Reiterates Need for Board and CEO Change at CN
Emphasizes Qualifications of Four Independent, Highly-skilled Director Candidates
Sets the Record Straight on Inaccurate Claims from CN Board
As a long-term CN shareholder, TCI is fully committed to the future health and performance of the Company and is acting to enhance value for all CN shareholders.
"With the meeting date now set, CN shareholders have a clear and certain path to exercise their rights as shareholders and hold the Company's underperforming Board accountable," said
"A new, high-quality Board with extensive railroad experience and expertise will help ensure CN is put on the right track to the benefit of the Canadian and US economies, shippers, employees and shareholders. CN can do better, and with a new Board, it will."
The Board Candidates
Gilbert Lamphere : One of the most experienced railroad executives inNorth America , with 40 years of experience in the railroad industry.Mr. Lamphere has been a board member of several public and private railroad companies.Allison Landry : Currently an independent director on the board of XPO Logistics, Inc., a leading North American transportation company.Ms. Landry previously spent 16 years as a highly respected equity research analyst at Credit Suisse specializing in the railroad, trucking, airfreight and logistics industries.Rob Knight : Former Chief Financial Officer of Union Pacific, a position he held for 15-years. DuringMr Knight's 40-year tenure at Union Pacific, he held a variety of senior executive positions, including General Manager of the company's energy and automotive businesses.Paul Miller : An expert in transportation, logistics, safety management and regulatory affairs and a former executive at CN from 1978-2011. During his 33-year career at the Company,Mr. Miller held leadership roles in operations, marketing and planning. He retired as CN's Vice President of Safety, Sustainability and Network Transportation in 2011.
The quality of the Board candidates is clear and indisputable. It is therefore notable that the Board has said nothing negative about the nominees but has instead chosen to attack TCI in an attempt to divert attention from the excellence of the candidates.
The Board has also not questioned the qualifications or ability of
Setting the Record Straight
CN shareholders deserve the truth. In its
- CN Claim: TCI is a "dissident shareholder" that only recently acquired its stake and is seeking to assert effective control over the Company.
- Fact: TCI has been a CN shareholder since 2018 and increased its stake in the Company due to the huge success and growth that will be achieved once CN has a strong Board and world-class CEO. TCI's actions are guided by and aligned with the interests of all shareholders, to re-establish CN as an efficient, fast-growing and well-governed railroad. TCI is a long-term shareholder with a compelling track record of advocating for strong corporate governance and is committed to the long-term success of CN. TCI invests in high-quality companies with deep and sustainable moats and believes strongly in the power of long-term compounding. TCI is not seeking to assert effective control over the Company.
Gilbert Lamphere ,Allison Landry ,Rob Knight andPaul Miller are independent of TCI and no member of TCI is up for election. - CN Claim: TCI's stake in Canadian Pacific ("CP") demonstrates a conflict of interest between TCI and other CN shareholders.
- Fact: Like many other CN shareholders, TCI is a firm believer in the long-term success and growth of the Canadian railroad industry and therefore owns both CN and CP, with a larger stake in CN. This is in no way unusual in the sector or in other industries. For years, CN has been losing market share. TCI believes that, with a strong Board and world-class CEO, CN will regain its dominant market position and be the fastest growing and most profitable Class 1 railroad once again. TCI's conviction in the future success and growth of CN under a new Board is reflected in the size of its investment in the Company, which is valued at
US$4.3 billion , substantially greater than its investment in Canadian Pacific (US$3.7 billion ) and Union Pacific (US$1.2 billion ). - CN Claim: CN's pursuit of Kansas City Southern ("KCS") resulted in "significant benefits for CN's shareholders" and "was demonstrably positive for CN."
- Fact: It is disingenuous for the Board and CEO to claim the bid was positive for CN when the positive outcomes were due solely to luck because the
Surface Transportation Board ("STB") unexpectedly delayed its ruling on the voting trust by four weeks. In fact, CN's failed attempt to acquire KCS was reckless and exposed a basic misunderstanding of the railroad industry and regulatory environment. The bid putC$2 billion of termination fees at risk and if the STB had issued its negative ruling in July (as CN expected), the outcome would have been very different. It is dishonest and misleading forMr. Ruest to claim credit for the entirely fortuitous outcomes and to fail to acknowledge the serious negative outcomes of the bid, specifically, damaging the reputation of CN, its Board and management team, antagonizing the STB and distracting management from running the network. - CN Claim: TCI has been "attacking the Company publicly."
