8-KLeadership ChangesCorporate Changes

NORFOLK SOUTHERN CORP 8-K Report, Executive Changes (Feb 28, 2011)

Filed February 28, 2011For Securities:NSC

Summary

Norfolk Southern Corporation (NSC) filed an 8-K on February 28, 2011, primarily announcing the election of Erskine Bowles to its Board of Directors. Mr. Bowles, a seasoned executive with experience as White House Chief of Staff and President of the University of North Carolina system, was appointed to the Finance and Compensation Committees. His election comes with standard director compensation, including a grant of 3,000 restricted shares subject to a vesting period. The filing also disclosed a prior business relationship between Norfolk Southern and L&C Railway, a shortline railroad majority-owned by Mr. Bowles' wife's family. While the Corporation paid $3.8 million in interchange fees and fuel surcharges through November 2010, the relevant operating assets of L&C Railway were sold prior to Mr. Bowles' election. This transaction was reviewed and approved under the company's related person transaction policy. Additionally, the company amended its bylaws to temporarily increase the board size to 13 directors until the 2011 Annual Meeting, after which it will reduce to eleven.

Key Highlights

  • 1Erskine Bowles elected as a new director, effective immediately.
  • 2Mr. Bowles appointed to the Finance and Compensation Committees.
  • 3Mr. Bowles receives a grant of 3,000 restricted shares as part of director compensation.
  • 4Disclosure of a prior relationship with L&C Railway, owned by Mr. Bowles' wife's family, with transactions approved under company policy.
  • 5Bylaws amended to increase the board size from 12 to 13 directors temporarily.
  • 6Board size to be reduced to 11 directors following the 2011 Annual Meeting.

Frequently Asked Questions

Erskine Bowles is a well-experienced individual with a background as White House Chief of Staff under President Clinton and as President of the University of North Carolina system. He was elected to Norfolk Southern's Board of Directors to bring his expertise, and he has been appointed to the Finance and Compensation Committees, indicating his intended contributions to key oversight areas.

The filing details that Mr. Bowles' wife and her family indirectly owned L&C Railway, a shortline railroad with which Norfolk Southern had interchange transactions. The company paid $3.8 million in interchange fees and fuel surcharges through November 2010. Importantly, the relevant operating assets of L&C Railway were sold by Mr. Bowles' family prior to his election to the board. This related party transaction was reviewed and approved by the company.

As part of his compensation, Mr. Bowles received a grant of 3,000 restricted shares of Norfolk Southern stock. These shares are subject to a restriction period that ends upon his death, disability, or retirement. He will also receive compensation consistent with other non-employee directors, as outlined in the company's director compensation policies.

The Board of Directors amended the company's bylaws to temporarily increase the number of directors from 12 to 13 until the 2011 Annual Meeting. This increase likely facilitated the immediate appointment of Mr. Bowles to the board, with a plan to reduce the size back to eleven shortly thereafter.