TCI Fund Management, Sir Christopher Hohn’s activist hedge fund, says there is a “a deliberate lack of transparency” and “a selective approach to disclosure with respect to governance matters” at Canadian National Railway.
TCI Fund Management, Sir Christopher Hohn’s activist hedge fund, says there is a “a deliberate lack of transparency” and “a selective approach to disclosure with respect to governance matters” at Canadian National Railway.
TCI this week wrote to Canadian National Railway’s board of directors to voice what it calls “serious concerns” about the Montreal-headquartered firm’s integrity and commitment to proper corporate governance practices.
The letter centres around the recent resignation of Julie Godin, CN’s youngest female director, from the company’s board on September 16.
TCI – which has been a CN shareholder since 2018, and recently increased its holdings to more than 5 per cent of shares outstanding, valued at USD4 billion – alleges the freight railway company failed to disclose this material development in an “appropriate and timely manner.”
Established in 2003 by Sir Christopher Hohn, the London-based activist hedge fund has a value-oriented, fundamental, private equity-like investment style, and is known for its fearsome and often-combative approach to boardroom battles.
This week’s letter maintains Godin’s resignation took place the same day TCI formally requisitioned a special meeting to replace four board directors, and the day before CN announced its new strategic plan.
Among other things, CN’s board failed to immediately issue a press release publicly announcing Godin’s resignation as required, TCI said, adding this was a “departure from CN’s prior practice” regarding communicating changes to the board or senior management.
“The manner in which Julie Godin’s resignation was dealt with, including the failure to inform the market by way of press release in a timely manner, especially in the existing context, raises serious questions about the integrity of the board and its commitment to good corporate governance,” the letter, dated September 29, read.
“This conduct is another example in a long list of corporate governance failures at CN and illustrates why urgent change to the board and leadership is necessary to put CN back on track.
“TCI has serious concerns about this failure to disclose and intends to report Canadian National to the relevant Canadian securities regulators and stock exchanges today.”
The latest salvo follows recent TCI criticisms of CN’s USD30 billion swoop for Kansas City Southern, the US, Mexico, and Panama-focused railroad operator.
Earlier this month Hohn called on CN to halt the bid, requesting a special meeting of CN shareholders aimed at overhauling the board and replacing its CEO.
“We believe CN’s best days are ahead of it, provided the company immediately withdraws from its reckless, irresponsible, and value destructive pursuit of KCS,” Hohn wrote.