- Fact: TCI has been critical of only the Board and CEO, not the Company. TCI has not attacked the Company; quite the opposite. TCI has said many times CN is a great company, and owns a unique asset – the best rail network in
North America . However, the Board is inadequate, and has been responsible for multiple corporate governance failures, while the CEO lacks the operational expertise to run a railroad. TCI is a long-term CN shareholder because it believes the Company owns a tremendous asset, but the Board and CEO have been underperforming for too long. Change is required to make CN the most efficient and fastest growing railroad in the industry once again.
TCI cautions shareholders to expect the Board to continue to allege TCI's campaign is against the Company rather than against the Board. To be clear, this is an attempt to distract attention from the failings of the Board and CEO and to escape accountability.
The Board may also attempt to turn the special meeting into a vote on TCI, rather than conduct an objective and informed debate on the merits of the four nominees.
The truth is that CN's Board and CEO lack the necessary operating and railway expertise to improve the performance of the Company.
The CN Board is Responsible for Multiple Corporate Governance Failures
Since 2016 (when
- The Board has assembled a slate of directors with no meaningful railroad operational experience or expertise.
- The Board has permitted a brain drain of high-quality operators to leave CN while not addressing the cause of their departures.
- A failure, twice, to appoint a world class CEO, instead first appointing
Luc Jobin – who held the post for less than two years – and nowMr. Ruest . - The Board has not held
Mr. Ruest accountable for the deterioration in CN's relative financial and operational performance; instead, the Board has increased his compensation. - The Board approved an abrupt about-turn in strategy, involving large headcount reductions, share buybacks, asset sales, capital expenditure reductions and short-term financial targets, rather than acknowledge and address the fundamental issue of a lack of a culture of operational excellence.
- The new plan is being implemented without a credible succession plan in place for a CEO who does not have the operational expertise or credibility to execute it and who is unlikely to remain with the Company beyond 2022.
- If leadership could execute on this plan – it should have happened years ago. Management's performance has been poor, and there is no evidence to suggest the same management team has the capabilities to achieve the targets it has set.
- The Board failed to disclose material developments to shareholders in an appropriate and timely manner. The resignation of
Julie Godin , CN's youngest female director, the day before the announcement of CN's new strategic plan, was not publicly disclosed. This exposed a deliberate lack of transparency and a selective approach to disclosure with respect to governance matters. - Despite many offers to do so, the Board has failed to engage with TCI, CN's second largest shareholder, when requisitioning a meeting to elect credible, independent, highly-skilled Board nominees supported by many shareholders.
- The CN share price has massively underperformed the North American railroad sector.
CN Can Do Better
With a new Board and world-class CEO, TCI is confident CN can get back on track and regain market share in the extremely attractive Canadian railway industry.
- With the right Board and CEO, CN's operations, service and efficiency will enable and enhance sustainable volume growth.
Gilbert Lamphere ,Allison Landry ,Rob Knight andPaul Miller are independent, highly-skilled and well-qualified individuals who have considerable operational and analytical experience in the railroad industry and will bring more balance and diversity to the Board.- Once elected, the independent Board members would work to select a new CEO. TCI has identified
Jim Vena as the outstanding candidate.Mr. Vena has a proven, 40+ year track record as an exceptional railroad operator. He spent 40 years at CN, where he started as a unionized employee in 1976 and worked his way up to become Chief Operating Officer from 2013 until his retirement in 2016. Most recently, during his two years as Chief Operating Officer and Senior Advisor to the Chairman at Union Pacific, he drove remarkable improvement in Union Pacific's operations, service, efficiency and profitability, resulting in a 650bps improvement in operating ratio,US$1.4 billion in efficiency savings and the best service production in Union Pacific's history.
