What is the main purpose of the CSX 2007-2009 Long Term Incentive Plan?

The Plan's primary purpose is to align the interests of key employees with those of shareholders by providing performance-based incentives. It aims to motivate and reward employees through stock awards tied to achieving specific financial and strategic goals, particularly improving the company's Operating Ratio.

In what form will the incentive payouts be made?

Payouts of Performance Grants under the Plan will be made in the form of CSX common stock.

Are there any factors that could influence the payout amounts beyond the Operating Ratio?

Yes, the Operating Ratio targets themselves are subject to adjustment based on the average cost of oil, recognizing the impact of fuel prices on expenses. Additionally, for certain executive officers, payouts can be adjusted upwards or downwards based on cumulative Operating Income and the successful completion of predetermined strategic initiatives.

CSX 8-K: Leadership Changes

Q: How will employee performance be measured under this new incentive plan?

Performance will be primarily measured by CSX's Operating Ratio, which is calculated as annual surface transportation operating expenses divided by surface transportation revenue for its rail and intermodal businesses, excluding non-recurring items. For executive officers, additional performance measures like cumulative Operating Income and the achievement of strategic initiatives will also be considered.

Summary

CSX Corporation (CSX) has filed an 8-K report detailing the adoption of the CSX 2007-2009 Long Term Incentive Plan (the "Plan") by its Compensation Committee on May 1, 2007. This plan, an extension of the CSX Omnibus Incentive Plan (COIP), is designed to incentivize and reward key employees by linking compensation payouts to the company's attainment of specific performance goals, primarily focused on improving its Operating Ratio. The Operating Ratio, defined as operating expenses divided by revenue for its rail and intermodal businesses (excluding non-recurring items), serves as the core metric for determining awards. The targets for the Operating Ratio are also subject to adjustments based on the average cost of oil, reflecting the company's exposure to fuel price volatility. Payouts under the Plan will be made in the form of CSX common stock. For certain executive officers, the payouts are further subject to adjustments based on cumulative Operating Income and the achievement of predetermined strategic initiatives, allowing for potential upward or downward modifications to ensure alignment with overall company performance and strategic direction.

Key Highlights

1CSX adopted the 2007-2009 Long Term Incentive Plan (the "Plan") on May 1, 2007.
2The Plan aims to motivate and reward certain CSX employees through Performance Grants.
3Payouts are primarily based on the company's attainment of a lower Operating Ratio.
4The Operating Ratio metric excludes non-recurring items and is sensitive to oil costs.
5Performance Grants will be paid out in the form of CSX common stock.
6Executive officer payouts may be further adjusted based on cumulative Operating Income and strategic initiatives.

CSX CORP 8-K Report, Executive Changes (May 7, 2007)

Summary

Key Highlights

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