UNION PACIFIC CORP, DEF 14A, 1995-02-24

UNION PACIFIC CORP
DEF 14A, 1995-02-24
RAILROADS, LINE-HAUL OPERATING

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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14A-6(E)(2))

[X] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12

Union Pacific Corporation
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

Union Pacific Corporation
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.

[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

Notes:

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[LOGO OF UNION PACIFIC CORPORATION APPEARS HERE]

DREW LEWIS
CHAIRMAN

February 24, 1995

Dear Union Pacific Stockholder:

We would like to take this opportunity to thank you for your
understanding, patience and support of our recently concluded
efforts to acquire the Santa Fe Pacific Corporation. We tried
to keep you abreast of events through press accounts, but with
activities moving so quickly and changing so often it was
difficult to stay in touch.

We continue to believe that acquiring Santa Fe would have
provided Union Pacific a unique opportunity to strengthen our
rail franchise and generate attractive returns to Union Pacific
stockholders. However, as events unfolded, it became apparent
that we would have to increase our offer in order to prevail.
We were unwilling to take that step. Although a transaction at
our final offered price would have benefitted us, overpaying to
acquire Santa Fe would not. Our first priority is and will
continue to be to serve the best interests of Union Pacific
stockholders.

Thank you very much for your continuing support of our
efforts on your behalf. We look forward to seeing many of you
in Salt Lake City on April 21.

Sincerely,

/s/ Drew Lewis
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[LOGO OF UNION PACIFIC NOTICE OF ANNUAL MEETING
CORPORATION APPEARS HERE] OF STOCKHOLDERS

Martin Tower
Eighth and Eaton Avenues
Bethlehem, PA 18018
February 24, 1995
To the Stockholders:

You are hereby notified that the 1995 Annual Meeting of Stockholders of
Union Pacific Corporation, a Utah corporation (the Company), will be held at
the Little America Hotel, Salt Lake City, Utah, at 8:30 A.M., Mountain
Daylight Time, on Friday, April 21, 1995 for the following purposes:

(1) to elect eight directors, each to serve for the term specified on page
3, 4 or 5 of the accompanying Proxy Statement;

(2) to approve amendment and extension of the Executive Incentive Plan of
Union Pacific Corporation and Subsidiaries, as amended;

(3) to approve an amendment to the 1993 Stock Option and Retention Stock
Plan of Union Pacific Corporation, as amended;

(4) to ratify the appointment of Deloitte & Touche as the independent
certified public accountants of the Company; and

to transact such other business as may properly come before the Annual Meeting
or any adjournment thereof; all in accordance with the accompanying Proxy
Statement.

Only stockholders of record at the close of business on February 10, 1995
are entitled to notice of and to vote at the Annual Meeting.

Stockholders are urged do date, sign and return the enclosed proxy promptly,
whether or not they expect to attend the meeting in person.

J. L. SWANTAK
Vice President and Secretary

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE URGED TO DATE, SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE
ENCLOSED ENVELOPE WHETHER OR NOT THEY EXPECT TO ATTEND THE ANNUAL MEETING IN
PERSON. YOUR PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED.
(The enclosed return envelope requires no postage if mailed in the United
States.)
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UNION PACIFIC CORPORATION

PROXY STATEMENT

FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 21, 1995

February 24, 1995

This Proxy Statement is being furnished to stockholders of Union Pacific
Corporation, a Utah corporation (the Company), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Stockholders (Annual Meeting) to be held on April 21, 1995
for the purpose of considering and voting upon the matters set forth in the
accompanying notice of the Annual Meeting. The first date on which this Proxy
Statement and the accompanying form of proxy are being sent to stockholders of
the Company is February 24, 1995.

The close of business on February 10, 1995 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting. As of the record date there were 205,911,168 shares of Common
Stock (Common Stock) of the Company outstanding, exclusive of shares held in
the treasury of the Company which may not be voted. On the record date no
person owned of record or was known to the Company to own beneficially more
than 5% of the outstanding shares of Common Stock.

Except in the election of directors, holders of shares of Common Stock are
entitled to one vote for each share registered in their respective names. In
the election of directors, stockholders may vote cumulatively and, at the
Annual Meeting, are entitled to eight votes for each share of Common Stock
registered in their respective names, i.e., as many votes per share as there
are directors to be elected. A stockholder may allocate votes to or among one
or more nominees for director in any manner desired. Unless the stockholder
specifies otherwise, the persons named in the enclosed proxy will allocate
their votes in their discretion among the Board of Directors' nominees for
director for whom they are authorized to vote. On all matters considered at the
Annual Meeting, abstentions and broker non-votes will be treated as neither a
vote "for" nor "against" the matter, although they will be counted in
determining if a quorum is present.

All shares represented by properly executed proxies will, unless such proxies
have previously been revoked, be voted at the Annual Meeting in accordance with
the directions on the proxies. If no direction is indicated, the shares will be
voted as recommended by the Board of Directors. The Company has no knowledge of
any other matters to be brought before the Annual Meeting. However, if any
other matters are properly presented to the

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Annual Meeting for action, it is intended that the persons named in the
enclosed proxy and acting thereunder will vote in accordance with their best
judgment on such matters. A stockholder executing and returning a proxy has the
power to revoke it at any time before it is voted by providing written notice
of such revocation to the Secretary of the Company, by submitting a validly
executed later-dated proxy or by attending the meeting and voting in person.
The mere presence of a stockholder at the Annual Meeting, however, will not
constitute a revocation of a previously submitted proxy.

The Company will bear the costs of its solicitation of proxies. In addition
to the use of the mails, proxies may be solicited by personal interview,
telephone, telegram and telefax by the directors, officers and employees of the
Company. Arrangements will also be made with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of solicitation
material to the beneficial owners of Common Stock held of record by such
persons, and the Company may reimburse such custodians, nominees and
fiduciaries for reasonable out-of-pocket expenses incurred by them in
connection with such solicitation. In addition, Morrow & Co., Inc., 909 Third
Avenue, New York, N.Y. 10022 has been engaged to solicit proxies for the
Company. The anticipated fees of Morrow & Co., Inc. are $14,500 plus certain
expenses.

STOCKHOLDER PROPOSALS

Stockholders desiring to submit a proposal for consideration for inclusion in
the Company's proxy statement and form of proxy relating to the 1996 Annual
Meeting of Stockholders must advise the Secretary of the Company of such
proposal and provide any statement in support thereof in writing by October 27,
1995.

(1) ELECTION OF EIGHT DIRECTORS

Unless authority to do so is withheld, the management intends to vote the
enclosed proxy at the Annual Meeting for the election of the eight nominees for
director named herein, all of whom are presently directors of the Company. It
is intended to elect the nominees for director to hold office for the terms
shown below or until their successors are elected. If any nominee for director
for any reason should become unavailable for election, it is intended that
discretionary authority will be exercised by the persons named in the enclosed
proxy in respect of the election of such other person as the Board of Directors
shall nominate. The Board of Directors is not aware of any circumstances likely
to cause

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any nominee for director to become unavailable for election. The eight nominees
for director receiving the highest number of votes cast at the Annual Meeting
will be elected.

As of February 10, 1995 all directors and executive officers as a group
beneficially owned 2,062,765 shares of Common Stock, representing 1.0% of the
outstanding Common Stock, of which 1,246,950 are shares with respect to which
such persons have the right to acquire beneficial ownership within 60 days
pursuant to stock options. No director or nominee for director beneficially
owned more than 0.22% of the outstanding Common Stock, or any of the Company's
4 3/4% convertible debentures.

The following tables set forth certain information on the nominees for
director and the directors continuing in office, including Common Stock
beneficially owned as of February 10, 1995.

<TABLE>
<CAPTION>
NAME AND PRINCIPAL OCCUPATION DIRECTOR COMMON
OR EMPLOYMENT SINCE STOCK
----------------------------- -------- ------
<S> <C> <C>
Nominee for Term Expiring in 1996

Jack L. Messman, /3/ 1994 227,635 shares(a)
President and Chief Executive Officer of
Union Pacific Resources Company, oil and
(ART) gas production, a subsidiary of the Com-
pany. Director, CTP, Inc., Novell, Inc.,
Safeguard Scientifics Inc., Tandy, Inc.,
WaWa, Inc. Age 54.

Nominee for Term Expiring in 1997

L. White Matthews, III, /1/ 1994 255,957 shares(b)
Executive Vice President--Finance of the
(ART) Company. Director, The Pilot Funds. Age
49.
</TABLE>

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<TABLE>
<CAPTION>
NAME AND PRINCIPAL OCCUPATION DIRECTOR COMMON
OR EMPLOYMENT SINCE STOCK
----------------------------- -------- ------
<S> <C> <C>
Nominees for Term Expiring in 1998

Robert P. Bauman, /3/,/4/ 1987 3,200 shares
Chairman, British Aerospace p.l.c., air-
craft and aerospace manufacturer, London,
(ART) England. Director, Capital Cities/ABC,
Inc., CIGNA Corporation, Reuters Holdings
p.l.c., Russell Reynolds Associates, Inc.
Age 63.

Richard K. Davidson, /3/ 1994 277,651 shares(c)
Chairman and Chief Executive Officer of
Union Pacific Railroad Company, a subsid-
(ART) iary of the Company, and President of the
Company. Director, California Energy Com-
pany, Inc., Chicago & North Western
Transportation Company, FirsTier Finan-
cial, Inc. Age 53.

Elbridge T. Gerry, Jr., /1/,/2/,/3/ 1986 4,087 shares(d)
Partner, Brown Brothers Harriman & Co.,
(ART) bankers, New York, N.Y. Age 61.

Lawrence M. Jones, /2/,/3/ 1988 8,111 shares
Retired Chairman and Chief Executive Offi-
cer, Coleman Company, Inc., manufacturer
(ART) of home and recreational products, Wichi-
ta, Kansas. Director, Coleman Company,
Inc., Fleming Companies, Inc., Fourth Fi-
nancial Corp. Age 63.
</TABLE>

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<TABLE>
<CAPTION>
NAME AND PRINCIPAL OCCUPATION DIRECTOR COMMON
OR EMPLOYMENT SINCE STOCK
----------------------------- -------- ------
<S> <C> <C>
Richard J. Mahoney, /3/,/4/ 1991 1,633 shares
Chairman and Chief Executive Officer,
Monsanto Company, agricultural, chemi-
cal, pharmaceutical and food products,
(ART) man-made fibers and plastics, St. Lou-
is, Missouri. Director, Metropolitan
Life Insurance Company. Age 61.

