01—Abstract
Summary
Summary of the 6-K filed March 23, 2005. Cited figures are marked; the original filing is the authoritative source.
This Form 6-K, furnished by Canadian Pacific Railway Limited (CP) for March 2005, is not a financial report.
It is the notice of annual and special meeting of shareholders, the management proxy circular, and the form of proxy for the May 5, 2005 meeting in Calgary. It contains no new earnings, guidance, or financial results. The circular covers 2004 audited financial statements (received, not approved, at the meeting), election of 10 directors, reappointment of PricewaterhouseCoopers LLP as auditors, and reconfirmation of the Shareholder Rights Plan.
Its contents are mainly governance, compensation, and ownership disclosure. The most investor-relevant item is the Shareholder Rights Plan. Shareholders must reconfirm it at this meeting or it ceases to have effect.
The board recommends approval and proposes amendments that would move the next reconfirmation date from 2005 to 2008 and cap lock-up break fees at the greater of 2.5%a of consideration or 50% of any increase from a competing bid. Other details include 158,814,091 shares outstanding as of February 21, 2005, one vote per share, and no holder of 10% or more of the shares. Board size was reduced from 11 to 10 after Jacques Lamarre resigned in October 2004.
Compensation disclosure shows CEO Robert Ritchie's 2004 base salary at $825,000b and total PIP award of $800,000 (139% of target). Corporate incentive payout was 137% of target, and the company exceeded its operating income target. Long-term incentives are heavily weighted toward stock options, with CEO direct compensation about 59% long-term.
All named executives have met share ownership guidelines. Shareholder proposals for the 2006 meeting are due by November 23, 2005.
02—Key points
Key Highlights
- Form 6-K is a proxy and meeting filing, not an earnings or financial results release; it contains no new 2004 results.
- Annual and special meeting set for May 5, 2005 in Calgary, with a record date of March 11, 2005.
- Shareholder Rights Plan must be reconfirmed at the meeting or it will lapse; the board unanimously recommends approval.
- Proposed amendments would extend the next reconfirmation to 2008 and cap break fees in lock-up agreements at the greater of 2.5% of consideration or 50% of any bid increase.
- Board of 10 directors (down from 11 after Jacques Lamarre's October 2004 resignation); 9 of 10 nominees are independent, with CEO Robert Ritchie the only non-independent nominee.
- PricewaterhouseCoopers LLP proposed for reappointment; 2004 total fees were $1.898 million, up from $1.501 million in 2003.
- CEO 2004 base salary of $825,000 and total PIP award of $800,000; corporate incentive payout was 137% of target after exceeding the operating income target.
03—Questions
Frequently Asked Questions
Does this filing report Canadian Pacific's 2004 financial results?
No. The filing is a notice of meeting and management proxy circular. It references 2004 audited financial statements that will be received at the meeting, but it does not present new financial results, guidance, or earnings figures.
Why is the Shareholder Rights Plan vote important?
Under the plan's terms, it ceases to have effect if not reconfirmed by shareholders at this meeting. Shareholders are asked to approve an amended and restated version that extends the next reconfirmation to 2008 and tightens lock-up break fee terms.
How much voting power do shareholders have, and is there a controlling holder?
As of February 21, 2005, there were 158,814,091 common shares outstanding, each with one vote. Management knows of no holder owning 10% or more of the shares.
How is executive pay linked to performance?
Pay is structured around the 50th to 75th percentile of a Canadian comparator group. CEO total direct compensation is about 59% long-term, mainly stock options, and the 2004 corporate incentive paid 137% of target because operating income exceeded plan.
What are the auditor fees and independence arrangements?
PricewaterhouseCoopers' fees for 2004 were $1.898 million, including $1.005 million in audit fees, $543,000 in audit-related fees, and $350,000 in tax fees. The Audit Committee pre-approves all non-audit services.
04—Continue