That's a lot of scratch. There's only two logical reasons possible: either they realized they had no case and would lose and be humiliated in a court of law anyway, or the really don't have as 'deep a bench' as their bluster, and would rather pay $9 million (again, that's a lot of scratch!) than be decimated by defections.
It was both.
Please read the document. According to CP, there was ~ $35 Million in dispute (RSUs + NPV of pension). There was a lawsuit - no one is guaranteed a win. A negotiated settlement was achieved (credit to all parties). CN paid ~25% of the amount in dispute, and obtained the non-solicit for a couple of years. A "split the difference" settlement would have seen CN paying ~ $17 Million, and no goodies. And, had CN not filed suit, they would have been paying the whole enchilada.
Pretty good outcome - especially for CN. And try not to worry too much about CN's bench strength - I'm not, and I'm a long (also long CP). Ka-CHING in both cases!
Careful, smoked - don't ascribe "reasoins" (sic) to me. The day after the Ackman enterprise was announced, I obtained and read the book about his battle with MBIA. Based on this, it was clear to me he wasn't going away. When EHH's name came up, it was evident he was the person for the job. Of course, I can't speak for anyone in the Canadian financial sector, or posters on this board at the time, because I'm not a member of either group. Or, for that matter, the "anynoe" (sic) group.
As to your explanation of the discrepancy in your views on the $9 Million "lot of scratch" / $30 Million "chump change", I only have one question: "What?"
And as to your analysis of the legal situation - again, I can only point out the fact that the matter was settled out-of-court, for much less than a 50/50 saw-off in CN's favour - matters of critical timing, gun-jumping, and ""it's" (sic)...reputation" notwithstanding.
$9 million is both...it is an egregiously high amount for a "grievously harmed" (IIRC, that was the exact wording in CN's legal filing, no?) victim to fork over in restitution to the assailant, and it is simultaneously a paltry sum for a huge corporation to risk it's hard-earned reputation over.
The issue of CN's timing is critical. It's the same as arresting someone for assault after the threat but before they swing their fist...it doesn't hold up. The law is very, very specific and detailed in all respects....for good reason. CN jumped the gun....HH remained unemployed when they stopped his pension.
Finally, it is interesting revisionism to say that HH's hiring was a "given". I don't recall one single person in the Canadian financial sector taking the whole thing as anything more than an interesting, temporary diversion that would end in a whimper. I don't believe many people took Ackman seriously in the least for at least 6 months...every poster with an opinion on this very board said Ackman was just pumping up the stock for a quick flip and it wouldn't get anywhere close to an actual vote. The only reasoin it seems so likely to you or anynoe else now is because it happened.
Smoked: sorry for my newbie navigation skills, or lack thereof - this is intended to be a response to your response of March 24th, but I can't bring that site option up. My apologies for any confusion.
Golly, Smoked, which is it - $9 Million is "a lot of scratch" (x 2), or $30 Million is "chump change"? Sorry, couldn't resist! Now, on to substantive matters.
First, I can't agree with your "unilaterally reneged on a contractual agreement" assertion. Surely this is what the legal action launched by CN was intended to resolve - and while I respect your right to handicap the outcome (and you do make some good points about Illinois etc) - to quote the old song - "It ain't necessarily so".
Re the timing - if you are in a legitimate dispute with another party about payments which may or may not be payable - would you continue to pay while the dispute drags through the courts? And, as we now know given the outcome, the dispute was, at a minimum, legitimate. I credit CN with playing with open cards once they saw EHH was involved with the Ackman enterprise - to wait until he got the job (which, let's face it, was a foregone conclusion, for very good reasons) would be to invite charges of deceptively laying in the weeds.
And as to EHH making that back and more - I agree, and more power to him! No question he is the pre-eminent transportation guy on the planet, and an outstanding all-round business guy. He created a ton of value at IC and CN, and is now doing the same thing at CPR, as expected.
Anyway, Smoked, thanks for your interesting comments and insights - I'm enjoying the discussion, and I hope you are as well.
Old: CN paid almost exaclty half of the foregone RSU payment of $17.7mm, and avoided paying the entire guaranteed pension amount of $16mm. So you are right, CN did not actually "bend over" financially on this as much as they could have been on the hook for.
This case was to be heard in an Illinois court, with a Canadian corporate defendant that unilaterally renegged on a contractual agreement with a U.S. citizen...not easy. And the timing by CN was perhaps more damning to their case than the action itself. They withheld payments immediately upon the announcement that Pershing was nominating HH for the position of CP CEO, instead of waiting to see whether he actually got the job. So when you say" no one knows how the case might have gone"....I know how would have bet.
But CN came out of this pretty badly wounded, IMO. Financially, they clawed back some money, sure. But for $35 billon companies, a $30 million legal win is chump change (as it turns out, Harrison made it all back and more before this agreement was even drawn up) , and the cost PR-wise was high. Ignoring non-plussed investors like mine, if I was a labourer at CN, I might not exactly "admire" way my company treated the railway guru that turned a one-time basket case into a world-beater The union line is "good riddance", sure, but when smart people get away from the mob chanting the slogans, they often see things a little more clearly.