27 April 2012

CP Board Demands Retraction of Pershing Square's False Accusations

Calgary Alberta - Canadian Pacific Chairman of the Board of Directors, John Cleghorn, today sent a letter to William Ackman.
 
The full text of the letter is below:
 
27 Apr 2012
 
Dear Mr. Ackman:
 
Canadian Pacific's Board of Directors has publicly expressed its disappointment with the false accusations you made during interviews with the Business News Network and CBC News on Monday, 23 Apr 2012, that CP had intentionally manipulated its first quarter earnings by improperly not accruing for bonuses.
 
Specifically, you said:  "So effectively, by not accruing for bonuses, they made the operating ratio look about 100 basis points better" and, in your answer to yourself as to why, "The answer is, to make the quarter look better, in my opinion." By making these statements, you called into question the integrity of CP, our Board of Directors, the Audit Committee of the Board of Directors, and the staff of CP who work on financial disclosure.
 
We believe that this is totally unacceptable behavior for a prospective member of our Board of Directors.
 
You have already had more than enough time to retract your false accusations. Our CFO, Kathryn McQuade, made herself available, and spoke, to your representatives so there could be no uncertainty as to the inaccuracy of your statements. Accruals for bonuses were properly made and recorded in full accordance with US GAAP and were appropriately disclosed in (1) CP's first quarter earnings release, (2) in the conference call comments by our CFO, and (3) in the MD&A in CP's quarterly report. This is consistent with CP's practice of transparent and proper communications with our shareholders and the public markets.
 
I could not put it better than Dick Kelly, Chairman, Canadian Pacific Board of Directors Audit Committee, who said in CP's public response to your false accusations:  "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."
 
We demand that you publicly retract your untrue accusations and offer your apology to the Company, our shareholders, our Board of Directors, our Audit Committee, and the dedicated employees whose integrity you called into question.
 
Yours truly,
 
John E. Cleghorn - Chairman of the Board.