James D. Robinson, III, /1/,/3/ 1989(e) 4,800 shares(f)
President, J. D. ROBINSON INC., a
strategic advisory company, and
(ART) Principal, RRE Investors, LLC, a
private investment company, New York,
N.Y. Former Chairman & CEO, American
Express Company. Director, Alexander &
Alexander Services, Inc., Bristol-
Myers/Squibb Company, The Coca-Cola
Company, First Data Corporation, New
World Communications Group, Inc. Senior
Advisor, Trust Company of the West. Age
59.
</TABLE>

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1. Member of the Executive Committee.

2. Member of the Audit Committee.

3. Member of the Finance and Corporate Development Committee.

4. Member of the Compensation, Benefits and Nominating Committee.

(a) Includes 100,000 shares of Common Stock subject to presently exercisable
stock options and 80,000 restricted shares granted under the 1993 Stock
Option and Retention Stock Plan.

(b) Includes 143,400 shares of Common Stock subject to presently exercisable
stock options and 80,000 restricted shares granted under the 1993 Stock
Option and Retention Stock Plan.

(c) Includes 150,500 shares of Common Stock subject to presently exercisable
stock options and 80,000 restricted shares granted under the 1993 Stock
Option and Retention Stock Plan.

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(d) Mr. Gerry also has shared voting or investment power with respect to
422,252 shares held in family trusts.

(e) Previously served as a director from 1974 to 1985.

(f) Mrs. James D. Robinson, III, is the beneficial owner of 2,000 shares of
Common Stock and Mr. Robinson is co-trustee for a family trust which owns
1,600 shares. Mr. Robinson disclaims beneficial interest in such shares.

- ---------

DIRECTORS CONTINUING IN OFFICE

The following directors are continuing in office for the respective periods
indicated or until their successors are elected. Each of these directors has
been elected to hold such office by the stockholders of the Company.

Term Expiring in 1996

<TABLE>
<CAPTION>
NAME AND PRINCIPAL OCCUPATION DIRECTOR COMMON
OR EMPLOYMENT SINCE STOCK
----------------------------- -------- ------
<S> <C> <C>
Richard B. Cheney, /2/,/4/ 1993 1,600 shares
Former Secretary of Defense; Senior Fel-
low, American Enterprise Institute, pub-
(ART) lic policy research, Washington, D.C.
Director, IGI Inc., Morgan Stanley Group
Inc., Procter & Gamble Co., U S WEST,
Inc. Age 54.

E. Virgil Conway, /1/,/4/ 1978 1,200 shares(a)
Financial Consultant. Chairman, Financial
Accounting Standards Advisory Council.
Director, Accu-Health, Inc., Centennial
Insurance Company, Metropolitan Trans-
(ART) portation Authority, Trism, Inc. Trust-
ee, Atlantic Mutual Insurance Company,
Consolidated Edison Company of New York,
Inc., HRE Properties, Mutual Funds Man-
aged by Phoenix Home Life. Age 65.
</TABLE>

6
<PAGE>

<TABLE>
<CAPTION>
NAME AND PRINCIPAL OCCUPATION DIRECTOR COMMON
OR EMPLOYMENT SINCE STOCK
----------------------------- -------- ------
<S> <C> <C>
Drew Lewis, /1/ 1986 453,000 shares(b)
Chairman and Chief Executive Officer of
(ART) the Company. Director, American Express
Company, AT&T Corp., Ford Motor Company,
FPL Group, Inc. Age 63.

Claudine B. Malone, /2/,/3/ 1990 1,621 shares
President, Financial and Management Con-
sulting, Inc., management consulting, Mc-
Lean, Virginia. Director, Dell Computer
(ART) Corporation, Hannaford Brothers, Hasbro,
Inc., Houghton Mifflin Company, Mallinc-
krodt Group, Lafarge Corporation, The
Limited, Inc., S.A.I.C., Scott Paper Com-
pany. Trustee, Penn Mutual Life Insurance
Co. Age 58.

Thomas A. Reynolds, Jr., /2/,/4/ 1989 8,200 shares
Chairman Emeritus, Winston & Strawn, law
(ART) firm, Chicago, Illinois, New York, N.Y.
and Washington, D.C. Director, Gannett
Co., Inc., Jefferson Smurfit Group. Age
66.

Term Expiring in 1997

Spencer F. Eccles, /2/,/3/ 1976 9,200 shares(c)
Chairman and Chief Executive Officer,
First Security Corporation, bank holding
(ART) company, Salt Lake City, Utah. Director,
Anderson Lumber Co., First Security Bank
of Utah, Zion's Cooperative Mercantile
Institution. Age 60.
</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
NAME AND PRINCIPAL OCCUPATION DIRECTOR COMMON
OR EMPLOYMENT SINCE STOCK
----------------------------- -------- ------
<S> <C> <C>
William H. Gray, III, /3/,/4/ 1991 1,400 shares
President, United Negro College Fund, educa-
tional assistance, New York, N.Y. Director,
Chase Manhattan Corp., Lotus Development
(ART) Corp., MBIA Inc., Prudential Insurance Com-
pany of America, Rockwell International Cor-
poration, Warner-Lambert Company, Westing-
house Electric Corporation. Age 53.

Judith Richards Hope, /1/,/2/,/4/ 1988 3,800 shares
Senior Partner, Paul, Hastings, Janofsky &
Walker, law firm, Los Angeles, California
(ART) and Washington, D.C. Director, The Budd Com-
pany, General Mills, Inc., Russell Reynolds
Associates, Inc., Zurich Reinsurance Center
Holdings, Inc. Member, The Harvard Corpora-
tion (The President and Fellows of Harvard
College). Age 54.

John R. Meyer, /1/,/2/,/3/ 1978 8,358 shares
Professor, Harvard University, Cambridge,
Massachusetts. Director, The Dun &
(ART) Bradstreet Corporation, Rand McNally Co.,
Inc. Trustee, Mutual Life Insurance Company
of New York. Age 67.

Robert W. Roth, /1/,/2/ 1972 7,200 shares
Retired President and Chief Executive Offi-
(ART) cer, Jantzen, Inc., sportswear manufacturer,
Portland, Oregon. Age 71.

</TABLE>

8
<PAGE>

<TABLE>
<CAPTION>
NAME AND PRINCIPAL OCCUPATION DIRECTOR COMMON
OR EMPLOYMENT SINCE STOCK
----------------------------- -------- ------
<S> <C> <C>
Richard D. Simmons, /1/,/4/ 1982 3,739 shares
President, International Herald Tribune, com-
munications, Washington, D.C. Director, In-
(ART) ternational Herald Tribune, J. P. Morgan &
Co., Incorporated, Morgan Guaranty Trust
Company of New York, The Washington Post
Company, Yankee Publishing. Age 60.
</TABLE>

- ---------

1. Member of the Executive Committee.

2. Member of the Audit Committee.

3. Member of the Finance and Corporate Development Committee.

4. Member of the Compensation, Benefits and Nominating Committee.

(a) Mrs. E. Virgil Conway is the beneficial owner of 16,000 shares of Common
Stock. Mr. Conway disclaims beneficial interest in such shares.

(b) Includes 280,000 shares of Common Stock subject to presently exercisable
stock options.

(c) In addition, 44,080 shares of Common Stock are held by trusts of which Mr.
Eccles is sole trustee or under powers of attorney granted to Mr. Eccles.
- ---------

Except for the directors listed below, each of the directors named in the
preceding tables has held the indicated office or position in his or her
principal occupation for at least five years. Each of the directors listed
below held the office or position first indicated as of five years ago.

Mr. Robert P. Bauman was Chief Executive of SmithKline Beecham p.l.c. through
April 1994 and since such date has been non-executive Chairman of British
Aerospace, p.l.c. Mr. Richard B. Cheney served as Secretary of Defense through
January 20, 1993, and since such date has been Senior Fellow, American
Enterprise Institute. Mr. Richard K. Davidson was Executive Vice President of
Union Pacific Railroad Company until August 7, 1991, President and Chief
Executive Officer of the Railroad until September 17, 1991, and since such
latter date has been Chairman and Chief Executive Officer of the Railroad. Mr.
Davidson has also been President of the Company since May 26, 1994. Mr. William
H. Gray, III, served as a member of the United States House of Representatives
from the Second

9
<PAGE>

District of Pennsylvania through August 1991 and since such date has been
President of United Negro College Fund. Mr. Lawrence M. Jones was President and
Chief Executive Officer of Coleman Company through September 1990, and Chairman
and Chief Executive Officer of Coleman through December 31, 1993. Mr. Drew
Lewis was Chairman, President and Chief Executive Officer of the Company
through May 26, 1994 and since such date has been Chairman and Chief Executive
Officer of the Company. Mr. Lewis also served as Chairman of Union Pacific
Railroad Company during August and September 1991. Mr. L. White Matthews, III,
was Senior Vice President--Finance of the Company until April 16, 1992 and
since such date has been Executive Vice President--Finance of the Company. Mr.
Jack L. Messman was Chairman and Chief Executive Officer of USPCI, Inc. (waste
management), a subsidiary of the Company, until May 1, 1991 and since such date
has been President and Chief Executive Officer of Union Pacific Resources
Company. Mr. Messman continued as Chairman of USPCI through December 31, 1994.
Mr. Thomas A. Reynolds, Jr., was Chairman of Winston & Strawn through December
31, 1992 and since such date has been Chairman Emeritus of such firm. Mr. James
D. Robinson, III, was Chairman and Chief Executive Officer of American Express
Company through January 25, 1993. Mr. Richard D. Simmons was President of The
Washington Post Co. (communications) through May 1991 and since such date has
been President of International Herald Tribune.

