Canadian Railroads > CP Rail CEO says shareholder activism 'overdue' at U.S. rivals

(Recasts with CEO interview)(Reuters) - Shareholder activism is "long overdue" at some major U.S. railways, Canadian Pacific Railway Ltd Chief Executive Hunter Harrison said in an interview on Tuesday, after several U.S. competitors reported disappointing financial results.

Full article at: http://www.reuters.com/article/2015/04/21/cp-results-idUSL1N0XI0QM20150421



Edited 1 time(s). Last edit at 04/22/15 08:32 by Appalachianrails.

"Harrison . . . declined to name specific railways, saying 'that would be mean.'"

Awww, he does have a heart!

So this is his way of saying that shareholders of other railroads should see things his way and do what he wants?

wabash2800 Wrote:
-------------------------------------------------------
> So this is his way of saying that shareholders of
> other railroads should see things his way and do
> what he wants?

I suspect it is his way of saying that share owners own the railroad, not management, their consultant buddies, and investment banks. If the railroads don't focus on doing their job, and delivering dividends and buybacks to their owners, the shareholders should hire new management.

Fred Green and his Bay Street buddies had a pretty good deal at CP. Lots of pay, fabulous benefits and frequent contracts as the railroad's performance slipped into the 80s for an operating ratio. Stock has done well since they were challenged.

(No different than lots of fat and happy entrenched entities. Government, big banks, Catholic church, union top leadership, cable TV networks, etc.  Sometimes a world shaking challenge is good for everybody.)

But rewarding stockholders is often done at the expense of long term prospects.

CPR_4000 Wrote:
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> But rewarding stockholders is often done at the
> expense of long term prospects.

I would change that to say .... ususally done at the expense ....

 

Will MacKenzie
Dundas, ON

...and the employees. Ask anyone that works for CN or CP how Hunter's involvement has changed their work environment. Morale is in the toilet.

Posted from iPhone

I wonder if this might have something to do with UP making him look bad on the recent business special? He might be suggesting UP's management might need to be replaced.

Ted Curphey
Ontario, OR

Poor Hunter, he's getting rebuffed at every turn as he shops CP to every other Class 1 in North America.  He clearly wants out of that job so bad, but his personal pride won't let him walk away with CP in worse shape than it is when he took it over.

Bull S%$T!
http://business.financialpost.com/news/transportation/canadian-pacific-railway-executives-off-guard-by-bs-comment-in-conference-call


This smoke and mirrors show at CP will end soon.

I'm ready for the tar and feathers, but as a stockholder in UNP, CSX and NSC, I've got to agree with him, particularly in regard to CSX.  UP is still doing a great job from my perspective; I just got the 2014 annual report today. 

cpcnguy Wrote:
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> Bull S%$T!
> http://business.financialpost.com/news/transportat
> ion/canadian-pacific-railway-executives-off-guard-
> by-bs-comment-in-conference-call
>
>
> This smoke and mirrors show at CP will end soon.

Sixty five percent operating ratios aren't good enough Hunter?  I'm so glad I'm retired...

Was there a thread I missed somewhere?  Please provide a link, or elaborate on how UP made him look bad.
funnelfan Wrote:
-------------------------------------------------------
> I wonder if this might have something to do with
> UP making him look bad on the recent business
> special? He might be suggesting UP's management
> might need to be replaced.

That's exactly what I was referring to.

hoydie17 Wrote:
-------------------------------------------------------
> Poor Hunter, he's getting rebuffed at every turn
> as he shops CP to every other Class 1 in North
> America.  He clearly wants out of that job so
> bad, but his personal pride won't let him walk
> away with CP in worse shape than it is when he
> took it over.

It's not just employees who encounter the Hunter "My way or the highway" doctrine, recently a Chief Financial Officer lasted 17 months at CP.  He had come over from one of Calgary based oil corporations, and stated that he would like to step into Hunter's shoes when he retires.  Wrong thing to say, fellow Southerner Keith Creel is being groomed for the top job. Will the Hunter legacy outlive the CEO?  Good question.



Edited 1 time(s). Last edit at 04/22/15 21:37 by eminence_grise.

Hunter's been gone from CN for a few years, now. How have things changed over there since he left? Status quo? Better? Worse?

CPR_4000 Wrote:
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> Hunter's been gone from CN for a few years, now.
> How have things changed over there since he left?
> Status quo? Better? Worse?


