(The following article by Brent Jang was posted on the Globe and Mail website on March 23.)
TORONTO — Canadian National Railway Co.’s top five executives had multimillion-dollar pay packets last year, when the company posted a record $2.1-billion profit.
Hunter Harrison, CN president and chief executive officer, collected $7.3-million (U.S.) in compensation in 2006, according to the Montreal-based freight carrier’s management information circular. His remuneration included a $1.5-million salary and $4.2-million bonus, but he didn’t cash in any options. In 2005, Mr. Harrison’s pay packet totalled $46.4-million, including $22.5-million in option gains and $17.3-million in long-term incentive plan payouts.
James Foote, Ed Harris, Claude Mongeau and Sean Finn were also part of CN’s multimillion-dollar circle in 2006. Mr. Foote, executive vice-president of sales and marketing, had $13.1-million in compensation, including $11.8-million in option gains. Mr. Harris, who retired two months ago as executive vice-president of operations, garnered $9.5-million, including $8.4-million in option gains.
Mr. Mongeau, chief financer officer, had $4-million in option gains to boost his total pay to $5.3-million. Mr. Finn, senior vice-president of public affairs and chief legal officer, collected $2.1-million, including $1.3-million in option gains, CN’s circular shows.
The circular was released as CN management continues to clash with the United Transportation Union over productivity measures.
CN sets daily standards, seeking to fill all available slots for train traffic by carefully assigning locomotives, crews and maintenance work to focus on moving shipments on time.
The 2,800-member UTU, which went on strike for 15 days last month, counters that employees are constantly under the gun, facing a stream of deadlines in an effort to meet CN’s targets as a “precision railroad.”
The results of a union vote on a tentative, one-year contract with CN will be released April 10. Former UTU chief negotiator Rex Beatty said in an interview yesterday that union members should reject the pact, but UTU Canadian legislative director Tim Secord urged ratification.
Meanwhile, CN and Canadian Pacific Railway Ltd. are maintaining their profit forecasts for 2007, despite a harsh winter that slowed rail operations in the first quarter.
CN estimates that its growth in diluted share profit for the full year will be in the “10 per cent-plus range, consistent with the company’s long-term vision,” according to Jean-Jacques Ruest, CN senior vice-president of marketing.
CPR president and CEO Fred Green said severe winter weather meant that trains endured frequent “stop-and-go” disruptions, including last week’s five-day shutdown of CPR’s main line in British Columbia. The railway rerouted traffic to other lines to keep the freight moving. “We aren’t running as efficiently as we did last year,” Mr. Green said yesterday at a JPMorgan Chase & Co. transport webcast from New York, where he showed photos of a section of B.C. track that washed out last week after a mudslide.
Still, he reaffirmed Calgary-based CPR’s profit guidance of $4.30 (Canadian) to $4.45 a diluted share, despite softening revenue.
David Newman, an analyst with National Bank Financial Inc., said that while CPR is able to direct some trains onto CN tracks, the added cargo on rail lines erodes efficiency.