COMPENSATION OF DIRECTORS

Directors who are not employees of the Company received an annual retainer of
$50,000, plus expenses in 1994. In addition, Chairmen or Co-Chairmen of Board
Committees receive annual retainers of $6,000 each. Directors who are employees
of the Company receive no retainers. For 1995, the annual retainer has been
increased from $50,000 to $60,000, $6,000 of which is required to be invested
in the Stock Unit Account referred to below. Under the Stock Unit Grant and
Deferred Compensation Plan for directors of the Company, a director may elect
by December 31 of any year to defer all or a portion of any compensation for
service as a director in the ensuing year or years, excluding reimbursement for
expenses. Payment of such deferred compensation begins, for amounts in the
Stock Unit Account, in the January following termination of service as a
director and, for amounts in the Fixed Income Account referred to below, at the
election of the director either at such time or in the January following
retirement from the director's primary occupation. Deferred compensation may be
paid, at the election of the director, in either a lump sum or in up to 10
equal annual installments and may be invested, at the

10
<PAGE>

option of the director, in either a Fixed Income Account or a Stock Unit
Account. The Accounts are unsecured obligations of the Company. The Fixed
Income Account earns interest compounded annually at a rate determined by the
Treasurer of the Company in January of each year. The Stock Unit Account
fluctuates in value based on changes in the price of the Common Stock, and
equivalents to cash dividends paid on the Common Stock are deemed to be
reinvested in the Stock Unit Account. Amounts deferred by three directors
during 1994 totaled $147,400.

Directors who are not employees of the Company may elect to receive $100,000
of term life insurance, for which the Company paid a premium of $348 for each
director in 1994, and to participate in a Company sponsored contributory health
care plan. Medical and dental benefits are paid only after payment of benefits
under any other group plan in which a director participates. In addition, each
non-employee director participates in a pension plan which provides an annual
pension benefit upon retirement from the Board of Directors with at least five
years of service. For a director retiring at age 65 or older the annual pension
benefit is $36,000. Directors Bauman, Conway, Eccles, Gerry, Hope, Jones,
Meyer, Reynolds, Robinson, Roth and Simmons currently are eligible to receive
pension benefits upon retirement. Retired directors are also eligible to
participate in a contributory medical program.

As part of its overall program to promote charitable giving, the Company has
established the Union Pacific Corporation Board of Directors' Charitable
Contribution Plan pursuant to which the Company has purchased $1 million of
life insurance on each incumbent non-employee director, subject to vesting
requirements based on length of service as a director (i.e., over a five-year
period in 20% increments). Death benefits will be paid to the Company, and the
Company will donate $500,000 of the proceeds to the Union Pacific Foundation
and $500,000 to one or more charitable organizations recommended by the
director. Directors derive no financial benefit from this program since all
charitable deductions accrue solely to the Company. Moreover, benefits paid to
the Company's Foundation may reduce the amount of funding that the Company
provides to the Foundation.

Under the 1992 Restricted Stock Plan for Non-Employee Directors of Union
Pacific Corporation, each individual who was a non-employee director on May 28,
1992, has received, and each individual elected as a non-employee director
thereafter has received or will receive, an award of 1,200 restricted shares of
the Common Stock. The restricted shares of Common Stock vest on the date a
director ceases to be a director of the

11
<PAGE>

Company by reason of death, disability or retirement. During the restricted
period, the director has the right to vote and receive dividends on such
shares, but may not transfer or encumber such shares, and will forfeit such
shares unless he or she remains a director during the restricted period. As
used above, "retirement" means termination of service as a director of the
Company, if (a) the director at the time of termination was ineligible for
continued service as a director under the Company's Retirement Policy, or (b)
the director had served as a director of the Company for at least three years
from the date restricted shares of Common Stock were granted to such director,
and such termination is (i) due to the director's taking a position with or
providing services to a governmental, charitable or educational institution
whose policies prohibit continued service on the board of the Company, (ii) due
to the fact that continued service as a director would be a violation of law,
or (iii) not due to the voluntary resignation or refusal to stand for
reelection by the director.

COMMITTEES OF THE BOARD

The Committees established by the Board of Directors to assist it in the
discharge of its responsibilities are described below. The preceding
biographical information on directors identifies committee memberships held by
each nominee for director and each director continuing in office.

The Executive Committee consists of nine members, seven of whom are non-
employee directors. The Committee has all the powers of the Board, when the
Board is not in session, to direct and manage, in the Company's best interest,
all of the business and affairs of the Company in all cases in which specific
directions have not been given by the Board. The Committee did not meet in
1994.

The Audit Committee consists of nine non-employee directors. The Committee
meets regularly with financial management, the internal auditors and the
independent certified public accountants to review the work of each. The
Committee reviews fees and non-audit engagements of the independent certified
public accountants. Both the independent certified public accountants and the
internal auditors have unrestricted access to the Committee and meet regularly
with the Committee, without senior financial management representatives
present, to discuss the results of their examinations and their opinions on the
adequacy of internal controls and quality of financial reporting. The Committee
also reviews the scope of audits as well as the annual audit plan. In addition,
the Committee reviews the administration of the Company's Statement of Policy
Concerning Business

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<PAGE>

Conduct and policies concerning environmental management, use of corporate
aircraft and officers' travel and business expenses. Each year the Committee
recommends to the Board of Directors selection of the firm of independent
certified public accountants to audit the accounts and records of the Company
and its consolidated subsidiaries. The Committee met three times in 1994.

The Finance and Corporate Development Committee consists of eleven members,
nine of whom are non-employee directors. The Committee is responsible for
oversight of the Company's financial position and long-term business
strategies. The Committee meets regularly with management to review the
Company's capital structure, short and long-term financing plans and programs,
dividend policies and actions, investor relations activities, insurance
programs, tax management and other related matters. The Committee also reviews
the investment management of assets held by the Company's pension, thrift and
other funded employee benefit programs, including the appointment of investment
managers and trustees. The Committee is also responsible for providing advice
and counsel to management with regard to the future direction of the Company
and the identification of strategic options and specific opportunities,
including acquisitions and divestitures. The Committee met three times in 1994.

The Compensation, Benefits and Nominating Committee consists of eight non-
employee directors who are ineligible to participate in any of the Company's
executive compensation plans. The Committee makes recommendations to the Board
of Directors as to employee salaries exceeding an amount set by the By-Laws
which cannot be exceeded without Board or Executive Committee approval. The
Committee administers the Company's Executive Incentive, Stock Option and
Retention Stock Plans and determines for senior executives the amounts of, and
the individuals to whom, awards shall be made thereunder. The Committee is
responsible for recommending and reviewing all the material amendments to the
Company's pension, thrift and employee stock ownership plans. The Committee
also periodically reviews the Company's vacation, life insurance and medical
and dental benefit plans and the matching gifts program to ensure that these
benefit plans remain competitive. The Committee has the responsibility of
assisting management with respect to matters of succession, reviewing the
qualifications of candidates for the position of director and recommending
candidates to the Board of Directors as nominees for director for election at
the annual meetings of stockholders or to fill such Board vacancies as may
occur during the year. The Committee will consider candidates suggested by
directors and stockholders of the Company. Stockholders desiring to suggest
candidates should advise the Secretary of the Company in writing by December 31
of the year

13
<PAGE>

preceding the annual meeting of stockholders and include sufficient
biographical material to permit an appropriate evaluation. In considering
candidates for director, the Board of Directors seeks individuals who have
demonstrated outstanding management or professional ability and who have
attained a position of leadership in their chosen careers. See pages 16-19 for
the Committee's report on 1994 compensation and stock ownership programs. The
Committee met five times in 1994.

During 1994, the Board of Directors met seventeen times. None of the
directors attended fewer than 75% of the meetings of the Board and Committees
on which he or she served. The average attendance of all directors at Board and
Committee meetings was 94%.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In 1990, USPCI, Inc. (USPCI), then a wholly-owned subsidiary of the Company,
purchased all of the outstanding shares of a closely held corporation which was
formed in 1986 to develop a hazardous waste incinerator and landfill (HWI) in
Pennsylvania. Andrew L. Lewis, IV, who was chief executive officer and owned
27.3% of the common shares and 34.3% of the preferred shares of the closely
held corporation, and Russell S. Lewis, who owned 6.5% of the common shares and
13% of the preferred shares, are sons of Drew Lewis, Chairman and Chief
Executive Officer and a director of the Company. Due to abandonment of the HWI
project in 1994, the stockholders relinquished all rights in the project.
Andrew Lewis served as a consultant to the Company in connection with the HWI
project and was paid $31,073 in 1994 under an agreement which expired May 25,
1994.

The purchase price and other terms for acquisition of the closely held
corporation were negotiated between Andrew Lewis and senior officers of USPCI
without participation by Drew Lewis, based on comparable transactions in the
hazardous waste industry, and were reviewed generally by a special committee
(the Special Committee) of non-employee members of the Board of Directors of
the Company with the assistance of independent legal counsel and financial
advisors. The Special Committee received an opinion from Alex. Brown & Sons
Incorporated (Alex. Brown), the Special Committee's financial advisor, that the
terms of the transaction were fair from a financial point of view to the
stockholders of the Company. Based on the recommendation of the Special
Committee, the advice of independent counsel and the opinion of Alex. Brown,
the Board of Directors of the Company, with Drew Lewis not participating,
approved the terms of the transaction.

14
<PAGE>

In 1994, Brown Brothers Harriman & Co. (BBH) managed certain pension funds of
the Company. The Company paid approximately $114,000 to BBH for these services.
Elbridge T. Gerry, Jr., a director of the Company, is a partner of BBH.

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission and
the New York Stock Exchange. Executive officers and directors are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. Based solely on a review of the copies of such forms furnished to
the Company and written representations from the Company's executive officers
and directors, the Company believes that none of its executive officers and
directors failed to comply with Section 16(a) reporting requirements in 1994.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation, Benefits and Nominating Committee is comprised of the
following non-employee directors: Robert P. Bauman, Richard B. Cheney, E.
Virgil Conway, William H. Gray, III, Judith R. Hope, Richard J. Mahoney, Thomas
A. Reynolds, Jr., and Richard D. Simmons.

