After months of a very public proxy battle, hours before a vote to decide their fate, Canadian Pacific’s (TSE:CP) beleaguered CEO has resigned, and five other board members have said they will not stand for re-election.
Fred Green's departure as president and CEO will be effective immediately.
Green leaves the company after 34 years, and has also resigned as a director ahead of CP’s shareholder meeting later this morning.
"The board wishes to thank Fred [Green] for his dedicated years of service," said CP chairman John Cleghorn in a recent statement.
Cleghorn himself has also announced he will not stand for re-election, along with Tim Faithfull, Edmond Harris, Michael Phelps and Roger Phillips.
"This decision was made after taking into account the views expressed by shareholders about the desire for board change," said CP in a statement.
The announcement comes after a four month-long campaign by William Ackman, whose hedge fund Pershing Square Capital is CP's largest shareholder with a 14.2-per-cent stake, to dethrone the current management and elect his hand-picked, seven directors.
Recently, Pershing Square garnered support from many of the railway's other major shareholders, and several proxy advisory firms have publically advocated for Ackman’s nominees in the election being held today.
CP suggested in a statement that it expects all seven directors backed by Ackman to win.
"Once Pershing Square nominates all seven of its director nominees, there will be only sixteen candidates for the sixteen available positions on the board," said the company.
"Accordingly, it is expected that the board will be comprised of the following individuals immediately following the annual meeting: William Ackman, Gary Colter, Richard George, Paul Haggis, Paul Hilal, Krystyna Hoeg, Tony Ingram, Richard Kelly, Rebecca MacDonald, The Hon. John Manley, Anthony Melman, Linda Morgan, Madeleine Paquin, David Raisbeck, Hartley Richardson and Stephen Tobias."
Among its recommendations for change, Pershing Square was seeking to replace Fred Green as chief executive with Hunter Harrison, the former head of Canadian National Railway Co. (TSE:CNR).
In an April letter to CP shareholders, Ackman wrote: "Time and time again, the company has announced a new plan, shown a glimmer of operational improvement, only to fail to achieve sustained progress.
"The problems are probably not the plans themselves. Rather, the failure has been execution of those plans by management and the board's inadequate oversight."
Earlier this month, proxy advisory firms Glass Lewis and Egan-Jones publically backed Pershing Square Capital. Institutional Shareholder Services (ISS) was among the first proxy advisory firms to publically voice its support for the hedge fund.
"Because the dissidents have demonstrated a compelling case that poor board oversight has allowed the company’s performance to drift further and further below both its peers and its potential over at least half a decade, it seems clear that change on the board is needed," ISS said in its report.
The Ontario Teachers’ Pension Plan (OTPP) also went public backing Pershing Square.
OTPP owns 2.3 million shares in CP, and on its website said it is voting for all seven nominees for the board put forth by Pershing.
According to reports from the Globe and Mail, the resignation of this many senior officers and directors marks the biggest proxy upset in corporate Canada.