CN Rail CEO Mongeau Resigns After Throat Surgery Last Yearby and
Mongeau: ‘It is difficult to fulfill such a demanding role’
Chief Financial Officer Jobin to take the reins on July 1
Canadian National Railway Co. Chief Executive Officer Claude Mongeau is stepping down after 22 years at the carrier, saying throat surgery last year has left him unable to continue in the job.
Mongeau, 54, will be replaced on July 1 by Luc Jobin, who has served as chief financial officer since 2009, the railroad said in a statement Tuesday. Jobin also will take over Mongeau’s position as president and join the board.
The leadership change adds to the challenges for Canada’s biggest railroad, which in April cut its annual profit forecast for the first time in eight years. Like all major North American railroads, the Montreal-based carrier is grappling with weaker demand for shipments of commodities such as coal and crude oil.
“I was filled with joy returning at the helm earlier this year, but I gradually came to realize that it is difficult to fulfill such a demanding role, given my new condition as a laryngectomee,” Mongeau said in the statement.
Shares fell 0.3 percent to C$77.21 at 9:47 a.m. in Toronto.
Mongeau went on leave in August after doctors found a rare type of precancerous soft-tissue tumor. He had surgery to replace his larynx and apologized at the annual meeting in April for his “raspy voice,” though gave a presentation that lasted about 20 minutes.
He served half his tenure at Canadian National as finance chief and was instrumental in its 1995 initial public offering. He assumed the CEO role in January 2010 after Hunter Harrison retired. Since then, the carrier’s shares have posted an annualized return of about 19 percent through last week, while the Standard & Poor’s/TSX Composite Index has gained 6 percent and the S&P Railroads Index has advanced 15 percent.
While Mongeau’s departure may not have been minutely planned, Canadian National will benefit from a “deep bench” of skilled managers, said Walter Spracklin, an analyst at RBC Capital Markets.
“I don’t think the board had lots of advance notice,’ he said in a telephone interview. “The key here at the end of the day, whether it’s Luc or whomever, it’s a very strong team at CN.”
Jobin, 57, joined the railroad after serving as a senior executive at Imasco, Imperial Tobacco, British American Tobacco and Power Corp. He coordinated Canadian National’s management team while Mongeau was on medical leave.
“Although Claude will remain available to help with the transition, we will miss him and his sound leadership dearly,” Chairman Robert Pace said in the statement. “His bold innovation agenda, centered on true supply-chain collaboration and solid customer service has set CN on a path of sustainable value creation for many years to come.”
Adjusted earnings this year will be in line with last year’s C$4.44 a share, the railroad said in April, having previously forecast a “mid-single digit” increase. Carloads will decline 4 percent to 5 percent as coal, crude oil and sand shipments remain weak, Canadian National said. A strengthening of the Canadian dollar against its U.S. counterpart contributed to the revision. Revenue fell 4.3 percent in the first quarter.