Rebecca MacDonald during a meeting of CP Rail shareholders in Toronto - 6 Feb 2012 Darren Calabrese.

6 February 2012

CP Board Nominees Wouldn't Buy Shares - Yet

Toronto Ontario - Rebecca MacDonald, one of Bill Ackman's hand-selected nominees for the board at Canadian Pacific Railway Ltd., made what on the surface seemed like a startling capitulation Monday at a shareholders meeting in Toronto.
 
When asked whether she would buy shares in CP as a board member, she responded:  "I would not buy shares today. Definitely, not."
 
She looked at Hunter Harrison, the former head of Canadian National Railway Co., who is being put forth by Mr. Ackman's Pershing Square Capital Management LP as a potential replacement for Fred Green, CP's current CEO. Mr. Harrison just spent $5-million of his own money on CP's shares betting big on its turnaround.
 
"You're a much braver man than I would be," Ms. MacDonald said.
 
Upon further clarification, she said she would be willing to invest in the company if the proposed management shake-up actually occurs, echoing the other nominees.
 
But she said she would be concerned as an investor by what appears to be a lack of accountability to the company's board by its management team.
 
Anthony Melman, the former Onex executive, who is also being put forth as a candidate for CP's board by Pershing, said he had the same concerns.
 
Both Mr. Melman and Ms. MacDonald said they would ensure that benchmarks are set, and the company's executives were held accountable if they missed those targets should they be elected to the board.
 
The pair are just two of five candidates put forth by Pershing, that also includes Mr. Ackman himself, his business partner, Paul Hilal, and restructuring expert, Gary Colter.
 
Mr. Ackman acknowledged Monday in an interview that none of the nominees have any railroad experience. But he said it was intentional because his five nominees will be put on a slate of existing directors and there are already two former railway executives sitting on the board, Ed Harris and Tony Ingram.
 
He said Mr. Harrison, if he is appointed as CEO, would also be given a spot on the board.
 
"It's intentional," he said. "We already have two railroad execs on the board. Part of our slate would have included railroad executives. But you don't want the board of a railroad company full of railroad execs. You want people with very good, relevant business experience. I think we've got a diverse group of people."
 
Scott Deveau.