What is the primary objective of the new CSX Long Term Incentive Plan?

The primary objective is to motivate and reward eligible CSX employees by aligning their compensation with the creation of shareholder value. This is achieved by setting performance goals tied to significant improvements in the company's Operating Ratio by fiscal year 2010.

How will payouts under the Plan be determined and when will they be made?

Payouts will be determined based on CSX's attainment of specific Operating Ratio targets for fiscal year 2010. These targets may also be adjusted based on the average cost of oil. If the targets are met, payouts will be made in the form of CSX common stock in early 2011.

Are there any provisions that could reduce the payout amounts for executives?

Yes, for certain executive officers, payouts may be subject to a discretionary downward adjustment of up to 30%. This reduction would be based on the accomplishment of specific company initiatives, giving management discretion to further refine rewards.

What is the Operating Ratio and why is it important for this incentive plan?

The Operating Ratio is a key efficiency metric for railroad companies, calculated as consolidated operating expenses divided by operating revenue (excluding non-recurring items). A lower Operating Ratio indicates greater efficiency. Tying incentive payouts to its improvement directly links employee rewards to the company's operational performance and profitability, which is a primary driver of shareholder value.

CSX 8-K: Leadership Changes

Summary

CSX Corporation (CSX) has filed an 8-K detailing the adoption of its 2008-2010 Long Term Incentive Plan (the "Plan") by the Compensation Committee on May 6, 2008. This plan is designed to align executive and employee compensation with shareholder value by setting performance goals based on achieving significant improvements in CSX's Operating Ratio by fiscal year 2010. The Operating Ratio, a key metric for efficiency, will be calculated excluding non-recurring items and may be adjusted based on the average cost of oil. Payouts, if any, are scheduled for early 2011 and will be made in the form of CSX common stock. Notably, for certain executive officers, payouts may be subject to a discretionary downward adjustment of up to 30% based on the accomplishment of specific company initiatives, providing an additional layer of management discretion in rewarding performance.

Key Highlights

1CSX adopted the 2008-2010 Long Term Incentive Plan (the "Plan") on May 6, 2008.
2The Plan aims to motivate employees by linking compensation to the attainment of pre-established Operating Ratio targets for fiscal year 2010.
3Significant improvement in the Operating Ratio is required to trigger payouts.
4The Operating Ratio calculation excludes non-recurring items.
5Payouts may be influenced by the average cost of oil.
6Awards will be in the form of CSX common stock and expected to be paid in early 2011.
7Executive officer payouts may be reduced by up to 30% at the company's discretion based on company initiatives.

CSX CORP 8-K Report, Executive Changes (May 9, 2008)

Summary

Key Highlights

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