Union Pacific Shares Rally After Naming Jim Vena As COO

Union Pacific

Union Pacific Corp. (NYSE: UNP)

Shares of Union Pacific Corporation ran up 7.4% in premarket trade Tuesday after the railroad operator appointed Jim Vena as its Chief Operating Officer, effective January 14. Vena, 60, previously served as Executive Vice President and COO at rival Canadian National Railway Company.

Lance Fritz, Union Pacific chairman, president and chief executive officer had this to say on Vena’s appointment: “Unified Plan 2020 combines precision scheduled railroading principles with our own UP Way tools and best practices. We have been making excellent strides rolling out Unified Plan 2020, and Jim’s vast knowledge of the precision scheduled railroading model brings significant experience and expertise that will enhance the work already underway.”

Vena spent more than 40 years working at Canadian National Railway Company. During his tenure, the company excelled with respect to safety incident ratio and operating ratio. Union Pacific is hoping that he will bring his expertise to the company, which is shifting to a new efficiency strategy.

He will oversee the implementation of a system known as Precision Scheduled Railroading that Union Pacific adopted in 2018. The system has helped to swell profits of giant railroads such as CSX Corporation, Canadian National, and Canadian Pacific Railway Ltd.

Vena will oversee all aspects of Union Pacific operations and report to Fritz. He is expected to receive $600,000 as base salary and $700,000 as potential annual bonus. Fadi Chamoun, analyst at BMO Capital Markets said the appointment of Vena as COO of Union Pacific is likely to help the Omaha, NE- based company to reduce costs, improve productivity, and address its scheduling challenges.

“We believe that Jim Vena could be instrumental in helping UNP push forward with its Unified Plan 2020, which aims principally to improve operational efficiency through the implementation of (precision scheduled railroading (PSR). Operational improvements could materialize faster under Vena’s leadership as he brings to bear his extensive experience in PSR,” Chamoun said.

Jason Seidl, analyst at Cowen & Co. upgraded Union Pacific stock from hold to buy. In a note to clients Seidl said, “We believe the company is less vulnerable to having the same level of disruptions that some recent PSR implementations have had, but note that results will likely not begin to meaningfully take hold until second half of 2019.”

Shares of the company were up 9.4% to $151.67 as of 10:25 a.m. ET on the New York Stock Exchange. Last year, the stock gained 3.l%, while the S&P index of US railroads increased 4.8%.

Union Pacific Corp. Profile

Union Pacific Corp. engages in the provision of railroad and freight transportation services. Its principal operating company, Union Pacific Railroad Co., operates as a railroad franchise. The Railroad’s diversified business mix includes agricultural products, automotive, chemicals, coal, industrial products, and intermodal. The company was founded in 1969 and is headquartered in Omaha, NE. – CNN Money