8-KLeadership ChangesMaterial AgreementsExhibits & Filings

CANADIAN PACIFIC KANSAS CITY LTD/CN 8-K Report, Agreement Terminated (Jan 23, 2017)

Filed January 23, 2017For Securities:CP

Summary

Canadian Pacific Railway Limited (CP) has filed an 8-K report detailing the departure of its Chief Executive Officer, E. Hunter Harrison, effective January 31, 2017. This transition was pre-arranged, with Keith Creel, currently President and Chief Operating Officer, appointed to succeed Mr. Harrison as President and CEO, effective the same date. The report outlines the terms of a Separation Agreement between CP and Mr. Harrison, which includes specific provisions regarding non-competition, non-solicitation, and various compensation and benefit adjustments. Key financial aspects of the separation involve a cash payment of US$4,806,470 for surrendered performance share units and the potential exercise of a specified number of vested options. Mr. Harrison will also forfeit significant pension, post-retirement benefits, and other equity awards, with a total estimated value of C$118 million (approximately USD$88,465,000) being relinquished. The agreement also stipulates that Mr. Harrison will sell all his CP shares by May 31, 2017. Investors should note that the leadership change was not due to any disagreement, indicating a smooth, albeit significant, executive transition.

Key Highlights

  • 1E. Hunter Harrison resigns as CEO and Board member, effective January 31, 2017.
  • 2Keith Creel appointed as new President and CEO, effective January 31, 2017, a move previously agreed upon.
  • 3A Separation Agreement has been executed between CP and E. Hunter Harrison.
  • 4Mr. Harrison receives a US$4,806,470 payment for surrendered performance share units.
  • 5Mr. Harrison forfeits a significant portion of his benefits and equity awards, valued at approximately C$118 million (USD$88,465,000).
  • 6Limited waivers on non-competition and non-solicitation clauses are granted to Mr. Harrison for a 36-month period, with specific restrictions.
  • 7Mr. Harrison is obligated to sell all his CP shares by May 31, 2017.

Frequently Asked Questions

E. Hunter Harrison is resigning from all his positions at Canadian Pacific Railway, including CEO and Board member, effective January 31, 2017. The report states that his decision to resign was not a result of any disagreement with the Company.

Keith Creel, currently the Company's President and Chief Operating Officer, has been appointed as the new President and Chief Executive Officer, effective January 31, 2017. This appointment aligns with a prior agreement for Mr. Creel to assume the CEO role.

Under the Separation Agreement, Mr. Harrison will receive a cash payment of US$4,806,470 for certain surrendered performance share units. He will also be permitted to exercise a specified number of vested stock options. However, he will forfeit substantial pension and post-retirement benefits, health benefits, and other equity awards, with an approximate total value of C$118 million (USD$88,465,000) relinquished.

Yes, the Separation Agreement includes limited waivers of non-competition and non-solicitation obligations for a 36-month period starting from his resignation date. These waivers permit him to work for another Class 1 railroad, excluding specific major competitors (CN, BNSF, UP), and restrict him from soliciting or hiring certain employees above a manager level.