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CP Rail president and CEO Fred Green has defended himself publicly on only two occasions since investor activist Bill Ackman and his hedge fund, Pershing Square Capital Management, launched a proxy battle to elect a dissident slate of directors and change the railway’s management.Jeff McIntosh/The Canadian Press/The Canadian Press

Fred Green may be the quietest target in proxy battle history.

Ever since the chief executive officer of Canadian Pacific Railway Ltd. sat down with the company's new and largest shareholder, Bill Ackman, last November, he has endured a constant stream of assaults on his leadership.

He sat mutely at the fall meeting while the New York activist told the railway's chairman, John Cleghorn, that it was time for the 55-year-old Mr. Green, a CP lifer and CEO for six years, to step down and make way for long-time archrival Hunter Harrison, retired chief of Canadian National Railway Co.

Mr. Green has defended himself publicly on only two occasions since Mr. Ackman and his hedge fund, Pershing Square Capital Management, launched a proxy battle to elect a dissident slate of directors and change the laggard railway's management. He was silent last week when proxy adviser Institutional Investor Services took the unusual step of recommending that shareholders specifically withhold their votes for Mr. Green and five directors, while supporting Pershing's slate.

The latest indignity came Tuesday when Mr. Ackman told a Toronto investment conference that he had heard rumours that CP was "going to fire" Mr. Green within days. CP's response to Mr. Ackman's startling remark? "No comment. We don't respond to rumours."

People close to Mr. Green said his silence reflects an unusual division of power between himself and Mr. Cleghorn, the company's chairman. Mr. Cleghorn has assumed the public job of leading CP through the battleground of its proxy contest with Mr. Ackman, while Mr. Green has largely been sidelined to focus on running the railway and rallying staff through months of turmoil.

"He believes this fight is not about him, it is about doing the right thing," said one person close to Mr. Green, who declined to be identified.

How has the railway chief remained focused at a time when his leadership has been so publicly questioned? An insight can be gleaned from a private town-hall speech Mr. Green gave at a Calgary conference centre to hundreds of CP employees last month.

According to an audio recording of the session obtained by The Globe and Mail, Mr. Green appears to have made peace with the prospect that shareholders might oppose his leadership at the May 17 proxy vote.

Speaking with a passion and eloquence that few outsiders have heard from him, Mr. Green thanked employees for fighting for "what is right" to defend CP's long-term turnaround strategy to serve all its stakeholders, including investors, customers and employees.

A life-long hockey player, Mr. Green told employees: "At some point in the process you can't predict victory. If victory comes it would be very, very good, but if victory doesn't come in whatever form … you still have to live with yourself. You still have to say, 'I left it all on the ice' …

"It is not an easy world, it's not an easy environment we are in right now, but perseverance is a quality … that will serve you very well and it will serve us very, very well."

In response to a question about why CP's board never interviewed Mr. Harrison as a potential replacement, Mr. Green conceded "it is a bit of a tricky question, especially for a guy in my shoes."

He said the board chose not to meet with the former CN chief because "the job is not vacant" and because directors are uncomfortable with Mr. Harrison's record of aggressive job- and cost-cutting that at times alienated customers. Mr. Green said Pershing representatives have told CP investors they plan to cut a third of the company's 1,000 locomotives and as many as 3,000 jobs.

"There are those on Wall Street who may like [Mr. Harrison's]reputation," Mr. Green said, but there are many customers, shippers and regulators who do not support what "the other gentleman brings."

In response to Mr. Green's warning about job cuts, Mr. Ackman said it is "totally and absolutely false that we plan layoffs." Because of the demographics of CP's aging work force, he said he expects there will be a substantial number of retirements over the next few years that he expects "will likely create job opportunities."

Mr. Ackman said Tuesday that 36 per cent of CP shareholders who have to date submitted proxies ahead of next week's vote support Pershing's dissident slate of directors. These proxies include Pershing's 14-per-cent stake. CP declined to discuss the number of investors who have currently voted in favour of its proposed slate.