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Union Pacific to find new CEO after pressure from hedge fund

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Union Pacific Corp. said Sunday it plans to name a new chief executive this year, hours after a major shareholder publicly urged the railroad giant’s board to oust Lance Fritz from the job.

Soroban Capital Partners, a New York hedge fund managing about $10 billion, on Sunday disclosed a letter it wrote to Union Pacific
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directors pushing for the change, arguing that the company has underperformed on Fritz’s watch. The letter was earlier reported on by The Wall Street Journal.

Union Pacific said in a statement that its board is focused on finding “highly-qualified candidates both within the industry and adjacent industries.” Among its considerations are a track record of success in safety and operational matters, the company said, crediting Fritz with achieving financial growth in difficult conditions.

Soroban argues that Union Pacific, the largest freight-railroad operator in the U.S. with a market capitalization of nearly $120 billion, had ranked worst in key operating metrics including safety, volume growth and total shareholder return during Fritz’s eight-year tenure, despite the strength of its network. The Omaha, Neb., railroad’s returns to shareholders, including dividends, are the worst on a percentage basis among so-called Class 1 freight railroad operators in that period, according to FactSet.

An expanded version of this report appears on WSJ.com.

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