During 1994, USPCI owned 60% of ECDC Environmental, L.C. (ECDC) which owns a
large non-hazardous waste landfill in the State of Utah. USPCI increased its
ownership to 80% in December 1994. ECDC has entered into two agreements with
Mr. William W. Gay and another individual (the Brokers) to solicit disposal
contracts for ECDC. Mr. Gay is the stepson of E. Virgil Conway, a director of
the Company. The agreements are a non-exclusive agreement through December 1997
for industrial waste and an exclusive agreement for municipal waste for the
State of California through April 1995. Under such agreements, the commission
rates range from 10% to 5% of the disposal fees in the first year of the
contract, 25% of such rates in the second year, 15% of such rates in the third
year and no commissions thereafter. Under the municipal waste agreement,
certain long-term high volume projects will have a lower commission rate
schedule and limits on the time period and tonnage for which commissions will
be paid, and the Brokers are entitled to advances of $12,000 per month, subject
to limited recoupment by ECDC. From January 1, 1994 to December 31, 1994, ECDC
had sold capacity under such agreements resulting in commissions in the amount
of approximately $395,000, of which Mr. Gay is entitled to approximately
$111,700, and advances in the amount of $124,000, of which Mr. Gay is entitled
to $30,000. In December 1994, the Company disposed of its interest in USPCI.

15
<PAGE>

In January 1993, railroad subsidiaries of the Company entered into a
consulting agreement with Modjeski & Masters, Inc., providing for that firm to
conduct fatigue assessment studies on certain railroad bridges. During 1994,
such subsidiaries paid approximately $133,500 to such firm for these services.
William B. Conway is a brother of E. Virgil Conway, a director of the Company,
and President of and owner of a substantial interest in Modjeski & Masters,
Inc.

In 1994, railroad and trucking subsidiaries of the Company in the ordinary
course of business provided approximately $30 million of transportation
services to Monsanto Company. Richard J. Mahoney is an officer and director of
Monsanto. The Company has continued and expects to continue to provide
transportation services to Monsanto in 1995.

Judith Richards Hope is a Senior Partner of Paul, Hastings, Janofsky &
Walker, a law firm that rendered legal services to the Company during 1994.

REPORT ON EXECUTIVE COMPENSATION

The Compensation, Benefits and Nominating Committee is responsible for
administering the executive compensation and stock ownership programs for the
Company. The Committee offers the following report on its decisions concerning
compensation for 1994.

Annual Compensation

Total annual compensation consists of two components; base salary and at-risk
annual incentive pay. Depending on the level of the executive, between 40% and
75% of total compensation will be at risk. In determining both salary and
incentive pay, the Committee weighs individual performance, corporate and
operating unit performance, the executive's position and responsibility in the
organization, the executive's experience and expertise, compensation for
comparable positions at comparable companies, and internal pay equity. In
making salary and incentive pay recommendations or decisions, the Compensation
Committee exercises subjective judgement using no specific weights for the
above factors. Salaries for the Company's executives are at or below the median
for comparable companies, except for the Company's most senior executives,
whose salaries are higher than the median. When the Company consistently
attains its performance criteria, total cash compensation including salary and
bonus will be equal to or slightly above the seventy-fifth percentile for
comparable companies. Comparable companies include those

16
<PAGE>

in the line of business index in the Performance Graph on page 26 of this Proxy
Statement as well as industrial companies of a similar size in different lines
of business with which the Company competes for first rate executive talent.

Annual incentive pay is awarded under the Executive Incentive Plan (EIP). In
accordance with the EIP, a stockholder approved formula based on return on
equity and net income generates funding to a reserve account for payment of
incentive awards. This formula is described more fully on page 27 of this Proxy
Statement. In 1994 a total of $17,136,393 was awarded to 185 executives.

The Committee and the Board of Directors are proposing for stockholder
approval at the 1995 Annual Meeting, an amendment of the EIP. The amendment
would, among other things, ensure compensation awarded under the EIP would be
tax deductible under the proposed regulations implementing the 1993 Tax Act.
The proposed EIP amendment is more fully described beginning on page 27 of this
Proxy Statement.

Long Term Compensation

The Committee believes long term compensation based upon performance of the
Common Stock encourages and rewards effective leadership and is designed to
align stockholder and executive interests. The Company's long term compensation
elements currently include stock option and retention stock awards.

Stock Options. Stock options are a key element in the Company's long term
compensation program. Stock options are generally granted annually with the
magnitude of the award based on the executive's position, experience and
performance, without giving particular weight to any one factor. The number of
options currently held by an executive was not a factor in any award granted in
1994. Stock options are granted with an exercise price equal to the fair market
value of the Common Stock on the date of the grant, and when vested are
exercisable up to ten years from the date of grant. To assure that stock awards
continue to align executive and stockholder interests, the Company maintains
guidelines for executive stock ownership levels and has communicated to
executives its expectation that they achieve and maintain a specific minimum
amount of stock ownership ranging from one times salary, to three to seven
times salary for senior executives. Until the minimum ownership amount is
achieved, executives are expected to retain in Common Stock, 100% of the profit
upon exercise of options, net of taxes and cost of exercise.

In order to ensure tax deductibility of stock option exercises by covered
executives, the Committee and the Board of Directors are proposing an amendment
to the 1993 Stock

17
<PAGE>

Option and Retention Stock Plan that would limit total stock awards to any
individual to a maximum of 10% of the shares available under the plan. This
amendment is more fully described beginning on page 31 of this Proxy Statement.

Retention Stock. Retention stock grants to executives are awards of shares
that are subject to forfeiture if the executive terminates employment before
the minimum three year retention period lapses. Awards of retention stock are
directed towards retention of executives, incentive for long term performance,
and alignment of executive interests with other stockholders of the Company.
During 1994, retention grants of 40,000 shares each were made to three senior
executives to ensure orderly management succession over the next several years.
In making these grants, the Committee recognized that the awards may not be
deductible by the Company for tax purposes because of the 1993 Tax Act.
However, the Committee believes retention of these executives is of paramount
importance to the Company's future growth and therefore granted these retention
awards.

CEO Compensation

In 1994, the Company's most highly compensated officer was Drew Lewis,
Chairman and Chief Executive Officer. The Committee reviewed Mr. Lewis'
performance for 1994 and approved annual and long term compensation awards for
him based on the factors previously outlined, with no specific weight given to
any factor. Mr. Lewis was on approved medical leave for approximately one month
during 1994. This was not a factor in the Committee's compensation decisions.
Some of the more significant accomplishments attained under Mr. Lewis'
leadership during 1994 are as follows:

The Company's 1994 net income from continuing operations was a record $958
million, 34% over 1993 performance. The Company's major operating units were
leaders in their respective industries. Union Pacific Railroad achieved a
record $754 million net income, bolstered by an 8% increase in carloadings.
Despite softening gas prices, Union Pacific Resources achieved a record $390
million net income as a result of record gas production of 772 MMCF per day and
a $100 million gain on the sale of the Wilmington oil field. Overnite
Transportation set new LTL volume and total tonnage records. However, because
of a harsh winter and the difficulties of handling increased volumes during a
Teamsters strike against other carriers, Overnite earnings were slightly below
last year's record earnings. In addition, Mr. Lewis demonstrated strong
leadership and strategic vision to enhance the Company's position in the
railroad industry by the Santa Fe merger proposal and by obtaining Interstate
Commerce Commission approval of the application to control

18
<PAGE>

the Chicago and North Western Railroad. He also strengthened the Company's
position in the oil and gas industry with the acquisition of AMAX Oil & Gas.

The Company continued to enhance its overall financial strength, maintaining
its debt-to-capitalization ratio goal of 40%, despite the acquisition of AMAX
and the disposition of USPCI. The Company continued to invest in its
subsidiaries for future growth, investing $2.3 billion, including the $725
million AMAX acquisition.

The second half of 1994 had a significant amount of railroad industry stock
volatility due to the various merger discussions and proposals. For the five
year period December 1989 through June 30, 1994 (prior to much of the merger
activity), the Company Common Stock price outperformed the S&P 500 by a margin
of 9% to 5%. When including the effects of the merger activity through December
31, 1994, the stock has grown at 3% annually compared to the S&P growth of 5%.
The Company's stockholders were paid dividends of $335 million during 1994,
reflecting an average growth in the dividend of 9% per year since 1989 compared
to the S&P growth of 4%.

The Committee concluded that Mr. Lewis' performance warrants 1994
compensation as reflected in the Summary Compensation Table on page 20.

The Compensation, Benefits and Nominating Committee

E. Virgil Conway, Chairman
Robert P. Bauman
Richard B. Cheney
William H. Gray, III
Judith R. Hope
Richard J. Mahoney
Thomas A. Reynolds, Jr.
Richard D. Simmons

19
<PAGE>

SUMMARY COMPENSATION TABLE

The following table provides a summary of compensation during the last three
calendar years for the Company's Chief Executive Officer and the other four
most highly compensated executive officers.

<TABLE>
<CAPTION>
---------------------------------------------------------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND COMPEN- STOCK OPTIONS/ LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS (A) SATION (B) AWARDS (C) SARS (D) PAYOUTS (E) SATION (F)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Drew Lewis 1994 $880,000 $1,500,000 $162,578 $ -0- 525,000 $ -0- $135,816
Chairman and 1993 850,000 1,894,437 114,124 -0- 140,000 -0- 134,436
CEO 1992 800,000 1,350,000 100,417 -0- 140,000 2,791,592 131,849

Richard K. Davidson 1994 537,450 800,000 82,640 1,895,000 168,750 -0- 27,089
Chairman and CEO of 1993 450,000 892,218 47,782 2,550,000 40,000 -0- 21,183
Union Pacific 1992 400,000 630,000 79,976 -0- 40,000 1,395,796 18,498
Railroad Company

Jack L. Messman 1994 460,000 685,000 43,652 1,895,000 150,000 -0- 37,653
President and CEO of 1993 430,000 872,218 51,860 2,550,000 40,000 -0- 28,479
Union Pacific 1992 415,000 615,000 29,718 -0- 40,000 1,395,796 25,170
Resources Company

L. White 1994 400,000 560,000 50,225 1,895,000 150,000 -0- 17,104
Matthews, III 1993 375,000 752,218 38,652 2,550,000 40,000 -0- 15,805
Executive Vice Presi- 1992 347,500 503,000 31,424 -0- 35,000 1,395,796 14,769
dent--Finance

Carl W. von Bernuth 1994 292,500 475,000 14,090 -0- 112,500 -0- 13,384
Senior Vice 1993 280,000 503,330 9,323 -0- 23,500 -0- 12,500
President and General 1992 250,000 350,000 8,536 -0- 22,300 837,478 11,500
Counsel
</TABLE>
- ---------
(a) Includes, for 1993 only, EIP awards and final payouts under the Strategic
Incentive Plan (SIP), which expired April 15, 1993, respectively as
follows: Mr. Lewis $1,450,000 and $444,437; Mr. Davidson $670,000 and
$222,218; Mr. Messman $650,000 and $222,218; Mr. Matthews $530,000 and
$222,218; and Mr. von Bernuth $370,000 and $133,330. Other years include
EIP awards only.

