Pershing Square Continues to Ignore CP's Clear
Progress
CP Sends Letter to Shareholders
Urges Shareholders to Vote the White Universal Proxy
Today
CALGARY, April 26, 2012
/PRNewswire/ - Canadian Pacific (TSX: CP) (NYSE: CP) today sent the
following letter to shareholders:
April 26, 2012
Dear Fellow Shareholder:
You face a critical decision about the future of your company at
Canadian Pacific's annual meeting of shareholders on May 17, 2012:
- You can vote for the continued success of CP's value-enhancing
Multi-Year Plan, approved by the Board and being executed by a CEO
and management team held accountable by the CP director nominees
or;
- Delay and disrupt the CP Plan by diluting the Board with the
dissident Pershing Square nominees who have offered no credible
alternative.
We strongly recommend you vote FOR the CP director
nominees - highly qualified business leaders who are serving the
best interests of ALL CP shareholders and Pershing Square CEO,
William Ackman.
PERSHING SQUARE'S AGENDA ENTAILS RISK AND
DISRUPTION
Pershing Square has put forward its own slate of nominees to
advance its agenda of replacing CP's Chief Executive Officer,
despite the risk and disruption this entails. In addition,
Pershing Square has ignored or misrepresented the operational and
financial success already being achieved by the CP management team
through the aggressive and successful execution of CP's Multi-Year
Plan.
PERSHING SQUARE PROPOSED UNPRECEDENTED
OPERATING RATIO PROJECTIONS - DESPITE HAVING NO PLAN
To justify its high-risk agenda, Pershing Square's original
claim was that it could reduce CP's operating ratio ("OR") to 65 by
2015, a reduction rate never achieved by any management team at any
Class I railroad. Subsequently, in an interview on BNN on
April 23, 2012, Mr. Ackman changed
the timeframe to "in four years" rather than "by 2015."
During Pershing Square's "townhall" meeting for CP shareholders on
February 6, 2012, Hunter Harrison, Pershing Square's CEO
candidate, appeared to back away from reducing CP's OR to 65 by
2015, instead promising "significant improvement."
Regardless of the actual OR targets and timeframe that Pershing
Square and Mr. Harrison have in mind - to date, no plan has been
presented and it appears that Pershing Square has no plan.
PERSHING SQUARE'S AGENDA: DISRUPTIVE CEO
CHANGE AND THREATENED "NUCLEAR WINTER"
Despite the absence of a plan, Pershing Square continues to push
for a change in management that risks disrupting the Company's
success and the shareholder value being created by the current CP
management team under CP CEO, Fred
Green.
In fact, rather than work with the Board, Pershing Square
demanded that CP install Mr. Harrison as CEO and threatened
"Nuclear Winter" if CP did not acquiesce. Mr. Harrison, as
the 67 year old former CEO of Canadian National Railway Company
("CN"), is well known to the CP Board and the Board has serious
questions about his track record in customer and regulatory
relations while at CN.
IN LIGHT OF CP'S SIGNIFICANT OPERATING AND
FINANCIAL MOMENTUM, PERSHING SQUARE HAS EFFECTIVELY ENDORSED CP'S
MULTI-YEAR PLAN
In response to requests from the CP Board for details on how
Pershing Square's unprecedented projections could be met, Pershing
Square stated that only after being installed as CEO would Mr.
Harrison develop a plan. By his own admission, Mr. Harrison
has noted that if he were installed as CEO, it would take him some
18 months to get his team in place, develop a plan and begin to
"move the needle." It remains unclear whether the four-year
timeframe for OR improvement cited by Mr. Ackman begins at the
beginning, sometime in the middle, or after that 18 month period
has elapsed.
There is still no evidence that Mr. Harrison has any real
knowledge of CP's Canadian assets and every reason to believe that
entrusting the Company and shareholders' investment to him while he
familiarizes himself constitutes unacceptable risk of disruption to
CP's value-generating Multi-Year Plan.
As Ed Harris, who has served as
Executive VP of Operations for both CP and CN, has told the Board,
"It is a mistake to underestimate the differences between the
infrastructure of CP and CN. On the one hand, in CN you have a
railroad that was built by Canadian taxpayers with twice the
proportion of sidings and double track and that therefore benefits
from significantly enhanced operating flexibility. On the other
hand, CP has to contend with greater geographic challenges."
Fred Green and his management
team are executing on CP's Multi-Year Plan, which was designed to
generate the best possible value from CP's unique assets.
CP's strong first quarter 2012 results are evidence that
operational successes are translating into financial results and
creating significant shareholder value. Our Multi-Year Plan
is working. In the first quarter, when compared to the first
quarter averages from the prior three years, train speed improved
13 per cent, active cars online improved 25 per cent, terminal
dwell improved 27 per cent and car miles per car day has improved
43 per cent, to 208 miles per day.
It is, therefore, not surprising that Pershing Square has begun
to back away from its previous statements about Mr. Harrison's
supposed strategy. During the April
23, 2012, interview on BNN, Mr. Ackman stated that any new
plan developed by Mr. Harrison would not be "materially different"
than CP's current plan and that he believes CP's current plan is
"reasonable."
Pershing Square and Mr. Harrison now seem to accept that CP's
Multi-Year Plan is the right plan.
Shareholders should ask themselves: why change a winning
team?
CP DOES NOT NEED A TEMPORARY CEO
As Mr. Harrison stated during the April
25, 2012, question and answer session hosted by the Bank of
Montreal, "And I think Bill
described it very well, that I would love to be in a position that
the Board, if they were, [pause] would choose me then to mentor a
successor and to put a team together that develops some
sustainability, and then I'm ready to, [pause] I'm ready to go back
to the pasture."
