Canadian Pacific CEO Hunter Harrison Departs, Gives up $118-Million Bonus

Hunter Harrison is widely considered to be the best railroad executive alive today.

He became Canadian National Railway’s (TSX:CNR)(NYSE:CNI) Chief Operating Officer in 1998, and was promoted to CEO in 2003. By the time he retired in 2009, he was credited with turning struggling CN from one of North America’s least efficient railroads to one of its best.

After a couple of years off, Harrison was approached by Bill Ackman of Pershing Square Capital Management to run Canadian Pacific Railway (TSX:CP)(NYSE:CP). Harrison agreed, despite losing out on millions worth of retirement benefits.

The gamble worked. Harrison transformed CP from a poorly-run organization into one of North America’s best railroads. Shares are up nearly 200% in the last five years.

Harrison was scheduled to retire from his post in July, but CP announced yesterday that he would be stepping down immediately to pursue opportunities involving other Class 1 railroads.

Focus immediately shifted to the most likely destination, Florida-based CSX Corp (NASDAQ:CSX). Not only is Harrison familiar with the company -- CP attempted to acquire it in 2014 -- but CSX’s CEO Michael Ward has indicated he will retire soon. No formal succession plan has been announced at CSX.

Incoming CP CEO Keith Creel and Chairman Andrew Reardon refused to answer any Harrison related departure questions on the company’s fourth-quarter conference call, saying more details will be released in a few days.

Both CP and CSX shareholders cheered the news, with CP shares rising 5.5% on the Toronto Stock Exchange while CSX shares increased more than 20%.