Canadian Pacific Railway Proxy Contest

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Canadian Pacific Railway Limited

May 17, 2012

At Canadian Pacific Railway Limited’s ("CP") annual meeting held on May 17, 2012, Pershing Square Capital Management, L.P. (“Pershing Square”) elected its seven nominees to Canadian Pacific Railway’s board following a lengthy, high-profile proxy contest. Funds managed by Pershing Square began acquiring CP common shares in September 2011, eventually making an investment of approximately $1.4 billion that represents more than 14 per cent of the outstanding shares of CP, and makes Pershing Square CP’s single largest shareholder.

In January 2012, following several weeks of engagement between the board and management of CP and representatives of Pershing Square, Pershing Square initiated a proxy contest to replace a minority of the board at CP’s May 17 annual shareholders meeting. Pershing Square ultimately put forward seven nominees for election to CP’s 16-person board and publicly advocated for management change, consistent with its discussions in its engagement with CP. Consistent with CP’s offer of a board seat to Pershing Square as part of the discussions with Pershing Square, CP included William Ackman, the founder of Pershing Square, in its slate of board nominees.

The proxy contest was notable for a number of reasons, including for the use by CP and, subsequently, Pershing Square of “universal” forms of proxy that gave shareholders the ability to choose from among all of the nominees for the board, regardless of whether they used management’s form of proxy or Pershing Square’s dissident proxy. As a result, shareholders were not constrained by the forms of proxy in respect of which director nominees they could support.

Following days of negotiations, arrangements were made in the late evening before the shareholders meeting which paved the way for the departure of CP’s CEO and five other board members, and the election of Pershing Square’s nominees. Following the shareholders meeting, the reconstituted board began the search for a new CEO which culminated five weeks later in the hiring of former Canadian National Railway CEO, Hunter Harrison.

Canadian Pacific was advised by Fasken Martineau with a team that included Bill Orr, Richard Steinberg, Aaron Atkinson, Brad Freelan, Daniel Fuke and Susan Newell (corporate/securities), Anthony Baldanza (regulatory) and Sam Rickett and Murray Braithwaite (litigation).

Fasken Martineau 2013 Canadian Proxy Contest/Proxy Battle Study
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