Who is the best railroad CEO?

Posted by Fred Frailey
on Sunday, April 10, 2011

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You tell me. I want to know. Let’s limit the selection to the top dogs of the six big North American railroads. If we opened bidding to the regional and short lines, as the chief justice I’d have to render a bench verdict and declare Indiana Rail Road’s Tom Hoback the winner. Okay, here are the contenders, in alpha order of railroad:
 
BNSF Railway, Matt Rose. How's this for prioritizing: As a young trainmaster in Fort Worth, he quit railroading when Missouri Pacific ordered him to relocate to Chicago before he could propose to Lisa, his future wife. Rose returned to steel wheels, joining Burlington Northern just before the Santa Fe merger, and rose to the top job in the course of only six years, in large part because of his people skills. Maybe it was pure dumb luck, but he resumed doubletracking of the Transcon across the Texas Panhandle just before the flood of overseas container business hit in 2004. BNSF rode that business wave like a California surfer. Today a signature habit is to spend a week a month on the railroad talking to his division officers. Already Rose is being mentioned as a possible chairman of parent company Berkshire Hathaway, particularly after the recent sudden resignation of the heir-apparent to Warren Buffett.
 
Canadian National, Claude Mongeau. This genial Quebecois has less than two years under his belt, but before that he was CN’s chief financial officer, engineering all the buyouts of regional connections (Wisconsin Central, BC Rail, Northern Alberta, Bessemer & Lake Erie, Elgin Joliet & Eastern, and ad infinitum), to cement CN’s dominant position across Canada and provide its own corridor across the U.S. northern Midwest. More customer-friendly and bearing fewer rough edges than his hard-driving predecessor, Hunter Harrison, Mongeau’s challenge is to preserve the operating discipline that Harrison instilled. For that, he turns to a Harrison protégé from the former Illinois Central, Keith Creel. I’m pleased to report CN trains are longer than ever.

Canadian Pacific, Fred Green. You’ve got to love and respect anyone named Fred. That’s what my mom said when I asked why I couldn’t adopt the name Jimmy Jack. I haven’t met Green, but I respect him for stepping up and investing money to raise CP’s capacity across Western Canada several years back, and starting this year, along the former Soo Line northwest of Minneapolis-St. Paul. Again, was it pure dumb luck that Green bought Dakota Minnesota & Eastern just as it began turning solidly profitable? Running the smallest of the Big Six railroads, Green has to try harder than the rest of the pack to keep up.
 
CSX, Michael Ward. The son of a Baltimore pool hall manager, Ward went to the University of Maryland, then accepted his dad’s challenge to apply to Harvard’s Graduate School of Business. He got in, and later became a CSX lifer. When he succeeded John Snow in 2003, expectations of Ward were low. Way too low, it turned out. Ward sought out a superior chief financial officer (Oscar Munoz, ex-Pepsico) and chief operating officer (Tony Ingram, ex-Norfolk Southern, later succeeded by David Brown, also from NS), and told them to fix what was broken. The turnaround at CSX has been amazing, enough to let Ward survive the election of a supposedly hostile slate of directors.
 
Norfolk Southern, Charles Moorman. Wick, as he’s universally known, calls himself “a kid who loves trains,” and anyone who doubts that should see his collection of brass HO-gauge passenger trainsets. He’s another lifer, who started at NS predecessor Southern Railway as a co-op student while in engineering school at Georgia Tech. Denied a mid-career leave of absence by NS to get a graduate degree at Harvard, Moorman quit, got his MBA, and talked his way back into good graces. His congenial personality (hey, he was born in the Big Easy) leads some to question whether he’s tough enough for the challenges facing Norfolk Southern. In 2011, with Australia’s mines out of commission from floods, the world can’t get enough of NS-served coal, and NS is stressed to satisfy demand. All railroads should be so challenged.
 
Union Pacific, Jim Young. UP aggressively cross-trains its rising stars, and Young put time in across the railroad, but not operations. Yet upon his elevation to the chief executive job in late 2005, Union Pacific seemed to settle down and get into its stride. Perhaps it is that he’s better than former CEO Dick Davidson at keeping his hands off day-to-day decision-making, while holding accountable those to make the calls. Up close, Young is quiet and unassuming, with a blue-eyed stare that bores into those he talks to. By all accounts, he is succeeding in a long-overdue mission: making Union Pacific, the product of a plethora of mergers, a company with a unified sense of purpose.

I am asking you pitch in and give me your opinions. We are celebrating success today. Which of these six deserves the gold crown? Turning an old figure of speech of its head, there are no stupid answers. And I can see forming on your lips the obvious question: When can we vote on the least effective chief executive? Soon, my friends, soon. — Fred W. Frailey.

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