8-KLeadership ChangesExhibits & Filings

CSX CORP 8-K Report, Executive Changes (Feb 12, 2018)

Filed February 12, 2018For Securities:CSX

Summary

CSX Corporation (CSX) announced on February 6, 2018, the adoption of a new long-term incentive program for certain employees, including its CEO and executive vice presidents, for the period of 2018-2020. This program, known as the CSX 2018-2020 Long-Term Incentive Plan, aims to align executive compensation with company performance and shareholder value. The awards are structured to motivate and reward key personnel over a three-year performance cycle. The compensation structure includes Performance Units and Stock Options, with a significant portion (60%) allocated to Performance Units. Payouts for Performance Units are contingent upon achieving predetermined goals for Operating Ratio (OR) and Free Cash Flow (FCF), each weighted at 50%. The potential payout for Performance Units can range from zero to 200% of the target award, with potential adjustments based on total shareholder return relative to peer companies. Stock Options vest at the end of the performance period.

Key Highlights

  • 1CSX adopted the 2018-2020 Long-Term Incentive Plan to motivate and reward key employees.
  • 2Awards consist of Performance Units (60%) and Stock Options (40%) for the CEO and Executive Vice Presidents.
  • 3Performance Unit payouts are directly tied to achieving goals in Operating Ratio (OR) and Free Cash Flow (FCF), each accounting for 50% of the payout.
  • 4Performance Units can pay out between 0% and 200% of the target award, based on company performance over the 2018-2020 period.
  • 5Payouts for certain executives may be adjusted by up to 25% based on CSX's total shareholder return relative to a comparator group.
  • 6Performance Units are expected to be paid in shares of CSX common stock in early 2021, following the performance cycle.
  • 7Stock Options will vest on February 6, 2021, and have an exercise price based on the stock's closing price on February 6, 2018.

Frequently Asked Questions

The CSX 2018-2020 Long-Term Incentive Plan is comprised of three components: Performance Units, Restricted Stock Units, and Stock Options. However, for the CEO and Executive Vice Presidents, awards were specifically structured with 60% Performance Units and 40% Stock Options, and no Restricted Stock Units were granted under this plan.

Performance Units will be evaluated based on the achievement of predetermined goals for Operating Ratio (OR) and Free Cash Flow (FCF), with each metric contributing 50% to the total payout. The performance period for OR is the company's 2020 results, while FCF will be measured from the beginning of 2018 through the end of 2020. Payouts, if earned, can range from 0% to 200% of the target award and are expected to be paid in CSX common stock in early 2021.

Yes, for certain executives, the payout of Performance Units may be subject to formulaic adjustments of up to 25% upwards or downwards. This adjustment is based on CSX's total shareholder return compared to a specified group of peer companies over the performance period.

The Stock Options granted under this plan will vest on February 6, 2021, which is at the end of the three-year performance cycle. Unexercised Stock Options will expire on February 6, 2028. The exercise price for these options is set at the closing price of CSX common stock on the grant date, February 6, 2018.