© Reuters. A GE AC4400CW diesel-electric locomotive in Union Pacific livery, seen ahead of a possible strike if there is no deal with rail workers’ unions, as a Metrolink commuter train (right) arrives at Union Station in Los Angeles, California, USA, September
(Reuters) -American Railroad Pacific Union (NYSE:) said on Sunday that it expects to name a successor to take over as CEO from 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 as we identify our next CEO to lead the Company forward.” future,” Fritz said in a statement.
The announcement comes after US hedge fund Soroban Capital Partners called in a letter on Sunday for Fritz to be replaced.
“Unlike typical shareholder commitments that come with numerous demands, Soroban has only one request: install new leadership that can keep trains running safely and on time,” the letter said.
Soroban urged Union Pacific to consider former COO Jim Vena as a possible replacement for Fritz, saying that “no internal candidate is remotely as qualified as Vena, and he is the top external candidate available.”
The hedge fund, which said it owns a stake of about $1.6 billion in the company, added that it sees a change in leadership could deliver about $18 of earnings per share in 2025.
Union Pacific said in a statement that the board is focusing the process on highly-qualified candidates both within the industry and in adjacent industries to identify a CEO capable of leading the company for a long-term tenure.
As part of the board’s succession planning process, it has considered shareholder input and will continue to do so, adding that it has been actively engaged with Soroban Capital since 2017.
Union Pacific reported a lower-than-expected fourth-quarter profit, hit by delayed shipments amid labor shortages and a winter storm that paralyzed cargo operations in the United States.
The development comes after activist investor Nelson Peltz ended his search for a board seat at Walt Disney (NYSE:) Co this month, after Chief Executive Bob Iger unveiled plans to spruce up Mickey Mouse’s house, buoying investors.
Salesforce (NYSE:) and activist investor Elliott Management Corp are also in talks to reach an agreement that could end a possible challenge to the board.