20
<PAGE>

(b) Principal components included in Other Annual Compensation for 1994 are
certain non-cash and other personal benefits for Mr. Lewis (reimbursements
for medicare tax on supplemental pension and thrift plans and taxes on
split dollar life insurance premiums $84,750), Mr. Davidson (tax and
financial counseling expenses $24,450, medicare tax reimbursements on
supplemental pension and thrift plans $20,757, and use of corporate
transportation $34,348), Mr. Messman (use of corporate transportation
$18,096), Mr. Matthews (tax and financial counseling expense $13,853 and
use of corporate transportation $23,954) and Mr. von Bernuth (use of
corporate transportation $5,926).

(c) Aggregate restricted stock holdings (see Retention Stock description on
page 18) and the value thereof as of December 31, 1994: Mr. Davidson,
80,000 shares, $3,630,000; Mr. Messman, 80,000 shares, $3,630,000; and Mr.
Matthews, 80,000 shares, $3,630,000. Dividends on these 80,000 share
succession related grants to Messrs. Davidson, Messman and Matthews will
accumulate but not be paid to the individuals until the lapse of the
restricted period and will be subject to forfeiture if service requirements
are not met.

(d) Amounts for 1994 represent three-year grants awarded in December 1994. For
a description of these 1994 grants, see page 23.

(e) Includes credits in 1992 of $1,577,337 for Mr. Lewis, $788,688 for Messrs,
Davidson, Messman and Matthews and $473,201 for Mr. von Bernuth with
respect to the initial awards made under the SIP when the Company's Common
Stock price first exceeded $50 for 60 consecutive days, including
discretionary awards. The additional credits are with respect to subsequent
periods when the share price achieved higher levels for 60 consecutive
days.

(f) All Other Compensation consists of Company-matched thrift plan
contributions (Mr. Lewis $26,400, Mr. Davidson $16,125, Mr. Messman
$27,600, Mr. Matthews $12,000 and Mr. von Bernuth $8,775 in 1994), life
insurance premiums or payments in lieu thereof in 1994 (Mr. Lewis $35,440,
Mr. Davidson $10,964, Mr. Messman $10,053, Mr. Matthews $5,104 and Mr. von
Bernuth $4,609) and, for Mr. Lewis, premiums ($73,976 for 1994) associated
with split-dollar life insurance policies.
- ---------

The Company has an employment agreement with Mr. Lewis which provided for his
employment through March 31, 1991. If the Company terminates Mr. Lewis'
employment without cause (as defined in the agreement) following the expiration
of the term of the

21
<PAGE>

agreement, Mr. Lewis will be entitled to continuation of his current base
salary for two years following such termination. If Mr. Lewis is removed from
his position as Chairman and Chief Executive Officer without cause, he has the
right under such agreement to treat such removal as a termination of his
employment by the Company. Under such agreement, Mr. Lewis may voluntarily
terminate his employment with the Company at any time but in that event will
receive no further payments or benefits from the Company. Mr. Lewis has agreed
not to engage in any business if such business competes, directly or
indirectly, with the Company for a minimum of three years after any termination
of employment.

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth information concerning the direct beneficial
ownership of the Company's Common Stock as of February 10, 1995 by the
Company's Chief Executive Officer and the other four most highly compensated
executive officers.

<TABLE>
<CAPTION>
NUMBER OF
SHARES
BENEFICIALLY PERCENT OF
NAME OWNED (A) CLASS
---- ------------ ----------
<S> <C> <C>
Drew Lewis 453,000 0.22%
Richard K. Davidson 277,651 0.13%
Jack L. Messman 227,635 0.11%
L. White Matthews, III 255,957 0.12%
Carl W. von Bernuth 126,925 0.06%
</TABLE>
- ---------
(a) Included in the number of shares beneficially owned by Messrs. Lewis,
Davidson, Messman, Matthews and von Bernuth are 280,000, 150,500, 100,000,
143,400 and 97,400 shares, respectively, which such persons have the right
to acquire within 60 days pursuant to stock options. Also included in the
number of shares owned by Messrs. Davidson, Messman, and Matthews are
80,000 restricted shares each awarded to such persons under the 1993 Stock
Option and Retention Stock Plan.

22
<PAGE>

OPTION/SAR GRANTS TABLE

The following table sets forth information concerning individual grants of
stock options during 1994 to the Company's Chief Executive Officer and the
other four most highly compensated executive officers. Stock appreciation
rights were not granted in 1994.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS/ OPTIONS/SARS EXERCISE GRANT DATE
SARS GRANTED TO OR BASE EXPIRATION PRESENT
NAME GRANTED(A) EMPLOYEES PRICE DATE VALUE(B)
---- ---------- ------------ -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Drew Lewis 175,000(c) 4.39% $47.00 12/15/04 $2,026,500
175,000(d) 4.39% 47.00 12/15/04 2,026,500
175,000(e) 4.39% 47.00 12/15/04 2,026,500
Richard K. Davidson 56,250(c) 1.41% 47.00 12/15/04 651,375
56,250(d) 1.41% 47.00 12/15/04 651,375
56,250(e) 1.41% 47.00 12/15/04 651,375
Jack L. Messman 50,000(c) 1.25% 47.00 12/15/04 579,000
50,000(d) 1.25% 47.00 12/15/04 579,000
50,000(e) 1.25% 47.00 12/15/04 579,000
L. White Matthews, III 50,000(c) 1.25% 47.00 12/15/04 579,000
50,000(d) 1.25% 47.00 12/15/04 579,000
50,000(e) 1.25% 47.00 12/15/04 579,000
Carl W. von Bernuth 37,500(c) 0.94% 47.00 12/15/04 434,250
37,500(d) 0.94% 47.00 12/15/04 434,250
37,500(e) 0.94% 47.00 12/15/04 434,250
</TABLE>
- ---------
(a) With respect to the grants shown for Messrs. Davidson, Messman, Matthews
and von Bernuth, 2,000 shares of each grant were in the form of an
incentive stock option and the balance in the form of a non-qualified
stock option. All of Mr. Lewis' grants were in the form of a non-qualified
stock option.

(b) Calculated in accordance with the Black-Scholes option pricing model. The
assumptions used in such option pricing model are: expected volatility,
21.49%; expected dividend yield, 3.0%; expected option term, 5 years; and
risk-free rate of return, 7.725%.

(d) Options do not become exercisable until the later of December 15, 1996 and
the date the price of the Common Stock has reached $54 per share, provided
that such options shall in any event become exercisable, unless previously
forfeited, on December 15, 2003.

23
<PAGE>

(e) Options do not become exercisable until the later of December 15, 1997 and
the date the price of the Common Stock has reached $60 per share, provided
that such options shall in any event become exercisable, unless previously
forfeited, on December 15, 2003.
- ---------

OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE

The following table sets forth individual exercises of stock options and
appreciation rights during 1994 by the Company's Chief Executive Officer and
the other four most highly compensated executive officers.

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
YEAR-END YEAR-END
SHARES --------------- ---------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- --------------- ---------------
<S> <C> <C> <C> <C>
Drew Lewis -0- $ -0- 280,000 $ -0-
525,000 -0-
Richard K. Davidson -0- -0- 150,500 398,530
168,750 -0-
Jack L. Messman -0- -0- 100,000 -0-
150,000 -0-
L. White Matthews, III -0- -0- 143,400 409,606
150,000 -0-
Carl W. von Bernuth 2,511 165,517 97,400 269,910
112,500 -0-
</TABLE>

DEFINED BENEFIT PLANS

Pensions for non-agreement employees of the Company, Union Pacific Railroad
Company, Union Pacific Resources Company and Union Pacific Technologies, Inc.,
are provided through the Pension Plan for Salaried Employees of Union Pacific
Corporation and Affiliates (Basic Plan), the Supplemental Pension Plan for
Officers and Managers of Union Pacific Corporation and Affiliates
(Supplemental Plan) and the Supplemental Pension Plan for Exempt Salaried
Employees of Union Pacific Resources Company and Affiliates (Supplemental
Plan). The amount of the annual pension benefit from all sources is based upon
average annual compensation for the 36 consecutive months of highest regular
compensation (including up to three cash incentive payments within the 36-
month period) within the 120-month period immediately preceding retirement
(final average earnings). Regular compensation for this purpose is the
aggregate amount reflected in the salary and

24
<PAGE>

bonus columns, except for Strategic Incentive Plan payments, of the Summary
Compensation Table on page 20. The credited years of service for each of the
five individuals named in the Summary Compensation Table are as follows: Mr.
Lewis 28, Mr. Davidson 34, Mr. Messman 14, Mr. Matthews 18 and Mr. von Bernuth
15.

The Supplemental Plans are unfunded non-contributory plans which provide,
unlike the Basic Plan, for the grant of additional years of employment and
deemed age to officers or supervisors, for the inclusion of earnings in excess
of the limits contained in the Internal Revenue Code of 1986, as amended (the
Code), and deferred incentive compensation in the calculation of final average
earnings and for any benefit in excess of the limitations provided for under
the Code. Messrs. Lewis, Davidson, Messman, Matthews and von Bernuth have
accrued benefits under one or more of the Supplemental Plans.

The Company has purchased annuities to satisfy certain unfunded obligations
under the Supplemental Plans to executives and certain other active and former
employees and has paid the Federal and State taxes on behalf of such persons
imposed in connection with these purchases. These purchases reduce the
Company's obligations under the Supplemental Plans. The benefits in the
following Pension Plan Table will be reduced for any employee for whom an
annuity was purchased by an amount calculated so that the expected aggregate
amount received by the employee from the annuity and the Supplemental Plan net
of Federal taxes will be the same as the net amount that would have been
received from the Supplemental Plan if the annuity had not been purchased.

