As CN highlights below, these erroneous claims include:
False or misleading characterizations of CN's performance;
Inaccurate description of financial risks associated with CN's bid for
Failure to provide a credible or differentiated plan; and
Failure to acknowledge concerns over the fact that TCI is the largest shareholder of CN's principal competitor.
'CN has announced an ambitious strategic plan to deliver immediate and long-term shareholder value, while retaining our commitment to safety, customer service and the communities we serve. This plan builds on the investments we have made in technology and capacity over the past three years to drive long-term sustainable growth in total revenues and operating margins. CN maintains an open and constructive dialogue with its shareholders, including discussions about areas where we can improve our business performance, but we will not indulge unfounded and bad-faith arguments that serve the interests of one shareholder over others - or of one of our competitors over CN. CN's Board and senior management team are intently focused on putting forward ideas, initiatives and people that drive us forward to where CN and the railroad industry are going, not where it's been.'
JJ Ruest, President and Chief Executive Officer of CN
CN remains fully committed to a long-term, sustainable growth strategy, with a focus on operational excellence, a customer-first culture, innovation and ESG leadership. On
TCI, which has a glaring conflict of interest as CP's largest shareholder, is trying to assert effective control over CN without presenting a credible plan to create superior or sustainable value
As we will demonstrate more fully in due course, TCI's critiques of the Company and its performance are largely false or misleading. This includes portraying CN's adjusted operating income, adjusted earnings per share and free cash flow as lower in the second quarter of 2021 than they were in the second quarter of 2018. In fact, each of these metrics increased measurably when calculated on a trailing 12-month basis ending in such periods, which is much more meaningful to demonstrate trends in underlying performance. TCI also mischaracterizes both executive compensation and OR at CN. TCI also omits the fact that much of CN's capital spending during this period was needed to invest in technology to enhance safety and reliability, renew CN's locomotive fleet and build network capacity and resiliency to lay the foundations for growth in total revenues and operating margins.
TCI is a recent 5% shareholder seeking to install its hand-picked CEO and elect five directors (including the CEO) to a board of 11, but it has yet to put forward a differentiated or credible plan for creating sustainable value for CN's customers, shareholders and communities. Material published this week by TCI contains only one paragraph about its plans for CN, and what they say sounds remarkably similar to what CN is already doing.
TCI's motives are highly suspect. Earlier this year, TCI worked constructively with CN, encouraging it to be a leader and present its Climate Action Plan to its shareholders for approval. By all accounts, it appears TCI then voted in favour of CN's directors, say-on-pay and Climate Action Plan at the company's Annual General Meeting on
Notably - this expression of overwhelming support was one week after CN announced its first proposal to buy KCS. Nothing of substance has changed since then, except for our increased bid for KCS, which secured an agreed transaction with KCS, and the pro-competition commitments we made in our submissions to the
CN's pursuit of KCS was a strategic move that resulted in significant benefits for CN's shareholders and stakeholders
Contrary to the false narrative TCI is propagating, CN's bid for KCS was the right strategic move for CN, and it resulted in multiple benefits for CN. CN's Board and management team ran a thoughtful engagement and scenario planning process leading up to the executed merger agreement to buy a strategic asset and to protect long-term shareholder interests. All claims by TCI of CN facing
CN shareholders should question TCI's motives of endorsing CN's closest competitor to pursue the transaction, while ignoring the equally compelling rationale of CN's interest of pursuing the same transaction. CN believes the critical difference is that CP has limited long-term growth opportunities without KCS, while CN's future as a standalone business is bright. On this point, CN agrees with TCI: CN has indeed built, 'a unique asset - the best rail network in
CN's Board and management team share a singular focus to execute on opportunities that are in the best interest of CN stakeholders.
CN has a strong and diverse Board of Directors that includes three new independent directors elected for the first time in
In the last year, CN has announced significant enhancements to its corporate governance profile, including an annual advisory vote on the Company's Climate Action Plan, appointing three new independent directors to the Board, reducing the size of the Board to ten independent directors, plus the CEO, lowering the mandatory retirement age, confirming term limits, and achieving gender parity among independent directors ahead of plan.
Chairman
About CN
CN is a world-class transportation leader and trade-enabler. Essential to the economy, to the customers, and to the communities it serves, CN safely transports more than 300 million tons of natural resources, manufactured products, and finished goods throughout
Forward-Looking Statements
Certain statements included in this news release constitute 'forward-looking statements' within the meaning of the United States Private Securities Litigation Reform Act of 1995 and under Canadian securities laws, including statements based on management's assessment and assumptions and publicly available information with respect to CN. By their nature, forward-looking statements involve risks, uncertainties and assumptions. CN cautions that its assumptions may not materialize and that current economic conditions render such assumptions, although reasonable at the time they were made, subject to greater uncertainty. Forward-looking statements may be identified by the use of terminology such as 'believes,' 'expects,' 'anticipates,' 'assumes,' 'outlook,' 'plans,' 'targets,' or other similar words.
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Contact:
Investment
Vice-President
Investor Relations
T: (514) 399-0052
E: investor.relations@cn.ca
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