Photo courtesy of Canadian Pacific.
“Hunter has made enormous contributions to CP, and we are forever grateful for his years of service,” said Andrew F. Reardon, chairman of the board. “We have a tremendous CEO-in-waiting in Keith Creel. Keith and his team are ready to formally take the reins.”
CP said Harrison had approached the board to discuss his retirement from CP and potential related modifications to his employment arrangements that would allow him to pursue opportunities involving other Class 1 Railroads. A special committee of the board oversaw discussions with Harrison, and following negotiations, receipt of independent legal advice, and careful deliberation, the special committee recommended to the board that CP enter into a separation agreement with Harrison.
Photo courtesy of Shutterstock.
The Wall Street Journal has reported that Harrison will partner with Paul Hilal, an activist investor, to try and land a top management position at another rail company, CSX.
In a Jan. 18 conference call with analysts to discuss fiscal 2016 results, Creel said he was “humbled and honored to lead” CP as it goes forward.
“It’s with mixed emotion that as Hunter leaves, I’ve worked with Hunter the last 20-plus years,” Creel said. “He’s been a close friend, a mentor. He has taught me the railroad business. But I can tell you this, if he’s taught me anything, he’s taught me how this operating model works and how to produce sustainable results, and this team is prepared for this transition.
“Some people say it’s an early transition. When I left the other railroad to come here to work with Hunter back in 2013, we had actually planned this transition this past summer. So we’re certainly prepared. This team is in place. The foundation is set and we will succeed.”
Net income at CP in the year ended Dec. 31, 2016, totaled C$1.599 billion, equal to C$10.69 per share on the common stock, up from C$1.352 billion, or C$8.47, in fiscal 2015. Total revenues fell to C$6.232 billion from C$6.712 billion.
Canadian grain freight revenues totaled C$962 million in 2016, down 10% from C$1.068 billion in 2015, while U.S. grain freight revenues eased 1% to C$518 million from $522 million. Carloads of Canadian grain also declined in 2016, falling to 270,000 from 285,000 in 2015, but in the United States, grain carloads increased 5% to 162,000 from 157,000.
“2016 featured stiff economic headwinds and a challenging volume environment, headlined by a precipitous decline in crude oil shipments and weakness in grain movements, particularly in the first half,” Harrison said. “These are not excuses, but opportunities to showcase our operating ability and leadership. As we have shown over the last four years, the precision railroading model works in all economic conditions.”
In 2017, CP said it plans to continue to find opportunities to enhance the productivity, fluidity and safety of its operations.