Union Pacific Scouts For New Chief After Soroban Capital Pushes For CEO Change, Investors Cheer Move

by Vandana Singh, Benzinga Editor
February 27, 2023 8:15 AM | 2 min read |
  • Union Pacific Corp UNP Chief Executive Officer Lance Fritz would step down this year after hedge fund Soroban Capital Partners called for him to be replaced.
  • Soroban Capital Partners, a New York hedge fund, disclosed a letter to Union Pacific directors pushing for the change, arguing that the company has underperformed on Mr. Fritz's watch. 
  • The Wall Street Journal earlier reported on the letter.
  • Union Pacific reported a lower-than-expected fourth-quarter profit, hurt by a labor shortage and the impact of extreme winter weather.
  • Union Pacific expects to name a successor this year, and Fritz said he looked forward to working with the board to find a new CEO.
  • "Union Pacific has been my home for 22 years, and I am confident that now is the right time for Union Pacific's next leader to take the helm," Fritz said without elaborating on the reasons for his decision.
  • In the letter, Soroban Capital called for Fritz to be replaced, saying he had lost the confidence of shareholders, employees, customers, and regulators.
  • The hedge fund said it had a "long-held view that current management is not capable of driving strong operating performance" and saw "a heightened risk of permanent damage to the franchise if left unaddressed."
  • Soroban urged Union Pacific to consider former Chief Operating Officer Jim Vena as a possible replacement for Fritz, saying, "no internal candidates are remotely as qualified."
  • The hedge fund said a change in leadership could generate about $18 of earnings per share in 2025.
  • Union Pacific said that it was looking for a new CEO capable of leading the company for a long-term tenure.
  • As part of the board's succession planning process, it had considered shareholder input and would continue to do so, and had been engaging with Soroban Capital since 2017.
  • Price Action: UNP shares are up 9.78% at $213.00 during the premarket session on the last check Monday.
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