Canadian Pacific Railway Ltd. paid $49.2-million in overall compensation to its new chief executive officer Hunter Harrison last year, a number including $9-million from rival Canadian National Railway Co.
A proxy circular filed Friday by CP included an enormous $35-million in pension-related guarantees and other benefits awarded to Mr. Harrison as compensation for forgoing his retirement benefits from CN.
When taking over CP in June last year after a hard-fought proxy battle for control of the railway led by activist investor William Ackman, Mr. Harrison’s former company CN had refused to pay his benefits and pensions. Mr. Harrison was CEO of CN between 2003 and 2009.
The proxy circular reported that the settlement between the two railway companies in February included a payment of $9-million from CN to CP toward Mr. Harrison’s compensation package. Previously, the companies had not disclosed financial terms. Currently leading a company-wide restructuring, Mr. Harrison has been a lynchpin in CP’s push for greater efficiency and is known for being very hands-on in efforts to improve the railway’s operations. As part of the legal settlement with CN in February, CP also can’t hire away certain CN executives.
According to the proxy circular’s summary of compensation, Mr. Harrison received a salary of just over $1-million for the six months he worked at CP. Annually, his salary is just over $2-million. That base salary was augmented considerably last year by a pension guarantee of $16-million, as well as so-called make-whole payments of $18.6-million which are meant to compensate for equity awards that Mr. Harrison will no longer get from CN.
In comparison, CP’s former CEO Fred Green received a total of $8.8-million in compensation last year, including a $4-million severance payment.