Canadian Pacific proxy battle results in strike threat over pension reform
2012 05 22
- Details
THE Canadian Pacific Railway faces an imminent strike by 4,800 employees over pension reform brought in by the company's new interim CEO whose appointment has resulted from a fierce proxy battle, reports the Toronto Globe and Mail.
The strike is over the appointment of new management following weeks of board-level battling between the old board and a major shareholder Bill Ackman, of New York's Pershing Square Capital Management, who successfully removed the old CEO Fred Green, replacing him with railway industry veteran Stephen Tobias as caretaker CEO.
The Teamsters Canada union ended its five-year contract on December 30, and now worried that Calgary-based CP will place new employees on less generous pensions in an effort to turn around underperforming freight operations.
Said CP chief operations officer Mike Franczak: "The offer on pension aligns with the industry and allows the railway to remain competitive as we invest in strategic infrastructure upgrades along our network."
Mr Franczak said the offer is fair. "We are willing to enter into binding arbitration or negotiation period extensions should an agreement not be reached at this stage," he said.
"This would ensure the continued operations of freight and commuter trains on CP's Canadian network for the benefit of our customers. Any extension to the bargaining process requires consent of the union or action of the federal government," he said.
Mr Ackman, 46, is CP's largest shareholder with a 14.2-per-cent stake. He and six other Pershing Square nominees now serve on CP's new board. Pershing Square is touting its recovery plan to chop CP's annualised operating ratio to 65 per cent within four years of replacing Mr Green.
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