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TCI Fund Management Ltd., one of CN's largest shareholders, has formally started a proxy fight to replace the Class I’s chief executive officer and some board members over the failed attempt to acquire Kansas City Southern.
TCI, which owns a 5% state in CN and opposed the railroad’s proposed merger with KCS, yesterday announced it is calling for a special meeting of CN shareholders for the purpose of adding four new members to the board who will "provide the deep railroad experience the current board lacks," according to a TCI press release.
The four nominees are Gilbert Lamphere, Allison Landry, Rob Knight and Paul Miller.
"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," said Chris Hohn, TCI founder and managing partner, in the release.
CN's bid for KCS "exposed a basic misunderstanding" of the railroad industry and its regulation, he added."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 US economies, shippers, employees and shareholders. CN can do better, and with a new board, it will," Hohn said.
If elected, TCI's nominees will lead the board in the selection of a new CN CEO. TCI has identified former CN and Union Pacific Railroad executive Jim Vena as a candidate to replace current CN President and CEO JJ Ruest.
CN acknowledged TCI’s announcement, but declined to comment until it receives the formal requisition from TCI.
On Sept. 12, KCS’s board determined that Canadian Pacific’s latest offer to acquire KCS was "superior" to CN's proposal. As a result, the KCS board intends to terminate its deal with CN.