The downfall of Luc Jobin

Posted by Fred Frailey
on Monday, March 05, 2018

Imagine yourself as chief executive of the most dynamic company in your industry. Thanks to your initiatives and some good luck, customers flock to you, whereas your competitors languish. Profits are up, though due to reinvestment in your infrastructure, not as much as investors expected. And yes, it’s true that you are behind in delivering the goods to your customers. How should your board of directors react to these mixed circumstances?

You, of course, are Luc Jobin, the CEO of Canadian National Railway, and today the world learned you have just been sacked. Frankly, I am stunned.

Ultimately, we will learn more about what led to this surprising outcome. My first reaction was that this would never have happened had Jobin run a U.S. railroad. Did Berkshire Hathaway fire Matt Rose and Carl Ice in 2014 after its BNSF Railway subsidiary found itself in precisely the same position—a year late in getting prepared for a boom in its business? Not at all. Berkshire’s Warren Buffet handed them a blank check and told them to fix things up. When Union Pacific melted down in 2004 for the second time in seven years, was Dick Davidson shown the door? No (quietly, his retirement date was moved up a year). And what about Hunter Harrison’s disastrous rollout of Precision Scheduled Railroading at CSX in mid-2017? I’m told his board, in effect, censured him for making directors look like fools, but that was it.

So maybe Canadians hold their business executives to more exacting standards. The government has been all over CN in recent months, wheat growers are (as always) complaining their orders for rail cars go unmet, and every time the railroad pulls itself out from brutal winter weather to regroup, another storm pounds down on the provinces. These are not ideal circumstances for keeping your position in business.

And recall that Jobin was not a career CN guy. He came there in 2009, the year that Hunter Harrison retired as CEO, as the chief financial officer. Maybe he didn’t really know the company that well. Remember, as well, Jobin had the CEO job thrust upon him just two years ago, when Claude Mongeau stepped aside after being partially disabled by cancer. Perhaps he couldn’t build a team that worked well together. His replacement, for now at least, is fellow Quebecer Jean-Jacques Ruest, the guy who got Jobin in trouble—he was CN’s chief marketing officer responsible in part for the business boom.

So there you have it. Beware of sudden success. It may lead to your undoing.—Fred W. Frailey

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