CN Shareholders Should Demand Change
CN's recent performance is the result of a railroad being run by a CEO without operational experience. Shareholders of CN can take steps to help get CN back on track by:
- Voting for
Gilbert Lamphere ,Allison Landry ,Rob Knight andPaul Miller . They have all had long and distinguished careers operating in and analysing the railroad industry. They bring vast railroad experience and knowledge, and they share a common and very achievable goal: to create a much-needed culture of operational excellence at CN, which is essential if the Company is to reach its full potential. - Demanding CN delay any unilateral appointment of three new Board members until after the Special Meeting where all shareholders will have a say on
Gilbert Lamphere ,Allison Landry ,Rob Knight ,Paul Miller and the current Board. Given the time between now and the Special Meeting, TCI is concerned that the Board will attempt to identify and install management-selected replacement directors, a common tactic for underperforming Boards and evidenced by the resignation ofJulie Godin inSeptember 2021 . Allowing the current Board to handpick successors will not result in the significant change that CN needs. - Asking the Board not to commence a CEO search until after the shareholder vote at the Special Meeting to ensure
Jim Vena is fully considered. - Insisting change needs to occur because, once the KCS deal closes, CP will be a much stronger competitor so CN needs to raise its game now to prepare for a tougher competitive environment.
Advisors
About
Founded in 2003 by Sir Christopher Hohn,
Disclosures
TCI has been a CN shareholder since 2018. TCI currently owns more than 5% of the shares outstanding (valued at US$4.3 billion) and is committed to the long-term success of CN.
Contacts
President, Canada
Direct: 416-867-2333
Cell: 647-621-2646
Email: irobertson@kingsdaleadvisors.com
Director, Communications, Marketing & Digital Strategy
Direct: 416-867-2357
Cell: 416-899-6463
Email: hkim@kingsdaleadvisors.com
TCI Media Contacts:
203-992-1230
Information in Support of Public Broadcast Solicitation
The information contained in this press release does not and is not meant to constitute a solicitation of a proxy within the meaning of applicable corporate and securities laws. Although TCI requisitioned the Special Meeting for the purposes of refreshing the current Board by adding four nominees, shareholders are not being asked at this time to execute a proxy in favour of TCI's nominees for election to the Board or any other resolutions set forth in the requisition. In connection with the Special Meeting, TCI has filed a preliminary information circular dated
Notwithstanding the foregoing, TCI is voluntarily providing the disclosure required in accordance with corporate and securities laws applicable to public broadcast solicitations.
This press release and any solicitation made by TCI in advance of the Special Meeting is, or will be, as applicable, made by TCI and not by or on behalf of the management of CN.
Shareholders of CN are not being asked at this time to execute proxies in favour of TCI's nominees (in respect of the Special Meeting) or any other resolution set forth in the requisition. TCI intends to make its solicitation primarily by mail, but proxies may also be solicited personally by telephone, email or other electronic means, as well as by newspaper or other media advertising or in person, by TCI, certain of its members, partners, directors, officers and employees, TCI's nominees or TCI's agents, including
A registered shareholder of CN who has given a proxy may revoke the proxy at any time prior to use by:
(a) depositing an instrument or act in writing revoking the proxy, executed or, in
(b) revoking the proxy in any other manner permitted by law.
A non-registered shareholder may revoke a form of proxy or VIF given to an intermediary or
Based on information provided to TCI by each respective nominee, none of TCI's nominees, nor any of their associates or affiliates, has had any material interest, direct or indirect, in any transaction since the commencement of CN's most recently completed financial year or in any proposed transaction which has materially affected or would materially affect CN or any of its subsidiaries.
Based on information provided to TCI by each respective nominee, none of TCI nor any member, partner, director or officer of TCI, nor any of TCI's nominees, nor any associates or affiliates of the foregoing, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in the matters currently known to be acted upon at the Special Meeting, other than in respect of TCI's ownership, control or direction of an aggregate of 36,699,825 common shares of CN, and the removal of certain incumbent directors and the election of the nominees as directors of CN.
CN's registered office address is 935, rue de La Gauchetière ouest,
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