Bill Ackman

The CEO of Pershing Square Capital Management on his public crusade to install a new leader at Canadian Pacific Railway

As told to Diane Brady

“I couldn’t believe the board made its decision before hearing our case”


Once you have a big stake in a company, you can usually influence its strategy. Before we pick a target we run an algorithm we call Return on Invested Brain Damage — the return has to be high enough to justify the work. Most of the time, management is not the problem. At Canadian Pacific [of which we own 14 percent], you have a CEO who has under-performed for six years and runs the worst-performing railroad in North America. We’ve sought to replace him with a man who had the best track record in the industry at Canadian National: Hunter Harrison.

Soon after we disclosed our stake, I spoke to [CP] Chairman John Cleghorn. We agreed to meet at the Montreal airport on Nov. 2. Although I’d said we wanted to talk about a management change, he and [CP CEO] Fred Green were there. After three of us made a presentation, Mr. Cleghorn said, “I’ve spoken to the board and want to let you know we’re 100 percent behind Fred.” I couldn’t believe the board made its decision before hearing our case. I asked to speak to him alone and said, “Look, the last thing we want here is a proxy contest, but if you’re not open to alternatives, we’ll go to the shareholders for support.” I got back on the plane. After the doors were closed and the engines started, the pilot said, “Bill, do you recognize this gentleman on the tarmac?” I looked out the window and there was John Cleghorn, standing in front of our plane with his arms folded. We powered down and I got out. He said, “Bill, I’ve had a chance to talk to Fred Green. He’s prepared to step aside for Hunter; that’s how much he hates CN. The board would like to work with you.” I got back on the plane and said, “That was easy.” We were practically high-fiving each other. I expected a call the next day. Thursday passed. Then Friday. On Saturday, I sent an e-mail and he called to say the board wanted Hunter to meet with their CFO. When I said we could join the board and work together on the CEO transition, he paused: “You want a board seat?” We’d already asked for two. I later realized they were determined to stand by their man.

We’ll take our slate of seven board nominees to a vote on May 17. I don’t like public battles. This is only our third proxy contest in eight years. You have to go to the mat if it’s right for shareholders.


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