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An activist shareholder has had his say at Canadian Pacific Railway Limited (NYSE:CP) (TSE:CNR) and installed a handpicked CEO to turn things around at the railroad.

CP’s largest shareholder, Bill Ackman of Pershing Capital Management LP, won a proxy battle six weeks ago to nominate seven nominees to the company’s board. The board named Hunter Harrison, 67, previously of the Canadian National Railway (NYSE:CP), as CEO.

Harrison’s obvious remit is to turn around CP, and has accepted the challenge, claiming that he is looking to cut operating expenses from the 80.1 percent of sales in March to 65 percent in 2015. To do this, he may have to repeat the feat he pulled off at Canadian National, and it may involve difficult labor negotiations, setting up an effective management team, rationalizing the loco fleet and perhaps cutting jobs.

According to Jason Seidl, a New York-based analyst at Dahlman Rose & Co, he probably will “evaluate the current people on his management team there and make some changes, bring in his own people and then embark on a plan to turn CP around.”

In any case Harrison’s baptism by fire will likely take the shape of negotiating with labor unions to help resolve contract talks that stalled and under arbitration – CP and the union have 90 days to agree on new terms, else be bound by those set up by the arbitrator. He is expected to achieve this, given that through his stint at Canadian National he has good equations with labor unions and has established trust.

The other major issue is likely to be fleet rationalization – with 1,700 locomotives, which Harrison may see fit to reduce by 20-25 percent, and a likely cut of 34,500 railcars, there could be a sizable impact on ramping up the company’s operating ratio.

Given that Harrison may be the best person for CP at this stage, his previous employer, Canadian National is, however, not pleased at his joining a rival, and has cut off his pension and benefits.

“Canadian National is concerned that it will be difficult, if not impossible, for Mr. Harrison to perform his new duties for CP without drawing upon his broad knowledge of CN’s confidential information, which he is not permitted to do,” Mark Hallman, a spokesman, said in a statement.

This has been brushed aside by Ackman, who said the claims were frivolous and that Harrison would be appropriately indemnified.