With the changing of the guard at Canadian Pacific Railway Ltd. this week, here are five key people to watch as the Bill Ackman era begins at the 131-year-old transportation giant:
Hunter Harrison, former Canadian National Railway CEO:
Mr. Ackman’s preferred successor to departed CP chief executive officer Fred Green, the Tennessee-born Mr. Harrison was president of Illinois Central Railroad from 1993 until its sale to Canadian National Railway Co. in 1998; he then become chief operating officer and president of CN, where his relentless drive for operating efficiency earned him Railway Age’s prestigious “Railroader of the Year” award in 2002. Mr. Harrison succeeded Paul Tellier as CEO in 2003 and was well regarded, although some complained that his drive for efficiency came at the expense of service. Mr. Harrison retired at the end of 2009, unhappy that the CN board hadn’t offered to extend his contract. The restless retiree eagerly accepted Mr. Ackman’s invitation to be the stalking horse CEO to replace Mr. Green. To show he was serious, Mr. Harrison invested $5-million in CP shares and even put his CN pension at risk. Whether or not he becomes CEO (he must compete for the job), Mr. Harrison’s polarizing candidacy helped define and legitimize Mr. Ackman’s campaign.
Paul Hilal, new CP director:
A trusted partner and close friend of Mr. Ackman’s, he met the future hedge fund boss when they were undergraduate roommates together at Harvard University in the 1980s. Mr. Hilal earned an MBA at Columbia University and worked as a financial adviser before joining Mr. Ackman’s Pershing Square Capital Management in 2006. Mr. Hilal was the first person that Mr. Ackman proposed to join him as a director at CP. When the board’s nominating committee refused to meet Mr. Hilal last December, it set the stage for the showdown that concluded this week.
Stephen Tobias, interim CEO and new CP director:
Mr. Ackman recruited this all-star railway veteran to his alternative slate of directors earlier this year to drive the CP board shakeup. Mr. Tobias began and ended his 40-year career at railway Norfolk Southern Corp., serving as chief operating officer and vice-chairman and earning the prestigious Railroader of the Year award in 2008. Mr. Tobias earned a reputation as a disciplined leader who placed a priority on rail safety and efficiency. Along with fellow board member and former Norfolk Southern executive colleague Tony Ingram, he will provide experienced oversight and hold the feet of management to the fire as CP drives toward improved operating efficiency.
Madeleine Paquin, acting chair:
Ms. Paquin, who turns 50 in two weeks, is one of the most successful and prominent female executives in Canada, heading Logistec Corp., an international cargo handling company founded by her father 60 years ago. As a long-standing director of CP (she joined in October, 2001) and expert in transportation supply chain management, it’s unclear whether she’s completely aligned with Mr. Ackman or a choice of the old-guard survivors of the pre-Ackman CP board to succeed John Cleghorn as chair. In the event of the latter, she will likely be looked upon to act as a counterbalance to the new blood and try to strike a balance between improving operating performance and maintaining service levels.
Mike Franczak, executive vice-president and chief operations officer:
Mr. Franczak enters the Ackman era on shaky ground. A CP lifer who worked his way up the railway’s operations structure over the past 25 years, Mr. Franczak will be on the hot seat to prove to a new, driven CEO and recharged board why he should keep his job after the railway’s chronically weak operating performance. That will be difficult as a new CEO comes in with a mandate to improve CP’s track record. If Mr. Franczak doesn’t last, expect CP to turn to an accomplished, active operations executive at a well-performing railway. That could be Keith Creel, CN’s chief operating officer, although Mr. Creel could be blocked from joining CP until Mr. Harrison’s non-compete clause with his former employer expires at the end of this year – if Mr. Harrison becomes CEO.
Editor's Note: Madeleine Paquin was chosen to serve as acting chair of the company.