Summary
CSX Corporation filed an 8-K report on May 12, 2013, detailing key actions taken by its Compensation Committee and Board of Directors on May 7, 2013. The primary focus of this filing is the approval of a new long-term incentive program for employees, including executive officers. This program is structured with two components: Performance Units and Restricted Stock Units (RSUs). The Performance Units are tied to the achievement of specific financial goals, namely operating ratio and return on assets (ROA), over an 11-quarter period from Q2 2013 to Q4 2015. Payouts for these units, which can range from zero to 200% of target awards, will be in CSX common stock in early 2016, with potential downward adjustments based on relative total shareholder return. The filing also outlines compensation adjustments for named executive officers, including base salaries, annual incentive opportunities, and specific RSU and restricted stock grants. Notably, Chairman, President, and CEO Michael J. Ward received a base salary of $1.2 million, an annual incentive opportunity of 120% of his base salary, and a significant RSU award. Furthermore, the report confirms the results of CSX's Annual Meeting of Shareholders held on May 8, 2013, where thirteen directors were elected, and the appointment of Ernst & Young LLP as the independent registered public accounting firm was ratified. Shareholder approval was also obtained, on an advisory basis, for the compensation of certain executive officers.
Key Highlights
- 1CSX implemented a new Long-Term Incentive Plan (LTIP) comprising Performance Units and Restricted Stock Units (RSUs) to motivate and reward employees.
- 2Performance Units are directly linked to achieving specific targets for operating ratio and return on assets (ROA) over an 11-quarter period (Q2 2013 - Q4 2015).
- 3Potential payouts for Performance Units range from 0% to 200% of target grants, payable in CSX common stock in early 2016.
- 4Executive compensation adjustments were approved, including base salary increases, annual incentive opportunities, and significant RSU/restricted stock grants for key officers.
- 5Michael J. Ward, CEO, received a base salary of $1.2 million and an annual incentive opportunity of 120% of his base salary.
- 6All thirteen incumbent directors were elected to the Board of Directors at the Annual Shareholder Meeting on May 8, 2013.
- 7Shareholders ratified the appointment of Ernst & Young LLP as CSX's independent registered public accounting firm for 2013 and approved executive compensation on an advisory basis.