Union Pacific's chief executive may have tanked his own deal, a $71.5 billion plan to create a transcontinental railroad that he touted as the future of freight.
It goes back to private remarks Jim Vena made at an industry event in March. The ultracompetitive, tough-talking executive threatened anyone who spoke out against Union Pacific's proposed combination with Norfolk Southern, which is currently awaiting regulatory approval.
"I'll probably increase everybody's rates that said they didn't want a seamless railroad by three or four extra percent to teach you a lesson," Vena said in a video recording of his remarks.
Union Pacific had spent months trying to prevent the recording from going public. Now that it is out, farmers, chemical makers and other opponents have amped up their warnings about the dangers of creating a rail giant with enormous pricing power.
Meanwhile, the Surface Transportation Board, the federal agency that must approve the deal, has moved to reassure all the companies, farms and unions that would be affected by the deal that it is taking into account the influence that threats can have on public comment. The board could make a decision whether to approve the deal in the middle of next year.
The board had ordered Union Pacific to release the video of Vena's remarks. Earlier this month, it said it has "serious concerns" that Vena's remarks may influence the willingness of those who would be affected by a merger to share their views for fear of commercial repercussions.
"Retaliation, whether perceived or actual, can seriously undermine the integrity of the Board's processes," it said. Any evidence or threat of retaliation, the board added, affects how it proceeds with the merger review.
Union Pacific said it doesn't retaliate against customers and that its chief executive had made an offhand comment. "Vena is known for being a dynamic speaker," the railroad said.
The stakes are high. A merger would create the country's first coast-to-coast railroad operated by a single company controlling 50,000 miles of tracks from the Jersey shore to California ports. Supporters say it would speed up shipping and make supply chains more efficient.
"This changes the dynamic for Union Pacific," said Robert Primus, a former chairman of the board. He said he also expects more scrutiny of the board.
Opponents, from the farmers, shippers and other firms that rely on rail service to the unions that represent rail workers, say a giant, powerful railroad would slack on service and drive up costs. The CEO's threat, they say, reinforces the downsides.
"Jim Vena crossed the line," said Chris Jahn, chief executive of the American Chemistry Council, which represents plastics and chemical companies. "Rail customers need competition and choice, not threats for speaking out against a bad deal."
At the helm of Union Pacific since 2023, Vena, 68, is known -- and loved -- on Wall Street for improving the company's performance and regularly surpassing rivals.
He is also known for sharp elbows and blunt talk. He laces earnings calls with talk about beating rivals on industry metrics like train length, speed and idle time. At a recent Morgan Stanley conference, he talked about running up hills with two female executives.
"I would have tripped one of them if I thought one of them was going to beat me," he said. "That's the way we should be here, OK?" he added. "Push the heck out of yourself and see what the heck you can do to win. I'm not here to be given second place."
During a keynote speech at the industry event where he made his controversial remarks, Vena first talked about besting his brother in racquetball in his 20s by realizing he could gain the advantage after hitting his brother with cross-court shots.
"He would give me a lot more space and would allow me to be able to make pass shots easier. So that's what I did. In fact, I hit him with the racket one day," Vena said.
The event, the Southwest Association of Rail Shippers conference in Houston, is an annual gathering every spring of hundreds of rail executives, consultants and academics who discuss services and the economic outlook. Railroads and their customers often meet on the side.
The proposed merger was a hot topic at the event. Union Pacific and Norfolk Southern say combining forces will cut shipping times and help customers better compete globally. Opponents say customers will be left with fewer alternatives when service is cut, shipments stall or rates spike.
"Come and see us, talk about what you need to move ahead with us and how we put this thing forward," Vena said during his speech. "If we don't do that, Union Pacific will still be there," he added, before saying he would probably be around, too, and threatened higher rates.
His remarks quickly ricocheted around the rail industry. Some shippers shared the comments with other railroad companies that oppose the merger. After catching wind, the Surface Transportation Board watched a video of Vena's speech over the summer.
Canadian Pacific Kansas City, a railroad that opposes the merger, petitioned the board to order Union Pacific to release the video. Union Pacific asked to keep the video confidential.
CPKC Chief Executive Keith Creel said the threats undermine the board's ability to review the merger, because it can't know whether customers gave honest feedback and won't be able to say it reached a sound decision based on hearing all concerns.
The regulators won't "ever know they're about to make a forever decision that all the forces against had been properly represented," Creel said during a recent earnings call. CPKC was the result of its own major rail merger, in 2023, between Canadian Pacific and Kansas City Southern.
Union Pacific said customers representing more than 30% of its volume support the merger. The company said it still believes in the merits of the deal and that it will get approved.
The Surface Transportation Board has extended the deadline for filing comments to Nov. 18. It invited commenters to pass along any threats or retaliation they faced and, in an uncommon move, told them that they have the option to provide their input confidentially.