TCI pushes to add industry veterans to CN board, remove CEO

In response to TCI’s announcement on Monday, CN said that it hasn’t yet received the formal request from TCI for a shareholder meeting, but that it would “review it and comment further in due course.” 

Lamphere is chairman of MidRail Corp., a company seeking to develop and operate overlooked rail infrastructure in North America. He has also served on numerous boards, including those of Patriot Rail, CSX, Florida East Coast Railway, CN and Illinois Central, and founded MidSouth Rail. Landry is a former Credit Suisse transportation analyst and serves on the board of XPO Logistics. Knight most recently served as CFO for Union Pacific (NYSE: UNP) and is a board member for Schneider National. Miller is a consultant and a former CN executive and he has served on boards of the Railway Association of Canada and the Association of American Railroads. 

These four recommendations would replace four incumbent CN directors: Robert Pace, who serves as board chair, Kevin G. Lynch, James E. O’Connor and Laura Stein, TCI said.

“We have assembled an independent, accomplished and world-class slate of director nominees. They all have had long and distinguished careers operating in and analyzing the railroad industry,” Hohn said. “They bring vast railroad experience and knowledge, and they also 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.

“A new, highly qualified board with renewed senior management will help ensure CN is put on the right track to the benefit of the Canadian and U.S. economies, shippers, employees and shareholders. CN can do better, and with a new board, it will,” he said.

TCI also reiterated its wish to remove Ruest and install Jim Vena as CEO. Vena most recently was COO of UP, and he was formerly a COO at CN. TCI said Vena would accept the position if it were offered to him.

“CN is a great company, and it owns a unique asset — the best rail network in North America. However, the business has been underperforming for too long, so change is required. We did not seek a proxy fight, but without urgent action CN’s operational and financial performance will continue to lag its peers under a board that lacks the right railroad experience and operational expertise,” Hohn said.

“The bid for KCS exposed a basic misunderstanding of the railroad industry and regulatory environment. The board consistently misjudged the STB and displayed flawed decision-making, committing billions of dollars to an ill-conceived pursuit of an unattainable asset. CN should focus on getting better rather than bigger,” he continued.

Hohn also said he would continue to call upon CN to adopt practices that address climate change and promote environmental, social and governance principles. 

Last week, TCI said it has retained Kingsdale Advisors, a shareholder advisory and communications firm, as a strategic adviser that would engage with CN’s shareholders to halt the plans to merge with KCS, “upgrade” CN’s board and identify and appoint a new CEO.

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