A GE AC4400CW diesel-electric locomotive in Union Pacific livery is seen near Union Station in Los Angeles, California September 15, 2022.
Bing Guan | Reuters
US rail operator Union Pacific said on Sunday it expects to appoint a successor to take on the chief executive officer position to replace Lance Fritz in 2023.
“Union Pacific has been my home for 22 years and I am confident that now is the right time for Union Pacific’s next leader to take the helm. I look forward to working with the Board of Directors in identifying of our next CEO to lead the company to the top.” future,” Fritz said in a statement.
The announcement comes after US hedge fund Soroban Capital Partners called for Fritz to be replaced in a letter on Sunday.
“Unlike typical shareholder agreements that come with numerous demands, Soroban has only one question: to install new leadership that can ensure the trains run safely and on time,” the letter said.
Soroban urged Union Pacific to consider former Chief Operating Officer Jim Vena as a possible replacement for Fritz. He said: “No internal candidate is even remotely qualified as Vena, and he is the most important external candidate available.”
The hedge fund, which said it owns about $1.6 billion in the company, added that a change in leadership could generate about $18 in earnings per share by 2025.
Union Pacific said in a statement that its board of directors is focusing the process on highly qualified candidates, both within the industry and adjacent industries, to find a CEO capable of leading the company for a long term.
As part of the board’s succession planning process, it has considered and will continue to consider shareholder input, adding that it has been actively involved with Soroban Capital since 2017.
Union Pacific reported lower-than-expected fourth-quarter earnings hurt by delayed shipments amid labor shortages and a winter storm that crippled freight operations in the United States.
The development comes after activist investor Nelson Peltz ended his search for a board seat at Walt Disney this month after Chief Executive Bob Iger made plans to fix Mickey Mouse’s home and welcomed investors.
Salesforce and activist investor Elliott Management are also in talks to reach an agreement that could end a potential governance challenge.
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