Canadian National Railway Co. is facing criticism from a large investor over the disclosure of the resignation of a board member.
Julie Godin resigned from the railway’s board of directors on Sept. 16, the day after CN learned it had lost the battle to buy U.S. railway Kansas City Southern to rival Canadian Pacific Railway Ltd.
CN issued no press release on Ms. Godin’s departure, instead posting a web link to a document that was created on Sept. 24 announcing her move.
CN said in an e-mail to The Globe and Mail on Wednesday that Ms. Godin quit the board to focus on the expanding duties of her day job as an executive at CGI Inc., the information technology company co-founded by her father, Serge Godin.
Ms. Godin could not be reached for comment.
The Children’s Investment Fund Management Inc. (TCI), which is CN’s second-biggest shareholder at 5.2 per cent, said it intends to report what it calls CN’s lack of disclosure to Canadian regulators.
“Her resignation and CN’s failure to publicly disclose it by way of press release raise serious securities and corporate governance issues,” Christopher Hohn, TCI’s founder, said in a letter to CN chairman Robert Pace.
TCI said is launching a proxy contest to unseat Mr. Pace and four other board members, including Jean-Jacques Ruest, CN’s chief executive officer. The Britain-based investor is unhappy with CN’s financial performance and share price, in addition to what it calls CN’s bungled attempt at buying KCS.
Mr. Hohn said CN had plenty of opportunities to disclose Ms. Godin had quit, including a Sept. 17 conference call with analysts, and later meetings with investors to discuss the company’s new strategic plan.
On the Sept. 17 call, held one day after Ms. Godin’s resignation, CN unveiled its response to TCI’s calls for new leadership, highlighting steps it would take to boost profits and shareholder returns. CN said it will add two board members in 2022, including the replacement of the retiring Mr. Pace, but did not mention Ms. Godin’s departure.
“CN made the required disclosure related to Julie Godin’s resignation on Sept. 24, within the 10 calendar day window specified by” securities regulators, CN spokesman Mathieu Gaudreault said in an e-mail to The Globe.
Ms. Godin, an independent director who sat on the railway’s finance and strategic planning committees, was paid $383,000 in cash and CN stock in 2020.
Sylvain Théberge, a spokesman for the Quebec securities regulator, Autorité des marchés financiers, declined to comment on CN. “The general rule regarding event-driven disclosure by [companies] is that any material change must be disclosed immediately by way of press release,” he said, adding that companies themselves determine what constitutes a material change.
According to Canada’s securities administrators’ policy, “changes to the board of directors or executive management” are “potentially material information.”
In its battle for CN’s board room, TCI has targeted directors Kevin Lynch, James O’Connor and Laura Stein, in addition to Mr. Pace and Mr. Ruest.
TCI wants to install railway veteran Gilbert Lamphere as chairman; and has named the following as director nominees: Allison Landry, a banker and director of freight company XPO Logistics Inc.; Rob Knight, former finance chief at Union Pacific Railroad Co.; and Paul Miller, a former CN executive. Former CN and Union Pacific operations executive Jim Vena is TCI’s pick to be CEO.
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