CP Board Demands Retraction of Pershing Square’s False Accusations

Sends Letter to William Ackman

CALGARY, April 27, 2012 /PRNewswire/ - Canadian Pacific (TSX: CP) (NYSE: CP) Chairman of the Board of Directors, John Cleghorn, today sent a letter to William Ackman. 

The full text of the letter is below:

27 April 2012

Dear Mr. Ackman:

Canadian Pacific's Board of Directors has publicly expressed its disappointment with the false accusations you made during interviews with the Business News Network and CBC News on Monday, April 23, 2012, that CP had intentionally manipulated its first quarter earnings by improperly not accruing for bonuses. 

Specifically, you said: "So effectively, by not accruing for bonuses, they made the operating ratio look about 100 basis points better" and, in your answer to yourself as to why, "The answer is, to make the quarter look better, in my opinion."  By making these statements, you called into question the integrity of CP, our Board of Directors, the Audit Committee of the Board of Directors, and the staff of CP who work on financial disclosure. 

We believe that this is totally unacceptable behavior for a prospective member of our Board of Directors.

You have already had more than enough time to retract your false accusations.  Our CFO, Kathryn McQuade,  made herself available, and spoke, to your representatives so there could be no uncertainty as to the inaccuracy of your statements.  Accruals for bonuses were properly made and recorded in full accordance with US GAAP and were appropriately disclosed in (1) CP's first quarter earnings release, (2) in the conference call comments by our CFO, and (3) in the MD&A in CP's quarterly report. This is consistent with CP's practice of transparent and proper communications with our shareholders and the public markets.

I could not put it better than Dick Kelly, Chairman, Canadian Pacific Board of Directors Audit Committee, who said in CP's public response to your false accusations: "It is outrageous for Mr. Ackman to make the accusations he did today on the Business News Network.  To put the Company's performance in a negative light, Mr. Ackman suggested that management deliberately distorted CP's financial results.  He attacks the competence of our Audit Committee, which approved our first quarter results."

We demand that you publicly retract your untrue accusations and offer your apology to the Company, our shareholders, our Board of Directors, our Audit Committee, and the dedicated employees whose integrity you called into question.

Yours truly,

(signed)

John E. Cleghorn
Chairman of the Board

CP recommends that shareholders vote FOR the continued forward momentum being carried about by the right management team under the supervision of the right Board.  To do so, vote FOR the election of the director nominees proposed by CP on the WHITE universal proxy.  In addition, shareholders are encouraged to visit www.CPonTrack.com to access the Company's Management Proxy Circular and for more information about CP, the CP management team and its value-generating Multi-Year Plan.

If you have any questions about the information contained in this document or require assistance in completing your WHITE universal proxy, please contact our proxy solicitation agents:

Note on Forward-Looking Information
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These and other factors are detailed from time to time in reports filed by CP with securities regulators in Canada and the United States.  Reference should be made to "Management's Discussion and Analysis" in CP's annual and interim reports, Annual Information Form and Form 40-F.  Readers are cautioned not to place undue reliance on forward-looking information.  Forward-looking information is based on current expectations, estimates and projections and it is possible that predictions, forecasts, projections, and other forms of forward-looking information will not be achieved by CP.  Except as required by law, CP undertakes no obligation to update publicly or otherwise revise any forward-looking information, whether as a result of new information, future events or otherwise.

About Canadian Pacific
Canadian Pacific (TSX:CP)(NYSE:CP) operates a North American transcontinental railway providing freight transportation services, logistics solutions and supply chain expertise. Incorporating best-in-class technology and environmental practices, CP is re-defining itself as a modern 21st century transportation company built on safety, service reliability and operational efficiency. Visit www.CPonTrack.com and see how Canadian Pacific is further driving shareholder value.

SOURCE Canadian Pacific