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.