Canadian Pacific Railway announced that, just prior to the Annual Meeting of shareholders of May 17,   Fred Green had stepped down as President and CEO, and had also resigned as a Director. The company also announced that Directors John Cleghorn (Chairman), Tim Faithfull, Edmond Harris, Michael Phelps and Roger Phillips had advised the company that they did not intend to stand for re-election. This move allowed all seven of Pershing Square’s nominees to be elected to the Board during the Annual Meeting.

Following the Annual Meeting, the Board selected Madeleine Paquin (President and CEO of Logistec Corporation)  to serve as acting Chair. The Board also appointed newly elected Director Stephen Tobias as interim CEO. Mr. Tobias is a 40-year veteran of the railroad industry and former Vice Chair and Chief Operations Officer of Norfolk Southern Corporation. The Board appointed a search committee to identify a permanent CEO.

As if the stresses of the proxy fight, senior management changes and the knowledge that numerous additional changes will be implemented once a new CEO has been appointed, are not enough, union members belonging to the Teamsters Canada Rail Conference, which represents 4,800 engineers, conductors and rail traffic controllers in Canada, walked off their jobs on May 23 forcing CP Rail to shut down its freight network. Negotiations are continuing, undoubtedly under pressure from the threat that Lisa Raitt, the federal Labour Minister may introduce back-to-work legislation when Parliament reconvenes on May 28. The federal government has taken similar action in other situations where federally-regulated companies providing essential services had threatened to lock out employees, or had become subject to work interruptions.

The company, which has contributed about $1.9 billion of solvency deficit contributions to its pension plan during the past three years, has stated that it requires changes to legacy pension and post-retirement benefits to make them industry-comparable. Among the range of proposed amendments, some of the options provide guaranteed pension payments that are a multiple of average Canadian industrial pension payments and exceeds what this union has already agreed to for the majority of its members at another major Canadian railway.