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CP Rail close to installing new CEO

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Half of the board of directors at CP Rail is now Bill Ackman’s Pershing Square slate.

With today’s announcement that former Suncor CEO Rick George is resigning as a director, following the June 11 announcement that director David Raisbeck was stepping down, Ackman’s group has seven of the fourteen seats on the board.

In the statements announcing George’s and Raisbeck’s resignations, the company said their board seats would not be filled.

Chairman Paul Haggis---part of the Pershing slate---thanked George “for his many contributions to the Company, particularly his leadership in the Board's search for a new CEO." A source familiar with the matter said that George’s resignation was a surprise.

The railway, meanwhile, is inching closer to hiring a new chief executive officer.

A source familiar with the search tells BNN that more than one person has been interviewed for the job and a hiring decision is expected “in a matter of weeks.”

Another person close to the company said the decision would be made “very soon.”

CP Rail had a board meeting scheduled for Tuesday in Calgary.

Since Bill Ackman’s New York-based Pershing Square Capital Management forced out CEO Fred Green, Chairman John Cleghorn and four long time directors in the hours before the company’s annual meeting on May 17, the company has been searching for a new chief executive.

Green was replaced on an interim basis by Stephen Tobias, the former vice chair and chief operating officer of Norfolk Southern in the United States. Tobias also sits on CP’s board.

Ackman’s preferred candidate to run CP is Hunter Harrison, the former CEO of rival Canadian National Railway. Harrison retired from CN at the end of 2009. He has said he can reduce CP’s operating ratio – expenses divided by revenue---to 65 percent. A lower number is better.

Canadian Pacific’s operating ratio is the highest of the major North American railroads. When the railway reported its first quarter results on April 20, the operating ratio was 80.1 per cent.

Harrison has been living in Florida since his retirement from CN. In spite of announcing his intention to pursue the job at CP after his non-compete clause with CN had expired, his former employer filed a lawsuit in an Illinois court and subsequently cancelled some $40 million US in pension and retirement benefits that had been payable to him.

On June 4, CP announced that Paul Haggis would be the new Chairman of the board of the railway. Haggis is the former President and CEO of OMERS, the Ontario Municipal Employees Retirement System.

Pershing Square is the largest shareholder in CP Rail, holding more than 14 per cent of the company.

The hedge fund first acquired its stake in the company last fall and then led a six-month proxy battle to over haul CP’s board and management.

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