The saga between activist hedge fund manager Bill Ackman and Canadian Pacific Railway (CP) continues this week after “Canadian Pacific Ltd. Chairman John Cleghorn said in an open letter to shareholders that the railroad’s board fully backs Chief Executive Fred Green and the entire management team,” reports the Wall Street Journal. “Mr. Ackman’s Pershing Square Capital Management LP hedge fund owns just over 14% of Canadian Pacific and wants to oust CP’s chief executive in favor of Hunter Harrison, former CEO of company rival Canadian National Railway Co.”
Click here to read a full text version of the letter.
In the letter, Cleighorn said “the board came to the unanimous conclusion that replacing the company’s chief executive officer, and thereby jeopardizing the successful execution of the multi-year plan, is not in the best interests of CP or its shareholders.” Cleghorn also outlined a multiyear plan for the company, which the CP board endorses, designed to fuel volume growth, expand the network and control costs. He said the board is “confident” the company will reach an operating ratio in the low 70s in the next three years.
Cleighorn criticized Ackman for not prsenting “any detailed, credible plan” and instead “encouraged activist investor Bill Ackman to accept CP’s offer to join its board,” writes the Wall Street Journal. “CP said it first offered Mr. Ackman a seat on its board in early December.”