Having to buy hundreds of new and used locomotives he deemed surplus, along with putting back in track he tore up. Trying to catch up on years of deferred maintenance after he drastically cut budgets. Hiring thousands of new employees (not all his fault) as well. I'll say we're still trying to clean up his mess. But you be the judge.

cpcnguy Wrote:
-------------------------------------------------------
> CPR_4000 Wrote:
> --------------------------------------------------
> -----
> > Hunter's been gone from CN for a few years,
> now.
> > How have things changed over there since he
> left?
> > Status quo? Better? Worse?
>
>
> Having to buy hundreds of new and used locomotives
> he deemed surplus, along with putting back in
> track he tore up. Trying to catch up on years of
> deferred maintenance after he drastically cut
> budgets. Hiring thousands of new employees (not
> all his fault) as well. I'll say we're still
> trying to clean up his mess. But you be the judge.

CN is hauling much more cargo now than it was carrying the day Hunter left the property.  To say the additional property was needed for future oil shipments which nobody anywhere anticipated in 2009 is alittle generous. Same thing with grain, and the huge congestion in the ports.

 

Lackawanna484 Wrote:
-------------------------------------------------------
> cpcnguy Wrote:
> --------------------------------------------------
> -----
> > CPR_4000 Wrote:
> >
> --------------------------------------------------
>
> > -----
> > > Hunter's been gone from CN for a few years,
> > now.
> > > How have things changed over there since he
> > left?
> > > Status quo? Better? Worse?
> >
> >
> > Having to buy hundreds of new and used
> locomotives
> > he deemed surplus, along with putting back in
> > track he tore up. Trying to catch up on years
> of
> > deferred maintenance after he drastically cut
> > budgets. Hiring thousands of new employees (not
> > all his fault) as well. I'll say we're still
> > trying to clean up his mess. But you be the
> judge.
>
> CN is hauling much more cargo now than it was
> carrying the day Hunter left the property.  To
> say the additional property was needed for future
> oil shipments which nobody anywhere anticipated in
> 2009 is alittle generous. Same thing with grain,
> and the huge congestion in the ports.
>
>  

A look at CN's property in how it's changed over the past decade and half would back up the deferred maintenance and removed assets comments, and the poor shape that Hunter left CN in after he milked the company for short term property and gains (didn't the current CEO comment on this?).  One of my favorite examples is the removal of parts of the second main track between Jasper and Red Pass through the Canadian Rockies.  Now it's a huge bottle neck, but since it goes through a national park, they can't put the track back in.  Extremely short term thinking since this trackage incorporates both the main line to Vancouver and the line to Prince Rupert.

Just my opinion, but I think there's a fundamental problem now with the philosophy of "shareholders" actually being considered "owners" of a company.  With so much stock trading and short term holding of stock, sometimes only micro-seconds now, it's hard for me to accept the concept of someone trading stock as "owning" that company.  Shouldn't someone who actually own's a company have a longer, vested stake in the long term future of that company?  With that kind of philosophy, it seems to me that company owners, managers, and executives would have a lot more focus on the long term instead of getting quick "pops" in financial success so that they can grab their profits and run, profits that are usually at the expense of the company itself.  With a longer term focus, one would also have to focus on improved employee moral, which would translate into better future productivity, taking good care of the assets, and actually think about how to grow and expand the company's future...

Again, just some thoughts.

cpn456 Wrote:
(snip)
>
> Just my opinion, but I think there's a fundamental
> problem now with the philosophy of "shareholders"
> actually being considered "owners" of a company. 
> With so much stock trading and short term holding
> of stock, sometimes only micro-seconds now, it's
> hard for me to accept the concept of someone
> trading stock as "owning" that company. 
> Shouldn't someone who actually own's a company
> have a longer, vested stake in the long term
> future of that company?  With that kind of
> philosophy, it seems to me that company
> owners, managers, and executives would have a lot
> more focus on the long term instead of getting
> quick "pops" in financial success so that they can
> grab their profits and run, profits that are
> usually at the expense of the company itself. 
> With a longer term focus, one would also have to
> focus on improved employee moral, which would
> translate into better future productivity, taking
> good care of the assets, and actually think about
> how to grow and expand the company's future...
>
> Again, just some thoughts.

Being able to see five, ten, or more years into the future is a huge benefit, but few of us possess it. There are many lines abandoned by PennCentral which NS or CSX would love to have back. But not the 40 years of taxes that would have been paid on then little used lines.

The overall argument is well put.  That's a good example of why employees should be owners of a significant stake in their company. As is the case in much of Europe. Where 25% isn't unusual. With the ability to block mergers, sales of significant parts of the business, etc.  Hasn't hurt BASF, Siemens, VW, etc.

The US tax code encourages share owners to be either hyper fast traders (the carried interest that hedge funds etc enjoy), or just over one year holders (capital gains). But there's no incentive to hold for more than one year. "Unearned" dividend income is always raw meat for the tax the rich populist politicians, but tax free dividends on shares held more than five years would be nice. There's little chance of such longer view enouragements to ownership, though.