New York investor Bill Ackman has recruited a U.S. rail legend to bolster his campaign to shake up Canadian Pacific Railway Ltd.
Mr. Ackman’s fund Pershing Square Capital Management LP said Monday that retired Norfolk Southern Corp. vice-chairman Stephen Tobias joins an expanded slate of alternative directors, which now numbers seven, that will be put to a shareholder vote at CP’s annual meeting May 17 in Calgary.
Mr. Tobias, 67, began and ended his 40-year career at Norfolk, which runs along the eastern portion of the United States, after a brief stint with the U.S. armed forces. He rose through the ranks quickly at the Virginia-based railway as a resourceful manager who reduced bottlenecks that delay trains, and earned a reputation as a disciplined leader who placed a priority on rail safety and efficiency.
When he was dispatched to Ohio in 1978 to clear the way for Norfolk trains buried by a gusting blizzard, he had the snow shovelled into empty coal hampers. The trains were then dispatched to a southern state, where the contents melted.
“My nearly 40 years of railroad operations experience enable me to make a real contribution to this project,” Mr. 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. One can’t overemphasize the importance of a culture of execution at a railroad.”
Mr. Tobias, named Railroader of the Year in 2008 by Railway Age magazine, is the second industry veteran to join Mr. Ackman’s team. Former Canadian National Railway Co. chief Hunter Harrison has agreed to serve as chief executive officer of his former rival CP, if shareholders vote in favour of Pershing Square’s boardroom nominees.
Mr. Tobias said he has known Mr. Harrison for three decades, asserting that there is “no better choice” than the former CN CEO to lead CP.
Calgary-based CP is backing an incumbent team of 15 directors, plus it’s recommending Mr. Ackman to be the 16th board member. CP spokesman Ed Greenberg said the freight carrier is executing on its multiyear turnaround strategy under the oversight of qualified directors.
“We have added to the CP board Tony Ingram and Ed Harris, both seasoned railroad executives who together bring over 80 years of rail experience,” Mr. Greenberg said. “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.”
Last week, CP CEO Fred Green lashed out at Mr. Harrison’s “flawed” recovery plans that would interfere with an ongoing strategy to run longer and faster trains. As well, CP has been deploying new fuel-efficient locomotives and upgrading tracks on the Edmonton-Winnipeg route.
CP’s board opposes Mr. Harrison’s push to be CP CEO and has argued that Mr. Ackman has a limited strategic vision for one of Canada’s oldest companies.
Mr. Tobias, a former Norfolk chief operating officer, appears to have been recruited by Mr. Ackman to address concerns that his proposed slate lacks industry experience. In addition to Mr. Ackman and his hedge fund partner Paul Hilal, the slate comprises Mr. Tobias, Alberta Enterprise Corp. chairman Paul Haggis; corporate restructuring specialist Gary Colter; former Onex Corp. executive Anthony Melman; and Rebecca MacDonald, executive chairwoman of Just Energy Group Inc.
If the alternative slate wins the proxy battle, it is possible Mr. Tobias will replace one of CP’s newest directors, Mr. Ingram, who was appointed in December to beef up the board’s industry experience. Mr. Ingram, a former executive at Norfolk, left the railway in 2004 to join rival CSX Transportation Inc.
Pershing Square acquired a 14.2-per-cent stake in CP last fall in a bid to revitalize an industry laggard that ranks as the least efficient among six major railways in North America.
Mr. Ackman said Mr. Tobias understands the ingredients required for success and would be “an invaluable resource to his fellow directors and to Hunter [Harrison]during this important transformation.”
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