Resolution involves creation of non-poaching agreement
CALGARY, Alberta—CP’s poaching of a senior CN executive created enough drama in the industry to cause the rail competitors to come to an agreement on hiring practices.
The turmoil started when CP hired Keith Creel away from rival CN and gave him the role of president and chief operating officer. In this position, he will be second-in-command to (and likely successor to) CEO Hunter Harrison. Harrison himself formerly led CN, where he was widely credited with transforming the railway into what is seen as the most efficient of North America’s big six railways. Harrison, 68, has said he does not see his tenure lasting more than three or four years and that grooming a successor would be a priority.
But Harrison’s move to CP was not without controversy. Harrison and his former employer were engaged in legal action after his hire by CP.
After CP issued the announcement about Creel’s appointment, CN issued a statement about the situation. It acknowledged Creel’s departure and said “it had settled its differences with CP and its former CEO Hunter Harrison. The settlement ends the outstanding litigation between CN and CP before the Federal Court in Chicago, Illinois.”
According to the statement, as part of the settlement, CP agreed not to hire “certain CN employees” until December 31, 2016. Other terms of the deal are confidential.
CN spokesman Mark Hallman declined to say if the deal reinstates almost $40 million in future pension and other benefit payments to Harrison that the railway cancelled last year as it accused him of breaking non-compete and other agreements he signed when he retired in 2009.
At the time, CN said Harrison’s restricted stock units are calculated to be worth more than $17.8 million and the value of his pension is approximately $20.6 million.
CN said it has a “deep bench of executive talent” and would announce Creel’s replacement shortly. Analysts speculate that either Mike Cory, senior vice-president of the western region, or Jim Vena, head of the southern region, will be chosen for the role.