The move follows a campaign by TCI Fund Management to force the ouster of CEO Jean-Jacques Ruest after a failed merger effort.
Canadian National lost out to rival Canadian Pacific (CP) - Get Canadian Pacific Railway Limited Report earlier this year in a fight to acquire Kansas City Southern (KSU) - Get Kansas City Southern (KSU) Report and create a single railroad linking Mexico, the United States and Canada.
TCI, which holds a 5% stake in Canadian National, welcomed the departure announcement.
“This announcement is a clear admission by the Board that change is needed, and we are here to help usher in that needed change as quickly as possible,” said Chris Hohn, TCI Founder and Portfolio Manager, in a statement.
TCI has put forward a slate of 4 independent board candidates for the CN board. It is pushing for the company to name former CN Chief Operating Officer Jim Vena as CEO. Vena retired from CN in 2016. He most recently served as chief operating officer and senior advisor to the chairman at Union Pacific (UNP) - Get Union Pacific Corporation Report.
Shares of Canadian National rose $3.71, to 3%, to $128 in after-hours trading Tuesday.
Canadian Pacific gained 34 cents, or 0.5%, to $73.82.
Kansas City Southern shares were unchanged.
Canadian National posted better-than-expected results for the third quarter, as earnings hit $1.23 a share on revenue of $2.9 billion. The company had been expected to report earnings of $1.14 a share on revenue of $2.83 billion. The company reaffirmed its full-year outlook for earnings per share of $5.31.
Union Pacific is a holding in the Real Money Action Alerts PLUS portfolio.