CN shares surge after railway promotes veteran employee to COO
The Canadian Press
Published Tuesday, February 19, 2013 9:28AM EST
Last Updated Tuesday, February 19, 2013 2:40PM EST
MONTREAL -- Shares in CN hit a new all-time high Tuesday as the Montreal-based railway announced the appointment of veteran employee Jim Vena to chief operating officer, a position left vacant with the departure of Keith Creel to rival Canadian Pacific.
Canadian National Railway's shares briefly reached $102 in intra-day trading and were up 93 cents at $101.52 later in the afternoon.
Italian-born Vena, 54, joined the railway in 1977 as a brakeman in Alberta and rose through the ranks to oversee all three of CN's operating regions. He will move to Montreal from Illinois, where he was senior vice-president of the southern region.
CN chief executive Claude Mongeau said Vena has "a wealth of railway experience and strong leadership skills" that will help drive the railway's agenda of operational and service excellence.
Replacing Vena as head of the southern region is Jeff Liepelt, 53, currently senior vice-president of the eastern region. Liepelt also started his career as a brakeman at the former Illinois Central Railroad in 1978, which was acquired by CN in 1999.
Analysts had expected that CN would move quickly to replace Creel from within by either Vena or Mike Cory, senior vice-president of the western region.
Benoit Poirier of Desjardins Capital Markets said it was "largely anticipated by the street since he has an established reputation as a strong railroader."
"We note that with Mr. Vena, Mr. Liepelt and Mike Cory, CN is equipped with a very strong bench," he wrote in a research note.
Poirier added that he prefers CN over CP for 2013 because its shares have more potential to increase due to more apparent growth opportunities, its cheaper price and stronger balance sheet.
The railway (TSX:CNR) also announced Tuesday the retirement next month of Sameh Fahmy, 61, its senior vice-president of engineering, mechanical and supply management.
Canadian Pacific (TSX:CP) hired Creel, 45, earlier this month to be its second-in-command and a likely successor to CEO Hunter Harrison, who came out of retirement last year to improve the performance of the Calgary-based railway.
The two railways resolved a legal dispute that arose after Harrison, a retired former head of CN, joined CP. As part of the settlement, CP has agreed not to hire "certain CN employees" until Dec. 31, 2016. Other terms of the deal are confidential.
On the Toronto Stock Exchange, CP's shares gained 81 cents at $120.44 in afternoon trading.