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A CN Rail locomotive moves through a rail yard in Dartmouth, N.S., on March 29, 2018.Andrew Vaughan/The Canadian Press

Canadian National Railway Co. has set the date for the proxy fight that pits the leadership of Canada’s largest railway against an activist shareholder.

CN said it will hold the vote on March 22, in response to a request from The Children’s Investment Fund Management Inc. (TCI), which has called for the ouster of the railway’s chairman, chief executive officer and two directors.

British-based TCI, unhappy with CN’s financial and market returns, is seeking support for its slate, which includes railway veteran Gilbert Lamphere as chairman; Allison Landry, a banker and director of XPO Logistics Inc.; Rob Knight, former finance chief at Union Pacific Corp. railway; and Paul Miller, a former CN executive.

TCI’s candidate for CEO is Jim Vena, who worked at CN for 40 years and later Union Pacific Railroad.

In a statement, CN defended its plan to boost its profit and cut costs while raising shareholder returns. The new strategy was announced in September after TCI called for the vote on CN’s leadership.

“The proxy contest initiated by TCI is misguided, costly and not in the best interest of CN’s shareholders or its other stakeholders,” CN said.

TCI’s Christopher Hohn has said CN needs a board with more railway experience, and noted the company’s performance has deteriorated under the leadership of CEO Jean-Jacques Ruest and chairman Robert Pace.

The activist investor’s campaign is reminiscent of the one launched against Canadian Pacific Railway Ltd. in late 2011 by William Ackman’s Pershing Square Capital.

Mr. Ackman succeeded in forcing out CP’s CEO and chairman and naming as CEO Hunter Harrison, a respected railroader who would turn around the carrier and make many investors rich in the process.

CN said its new drive to improve operations will reduce its work force by 1,050, including 650 managers. Those job losses began last week, with CN police escorting some laid-off managers off CN properties.

Also up for elimination are CN’s non-rail investments, including Great Lakes commodity ships, a freight forwarding business and trucking company TransX Group, which CN bought in 2019.

“CN remains committed to executing its ambitious, long-term, sustainable growth strategy, and is grateful for early expressions of support for this plan that it has received from valued shareholders, customers, partners and other key stakeholders,” CN said in a press release on Monday.

Analysts say CN’s cuts might not be deep enough to regain its status as the industry’s best-run railway, giving weight to Mr. Hohn’s campaign.

TCI raised its stake in CN to more than 5 per cent from 3 per cent after the railway’s failed attempt to buy Kansas City Southern railway. The fund said CN misread the U.S. regulator’s appetite for consolidation and fostered ill will at the U.S. Surface Transportation Board (STB) and Department of Justice.

KCS’s board threw its support behind a cheaper offer from CP after the STB blocked a preliminary takeover step by CN.

Mr. Hohn is an experienced activist investor who has led campaigns against boards at U.S. railway CSX Corp., ABN Amro and Deutsche Boerse. He is also the biggest shareholder at CP, with an 8-per-cent stake worth $4-billion.

This year, Mr. Hohn successfully pushed both Canadian railways to enact climate change initiatives, requiring them to publish their carbon emissions and plans to reduce them. U.S.-based Union Pacific Railroad, another large investment of Mr. Hohn, has not adopted the initiative.

Working with other groups and investors, his goal is to have 100 of the companies in the S&P 500 stock index agree to do so by next year.

In a recent interview with The Globe and Mail, Mr. Hohn said he wants the big six railways that operate in North America, including CN and CP, to collaborate to develop locomotives that run on electricity or hydrogen.

“Diesel cars are going away and we have to find a cleaner fuel for locomotives,” Mr. Hohn said. “”They’ve got to find new technology. We think the real solution is for the industry to collaborate.”

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