Jim Vena, protege of vaunted rail executive Hunter Harrison, seen as likely helping boost UP’s move to greater efficiency.
Union Pacific’s new Chief Operating Officer (COO) is getting plaudits from investors who think the new executive will keep the railroad on track to getting leaner.
The second-largest rail operator by track mileage named Jim Vena as its new COO effective January 14.
Vena, a 40-year executive with Canadian National Railway who started as a brakeman, served as Executive Vice President and COO of Canada’s largest railway under Hunter Harrison, its former chief executive.
Harrison, who passed away in 2017, is credited with the now widely used strategy of “precision scheduled railroading,” which seeks to drive more efficiencies and improve a railroad’s on-time performance.
But the strategy, which has also resulted in numerous layoffs and service changes, has also drawn some skepticism from shippers as to who the real beneficiary is.
Union Pacific is trying its own version of precision scheduled railroading through its Unified Plan 2020, which is being implemented on the company’s Mid-American corridor.
Union Pacific hopes the plan will reduce dwell times for railcars and improve train velocity. On the company’s last conference call, CEO Lance Fritz said he was pleased with the initial results and we've seen improvement in several indicators."
Deutsche Bank equity analysts noted that the hiring of Vena, 60, was a positive for the company as he should be able to bring his own experience with precision scheduled railroading to the table. But it cautioned that Union Pacific still needs to show that its “Unified 2020 play is gaining traction – in an environment of slowing volume growth (particularly in fracking sand, where UNP has disproportionate exposure).”
Vena’s appointment prompted a jump of nearly 9 percent for Union Pacific shares, but Deutsche Bank cautioned “further gains won’t likely come until there is tangible evidence in the numbers.”
Vena is receiving $600,000 in base salary with a $750,000 target bonus and the potential to earn a $4 million equity grant should the company hit certain profitability measures.
Susquehanna Financial Group had a similar take on Vena’s appointment, noting that the terms of his employment letter “should provide breathing room to make difficult decisions.”