Union Pacific has named former COO Jim Vena as its new CEO and promoted Beth Whited, its current sustainability and strategy EVP, to serve as the Class I railway’s president.
The changes will become effective Aug. 14.
UP (NYSE: UNP) on Wednesday morning also announced the appointment of two new members to its board of directors and reported its financial results for the second quarter of 2023. Net income declined 14% to $1.6 billion.
New CEO, new president and new board chairman
Lance Fritz is currently UP’s president, CEO and chairman of the board. He announced in February that he would be stepping down amid pressure from a shareholder. Soroban Capital Partners had sought to replace Fritz because of regulators’ scrutiny of UP’s operations and also because of what it characterized as lackluster shareholder returns. But UP insisted in February that its search for a new CEO had already been ongoing independent of Soroban’s calls.
Wednesday’s announcement indicates that UP will be splitting Fritz’s three roles among three people instead of having one person assume all the duties.
Vena, who will be CEO and a member of UP’s board, previously served as the railway’s chief operating officer from 2019 to 2020 and was a senior adviser to the chairman in 2021. He was known for spearheading UP’s efficiency initiatives, and his team garnered efficiency savings of over $1 billion during his tenure, according to the company.
Vena also had a 40-plus-year career at Canadian railway CN (NYSE: CNI), including serving as its COO from 2013 to 2016. He began his career at CN as a brakeman. He also sits on the board of directors for FedEx and DCLI.
Vena will be overseeing UP’s operations, finance, marketing and sales, supply chain and technology functions.
“One of the most vital characteristics we considered as we conducted the search to identify the next CEO was extensive railroad operating experience,” Mike McCarthy, UP’s lead independent director, said in a news release. “Jim has that and more. After a comprehensive search process, the Board unanimously determined that his track record of operating excellence was unparalleled, and he is the right candidate for the job.”
McCarthy himself has been named as UP’s chairman of the board.
“I am excited about returning to Union Pacific and look forward to the journey to be the safest, most reliable and most efficient railroad in the industry,” Vena said. “Working closely with the entire team, my focus from day one will be to ensure the Company delivers industry-leading customer and operating excellence, cultivates and empowers our employees, and cares for the communities in which we operate. These efforts will generate strong shareholder returns.”
Meanwhile, Whited, who currently serves as UP’s chief human resources officer and the railroad’s executive vice president for sustainability and strategy, will be the company’s president. She will report to Vena.
Whited will be responsible for UP’s strategy, workforce resources, sustainability, law, corporate relations and government affairs functions. She has served UP for more than 35 years and has held other leadership positions within the company.
“Beth has been key to Union Pacific’s transformation over many years across numerous functions. Her award-winning work driving sustainability and workforce development helped the company advance its culture and distinguish itself from peers,” McCarthy said.
Whited said, “I care deeply about the Union Pacific team and the many stakeholders who rely upon us. I am very proud of what we stand for and am looking forward to continuing my career at a company that has been transformational to our world and my life. I look forward to working with Jim and the rest of our team as we strive to make Union Pacific one of the strongest franchises in America.”
In response to the changes, Fritz said: “I’d like to express my deep appreciation to the stakeholders of Union Pacific for giving me the privilege of leading this historic company for the past eight years. I am pleased by the progress we’ve made together to enhance value for our stakeholders and chart a strong path forward. I welcome Jim back to Union Pacific, and am confident that we have the right leaders to advance the hard work underway.”
Said McCarthy: “The Board is grateful to Lance for his leadership over the last eight years. Lance successfully positioned Union Pacific for long-term success, and we wish him the very best in his next chapter.”
New board members
UP also appointed two new members to its board of directors, effective immediately: Doyle Simons, former president and CEO of Weyerhaeuser, and John Wiehoff, former chairman, president and CEO of C.H. Robinson.
“The additions of Doyle and John are a continuation of the Board’s ongoing refreshment process to ensure we have the right mix of skills and expertise to advance the company’s strategic and operational objectives,” McCarthy said. “Both new directors bring impressive track records leading public companies as chief executives, serving on public company Boards, and experience partnering with Union Pacific. We look forward to their contributions as we collectively focus on enhancing value for all of our stakeholders.”
The board has formed a new safety and service quality committee, which will be responsible for reviewing, evaluating and monitoring compliance with safety programs and providing oversight of UP’s service performance, the company said.
UP’s board of directors now has 12 directors, 11 of whom are independent and four of whom have been added since 2021, the railway said.
Q2 2023 financial results
UP’s net income for the second quarter of 2023 was $1.6 billion, or $2.57 per diluted share, down from net income of $1.8 billion, or $2.93 per diluted share, for the second quarter of 2022. Financial results for the second quarter of 2023 include the previously disclosed $67 million labor expense and a $73 million income tax benefit, UP said.
Operating revenue fell 5% year over year to $6 billion on reduced fuel surcharge revenue, lower volumes and an unfavorable business mix, partially offset by core pricing gains, UP said. Volumes were also down by 2%.
Operating income slipped 12% to $2.2 billion, while operating ratio was 63%, compared with OR of 60.2% for the second quarter of 2022. Investors sometimes use OR to gauge the financial health of a company, with a lower OR implying improved health.
“The results this quarter were impacted by softening consumer markets, inflation, a one-time labor expense, and increased workforce levels,” Fritz said in the Wednesday news release. “The entire team remains focused on maintaining a solid service product while taking steps to recapture lost productivity and lay a strong foundation for sustainable future success. We took actions throughout the second quarter to drive greater network fluidity and provide our customers with better service. We finished the quarter with resource levels more aligned with demand, as we stored excess locomotives, improved recrew rates, and reduced borrowed-out employees.”
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