Canadian Pacific Railway Limited announced that Keith Creel has been appointed President and Chief Executive Officer of the company effective January 31, 2017 following E. Hunter Harrison’s decision to retire from CP.
“Hunter has made enormous contributions to CP, and we are forever grateful for his years of service,” said Andrew F. Reardon, Chairman of the Board. “We have a tremendous CEO-in-waiting in Keith Creel. Keith and his team are ready to formally take the reins.”
“Leaving CP is bittersweet,” said Mr. Harrison. “I have had a wonderful experience and depart with many friends and with full confidence in Keith’s ability to build on the great success we have enjoyed.”
Mr. Harrison had approached the Board to discuss his retirement from CP and potential related modifications to his employment arrangements that would allow him to pursue opportunities involving other Class 1 Railroads. A special committee of the Board oversaw discussions with Mr. Harrison. Following negotiations, receipt of independent legal advice, and careful deliberation, the special committee recommended to the Board that CP enter into a separation agreement with Mr. Harrison.
Under the terms of the separation agreement, CP has agreed to a limited waiver of Mr. Harrison’s non-competition obligations. In consideration of the waiver Mr. Harrison has agreed to terminate all roles he has with CP and forfeit substantially all benefits and perquisites he is entitled to receive from CP going forward, including his pension. In addition, Mr. Harrison has agreed to surrender for cancellation all of his vested and unvested equity awards, except for a portion of his vested options he was granted upon arrival at CP in June 2012. The total value of benefits and awards forfeited by Mr. Harrison is approximately C$118 million, with the value of the equity awards surrendered calculated based on their in-the-money value relative to the current trading price of CP’s shares.
The previously-agreed consulting agreement between CP and Mr. Harrison will not take effect and Mr. Harrison will not be providing any consulting or other services to CP following his retirement. CP has also reinforced Mr. Harrison’s non-solicitation obligations with respect to senior CP employees. Mr. Harrison has agreed to sell all of his CP shares by May 31, 2017. CP will have no role in Mr. Harrison’s future endeavours.
Keith Creel was appointed President and CEO in February, 2013 and joined the CP Board of Directors in May of 2015. Creel previously served as the Executive Vice-President and COO of Canadian National Railway Company.
“This transition has been planned since Keith’s arrival back in 2013 and we are confident in his abilities to lead the company,” said Andrew F. Reardon, Chairman of the Board. “Under Hunter Harrison’s leadership, CP built a strong foundation for future success; that foundation, together with Keith’s passion for railroading, operational expertise and commitment to customer service and safety, positions the company well for many years to come.”
For eleven consecutive years, CP has been the safest Class 1 railroad in North America, measured by train-accident frequency. “As a result of our dedication to safety, in 2016 we celebrated our lowest train accident frequency ever,” Creel said. “Still, we acknowledge that one incident is too many and we will continue to hold ourselves and others accountable when it comes to safety.”
Under Creel’s leadership, CP will continue to find safer, more efficient ways to connect customers to domestic and global markets, and will continue to play a prominent role in connecting communities in both Canada and the U.S. “To be leading such an iconic company as Canada celebrates its 150 anniversary, is truly special,” Creel said. “CP has a proud history and I am privileged to stand alongside today’s railroaders to build an even brighter future. I am excited to connect with employees, customers and communities across the continent as we continue to safely move the North American economy.”