Waiting for Hunter

Guess what everyone is doing at Canadian Pacific HQ in Calgary? The place is like a besieged city that has sent up the white flag and now waits for the invading army to enter the gates and plunder. So yes, copier machines are running off copies of Hunter Harrison’s two books, “How We Work & Why” and “Change, Leadership, Mud & Why” and everyone who isn’t busy working on resumes is giving those books a read, trying to divine what working for this man will be like. Each department is preparing a multipage summary of what it is doing. “Basically,” says one source, “it’s hunker down and wait for Hunter.” Says another: "Anyone not pulling three times their weight will become rabid pretty quick.” Ouch!

The board members appointed to the search committee, charged with evaluating possible successors to just-departed chief executive officer Fred Green,  should be reporting back any day now. There are a very limited number of choices, and it’s ludicrous to imagine the board appointing anyone but Hunter Harrison to the job. Harrison has a track record running CP competitor Canadian National and is the choice of Bill Ackman, whose hedge fund Pershing Square Capital Management is CP’s largest shareholder.

So I suspect that what the search committee is really looking for is Harrison’s backup and probable successor after a few years. Two names are on everyone’s lips. One is Keith Creel, an American and Harrison protégé who is now chief operations officer at Canadian National. CN badly wants to keep Creel, showing its love by bestowing total compensation of almost $3 million a year in 2011, according to CN’s proxy statement. He may be contractually obligated to stay with CN, too; I don’t know. The other name is that of David Brown, also an American and a well regarded operating captain at Norfolk Southern and then CSX. He is a protégé of Tony Ingram, the now-retired CSX executive who recruited Brown to come to that railroad and who is today a CP director. But earlier this year Brown was brusquely dismissed as chief operations officer at CSX, with no explanation ever being given. Was it for cause? Or did Brown simply get in the way of the ambitions of Oscar Munoz, the chief financial officer of CSX who was only too glad to replace Brown as COO and become first in line to succeed chief executive Michael Ward. Brown would have some explaining to do to the search committee.

Alas, as the days and weeks pass, more and more leaks out about the perilous commercial and financial condition of Canadian Pacific. Harrison will find less to work with on this railroad than he thinks. But I’ll save that for a future report.—Fred W. Frailey