The estimated annual benefits payable under the Basic Plan and Supplemental
Plans at normal retirement at age 65 based upon final average earnings and
years of employment is illustrated in the following table:

<TABLE>
<CAPTION>
PENSION PLAN TABLE
-----------------------------------------------------------------------
FINAL
AVERAGE 15 YEARS OF 20 YEARS OF 25 YEARS OF 30 YEARS OF 35 YEARS OF 40 YEARS OF
EARNINGS EMPLOYMENT EMPLOYMENT EMPLOYMENT EMPLOYMENT EMPLOYMENT EMPLOYMENT
-------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ 800,000 $197,880 $263,840 $ 329,800 $ 395,680 $ 434,960 $ 474,240
1,000,000 247,890 330,520 413,150 495,680 544,960 594,240
1,200,000 297,900 397,200 496,500 595,680 654,960 714,240
1,400,000 347,910 463,880 579,850 695,680 764,960 834,240
1,600,000 397,920 530,560 663,200 795,680 874,960 954,240
1,800,000 447,930 597,240 746,550 895,680 984,960 1,074,240
2,000,000 497,940 663,920 829,900 995,680 1,094,960 1,194,240
2,200,000 547,950 730,600 913,250 1,095,680 1,204,960 1,314,240
2,400,000 597,960 797,280 996,600 1,195,680 1,314,960 1,434,240
2,600,000 647,970 863,960 1,079,950 1,295,680 1,424,960 1,554,240
2,800,000 697,980 930,640 1,163,300 1,395,680 1,534,960 1,674,240
3,000,000 747,990 997,320 1,246,650 1,495,680 1,644,960 1,794,240
</TABLE>

25
<PAGE>

The benefits in the foregoing Pension Plan Table would be paid in the form of
a life annuity with a 50% surviving spouse's benefit and reflect offsets for
Social Security. The benefits would be somewhat lower if Railroad Retirement
offsets were applicable.

FIVE-YEAR PERFORMANCE COMPARISON

The graph set forth below provides an indicator of cumulative total
shareholder returns, assuming reinvestment of dividends, for the Company as
compared to the S&P 500 Stock Index and a peer group comprising CSX
Corporation, Norfolk Southern Corp., Burlington Northern, Inc., Burlington
Resources, Inc., El Paso Natural Gas Co., Santa Fe Pacific Corporation, Santa
Fe Natural Resources, Inc., Santa Fe Gold Corporation and Catellus Development
Corp. (the real estate development subsidiary of Santa Fe).

[GRAPH APPEARS HERE]

<TABLE>
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
AMONG UNP, S&P 500 INDEX AND PEER GROUP.

Measurement period S&P Peer
(Fiscal Year Covered) UNP Index Group
- --------------------- -------- -------- --------
<S> <C> <C> <C>
Measurement PT -
12/89 $ 100 $ 100 $ 100

FYE 12/90 $ 95.32863 $ 96.88539 $ 90.21171
FYE 12/91 $ 143.9254 $ 126.2761 $ 130.4591
FYE 12/92 $ 167.1601 $ 135.8832 $ 141.4682
FYE 12/93 $ 183.5445 $ 149.5116 $ 179.9031
FYE 12/94 $ 137.2406 $ 151.5348 $ 166.7111

</TABLE>

26
<PAGE>

(2) APPROVAL OF AMENDMENT AND EXTENSION
OF THE EXECUTIVE INCENTIVE PLAN

INTRODUCTION

On July 28, 1994 the Board of Directors approved and recommended for
submission to the stockholders for their approval the amendment and extension
of the Executive Incentive Plan of Union Pacific Corporation and Subsidiaries
(the Plan). The approval by an affirmative vote of the holders of a majority of
the shares of Common Stock present, in person or by proxy, at the 1995 Annual
Meeting is required for approval of amendment and extension of the Plan.

AMENDMENT AND EXTENSION OF THE PLAN

In July 1994, the Executive Incentive Plan Committee (the Committee),
composed of the members of the Compensation, Benefits and Nominating Committee
of the Board of Directors, who are not employees of the Company and who are
ineligible to participate in the Company's compensation plans, which is charged
with administering the Plan, considered increasing the funding formula
requirements, establishing a maximum award formula to ensure the Company is
entitled to a tax deduction for compensation to its five most highly
compensated executive officers and extending the Plan. Accordingly, the
Committee recommended the amendment and extension to the Board of Directors and
on July 28, 1994 the Board approved the amendment and extension and recommended
that it be submitted to stockholders for their approval for the reasons
discussed below.

The current formula for determining the amount that may be credited to the
Incentive Reserve Account under the Plan provides that the maximum amount that
may be credited for any year shall be 1.5% of net income when the return on
average annual total stockholders' equity is 8.0%, and shall be 3.0% of net
income when the return on average annual total stockholders' equity is 10.0% or
more. At intermediate levels of return on average annual total stockholders'
equity (between 8.0% and 10.0%), the maximum percentage of net income that may
be credited to the Incentive Reserve Account will increase 0.075% for each
incremental 0.1% increase in the return on average annual total stockholders'
equity. The Committee reflected upon the strong performance of the Company in
recent years and recommended raising the funding thresholds to reflect that
success and to challenge and motivate management to continue producing strong
returns for stockholders. Accordingly, the Committee proposed and the Board of
Directors approved increasing from 8.0% to 10.0% the return on equity required
to credit 1.5% of net income to the Incentive Reserve Account and increasing
from 10.0% or more to 12.0% or more the return required to credit a maximum
3.0% of net income to such Account. The

27
<PAGE>

intermediate thresholds, as well, would be increased from between 8.0% and
10.0% to between 10.0% and 12.0%.

The Committee also proposed and the Board of Directors approved amending the
Plan to establish a formula to limit the maximum awards to covered employees
within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Code), to ensure the Federal tax deductibility of all awards under
the Plan. The proposed formula is described on page 29.

The Plan currently provides that no awards may be made with respect to any
year after calendar year 1995. If the extension is approved by stockholders,
awards under the Plan may be made with respect to each calendar year through
2005.

The Board of Directors believes that the extension of the Plan is desirable
since the Plan is a key element in the Company's compensation program. The Plan
promotes the Company's interests and those of its stockholders by strengthening
the Company's ability to attract and retain the services of employees with
experience and ability.

SUMMARY OF THE PLAN AS AMENDED

The following summary of the material features of the Plan as proposed to be
amended does not purport to be complete and is qualified in its entirety by
reference to the text of the Plan, a copy of which has been filed with the
Securities and Exchange Commission.

Administration. The Plan is administered by the Committee. The Committee may
delegate its authority under the Plan to one or more officers or employees of
the Company or one of its subsidiaries.

Eligibility. The Committee selects those executives who are to receive awards
for any year from among regular employees of the Company or a subsidiary
(including officers who are also directors). In 1994, 185 employees
participated in the Plan.

Incentive Reserve Account. The Plan's incentive reserve funding formula
provides that the Board of Directors may credit the Incentive Reserve Account
each year with such amount as it may determine, subject to a maximum amount for
any year of 1.5% of net income when the return on average annual total
stockholders' equity is 10.0%, and 3.0% of net income when the return on
average annual total stockholders' equity is 12.0% or more. At intermediate
levels of return on average annual total stockholders' equity (between 10.0%
and 12.0%), the maximum percentage of net income that may be credited to the
Incentive Reserve Account will increase 0.075% for each incremental 0.1%
increase in the return on average annual total stockholders' equity. Average
annual total

28
<PAGE>

stockholders' equity is calculated as the average of (i) total stockholders'
equity, including preferred stock, as shown on the consolidated financial
statements of the Company at the beginning of each year, and (ii) total
stockholders' equity, including preferred stock, as shown on the consolidated
financial statements of the Company at the end of such year, adjusted in the
case of clause (ii) to include income from continuing operations before
extraordinary items (determined in conformity with generally accepted
accounting principles) and amounts to be credited to the Incentive Reserve
Account under the Plan for such year. Net income is the consolidated net
earnings from continuing operations (before extraordinary items), determined in
accordance with generally accepted accounting principles, before giving effect
to provision for amounts to be credited to the Incentive Reserve Account.

Awards. As soon as practicable at the end of each year, the Committee may
grant awards not exceeding the unawarded credit balance in the Incentive
Reserve Account to executives in such dollar amounts as it in its sole
discretion shall determine. The amount of an individual award will depend upon
the Committee's evaluation of such executive's performance. The maximum annual
award which may be made to executive officers whose compensation is subject to
Section 162(m) of the Code shall be 0.25% of covered income for the Chief
Executive Officer and 0.15% of covered income for other covered executive
officers (generally the four highest compensated officers other than the Chief
Executive Officer). Covered income is defined as the greater of net income
(excludes certain items) for the year or such net income for the first eleven
months of the year.

A designated executive may make an election prior to September 30 in the year
for which an award may be granted to him by the Committee specifying that a
percentage (in multiples of ten percent) of any award which may be granted to
him be in the form of an immediate cash award or a deferred award in one or
more Investment Accounts as may be established from time to time by the
Committee. Deferred awards are paid after termination of employment or, if
elected by the executive, on a date or dates selected by the executive.

Investment Accounts currently available are designed to mirror the
performance of various mutual funds available to employees under the Company's
thrift plans, and also include an Account based on the performance of the
Common Stock, as well as a "Fixed Income Account" which is credited with
interest, compounded quarterly, at an annual rate equal to the average for the
previous four years of the interest rates for the month of December in each of
such years for Moody's Single A new Public Utility issues and Single A
Corporate Bond Yield Averages. The amounts credited in all Investment Accounts
represent general liabilities of the Company and do not constitute a trust fund
or otherwise create any property interest in any employee or his beneficiary.

29
<PAGE>

Any amounts credited to the Incentive Reserve Account which are not awarded
may be carried forward and be awarded by the Committee in future years during
which the Plan remains in effect. At February 10, 1995 the Incentive Reserve
Account attributable to 1994 and prior years had an undistributed balance
amounting to $17,568,813. The amount credited to the Incentive Reserve Account
in respect of each year is reported upon to the Committee by the Company's
independent certified public accountants. For 1994, $23,000,000 was credited
to the Incentive Reserve Account.

Amendment, Suspension or Termination. The Board of Directors of the Company
may amend, suspend or terminate the Plan at any time, subject to the rights of
an executive in awards previously made to him. The Board may not, however,
without stockholder approval (i) increase the limitation of the amount of
awards which may be granted under the Plan, (ii) extend the period of the Plan
or (iii) amend the Plan in a manner which is material for purposes of the
stockholder approval requirement of section 162(m) of the Code.

