Activist investor asks CN to postpone CEO pick after special shareholder meeting
LONDON – Activist investor TCI Fund Management has asked Canadian National to postpone the selection of its next chief executive until after the extraordinary shareholders’ meeting in March.
CN announced Monday that it will appoint a new CEO in January, when CEO JJ Ruest is expected to retire.
TCI’s request for a break in CEO selection process comes after its recommended CEO candidate, former CN COO Jim Vena, withdrew his name from consideration over the weekend. end. [see “Jim Vena withdraws …,” Trains News Wire, Dec. 20, 2021].
“Given the history of CN’s board failures in CEO appointments, it is no surprise to us that the board has yet to succeed in attracting the best candidate for the post, “London-based TCI said in a statement.
News of Vena’s withdrawal caused CN shares to fall 6.5% on Monday. TCI suggested that CN had pulled out all the stops against Vena, who was well into the interview process. Vena dropped out after it was clear the board would not support TCI’s calls for sweeping changes to the railroad, according to people familiar with the matter.
“The board is in conflict, which makes the current selection process flawed and unreliable. A CEO has to be certain that he or she will have the unwavering support of the board, and currently that cannot be guaranteed, ”said TCI.
TCI appointed a list of four directors. CN shareholders will vote on the nominees for the board of directors at the special meeting of shareholders on March 22, which is called at TCI’s request.
“If CN shareholders elect the four independent candidates nominated by TCI at the special meeting, they can be confident that the board will conduct a fair CEO selection process and be able to provide the new CEO with stable and supportive support. sustainable, ”TCI said.
It was not clear whether Vena would toss her hat in the ring if all four candidates for TCI’s board were elected. TCI declined to comment.
“The need for change on the CN Board of Directors has never been clearer and TCI remains fully committed to bringing much-needed rail experience to the Board for the benefit of all CN shareholders,” said TCI.
TCI’s nominees are Gil Lamphere, a former CN board member; Rob Knight, former CFO of Union Pacific; Allison Landry, former Credit Suisse analyst; and Paul Miller, retired vice-president of CN.
“The appointment of the new CEO should therefore be postponed until after the special meeting so that shareholders can vote on who should lead the vitally important search for a CEO who can initiate a business transformation that will pave the way for growth. future, ”TCI said.
TCI, CN’s second-largest shareholder, launched its proxy contest in August after the U.S. Surface Transportation Board effectively called off CN’s plans to merge with Kansas City Southern. The fund criticized what it sees as a deterioration in CN’s operational and financial performance and called for the resignation of Ruest and board chairman Robert Pace, who is due to step down next year.
In response, CN announced in September a Full Speed Ahead plan to improve the railroad’s operating ratio, reduce costs and capital expenditures, and increase shareholder returns through a combination of profit growth. and share buybacks.
Ruest announced his retirement a day after TCI released its plan to improve CN’s operations and financial performance.
CN did not immediately respond to a request for comment.