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Hunter Harrison would target costs at CP Rail

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Hunter Harrison, the former railroad boss that an activist investor wants installed as chief executive of Canadian Pacific Railway (CP-T), said on Monday he would take costs in hand at CP but not head down a "slash and burn" path.

Harrison, a former CEO of Canadian National Railway (CNR-T), also said he would "declare war on bureaucracy" at CP within the first 100 days if he took the top job at Canada's second biggest railroad.

He made the comments at a town hall-style meeting of about 300 investors, lawyers and media members, where investor William Ackman was pitching Harrison and five replacement board members as a remedy for CP's lagging efficiency.

Ackman's Pershing Square Capital Management holds a 14.2-percent stake in the railway, and is pushing for dramatic improvements in CP's productivity, but he said at the meeting he had no plans to take over the company.

The New York hedge fund's board nominees include Ackman and his partner Paul Hilal, management consultant Gary Colter, energy industry executive Rebecca MacDonald and former Onex Corp. executive Anthony Melman.

Ackman, 45, said he was not claiming the current board was incompetent, otherwise he would have been trying to remove all 15 members.

"These are smart people ... who unfortunately have not been able to get the job done," he said.

Ackman believes Harrison, 67, who turned Canadian National into one of North America's top-performing railroads, can repeat the trick with CP.

Canadian Pacific has publicly backed CEO Fred Green and his plans to improve the operating ratio to 70-72 percent in 2014. It will hold its annual meeting and board vote on May 17 in Calgary, Alberta.

Lower ratios, which measure what percentage of revenue is needed to run a railway, indicate more efficient and generally more profitable carriers. CP's operating ratio, at 81.3 percent, is the weakest of North America's six big railroads.

Best-in-class CN boasts a ratio of just 63.5 percent. Much of its efficiency gains came during Harrison's tenure, first as chief of operations and then as CEO. He retired in 2009.

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