Canadian Pacific CEO Hunter Harrison Retires Early

(RTTNews) - Canadian Pacific Railway Limited (CP, CP.TO) said that Keith Creel will become President and Chief Executive Officer of the company effective January 31, 2017 following Hunter Harrison's decision to retire from CP.

The company said Harrison will take vacation leave effective immediately until January 31, 2017, and Mr. Creel will assume the CEO's responsibilities during this period.

Meanwhile, the Wall Street Journal reported that Hunter Harrison is joining with an activist investor in an attempt to shake up management at rival railroad CSX Corp.

Harrison completing an agreement to team up with Paul Hilal, who left William Ackman's Pershing Square Capital Management LP to launch his own fund last year. They are expected to try to put Harrison in a senior management position at CSX, which CP approached about buying last year and in 2014, according to the Journal.

Hilal's fund, Mantle Ridge LP, has raised more than $1 billion for a single investment, Investors have committed to locking up their money in the fund for five years, the report said. "We are close to a deal to potentially look at some opportunities," Harrison reportedly said.

In a meantime, Canadian Pacific today noted that Harrison had approached the Board to discuss his retirement from CP and potential related modifications to his employment arrangements that would allow him to pursue opportunities involving other Class 1 Railroads. A special committee of the Board oversaw discussions with Mr. Harrison. Following negotiations, the special committee recommended to the Board that CP enter into a separation agreement with Harrison.

Under the terms of the separation agreement, CP has agreed to a limited waiver of Mr. Harrison's non-competition obligations. In consideration of the waiver Mr. Harrison has agreed to terminate all roles he has with CP and forfeit substantially all benefits and perquisites he is entitled to receive from CP going forward, including his pension.

In addition, Mr. Harrison has agreed to surrender for cancellation all of his vested and unvested equity awards, except for a portion of his vested options he was granted upon arrival at CP in June 2012. The total value of benefits and awards forfeited by Mr. Harrison is approximately C$118 million, with the value of the equity awards surrendered calculated based on their in-the-money value relative to the current trading price of CP's shares.

The previously-agreed consulting agreement between CP and Mr. Harrison will not take effect and Mr. Harrison will not be providing any consulting or other services to CP following his retirement. CP has also reinforced Mr. Harrison's non-solicitation obligations with respect to senior CP employees. Mr. Harrison has agreed to sell all of his CP shares by May 31, 2017. CP will have no role in Mr. Harrison's future endeavours.