{ "docId": "019dd923-622b-71dc-a6dc-52ab24c53815", "docSlug": "1dca9cf84925", "documentTitle": "Union Pacific Corporation (UNP)", "authorId": "15_Soroban", "authorName": "Eric Mandelblatt", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "activist_investor", "sourceTypeLabel": "Activist investor", "presentationDate": "2023-02-22 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 22, "pageCount": 43, "prevPage": 21, "nextPage": 23, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "balanced", "nDataPoints": 0, "notes": "The slide uses a 'before and after' structure centered around Jim Vena's tenure to show that the lack of confidence is a persistent, cyclical issue.", "elementsJson": [ "headline_text", "bullet_list" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622b-71dc-a6dc-52ab24c53815/22", "deckHref": "/decks/019dd923-622b-71dc-a6dc-52ab24c53815", "deckJsonHref": "/decks/019dd923-622b-71dc-a6dc-52ab24c53815.json", "deckAnchorHref": "/decks/019dd923-622b-71dc-a6dc-52ab24c53815#slide-22", "components": [ { "bbox": { "h": 0.05, "w": 0.9, "x": 0.05, "y": 0.55 }, "kind": "list", "text": "Since Jim Vena left as COO, analysts have begun questioning management's execution again, asking sharp/pointed questions", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b05bc569-423e-4ccd-b4f6-32a52c5382c6", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.9, "x": 0.05, "y": 0.15 }, "kind": "list", "text": "Before Jim Vena, analysts had consistently expressed skepticism around management's ability to execute", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c9ac4606-4e50-44fe-8389-954f12446287", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "\"Given the trends that we're exhibiting, the reversal in those trends, I'm just trying to understand what confidence that we can put in a reasonable timeframe, long term is a fairly vague definition, a reasonable time frame for evolution toward a 55% OR.\" — RBC; \"One of the pushbacks we get in sort of recommending your stock is that there is a perception out there that maybe management is a little bit taking their time on the margin side. There isn't as much of a sense of urgency.\" — Bernstein; \"Lance, I wonder if you could just give your investors a little bit of confidence... you guys have had some pretty significant OR targets out there for some time now.\" — Barclays; \"Our analysis shows a significant efficiency gap between Union Pacific and its peers... This structural opportunity is execution-dependent but we sense the productivity improvement momentum currently occurring in the U.S. railroads, in part due to the management changes at CSX, provides significant incentive for management to attack this opportunity with more vigor.\" — BMO; \"...we expect that management will begin to act with a sense of urgency to restore investor confidence (or will face increasing pressure to do so).\" — Bernstein; \"[on relative underperformance vs. peers] \"...this is a tough question. But Lance, is there a sense of urgency that's been elevated?\" — Deutsche Bank; \"Ultimately, management needs to deliver better cost performance and under constant questioning they remained steadfast in their outlook to do so... we believe pressure will build on management to execute well.\" — Citi; \"...I just want to understand what's embedded in the back-half guidance or the revised full year guidance? Because this is now the second time in, I don't know, 40-45 days that we're revising the full year outlook. ...there are a few people out there that have many decades of PSR experience that have been PSR implemented... Those guys seem to be available on a consultancy basis. I don't know if there is scope to bring in somebody on a short-term basis to accelerate some of the progress... Is that something that you're considering or looking at doing?\" — Deutsche Bank; \"I want to ask just a bigger picture question. I think some people are questioning the success or maybe the sustainability of PSR. ... We were supposed to do at 55% this year on our way to a lower low to mid-50s OR in a couple of years. Are those just the wrong numbers to be thinking about now for the OR over time?\" — Wolfe; \"And then for next year, I heard the word confident a lot. ...but not confident enough to give the OR guide for next year of 55%. ...is 55% achievable for next year?\" — RBC; \"...you laid out a multiyear productivity improvement for the network. ...are you confident that you can eventually obtain the aggregate plan over time? ...reset at a lower level going forward?\" — Evercore ISI; \"...can you talk a little bit to the longer-term transition plans? What skill sets do you think the Board really is focused on for the next leader of the business.\" — Susquehanna; \"After a period pre-pandemic where significant improvement in operating efficiency resulted in the mgmt. team at the time boasting a forecast for an 'industry leading O/R,' mgmt. has now backed off that objective... Looking back to the period late 2016 to early 2019, that time was characterized by guidance that lacked conviction, a dearth of PSR expertise at the mgmt. level and (ultimately) sub-par operating results. Fundamentally, we are concerned that we are entering a new period characterized by the very same challenges.\" — RBC", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-64d2-7657-bbde-e51df59387c7", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.9, "x": 0.05, "y": 0.05 }, "kind": "title", "text": "Investors have understandably lost confidence in current leadership's ability to lead UNP to its full potential", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e55cbaef-05df-4f64-a1ab-569dec9b673c", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "before-after-framing", "slug": null, "matchId": "59c2fc75-0ecc-4475-badd-cb35903f7443", "evidence": "The slide is structured into two distinct time periods (Before Jim Vena vs. Since Jim Vena left) to highlight a recurring pattern of investor skepticism.", "confidence": 0.95 } ], "arcBeats": [ { "to": 22, "from": 17, "beatId": "1b052fef-3e65-4e33-85f0-034bb3d25b5e", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Agitate", "beatSlug": "problem-agitate-solution-agitate-make-it-worse", "evidence": "Slides 17-22 emphasize the consequences of continued underperformance and failure to meet targets", "position": 1, "confidence": 0.8, "parentBeatName": "Development", "parentBeatSlug": "development" } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }