Cana­dian Pa­cific paid CEO C$49.2 mil­lion

The Pak Banker - - COMPANIES/BOSS -

Cana­dian Pa­cific Rail­way Ltd. (CP) paid Hunter Har­ri­son C$49.2 mil­lion ($48 mil­lion) last year af­ter re­cruit­ing him as chief ex­ec­u­tive of­fi­cer fol­low­ing a proxy fight by ac­tivist in­vestor Wil­liam Ack­man.

Har­ri­son’s com­pen­sa­tion for 2012 in­cluded about C$1 mil­lion in salary, a pen­sion guar­an­tee val­ued at C$16 mil­lion and C$18.6 mil­lion in “make-whole pay­ments” to com­pen­sate for re­stricted share units that Har­ri­son, once the chief of ri­val Cana­dian Na­tional Rail­way Co. (CNR), for­feited when he agreed to join the com­pany, Cana­dian Pa­cific said to­day in its proxy fil­ing.

Cana­dian Pa­cific Rail­way Ltd. Chief Ex­ec­u­tive Of­fi­cer Hunter Har­ri­son is try­ing to re­duce the com­pany’s op­er­at­ing ra­tio, an in­dus­try bench­mark that com­pares ex­penses to sales and is the worst of the large North Amer­i­can rail­roads.

Har­ri­son, 68, took over in June af­terAck­man’s Per­sh­ing Square Cap­i­tal Man­age­ment LP won a proxy fight to oust Har­ri­son’s pre­de­ces­sor. He is try­ing to re­duce the com­pany’s op­er­at­ing ra­tio, an in­dus­try bench­mark that com­pares ex­penses to sales and is the worst of the large North Amer­i­can rail­roads.

The new CEO “has nearly 50 years of rail­road ex­pe­ri­ence and lead­er­ship,” Cana­dian Pa­cific said in the fil­ing. “CP is now ben­e­fit­ing from his strong track record of ser­vice re­li­a­bil­ity, ef­fi­cient as­set uti­liza­tion, strate­gic cap­i­tal ex­pen­di­ture and his fo­cus on safety and the devel­op­ment of peo­ple.”

Cana­dian Pa­cific has surged 78 per­cent in Toronto since June 27, the day be­fore Har­ri­son took over, top­ping the 12 per­cent gain by Canada’s bench­mark Stan­dard & Poor’s/TSX Com­pos­ite In­dex. The stock trades at more than an 80 per­cent pre­mium to Cana­dian Na­tional, on a price-to-earn­ings ba­sis.

Har­ri­son’s an­nual base salary has been set at C$2.1 mil­lion, an amount that in­cludes com­pensa- tion for C$1.5 mil­lion in lost yearly Cana­dian Na­tional pen­sion pay­ments.

“Based on the man­date from CP share­hold­ers, the board sought and se­cured the best pos­si­ble CEO in the in­dus­try,” Ed Green­berg, a Cana­dian Pa­cific spokesman, said in an e-mailed mes­sage. “Mr. Har­ri­son is a veteran rail­roader who is one of the most re­spected and suc­cess­ful lead­ers in the in­dus­try and has brought with him to CP an en­vi­able track record.”

The spokesman said Har­ri­son “has taken this rail­way to new lev­els of op­er­a­tional ex­cel­lence.” Har­ri­son’s di­rect com­pen­sa­tion amounted to about C$4.1 mil­lion, while hir­ing costs made up the rest of the C$49.2 mil­lion to­tal, Green­berg said.

The new CEO re­ceived C$1.8 mil­lion in stock awards, C$10 mil­lion in op­tions awards, C$1.3 mil­lion in an­nual in­cen­tives, a spe­cial hous­ing al­lowance of C$46,341 and use of com­pany air­craft val­ued at C$277,200, the fil­ing shows.

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