Canadian Pacific Railway (A): Border Skirmish or Nuclear Winter?
(8 pages of text)
Case (Pub Mat)
In early 2012, the chair of the board of directors of Canadian Pacific Railway (CP) had to determine how to respond to demands made by the company’s largest shareholder, Pershing Square Capital Management (Pershing), an activist hedge fund. Pershing’s chief executive officer (CEO) claimed that CP was underperforming, and expressed his desire to replace two board members and appoint a new CEO. The chair of the board of directors had to determine the best means to fight the proxy battle and serve the interests of shareholders. Pershing was not likely to back down easily. With a shareholders’ meeting expected to occur in the next few months, the chair had to resolve the matter quickly. Because shareholder activism was relatively new in Canada, the outcome of this conflict would send a message to other activists interested in Canadian organizations.
This case series is designed for both undergraduate and graduate level courses, and can be used to facilitate a progressive in-class discussion in courses on corporate governance, risk management, corporate strategy, and leadership. The case series has been designed in three parts to illustrate the progressive nature of the correspondence between CP and its shareholders, and to allow students to make key decisions at crucial stages as the proxy battle and its timeline unfolds. This case is designed to
- introduce students to the scope of board of director responsibilities and accountabilities;
- explore the role of shareholder activism in the governance of corporations;
- illustrate the importance of corporate communications and shareholder engagement; and
- introduce to students the influential role that proxy advisory firms and institutional shareholders play in the shareholder voting process.
Transportation and Warehousing
Canada, Large, 2012
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