Union Pacific Corporation announced today it would be seeking a replacement for CEO Lance Fritz this year, shortly after a major shareholder called for his departure.
The largest U.S. freight rail carrier said it had formed a task force of each of the board’s committee chairs in November to consider a new leader. It explained that the board is “focusing the process on highly-qualified candidates both within the industry and adjacent industries,” and expects Fritz’s successor to assume the position in 2023.
The statement came following the board’s receipt of a letter from Eric Mandelblatt, managing partner and CIO of hedge fund Soroban Capital Partners, which is one of the largest investors in Union Pacific, holding a stake valued at about $1.6 billion. Mandelblatt argued that under Fritz’s eight-year tenure, Union Pacific has ranked the worst in every key railroad operating metric. He added that key constituents have “understandably lost confidence in Mr. Fritz’s ability to lead the company.”
Only One Demand
Mandelblatt indicated that unlike typical shareholder engagements which come with numerous demands, “Soroban has only one ask: install new leadership who can get the trains to operate safely and on time.” He recommended hiring Jim Vena, Union Pacific’s former Chief Operating Officer (COO).
Fritz, who has led Union Pacific since February 2015, wrote that he was looking forward to working with the board to find the new CEO.
Shares of Union Pacific Corporation (UNP) jumped on the news and are up almost 10% today. They hit an all-time high in March of last year, but have fallen more than 23% since.