BENEFITS UNDER THE PLAN AS AMENDED

The proposed amendments would not have affected the amounts paid in 1994
under the Plan. Information with respect to such amounts is set out below:

<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE
----------------- ------------
<S> <C>
Drew Lewis $ 1,500,000
Chairman and CEO
Richard K. Davidson 800,000
Chairman and CEO of Union Pacific Railroad Company
Jack L. Messman 685,000
President and CEO of Union Pacific Resources Company
L. White Matthews, III 560,000
Executive Vice President--Finance
Carl W. von Bernuth 475,000
Senior Vice President and General Counsel
Executive Group 5,794,045
Non-Executive Director Group -0-
Non-Executive Officer Employee Group 11,342,348
</TABLE>

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
PROPOSAL 2.

30
<PAGE>

(3) APPROVAL OF AMENDMENT OF THE
1993 STOCK OPTION AND RETENTION STOCK PLAN

INTRODUCTION

On July 28, 1994 the Board of Directors approved and recommended for
submission to the stockholders for their approval the amendment of the 1993
Stock Option and Retention Stock Plan of Union Pacific Corporation (the Plan).
The approval by an affirmative vote of the holders of a majority of the shares
of Common Stock present, in person or by proxy, at the 1995 Annual Meeting is
required for approval of amendment of the Plan.

AMENDMENT OF THE PLAN

In July 1994, the Stock Option Committee (the Committee), composed of the
members of the Compensation, Benefits and Nominating Committee of the Board of
Directors, who are not employees of the Company and who are ineligible to
participate in the Company's compensation plans, which is charged with
administering the Plan, considered establishing an aggregate award limit to
ensure a tax deduction for compensation to the Company's five most highly
compensated executive officers. Accordingly, the Committee recommended to the
Board of Directors amendment of the Plan to limit aggregate awards to any
individual to 10% of the total shares available in the Plan and on July 28,
1994 the Board approved the amendment and recommended that it be submitted to
stockholders for their approval.

SUMMARY OF THE PLAN AS AMENDED

STOCK SUBJECT TO THE PLAN

The Plan provides for the grant of non-qualified stock options, incentive
stock options, stock appreciation rights and retention shares. Under the Plan
the maximum number and kind of shares as to which options, stock appreciation
rights or retention shares may be granted (subject to adjustment in certain
events as described below) is 16 million shares of Common Stock. The aggregate
of awards to any one individual shall be limited to 10% of the total shares
available in the Plan. Upon the expiration, termination or cancellation (in
whole or in part) of unexercised non-qualified or incentive stock options or
forfeiture of retention shares on which no dividends have been paid, the shares
of Common Stock

31
<PAGE>

subject thereto shall again be available for option or grant as retention
shares under the Plan. Shares of Common Stock covered by an option, or portion
thereof, which is surrendered upon exercise of a stock appreciation right, and
forfeited retention shares on which dividends have been paid, shall thereafter
be unavailable for option or grant as retention shares under the Plan. The
market value of a share of Common Stock based on the closing price on the New
York Stock Exchange Composite Tape on February 10, 1995 was $51.00.

ADMINISTRATION

The Plan is administered by the Committee. The Committee may delegate its
authority under the Plan to one or more officers or employees of the Company or
one of its subsidiaries, provided, however, that no delegation shall be made of
authority to take an action which is required by Rule 16b-3 promulgated under
the Securities Exchange Act of 1934 to be taken by "disinterested persons" in
order that the Plan and transactions thereunder meet the requirements of such
Rule.

ELIGIBILITY

Plan participation is limited to employees of the Company and its
subsidiaries. As of December 31, 1994 there were approximately 46,568 employees
of the Company and its subsidiaries. Directors who are not full-time employees
are not eligible.

Options, stock appreciation rights and retention shares may be granted by the
Committee to eligible employees in such number and at such times during the
term of the Plan as the Committee shall determine. In granting options, stock
appreciation rights and retention shares the Committee shall take into account
such factors as the Committee may deem relevant in respect to accomplishing the
Plan's purposes, including one or more of the following: the extent to which
performance goals have been met, the duties of the respective employees and
their present and potential contributions to the Company's success. Retention
shares may be granted only to reward the attainment of individual, Company or
subsidiary goals, or to attract or retain employees of the Company or any
subsidiary, and shall be granted subject to the attainment of performance goals
unless the Committee shall determine otherwise.

TERMS AND CONDITIONS OF NON-QUALIFIED OPTIONS

All non-qualified options granted under the Plan will be options which do not
meet the requirements of Section 422 of the Internal Revenue Code of 1986, as
amended (the

32
<PAGE>

Code), and will be subject to the following terms and conditions: (i) the
option price per share will be determined by the Committee but will not in any
event be less than 100% of the fair market value of the Common Stock on the
date the option is granted, (ii) in no event will any option be exercisable
more than 10 years after the date the option is granted, (iii) except in cases
of death or disability of the employee, the shares covered by an option may not
be purchased for 12 months after the date on which the option is granted
(unless the Committee determines otherwise), or such longer period or periods
and subject to such conditions as the Committee may determine, but thereafter
may be purchased at one time or in such installments over the balance of the
option period as may be provided in the option, and (iv) an option may not be
transferred except that it may be exercised by an optionee's legal
representatives or heirs. All options will expire immediately if the optionee
is discharged from employment for deliberate, willful or gross misconduct. If
the optionee's employment is terminated due to retirement, disability or death,
the option may be exercised to the extent shares were then purchasable (except
that the holding periods described in clause (iii) above will not apply in
cases of death or disability, and the Committee may determine that particular
limitations shall not apply), but only if exercised within five years after the
date of such termination (unless the Committee shall provide for a shorter
period at the time the option is granted). In all other cases, the option may
be exercised to the extent shares were then purchasable (except that the
Committee may determine that particular limitations shall not apply) but only
if exercised by the optionee within 3 months of the date of such termination
(unless the Committee shall provide for a shorter period at the time the option
is granted). The Committee will determine with respect to each option grant the
nature and extent of the restrictions, if any, to be imposed on the shares
which may be purchased thereunder.

At the discretion of the Committee, all or a portion of the exercise price of
the option may be paid by the surrender of previously acquired Common Stock
owned by the optionee or by authorizing the Company to withhold shares of
Common Stock otherwise issuable upon exercise of the option. In addition, the
Committee may permit the optionee to pay amounts due under applicable
withholding tax laws upon exercise of options by authorizing the Company to
withhold or accept shares of Common Stock.

TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS

The Committee may also grant a stock appreciation right in connection with a
non-qualified option, either at the time of grant or by amendment. Each stock
appreciation right shall entitle the optionee to surrender to the Company
unexercised the related option, or any portion thereof, and to receive from the
Company in exchange therefor an amount

33
<PAGE>

equal to the excess of the fair market value of one share of Common Stock over
the option price per share times the number of shares covered by the option, or
portion thereof, which is surrendered. Payment shall be made in shares of
Common Stock valued at fair market value, or in cash, or partly in shares and
partly in cash, all as shall be determined by the Committee. The Committee may
permit the optionee to pay amounts due under applicable withholding tax laws
upon receipt of shares of Common Stock by authorizing the Company to withhold
or accept shares of Common Stock.

TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS

The Committee may also grant incentive stock options as defined under Section
422 of the Code. All incentive stock options issued under the Plan shall,
except for the provisions respecting expiration of such options in the event of
disability and retirement, be subject to the same terms and conditions as the
non-qualified options granted under the Plan. In the case of termination of
employment due to disability or retirement, incentive stock options expire as
such 12 and 3 months, respectively, after such termination (but such incentive
stock options may still be exercised as non-qualified options for the remainder
of the exercise period for non-qualified options described above). The
aggregate fair market value (determined as of the date the incentive stock
option is granted) of the shares of stock with respect to which incentive stock
options are exercisable for the first time by an optionee during any calendar
year, under the Plan or any other stock option plan adopted by the Company or
any subsidiary, shall not exceed $100,000.

TERMS AND CONDITIONS OF RETENTION STOCK GRANTS

The Committee may also grant retention shares to an employee (a participant).
Such shares shall be restricted for such periods as the Committee in its
discretion shall determine, provided, however, that such periods shall not be
less than 3 years from the date of grant (the Restricted Period) and the
Committee may also specify other terms and conditions to the right of a
participant to receive the shares without restriction (Vesting Conditions).
During the Restricted Period and prior to the satisfaction of any Vesting
Conditions, the participant shall have the entire beneficial interest in, and
all rights and privileges of a stockholder as to, such shares, including the
right to vote such shares and, unless the Committee determines otherwise, the
right to receive dividends, subject to the following restrictions: (i) the
participant shall not be entitled to delivery of the stock certificate until
expiration of the Restricted Period and the satisfaction of any Vesting
Conditions; (ii) none of the retention shares may be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of during the Restricted
Period or prior to the satisfaction of any Vesting Conditions; and (iii) all of
the retention shares shall be forfeited

34
<PAGE>

and all rights of the participant to such shares shall terminate unless the
participant remains in continuous employment of the Company or a subsidiary
during the Restricted Period and until any applicable Vesting Conditions have
been satisfied, except as provided below. Unless the Committee determines
otherwise at the time retention shares are granted, in case of a participant's
termination of employment due to death, disability or retirement either (i) at
age 65 or (ii) prior to age 65 at the request of the Company, if all Vesting
Conditions have been satisfied, the participant's retention shares shall
immediately vest and be delivered to the participant or his beneficiary, as the
case may be. If a participant's employment terminates for any reason other than
death, disability or retirement as described in the preceding sentence, the
participant's retention shares shall be forfeited. If a participant's
employment terminates for any reason prior to the satisfaction of any Vesting
Conditions, then unless the Committee determines otherwise at the time the
retention shares are granted, the participant's retention shares shall be
forfeited. On any termination of employment, the Committee may in its
discretion permit the participant to retain retention shares which would
otherwise be forfeited.

The Committee may permit a participant to pay amounts due under applicable
withholding tax laws on lapse of restrictions on retention shares by
authorizing the Company to withhold shares of Common Stock.

