The corporate structure of the PV&T Railway Trust & subsidiaries

The PV&T Railway Trust was formed in 1928 (after a hard fought-against takeover attempt) to control a voting majority of the PV&T’s stock, ensure the continued health of the railroad, and provide pensions (and dividends) for workers and minority stockholders.

The controlling family prior to the formation of the trust came from the pink belt across central new hampshire & vermont, so when they set it up they made sure that it would be resistant to board tampering by putting in the bylaws how the Trust could invest dividends they get from the stock (back into the railroad), requiring the trust always keep a +1 majority of the voting stock in its subsidiaries, needing a unanimous vote to change the charter, and by assigning a board seat to each of the direct subsidiaries, having the direct subsidiaries select the board chair, the same number of at large seats and, in addition, the same number again of union seats.

(In 2023, this made a 21 member board; the LT&L chair, one member for each of the PV&T, TdM, D&H, GFM, Groupe I&M, and ILW; the seven union seats, and 7 others, 4 of which were held by the railroad unions and 3 were held by large minority stockholders.)

Oh, and the charter also said that the highest salary in the system could be no more that 40× the lowest, and board members could be given a maximum yearly honorarium of 10× the lowest salary. And by the “lowest salary” this included contract employees.

This is not a takeover bid friendly board, as many corporate raiders have discovered after getting enough stock to guarantee a seat on the board, only to have their bright diversification/divestiture/union-busting dreams sunk of the reef of all of the various poison bills in the bylaws.

This structure made electrification even more appealing; putting wires up is really expensive at first, but makes the money back over time, so if you’re always not chasing the next quarter’s results the “making money back over time” part overrules the initial cost.

And so, by the time the 1960s rolled around, the PV&T could afford to merge with the LT&L & TdM without stepping on the trust’s charter, and then the increase in revenue not only managed to insulate the railroad somewhat from the depression in the 1970s but save enough money to win the 1983 bidding war for the mortibund D&H and salvage it from the sad state it was in.

After the D&H merger, the board tweaked the organizational structure of the 4 major railroads that made up the Parsons Vale Lines; the TdM (formerly a subsidiary of the PV&T and LT&L) and the D&H (merged into the PV&T) were taken out of their control and placed at the same reporting level as the PV&T and LT&L, and then in the mid 1970s ILW was moved up the corporate structure to become a top-level subsidiary of the trust.

The official goal of the Parsons Vale Lines is to electrify all of the important trunk lines in the system, and as of 2024 the PV&T and D&H are completely electrified, with the P&W not very far behind, and the CTRC project (Owego-Chicago via the D&H, OSW, and CSS&SB) expects to power the entire route by mid-2024.

In the 2023 annual report, the railroads making up the Trust reported a total of about 1.8 million carloads, bringing in about CAD 6.9 billion; 5.3 billion of that went to operating costs, leaving ~1.6 billion in profit (¾ths of that was immediately churned back into the CTRC project, leaving 300 million to put into the Trust’s capital/disaster fund and 100 million in dividends for the minority stockholders.)

From 1928 through 1964, the Trust operated out of Boston, MA, but the TdM/LT&L merger moved their HQ to Montréal, PQ where it remains today.

  • Copyright © 2024 by Jessica L. Parsons ( unless otherwise noted
    Mon Feb 20 03:26:29 PST 2023