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Mike Franczak Resigns: CP Railway Chief Operations Officer Will Not Be Replaced

10/01/2012 05:21 EDT | Updated 12/01/2012 05:12 EST
CP
CALGARY - Canadian Pacific Railway (TSX: CP) says Mike Franczak, executive vice-president and chief operations officer, is stepping down after 25 years with the company.

The company said Monday his resignation is effective immediately and his position is not being replaced at this time.

"I wish to congratulate Mike on his distinguished career and thank him for his 25 years of dedication to CP and its customers," said CEO Hunter Harrison.

Harrison took the helm at the railway operator this summer after a bruising shareholder battle.

Harrison, 67, is the former CEO of Canadian National Railway (TSX:CNR) and is credited with turning CN into one of North America's most successful railways.

New York hedge fund Pershing Square Capital Management became the largest shareholder of Canadian Pacific last year, touching off a bitter months-long battle that resulted in the departure of the railway's chief executive, its chairman and several directors.

Harrison had said the railway could cut expenses as a percentage of revenues to the mid-60 range in four years — an operating ratio target CP's former management and board deemed unrealistic.

During the second quarter, CP's operating ratio was 82.5, an increase of 80 basis points.

The company has started to undergo changes under Hunter's direction. Last month, it appointed Michael Redeker, who came from ATB Financial, as chief information officer.

Brian Grassby, senior vice-president finance for CP, told a conference last month that Harrison continues to examine the railway's network and terminals, ask questions and focus on service as it tests a new train design.

Already, he said the speed of decision making has been improved and there is an increased focus by employees on service and controlling costs.

Last week,the company said it reached a tentative agreement with members of the United Steelworkers Local 1976, which represents 800 clerical and intermodal employees at CP.

Canadian Pacific transports coal, fertilizer, grain, automobiles, consumer goods and other materials across its North American rail network.

Shares in the company, which made the announcement after markets closed, rose 1.3 per cent or $1.05 to $82.64 Monday on the Toronto Stock Exchange.

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