Report: Harrison to retire early from CP to pursue CSX takeover

E. Hunter Harrison will retire as chief executive officer of Canadian Pacific effective Jan. 31, five months ahead of schedule so that he can "pursue opportunities" at other Class Is, CP announced yesterday.

Reports in the Wall Street Journal and MarketWatch today said Harrison is completing an agreement to join with activist investor Paul Hilal in an attempt to shake up management at CSX Corp.

A CSX spokesman declined to comment on the Harrison report.

Harrison, who was expected to retire from CP in July, will be on vacation through the end of January, CP officials said in a press release. As expected, Keith Creel will succeed Harrison as CEO at CP.

"Leaving CP is bittersweet," said Harrison in the press release. "I have had a wonderful experience and depart with many friends and with full confidence in Keith's ability to build on the great success we have enjoyed."

CP Chairman Andrew Reardon declined to take questions on the Harrison announcement during a fourth-quarter earnings conference call with analysts yesterday. However, Reardon said the company was grateful for Harrison's "enormous contributions" to CP's turnaround success, including his mentoring of Creel and the company's leadership team.

"We have a tremendous CEO-in-waiting in Keith Creel," Reardon added.

Harrison had approached CP's board to discuss his retirement and potential modifications to his employment agreements that would allow him to "pursue opportunities involving other Class I railroads," CP officials said. After negotiating with with a special committee, Harrison entered into a separation agreement that waives his non-competition obligations. In exchange, Harrison agreed to give up all his CP benefits and equity awards, which the company estimated to be worth 118 million Canadian dollars.

Last year, CP announced a three-year consulting agreement with Harrison that would kick in after his retirement. Under the new separation agreement, Harrison will not provide any consulting or other services to CP after he retires, company officials said.

In addition, the agreement "reinforces" Harrison's non-solicitation obligations with respect to senior CP employees. Harrison also agreed to sell all of his CP shares by May 31. CP will have "no role in Harrison's future endeavors," officials from the railroad said.