Mr. Ackman provided a clue to what Pershing Square has in mind
during his April 23, 2012, interview
with BNN. Mr. Ackman was directly asked if he had spoken with
Keith Creel, Chief Operating Officer
and Executive Vice President of CN. As CP disclosed in its
Management Proxy Circular over a month ago, Mr. Ackman suggested
that, since Mr. Harrison was still subject to a non-solicitation
covenant in favour of CN, CP should hire a CN executive prior to
hiring Mr. Harrison. Under sustained questioning on
television by BNN presenter Howard
Green, Mr. Ackman came up with a different version of the
truth:
Howard Green: Did you speak with Keith Creel of CN? |
William Ackman: # |
Howard Green: Did Hunter speak with him. |
William Ackman: # I mean I don't speak for
Hunter. |
Howard Green: Did you recommend to CP that they hire
Keith Creel before Hunter Harrison? |
William Ackman: We've heard wonderful things about Keith
Creel. |
Howard Green: But did you recommend that to CP? |
William Ackman: We understand he's an excellent
operating executive. We said to them, look, one of the things
you could do is you could recruit Keith Creel or another potential
candidate. |
Howard Green: Prior to hiring Hunter Harrison so he
would not be in breach of his non-solicit. |
William Ackman: That's correct. |
It is worth noting that CN has already filed a lawsuit against
Mr. Harrison for breach of his contractual undertakings to CN.
VOTE FOR CP'S DIRECTOR NOMINEES ON THE WHITE
UNIVERSAL PROXY TODAY
CP's Board of Directors is confident that CP has the right
plan and the right team to successfully execute the Multi-Year Plan
and generate substantial value for shareholders. CP's
Board is unanimous in its belief that Pershing Square's demand that
it replace the Company's CEO with Mr. Harrison would delay and
damage CP's value-generating plan, and represents unwarranted risk
to shareholder value at a critical time.
You may vote for CP's director nominees in accordance with the
instructions provided on the WHITE universal proxy on the
Internet, or by signing, dating, and returning the WHITE
universal proxy in the postage−paid envelope provided. Only
your last−dated proxy will count. Any proxy may be revoked at
any time prior to its exercise at the annual meeting as described
in the Management Proxy Circular.
You can visit www.CPonTrack.com for a copy of CP's Management
Proxy Circular and for more information about CP, our team and our
value-generating Multi-Year Plan.
On behalf of CP's Board of Directors, thank you for your
continued support and interest in CP.
Sincerely,
/s/
John E. Cleghorn
Chairman of the Board of Directors
If you have any questions about the information contained in
this document or require assistance in completing your WHITE
universal proxy, please contact our proxy solicitation
agents:
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Georgeson |
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MacKenzie Partners, Inc. |
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TOLL FREE - 1-866-374-9187 or
International Toll Free Number
(outside Canada and
U.S.): 1-866-682-6148 |
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TOLL FREE 1-800-322-2885
or
(212) 929-5500 (Call Collect) |
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email: askus@georgeson.com |
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email: proxy@mackenziepartners.com |
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Note on Forward-Looking Information
This news release contains certain forward-looking information
within the meaning of applicable securities laws relating, but not
limited, to our operations, priorities and plans, anticipated
financial performance, business prospects, planned capital
expenditures, programs and strategies. This forward-looking
information also includes, but is not limited to, statements
concerning expectations, beliefs, plans, goals, objectives,
assumptions and statements about possible future events,
conditions, and results of operations or performance.
Forward-looking information may contain statements with words such
as "anticipate", "believe", "expect", "plan" or similar words
suggesting future outcomes.
Undue reliance should not be placed on forward-looking
information as actual results may differ materially from the
forward-looking information. Forward-looking information is
not a guarantee of future performance. By its nature, CP's
forward-looking information involves numerous assumptions, inherent
risks and uncertainties that could cause actual results to differ
materially from the forward-looking information, including but not
limited to the following factors: changes in business strategies;
general North American and global economic, credit and business
conditions; risks in agricultural production such as weather
conditions and insect populations; the availability and price of
energy commodities; the effects of competition and pricing
pressures; industry capacity; shifts in market demand; inflation;
changes in laws and regulations, including regulation of rates;
changes in taxes and tax rates; potential increases in maintenance
and operating costs; uncertainties of investigations, proceedings
or other types of claims and litigation; labour disputes; risks and
liabilities arising from derailments; transportation of dangerous
goods; timing of completion of capital and maintenance projects;
currency and interest rate fluctuations; effects of changes in
market conditions and discount rates on the financial position of
pension plans and investments, including long-term floating rate
notes; and various events that could disrupt operations, including
severe weather, droughts, floods, avalanches and earthquakes as
well as security threats and governmental response to them, and
technological changes. The foregoing list of factors is not
exhaustive.
These and other factors are detailed from time to time in
reports filed by CP with securities regulators in Canada and the
United States. Reference should be made to
"Management's Discussion and Analysis" in CP's annual and interim
reports, Annual Information Form and Form 40-F. Readers are
cautioned not to place undue reliance on forward-looking
information. Forward-looking information is based on current
expectations, estimates and projections and it is possible that
predictions, forecasts, projections, and other forms of
forward-looking information will not be achieved by CP.
Except as required by law, CP undertakes no obligation to update
publicly or otherwise revise any forward-looking information,
whether as a result of new information, future events or
otherwise.
About Canadian Pacific
Canadian Pacific (TSX:CP)(NYSE:CP) operates a North American
transcontinental railway providing freight transportation services,
logistics solutions and supply chain expertise. Incorporating
best-in-class technology and environmental practices, CP is
re-defining itself as a modern 21st century transportation company
built on safety, service reliability and operational efficiency.
Visit www.CPonTrack.com and see how Canadian Pacific is further
driving shareholder value.
SOURCE Canadian Pacific