Reuters: Regulatory News: UPDATE 1-CP Rail open to compromise with Ackman before vote

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UPDATE 1-CP Rail open to compromise with Ackman before vote May 2nd 2012, 14:11 Wed May 2, 2012 10:11am EDT * CP says shareholders would prefer compromise * Proxy vote set for May 17 TORONTO May 2 (Reuters) - Canadian Pacific Railway Ltd indicated on Wednesday it is willing to negotiate a compromise with activist investor William Ackman and avoid a proxy vote that could lead to the ouster of its longtime chief executive later this month. Ackman's Pershing Square Capital Management, a hedge fund that's CP's top shareholder with 14.1 percent, has nominated a slate of seven new directors and wants to replace CP Chief Executive Fred Green with former Canadian National Railway Co CEO Hunter Harrison. Shareholders of Canada's No. 2 rail operator are set to vote on the proposal at the company's annual meeting on May 17. Recent shareholder polls show that many institutional shareholders favor the dissident slate of directors put forward by Pershing Square. "CP has heard many of its shareholders who have indicated they would prefer to see a reasonable compromise worked out before the May 17 annual meeting," said CP spokesman Ed Greenberg. "Mr. Ackman's recent public statements indicate he is opposed to a compromise. If that changes, we would be pleased to have discussions towards a constructive resolution that would be in the best interests of CP and all its shareholders." The comments represent a change in tone from the more aggressive stance taken by the railroad since Ackman launched his drive to replace Green late last year. A recent poll by consulting firm Brendan Wood International of CP institutional shareholders, representing about 45 percent of the shares in the company, found that about 75 percent favor Pershing Square's slate of directors. Earlier on Wednesday, a report in the Globe and Mail said CP may offer to back at least four of Ackman's alternative slate of seven directors, citing sources close to CP and some of its largest shareholders. CP has indicated it remains opposed to Ackman's plan to name Harrison as CP's new CEO, but is prepared to commit to a search for a new chief to replace Green, the newspaper reported. Sources close to Pershing Square said they see little room for negotiation in CP's offer as Harrison is central to Ackman's strategy to transform the underperforming railway, the newspaper said. Pershing Square was not immediately available for comment. Link this Share this Digg this Email Reprints

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