positive for Pershing in the sense that the board candidates that they had beforehand lacked railroad experience,” he noted.
“Whether it puts a lot of pressure on CP, I think, is a lot more debatable.”
While Harrison is a longtime player in the railroad industry, he isn’t currently listed as one of Pershing’s prospective nominees.
Last week, chief executive Green and other members of CP’s current management took aim at Pershing Square’s proposals for change at the top during an investor presentation.
Green said the future of CP would be put in jeopardy if Pershing Square succeeds in replacing him with Harrison, adding that Harrison’s successor at CN, Claude Mongeau, and his team “have been doing all they can to de-Hunter CN” since his departure.
John Cleghorn, chairman of CP’s board of directors, told the investor day that the board fully endorses current management and its multi-year plan to improve results and that any shift in strategy — such as a management shakeup — could result in customers fleeing to its rival.
CP’s annual general meeting will be held in Calgary on May 17.
Canadian Pacific shares rose 74 cents to $76.45 in afternoon trading on the Toronto Stock Exchange.