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Canadian Pacific Railway Ltd. (CP-T), battling a fierce challenge from its largest shareholder, is setting performance records this year, Chief Executive Fred Green said on Tuesday in an unusually blunt response to his critics.
Hitting back at U.S. activist investor William Ackman, who wants him replaced by former Canadian National Railway (CNR-T) CEO Hunter Harrison, Green said CP's improvement looks set to continue while Harrison would drive customers away.
Green, who was speaking at a three-hour investor meeting in Toronto, was uncharacteristically direct at times in criticizing Harrison, a marked departure from his usual "nice guy" demeanor and CP's traditional low-key approach.
Shippers' experience under Harrison - a tough, no-nonsense CEO who introduced tight railroading schedules, slashed costs and fined customers if they held onto cars longer than agreed - was "not pleasant," Green said.
CN's current management and CEO, Claude Mongeau - who replaced Harrison when he retired in 2009 - are doing all they can to "de-Hunter CN," he said.
"Shippers get to vote too. They vote with their market share, and Claude Mongeau and CN have open arms to those customers as they transform CN to a very different model than of its last leader," Green told a room of about 150 at a conference center north of Toronto's financial district.
Much of the battle between CP and Ackman's Pershing Square Capital Management, which has a 14.2-percent stake in CP, centers on the railroad's operating ratio, which is the weakest in North America. CN's is the strongest, a feat achieved under Harrison's watch.
Shareholders will vote on Ackman's move to replace Green with Harrison at CP's annual meeting on May 17.
RECORD OPERATING METRICS THIS YEAR
Green said CP's most recent operating numbers show CP is becoming far more productive and efficient and doesn't need any repairs from a new CEO.
In the first two months of this year CP's train speed was up 15 percent and its yard dwell down 29 percent, compared with the average of the past three years.
"This is not about a soft winter and easy year-over-year comparisons," Green said. "We are setting new records."
CP's investor day meeting comes seven weeks after Ackman held a similar, but larger, event in the heart of Toronto's financial center to lay out his reasons for wanting Green out.
Green said that some of Pershing's analysis of CP's operating metrics is "flawed." It is wrong about CP's pricing and service quality as well as its railcar and locomotive utilization, he said.
"I don't mind criticism but I do think it's reasonable to ask that it be based on facts," he added.
Earlier in the day, Green told Reuters in an interview that CP's shareholders are pleased with the direction the company is taking and with the improvement in its operations.
"What we've found is that there's an awful lot of change that is occurring in the company and people are just delighted with the amount of change that's happening and how it's manifesting itself in superb operating metrics," Green said.