01—Abstract
Summary
Summary of the 10-K/A filed April 23, 2026. Cited figures are marked; the original filing is the authoritative source.
This filing provides an overview of Canadian Pacific Kansas City Ltd.'s (CPKC) corporate governance, executive compensation, and director information as of the fiscal year ending December 31, 2025.
The company emphasizes its commitment to strong governance practices, with a highly qualified and experienced Board of Directors, where 93%a of nominees are independent. The Board composition is balanced with a diversity of viewpoints and skills critical for effective oversight. Executive compensation is designed to align management's interests with shareholders', featuring a significant portion of 'at-risk' pay, primarily through equity-based awards like Performance Share Units (PSUs) and stock options.
The company highlights its robust share ownership requirements for executives and directors, ensuring a vested interest in long-term value creation. Compensation decisions are guided by a Compensation Committee comprised of independent directors, with external advisors providing support to ensure competitive and performance-driven pay structures. The filing details the compensation components, 2025 performance, and realized vs. awarded pay, demonstrating a strong link between executive pay and shareholder value.
02—Key points
Key Highlights
- The Board of Directors comprises 93% independent nominees, reflecting a commitment to strong corporate governance.
- Directors and executive officers have significant share ownership requirements, aligning their interests with shareholders.
- Executive compensation is heavily weighted towards 'at-risk' pay (average 82% for NEOs), with a substantial portion in equity-based incentives (PSUs and stock options).
- The company achieved strong operational and safety performance in 2025, with a STIP corporate performance payout of 121%.
- The 2023 PSU awards vested with a 91% payout factor, demonstrating performance-based vesting.
- The Compensation Committee uses independent advisors (FW Cook) and has a disciplined process for setting executive compensation.
- CPKC has adopted clawback policies aligned with SEC requirements to ensure accountability for incentive-based compensation.
03—Questions
Frequently Asked Questions
What is the composition of CPKC's Board of Directors in terms of independence?
CPKC's Board of Directors is composed of highly qualified and experienced individuals. As of the filing date, 93% of the director nominees are independent, indicating a strong commitment to effective governance and oversight. This composition aims to bring a diversity of viewpoints and relevant skills crucial for guiding the company's strategy and operations.
How is executive compensation structured at CPKC to align with shareholder interests?
CPKC's executive compensation program is designed with a strong emphasis on 'pay for performance' and alignment with shareholder interests. A significant portion of the target total direct compensation is 'at-risk,' with an average of 82% for Named Executive Officers (NEOs). Key components include incentive-driven pay, equity-based compensation (Performance Share Units and stock options), and mandatory share ownership requirements for executives. Compensation components are structured to pay out over multiple performance periods, linking them to short- and long-term business strategies.
What were the key performance highlights for CPKC in 2025, particularly concerning executive compensation?
In 2025, CPKC demonstrated strong operational and safety performance. The company led the industry in safety for the third consecutive year and achieved record revenues of $15.1 billion, with a core adjusted operating ratio of 59.9%. These strong results led to a Short-Term Incentive Plan (STIP) corporate performance payout of 121%. While overall corporate results were strong, the Board capped the CEO's individual performance factor at 100% to ensure alignment with the company's overall performance, impacting 30 officers similarly.
What measures does CPKC have in place to manage compensation risk and ensure accountability?
CPKC employs several measures to manage compensation risk and ensure accountability. This includes rigorous compensation risk reviews conducted periodically, which have concluded that no risks were identified that could materially adversely affect the company. Key policies include Dodd-Frank and Senior Executive Clawback Policies to recover incentive compensation in case of accounting restatements, as well as anti-hedging and anti-pledging policies for directors and executive officers. Additionally, non-compete and non-solicitation clauses in long-term incentive award agreements help manage retention risk.
04—Continue