Report: Hunter Harrison bound for CSX

CEO may team up with activist investor after departing early from Canadian Pacific
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Canadian Pacific CEO E. Hunter Harrison
Associated Press
CALGARY, Alberta — Canadian Pacific CEO E. Hunter Harrison may not be retired for long.

The operations wizard and turnaround specialist could be headed for a senior position at CSX Transportation as part of an investor-led management shakeup, according to a report in The Wall Street Journal.

Harrison tells the newspaper that he’s finalizing an agreement with activist investor Paul Hilal, who was a part of the Pershing Square Capital Management team that successfully ousted CP CEO Fred Green and several CP directors after a bitter proxy battle in 2012.

“We are close to a deal to potentially look at some opportunities,” Harrison told the Journal. Harrison and Hilal — who last year launched his own activist hedge fund — worked together on CP’s unsuccessful attempts to acquire Norfolk Southern and CSX over the past two years.

CSX spokesman Gary Sease says the railroad does not comment on market speculation. The company’s stock surged 11 percent on the news.

This afternoon, CP announced that Harrison will retire at the end of the month, ahead of his planned departure at the end of June. The surprise move prompted speculation that Harrison would land at another Class I railroad.

President and Chief Operating Officer Keith Creel will become CEO on Jan. 31, completing a transition that had been in the works for months.

“The future is now and that future is very bright,” CP Chairman Andrew Reardon says.

Harrison had approached the CP board about his retirement and modifications to his employment agreements that would allow him to pursue opportunities with other Class I railroads. Harrison had planned to stay on as a consultant to CP for three years after his retirement.

Under the terms of the separation agreement, CP has agreed to a “limited waiver” of Harrison’s non-competition obligations and barred Harrison from poaching senior CP executives. In return, Harrison agreed to forego $118 million in benefits and awards.

During the railway’s earnings call this afternoon, CP officials refused to elaborate on Harrison’s retirement. But they expect to file a copy of Harrison’s separation agreement with regulators within a few days, says Maeghan Albiston, CP’s assistant vice president of investor relations.

With Harrison, 72, stepping down earlier than planned, Creel was asked if he expected to move more quickly on any initiatives that may be in the works. The short answer is no.

“Hunter’s never, never stood in my way,” Creel says. “He’s always supported me, and he’s trusted me for a long time….We’re going to do the right things. He’s taught us well.”

“I’ve learned a lot from that gentleman over the years and we know how to [run a] railroad at this company,” Creel says. “And we’re going to make money for our shareholders.”

Attempts to reach Harrison, who is on vacation through the end of the month, were unsuccessful. But in a statement, Harrison said, “Leaving CP is bittersweet. 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."

Harrison retired as Canadian National’s chief executive at the end of 2009. Activist investor Bill Ackman coaxed Harrison out of retirement in 2012. Harrison went on to transform CP and push its operating ratio from the back of the pack to second only to CN.

NEWSWIRETrains News Wire

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