A GE AC4400CW diesel-electric locomotive at the Union Pacific panel near Union Station in Los Angeles, California, September 15, 2022.
Bing Guan | Reuters
US railroad company Union Pacific said Sunday it expects to name a successor to take over as chief executive officer to replace Lance Fritz in 2023.
“Union Pacific has been my home for 22 years and I’m confident now is the right time for the next leader of Union Pacific to take the helm. I look forward to working with the Board of Directors as we identify the next CEO to lead the company into the 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 engagements that come with many demands, Soroban has only one request – to install new leadership that can make the trains run safely and on time,” the letter read.
Soroban urged Union Pacific to consider former Chief Operating Officer Jim Vena as a possible replacement for Fritz saying “There are no remotely qualified internal candidates like Vena, and he is the leading external candidate available.”
The hedge fund, which said it owns about $1.6 billion in the company, added that it sees the change in leadership could generate about $18 in earnings per share in 2025.
Union Pacific said in a statement that the board is focusing the process on highly qualified candidates within the industry and adjacent industries to identify a CEO capable of leading the company for the long term.
As part of the Board’s succession planning process, it has taken into account shareholder input and will continue to do so, adding that it has been actively involved with Soroban Capital since 2017.
Union Pacific reported lower-than-expected fourth-quarter earnings, hit by shipment delays amid a labor shortage and a winter storm that disrupted shipments across the United States.
The development comes after activist investor Nelson Peltz ended his bid for a seat on Walt Disney’s board of directors this month, after CEO Bob Iger laid out plans to overhaul Mickey Mouse’s home, cheering investors.
Salesforce and activist investor Elliott Management are also in discussions to reach an agreement that could end a potential challenge to the board.
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