What are the primary performance metrics for the new long-term incentive plan?

The primary performance metrics for the CSX 2019-2021 Long-Term Incentive Plan are Operating Ratio (OR) and Free Cash Flow (FCF). Each metric is weighted equally at 50% and will be measured independently over the cumulative performance period from 2019 through 2021.

How are Performance Units structured and what is the potential payout?

Performance Units represent a significant portion (60%) of the awards for the CEO and executive vice presidents. Payouts can range from zero to 200% of the target award, depending on the achievement of the OR and FCF goals. These payouts will be made in shares of CSX common stock in early 2022. Additionally, these payouts may be adjusted upward or downward by up to 25% based on CSX's total shareholder return compared to a peer group.

What changes were made to CEO James M. Foote's compensation?

Effective February 6, 2019, CEO James M. Foote's annual incentive opportunity was increased to 140% of his annual base salary. Furthermore, his target long-term equity award was increased from $9 million to $10 million.

When do the awarded Stock Options expire and what is their exercise price?

The Stock Options awarded under the plan will expire on February 6, 2029, if unexercised. The exercise price for each Stock Option is set at the closing price of CSX common stock on the grant date, which was February 6, 2019.

CSX 8-K: Leadership Changes

Summary

CSX Corporation (CSX) filed an 8-K report on February 12, 2019, detailing a new long-term incentive program, the CSX 2019-2021 Long-Term Incentive Plan (the '2019-2021 Plan'), approved on February 6, 2019. This plan aims to motivate and reward key employees, including executive officers, through a mix of Performance Units, Stock Options, and Restricted Stock Units. For the President and CEO, James M. Foote, and other executive vice presidents, awards consist of 60% Performance Units and 40% Stock Options, with no Restricted Stock Units granted to this group. The Performance Units have a payout range of 0% to 200% of target awards, contingent on company performance over the three-year period (2019-2021) against specific goals for Operating Ratio (OR) and Free Cash Flow (FCF), each weighted at 50%. Payouts will be in CSX common stock in early 2022. Executive officer payouts are also subject to adjustment based on total shareholder return relative to a peer group. Additionally, the report notes an increase in the annual incentive opportunity for CEO James M. Foote to 140% of his base salary and an increase in his target long-term equity award from $9 million to $10 million, effective February 6, 2019.

Key Highlights

1CSX has implemented a new long-term incentive program for 2019-2021, featuring Performance Units and Stock Options for top executives.
2Performance Unit payouts are tied to achieving 50% Operating Ratio (OR) and 50% Free Cash Flow (FCF) goals over the 2019-2021 period, with potential payouts ranging from 0% to 200% of target.
3CEO James M. Foote and other executive vice presidents received awards structured as 60% Performance Units and 40% Stock Options.
4Executive officer Performance Unit payouts can be adjusted by up to 25% based on CSX's total shareholder return relative to a specified peer group.
5Stock Options vest over three years, with one-third vesting annually on February 6, 2020, 2021, and 2022.
6CEO James M. Foote's annual incentive opportunity has been increased to 140% of his base salary.
7The target long-term equity award for CEO James M. Foote has been raised from $9 million to $10 million.

CSX CORP 8-K Report, Executive Changes (Feb 12, 2019)

Summary

Key Highlights

Frequently Asked Questions