Canadian National CEO Retirin 10/20 06:59
OMAHA, Neb. (AP) -- Canadian National's CEO is retiring instead of staying
to fight against an investor who has been pushing for his ouster.
The Montreal-based railroad on Tuesday announced JJ Ruest's decision to
retire at the end of January without mentioning the pressure it is facing from
the London-based investment firm TCI Fund. The fund is also seeking several
operational changes at Canadian National in the wake of its failed attempt to
acquire Kansas City Southern railroad.
A special shareholder meeting has been scheduled for March 22 to vote on
"I have been honored to lead CN during my time as chief executive officer,
and I am confident that the Company is well positioned to continue to thrive
following my retirement," Ruest said in a statement.
CN Board Chairman Robert Pace said Ruest delayed discussing his retirement
plans while the railroad was trying to acquire Kansas City Southern this summer
and until after the railroad announced a new strategic plan last month.
Ultimately, Kansas City Southern chose to accept a rival $31 billion buyout
offer from Canadian Pacific railroad after regulators rejected part of CN's
Canadian National has urged investors to back its own strategic plan that
calls for cutting $550 million in costs, reinstating stock repurchases and
delivering 20% growth in earnings per share in 2022.
TCI has said Canadian National hasn't been doing enough to improve its own
operations and it shouldn't have pursued Kansas City Southern. TCI, which owns
5% of CN's stock, has nominated four new directors who would then help choose a
new CEO for the railroad. TCI said Tuesday it will continue to press for
changes after Ruest's retirement.
"Dismissing the same CEO that the Board put in place just three short years
ago is a good start, but it does not address the fundamental problem of a lack
of leadership, failed strategic oversight, and the vacuum of operational
expertise at the board level," said Chris Hohn, TCI's founder and portfolio
manager. "Putting a new plan out a month ago without having the CEO needed to
implement it is a massive corporate governance failure and puts the future of
the Company at risk."
TCI urged Canadian National to consider hiring the CEO candidate it is
backing but the railroad said it plans to conduct a global search for its next
Canadian National is one of the largest railroads in North America and it
operates nearly 20,000 miles of track crossing Canada and crossing the U.S.
Midwest south to the Gulf Coast.