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CP results highlight need for change: Ackman

Bill Ackman, the head of the New York-based hedge fund agitating for change at Canadian Pacific Railway (CP-T), is once again taking aim at the railroad operator's management.

After issuing a letter to CP shareholders, in which Ackman said the company's recent operating results were "distorted" by a mild winter among other things, he joined BNN to talk about his ongoing proxy battle.

Ackman is calling for CP's current CEO Fred Green to be replaced with Hunter Harrison, the former head of rival Canadian National, as well as nominating seven members to the board.

"In order to have the dramatic change in the company…we've proposed directors who are going to come in and they're not going to be concerned about protecting their legacy in the past, they're not going to be concerned about mistakes in the past, they're going to step up and do what they think is in the best interests of the company going forward," he says. "The risk is sticking with a team that in six years [the tenure of the current CEO] hasn't made any progress."

Ackman maintains that his plan for the company is not about drawing up an entire new operating blueprint, but rather installing management that follows through on its promises.

"It's not about tearing up what they already have," he says. "Are you going to rely on the guys who have not made any progress in improving profitability in six years?"

CP Rail says it's "untrue and irresponsible for Pershing Square to accuse CP of manipulating its first-quarter earnings."

"It is outrageous for Mr. Ackman to make the accusations he did today on the Business News Network. To put the Company's performance in a negative light, Mr. Ackman suggested that management deliberately distorted CP's financial results. He attacks the competence of our audit committee, which approved our first quarter results," Dick Kelly, Chairman, Canadian Pacific Board of Directors Audit Committee, said in a statement.

Ackman says the recent run-up in the company's stock price is a sign that shareholders are looking for change at CP.

"To own the stock at $75 a share, you have to believe there's going to be a major changes," he says.

Pershing Square acquired a 14.2-percent stake in CP Rail last fall -- making it the largest shareholder. Ackman's ultimate goal is to lower CP's operating ratio to 65 percent from the 80.1 percent at the end of the first quarter [the lower the number the better]. CTV Two CTV News CTV News Channel BNN - Business News Network CP24