CALGARY - The battle for control of one of Canada's most iconic corporations is about to be decided.

Shareholders of Canadian Pacific Railway Ltd. will gather in Calgary later Thursday to decide whether to stay the course with CEO Fred Green or to clean house at a railroad that has lagged behind its peers.

The latter is likely to be the outcome if the majority of shareholders heed three prominent advisory firms and two major pension funds that have publicly slammed CP's performance under Green.

New York hedge fund Pershing Square Capital Management, led by activist investor Bill Ackman, began buying shares in Canadian Pacific last fall. It's now the largest shareholder, with a 14.2 per cent stake.

In December, Ackman made it clear what his fund was up to: a campaign to oust Green and replace him with Hunter Harrison, the ex-boss of rival railroad Canadian National Railway Co. (TSX:CNR).

To achieve its goal, Pershing Square has proposed seven nominees for shareholders to elect to CP's 16-member board. Meanwhile, CP is urging shareholders to vote for its 15 current board members, and has put Ackman up for nomination as well.

Much of the debate in recent months has been over what can be done to improve Canadian Pacific's operating ratio, a key performance metric in the railroad industry that calculates the percentage of revenues spent to operate the railroad.

CP believes it has a realistic plan to bring the ratio down from 80.1 per cent to 70 to 72 per cent for 2014 through cost cutting and revenue boosting.

It says there are structural factors -- its trains have to traverse steep terrain, for example -- that prevent it from pushing its operating ratio lower. It sought to back up that argument earlier this year by releasing a study it commissioned from consultancy Oliver Wyman examining the differences between CP and CN.

Pershing Square doesn't buy CP's explanation for why it has underperformed other North American railroads. It believes it comes down to poor corporate culture, and that under Harrison's leadership it can achieve a 65 per cent operating ratio by 2015.

Two major pension funds -- the Canada Pension Plan Investment Board and Ontario Teachers Pension Plan - have said publicly they support Pershing Square's push for change. So too have proxy advisory firms Institutional Shareholders Services and Glass Lewis & Co. and credit rating agency Egan Jones Ratings Co.

Canadian Pacific warns Harrison's leadership could mean deep cuts at the railroad and could jeopardize relationships with customers. Some of its biggest customers, including miner Teck Resources Ltd. and fertilizer maker Mosaic Co., have come out in support of Green's continued leadership.

The clock has now run out for Pershing Square and Canadian Pacific to make their cases, and the fate of the storied railroad is now in the hands of its investors.