Canadian National outlines strategic vision following failed KCS merger
Canadian Class I Receives First TekTracking CTA System
No injuries after CN Rail car derails in Amherstview, Ont
CN, Under Siege from TCI, ‘Redefining.’ Will it Work?
SNC-Lavalin wins mandate to study feasibility of potential northern railway route in Quebec
RFQ Released for Toronto’s Scarborough Subway Extension Project
CPKC a ‘Powerful Combination’
CN to conduct strategic review of non-rail assets
Canadian Pacific closes in on KCS merger
Via Rail cancels plans to resume full Montreal-Halifax service
An activist shareholder is pushing forward with plans to propose the removal of CN President and CEO JJ Ruest and add four industry veterans to the board following the railroad’s likely failed attempt to acquire Kansas City Southern.
Founder and managing partner Chris Hohn of London-based TCI Fund Management, which owns 5.2% of CN (NYSE: CNI), claims CN has been “underperforming” in recent quarters, as witnessed by a climbing operating ratio compared with other Class I railroads, and that its recent attempt to acquire KCS (NYSE: KSU) demonstrated “misguided” priorities, according to a filing to the U.S. Securities and Exchange Commission.
TCI is seeking to arrange a shareholder meeting “for the purpose of refreshing” the current CN board of directors and adding four industry veterans who will “provide the deep railroad operational experience the current board lacks.”
TCI seeks to install Gilbert Lamphere, Allison Landry, Rob Knight and Paul Miller to CN’s board.
In response to TCI’s announcement on Monday, CN said that it hasn’t yet received the formal request from TCI for a shareholder meeting, but that it would “review it and comment further in due course.”
Lamphere is chairman of MidRail Corp., a company seeking to develop and operate overlooked rail infrastructure in North America. He has also served on numerous boards, including those of Patriot Rail, CSX, Florida East Coast Railway, CN and Illinois Central, and founded MidSouth Rail. Landry is a former Credit Suisse transportation analyst and serves on the board of XPO Logistics. Knight most recently served as CFO for Union Pacific (NYSE: UNP) and is a board member for Schneider National. Miller is a consultant and a former CN executive and he has served on boards of the Railway Association of Canada and the Association of American Railroads.
These four recommendations would replace four incumbent CN directors: Robert Pace, who serves as board chair, Kevin G. Lynch, James E. O’Connor and Laura Stein, TCI said.
“We have assembled an independent, accomplished and world-class slate of director nominees. They all have had long and distinguished careers operating in and analyzing the railroad industry,” Hohn said. “They bring vast railroad experience and knowledge, and they also share a common and very achievable goal: to create a much-needed culture of operational excellence at CN, which is essential if the company is to reach its full potential.
“A new, highly qualified board with renewed senior management will help ensure CN is put on the right track to the benefit of the Canadian and U.S. economies, shippers, employees and shareholders. CN can do better, and with a new board, it will,” he said.
TCI also reiterated its wish to remove Ruest and install Jim Vena as CEO. Vena most recently was COO of UP, and he was formerly a COO at CN. TCI said Vena would accept the position if it were offered to him.
“CN is a great company, and it owns a unique asset — the best rail network in North America. However, the business has been underperforming for too long, so change is required. We did not seek a proxy fight, but without urgent action CN’s operational and financial performance will continue to lag its peers under a board that lacks the right railroad experience and operational expertise,” Hohn said.
“The bid for KCS exposed a basic misunderstanding of the railroad industry and regulatory environment. The board consistently misjudged the STB and displayed flawed decision-making, committing billions of dollars to an ill-conceived pursuit of an unattainable asset. CN should focus on getting better rather than bigger,” he continued.
Hohn also said he would continue to call upon CN to adopt practices that address climate change and promote environmental, social and governance principles.
Last week, TCI said it has retained Kingsdale Advisors, a shareholder advisory and communications firm, as a strategic adviser that would engage with CN’s shareholders to halt the plans to merge with KCS, “upgrade” CN’s board and identify and appoint a new CEO.
This article first appeared on www.freightwaves.com
About this website
Railpage version 3.10.0.0037
All logos and trademarks in this site are property of their respective owner. The comments are property of their posters, all the rest is © 2003-2021 Interactive Omnimedia Pty Ltd.
You can syndicate our news using one of the RSS feeds.