Union Pacific will replace rail CEO

OMAHA

Union Pacific announced plans on Feb. 26 to replace its CEO later this year after a hedge fund that holds a $1.6 billion stake in the railroad went public with its concerns about his leadership.

The managing partner of Soroban Capital Partners, Eric Mandelblatt, said in a letter that the Omaha, Nebraska-based railroad has lagged behind its peers during Lance Fritz’ tenure over the past eight years and that a leadership change is overdue. The hedge fund has been privately pressuring Union Pacific to oust Fritz at least since last year.

“UNP [Union Pacific] has repeatedly and significantly failed to reach its potential under Mr. Fritz’s leadership,” Mandelblatt wrote. “UNP has ranked the worst in safety, volume growth, revenue growth, cost management, EBIT growth, and total shareholder return. These are highly underwhelming results despite UNP having the premier railroad franchise in North America.”

Mandelblatt urged the railroad to hire former Chief Operations Officer Jim Vena, who helped overhaul Union Pacific’s operations several years ago. But the railroad’s board said in a statement that it has been working with a leadership consultant since last year to identify the best internal and external candidates for the job.

Vena was brought in to Union Pacific in 2019 from Canadian National to help the railroad change to a new operating model that relies on fewer, longer trains and significantly fewer employees and locomotives to move freight, but Vena left after less than two years on the job.