CP cuts perks, pay for execs following criticism
Canadian Pacific Railway is cutting back on perks for its top executives and changing the way they’re paid in response to shareholder frustration over C-suite compensation.
In a regulatory filing, the Calgary-based company says operating ratio, a key measure of efficiency in the railway industry, will have less influence in determining executive compensation. It improved for five straight years under Hunter Harrison as CEO. Instead, CP will focus on safety and operating income to incentivize executives, its proxy circular said.
The filing said calls for safety performance measures came from shareholders that CP consulted with last year after its annual meeting, during which a bare majority of them rejected the company’s executive pay system in a non-binding vote.
Kevin Thomas, a director for the Shareholder Association for Research & Education, said Thursday CP deserves credit for making the changes. But he added the company is still taking into account railway performance. “I like the strong attention to safety ... but I’m a little concerned that there’s also a strong attention to train speed and I think that might conflict on the safety side,” he said, adding that CP’s executive pay remains excessive compared to similar companies.
Peter Kimball, executive director of shareholder advisory firm ISS Corporate Solutions of Rockville, Md., said CP’s filing shows it has made a “fairly comprehensive suite of changes” to address shareholder concerns.
New CEO Keith Creel, who earned $8.9 million as president and COO last year, will have his use of the corporate jet restricted to business commuting and family visits within North America, CP added.