Hedge fund Soroban Capital Partners is pushing Union Pacific Corp. to replace Chief Executive Lance Fritz, arguing the railroad has underperformed on his watch, according to a letter the fund sent the railroad operator’s board Sunday.
Soroban is a longtime Union Pacific UNP, +0.36% investor, one of the company’s biggest shareholders with a 1%-plus stake valued at about $ 1.6 billion, the letter said.
Soroban argues that Union Pacific, the largest freight railroad operator in the U.S. with a market capitalization of nearly $ 120 billion, has ranked worst in key operating metrics including safety, volume growth and total shareholder return during Fritz’s eight-year tenure despite the strength of its railroad network. The Omaha, Neb., railroad’s returns to shareholders, including dividends, are the worst on a percentage basis among so-called Class 1 freight railroad operators in that period, according to FactSet.
The $ 10 billion hedge fund is pushing for railroad veteran Jim Vena, Union Pacific’s chief operating officer from 2019 to 2020, to take the top post instead. Soroban believes the company’s stock price could double in two years under Vena, who was in the running in 2021 to be CEO of Canadian National Railway Co., given his operational experience in the industry, said the letter. Soroban made the letter public after The Wall Street Journal reported about it.
An expanded version of this report appears on WSJ.com.
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