CALGARY - The chairman of Canadian Pacific Ltd. (TSX:CP) is publicly demanding a retraction and apology from Bill Ackman, the New York-based fund manager who is leading a shareholder revolt against CP's current leadership.

But Ackman didn't appear to be in an apologizing mood Friday.

John Cleghorn, a retired chief executive of the Royal Bank who is now chairman of CP's board of directors, said Friday that Ackman has had ample time to admit he was wrong to question the company's integrity in interviews given Monday.

"We believe that this is totally unacceptable behaviour for a prospective member of our board of directors," Cleghorn said in a letter released by the company Friday.

Cleghorn ends his letter with a demand for a retraction and apology to the company, its shareholders, employees and board of directors.

Ackman, for his part, stood his ground.

"We have always spoken the truth based on sources and facts we have found reliable, and our concerns regarding Q1 accruals have been based on multiple sources," Ackman said in a statement.

"This proxy contest is about which directors and CEO are best suited to restore CP to greatness."

The case for change at Canadian Pacific is "overwhelming based on the company's own reported numbers over the past six years," he added.

It's the latest in an increasingly heated string of exchanges between Ackman and Canadian Pacific's current directors and management, who are resisting calls to replace CP chief executive Fred Green.

Earlier in the week, the head of Canadian Pacific's audit committee complained that Ackman had made false accusations about how executive bonuses were reported in CP's first-quarter financial statements last week.

The company reported a first-quarter profit of $142 million or 82 cents per share on $1.37 billion in revenue. That compared with a profit of $34 million, or 20 cents per share, on $1.16 billion in revenue in the same quarter a year earlier when winter storms bogged down the railway and slowed shipments.

However, Ackman, who heads Pershing Square Capital Management, said the improvement in earnings was not all due to improvements at the railway.

In a letter to shareholders issued Monday, Ackman said the railway benefited from a mild winter and an improved economy.

Ackman also said Monday in TV interviews that CP didn't set aside money for bonuses in its first-quarter results, which made operating ratios appear healthier.

Canadian Pacific was quick to dispute Ackman's comments about accruals for executive bonuses, saying he got the facts wrong -- an assertion repeated by Cleghorn in his letter Friday.

He said the accruals for bonuses were properly made and recorded in full accordance with accounting rules and disclosed in the company's press release, in a conference call and in its discussion and analysis filed with regulators.

"This is consistent with CP's practice of transparent and proper communications with our shareholders and the public markets," Cleghorn wrote.

"We demand that you publicly retract your untrue accusations and offer your apology to the company, our shareholders, our board of directors, our audit committee, and the dedicated employees whose integrity you called into question," Cleghorn concluded.

Meanwhile, the union representing CP's conductors, trainmen, yardmen, locomotive engineers and rail traffic controllers received a mandate from members Thursday to call a strike if necessary to back its position in contract negotiations.

In a release, Green said talks with the union about changes to the company's legacy pension plan will continue under the supervision of a federally appointed conciliator, and that no work stoppage can occur until "the expiration of a cooling-off period" on May 23.

"CP has a long history of constructive relations with its unions and we are confident that we can reach a settlement with the (Teamsters Canada Rail Conference)," Green said.

"It is vital to the future of the railroad that legacy pension issues are resolved."

CP noted it has made $1.9 billion in solvency deficit contributions to its pension plan over the past three years.