The letter appears to be of an orchestrated response to the purchase last October of 12.2% of CP by U. S. hedge fund Pershing Square, led by activist Bill Ackman.
Cleghorn, asserting that the board supports CP’s CEO and management team, contends that Pershing Square is advocating change in management, but has not presented any detailed, credible plan; Pershing Square does not fully take into account structural differences between CP and peers as well as rising annual pension costs associated with CP’s legacy pension plans: and Pershing Square suggests operating ratio reduction at a pace never achieved by any railway.
He said the board is open to views of shareholders and encourages Ackman accept its offer to join the board and participate “with full knowledge of the facts in execution of the multiyear plan.”
He said the plan has three key elements: driving volume growth, expanding network capacity “to safely and efficiently support higher volumes,” and controlling costs.
He added: “The board is confident in CP's ability to reach an operating ratio in the low 70s in the next three years. We will not stop there—as we achieve our goals, we will set new targets.”