ADJUSTMENT IN EVENT OF CAPITAL CHANGES

In the event of recapitalizations, stock splits, stock dividends,
combinations or exchanges of shares, mergers, consolidations, rights offerings,
separations, spin-offs, reorganizations, liquidations or other changes in the
corporate structure or shares of the Company, the Plan provides that the Board
of Directors of the Company may, upon the recommendation of the Committee, make
such equitable adjustments as it deems appropriate in the number and kind of
shares authorized by the Plan, in the option price and in the number and kind
of shares or other securities or property subject to options, stock
appreciation rights or awards of retention stock.

DURATION AND AMENDMENT OF THE PLAN

No option or stock appreciation right or retention shares may be granted
pursuant to the Plan after April 16, 2003. The Board of Directors may at any
time terminate the Plan with respect to any shares of the Common Stock not at
the time subject to an option, stock appreciation right or retention share
grant and may alter or amend the Plan (including any amendment deemed necessary
to ensure that the Company may obtain any required regulatory approval or to
ensure that the grant or exercise of options or stock appreciation

35
<PAGE>

rights, or the grant or payment of retention shares or any other provision of
the Plan complies with Section 16(b) of the Securities Exchange Act of 1934),
provided, however, that without the approval of stockholders no amendment may
be made which would (i) increase the maximum number of shares for which
options, stock appreciation rights or retention shares may be granted under the
Plan (except in the case of adjustments in the event of capital changes as
referred to above), (ii) extend the term of the Plan or (iii) change the class
of eligible persons who may receive options, stock appreciation rights or
retention shares under the Plan. No change may be made in any option, stock
appreciation right or retention shares previously granted that would impair the
rights of an optionee or participant without his or her consent.

TAX STATUS OF NON-QUALIFIED OPTIONS, STOCK APPRECIATION RIGHTS, INCENTIVE STOCK
OPTIONS AND RETENTION SHARES

Counsel has advised that under present Federal tax laws and regulations, the
Federal income tax consequences to optionees and the Company as a result of the
grant and exercise of non-qualified stock options, stock appreciation rights,
and incentive stock options pursuant to the Plan, and to participants and the
Company as a result of the grant of retention shares and the lapse of the
restrictions thereon pursuant to the Plan, should be as described below.

Non-Qualified Stock Options and Stock Appreciation Rights. Optionees will not
have taxable income upon the grant of a non-qualified stock option or a non-
qualified stock option with a stock appreciation right attached. Upon the
exercise of a non-qualified stock option or a related stock appreciation right,
the Federal income tax consequences to the optionee depend upon whether or not
the stock issued upon exercise is both non-transferable and subject to a
substantial risk of forfeiture. Unless both of the foregoing conditions are
present, the optionee will have taxable income at the time of such exercise
equal to the excess of the fair market value of the option stock on the date of
exercise over the option price.

The Company or a subsidiary will be generally entitled to a deduction, for
Federal income tax purposes, in the same amount as the income that the optionee
recognizes and in the taxable year in which the optionee recognizes the income.
An optionee exercising a non-qualified stock option or a stock appreciation
right is subject to withholding for Federal, and generally for state and local,
income and payroll taxes.

Incentive Stock Options. Optionees will not have taxable income upon the
grant of an incentive stock option. Upon the exercise of an incentive stock
option, the optionee will

36
<PAGE>

not have taxable income, provided the optionee at all times from the date of
the granting of the incentive stock option to a date three months before the
date of exercise has been an employee of the Company or a subsidiary. In the
case of an optionee who is disabled within the meaning of Section 22(e)(3) of
the Code, the three-month period is extended to one year. The excess of (i) the
fair market value (on the exercise date) of the stock transferred to an
optionee pursuant to his or her exercise of an incentive stock option over (ii)
the option exercise price, increases the optionee's income for purposes of the
alternative minimum tax and may as a consequence give rise to a liability under
that tax.

If the optionee makes a "disqualifying disposition" of stock acquired
pursuant to the exercise of an incentive stock option, the optionee will
recognize taxable income equal to the amount by which the fair market value of
the option stock at the time of exercise (or, if less, the amount realized on
such disposition) exceeds the option price. A disqualifying disposition
generally includes a sale, exchange, gift, or transfer of legal title within
one year of exercise of the incentive stock option or within two years of
grant, whichever is later.

The Company and its subsidiaries will not be entitled to any Federal income
tax deductions with respect to incentive stock options unless the optionee
makes a disqualifying disposition of the option stock. If an optionee makes
such a disposition, the Company or a subsidiary will then be entitled to a tax
deduction equal to the amount by which the fair market value of the option
stock at the time of exercise (or, if less, the amount realized on such
disposition) exceeds the option price.

Retention Shares. The Federal income tax consequences of a grant of retention
shares depend upon whether or not a participant elects to be taxed at the time
of the grant of such shares.

If no election is made, the participant will not recognize taxable income at
the time of the grant of the retention shares. When the restrictions on the
shares lapse, the participant will recognize ordinary taxable income in an
amount equal to the fair market value of the retention shares at that time.

If the election is made, the participant will recognize taxable income at the
time of the grant of the retention shares in an amount equal to the fair market
value of such shares at that time, determined without regard to any of the
restrictions. If the shares are forfeited before the restrictions lapse, the
participant will be entitled to no deduction on account thereof.

The participant is subject to withholding for Federal, and generally for
state and local, income and payroll taxes at the time that he or she recognizes
income as a result of the

37
<PAGE>

grant of the retention shares or lapse of restrictions. Dividends payable to
the participant prior to that time are taxed as additional compensation, not as
dividend income.

The participant's tax basis in the retention shares is the amount recognized
by him or her as income attributable to such shares. Gain or loss recognized by
the participant on a subsequent disposition of any such shares is capital gain
or loss if such shares are otherwise capital assets.

The Company or a subsidiary generally will be entitled to a tax deduction in
the same amount as the income recognized by the participant as a result of the
grant of retention shares or lapse of restrictions and in the taxable year in
which the participant recognizes such income, and also for any dividends
payable before the participant recognizes such income.

GRANTS UNDER THE PLAN AS AMENDED

The proposed amendment would not have affected the grants of option and
retention shares under the Plan in 1994. Information with respect to such
grants is set out below:

<TABLE>
<CAPTION>
NAME AND POSITION OPTIONS (A) RETENTION SHARES
----------------- ---------------- ----------------
<S> <C> <C>
Drew Lewis 525,000 shares -0-
Chairman and CEO
Richard K. Davidson 168,750 shares 40,000
Chairman and CEO of Union Pacific Railroad
Company
Jack L. Messman 150,000 shares 40,000
President and CEO of Union Pacific
Resources Company
L. White Matthews, III 150,000 shares 40,000
Executive Vice President-Finance
Carl W. von Bernuth 112,500 shares -0-
Senior Vice President and General Counsel
Executive Group 1,554,450 shares 120,000
Non-Executive Director Group -0- -0-
Non-Executive Officer Employee Group 2,445,750 shares 74,350
</TABLE>
- ---------
(a) Generally represents three-year grants as described on page 23.
- ---------

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
PROPOSAL 3.

38
<PAGE>

(4) RATIFICATION OF APPOINTMENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors, upon the recommendation of the Audit Committee, has
appointed Deloitte & Touche as the firm of independent certified public
accountants to audit the books and accounts of the Company and its consolidated
subsidiaries for the year 1995 subject to ratification by stockholders. The
appointment of Deloitte & Touche continues a relationship that began in 1969.

A representative of Deloitte & Touche is expected to be present at the Annual
Meeting, will have an opportunity to make a statement if such representative
desires to do so and will be available to respond to appropriate questions by
stockholders.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
PROPOSAL 4.

OTHER BUSINESS

The only business to come before the meeting of which the management is aware
is set forth in this Proxy Statement. If any other business is presented for
action, it is intended that discretionary authority to vote the proxies shall
be exercised in respect thereof.

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE URGED TO DATE, SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE
ENCLOSED ENVELOPE.

J. L. SWANTAK
Vice President and Secretary

Any security holder wishing to receive, without charge, a copy of Union
Pacific's 1994 Annual Report on Form 10-K (without exhibits) filed with
the Securities and Exchange Commission or the Company's report,
"Commitment to Workplace Diversity" (which will be available after June 1,
1995) should write to Secretary, Union Pacific Corporation, Martin Tower,
Eighth and Eaton Avenues, Bethlehem, PA 18018.

39
<PAGE>

[LOGO OF UNION PACIFIC
CORPORATION APPEARS HERE]
P
R MARTIN TOWER
O EIGHTH AND EATON AVENUES
X BETHLEHEM, PA 18018
Y

PROXY
SOLICITED BY BOARD OF DIRECTORS
ANNUAL MEETING APRIL 21, 1995
SALT LAKE CITY, UTAH

The UNDERSIGNED hereby appoints DREW LEWIS and JUDY L. SWANTAK as Proxies,
each with the power to appoint a substitute, and hereby authorizes them to
represent and to vote all the shares of stock of UNION PACIFIC CORPORATION
which the undersigned is entitled to vote at the annual meeting of
stockholders to be held on April 21, 1995 or any adjournment thereof as
indicated upon all matters referred to on the reverse side and described in
the proxy statement for the meeting, and, in their discretion, upon any
other matters that may properly come before the meeting.

Election of Directors

NOMINEES: R. P. Bauman, R. K. Davidson, E. T. Gerry, Jr., L. M.
Jones,R. J. Mahoney, L. W. Matthews, III, J. L. Messman and J. D.
Robinson, III

(OVER)

<PAGE>

[X] Please mark your
vote as in this 1395
example.

This Proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this Proxy will be voted FOR all of the Board of
Directors' nominees and FOR proposals 2, 3 and 4.
- --------------------------------------------------------------------------------
If no direction is made or if you vote "FOR" the election of the nominees
as directors, the proxies will allocate votes in their discretion among the
nominees, unless otherwise specified.

FOR WITHHELD
1. Election of +++++++ +++++++
Directors + + + +
(see reverse) + + + +
+++++++ +++++++

For, except vote withhold from the following nominee(s):

________________________________________________________

To distribute your votes on a cumulative basis, write below the name(s) of the
nominee(s) you wish to vote for and the number of votes you wish to cast for
each

________________________________________________________

The Board recommends a vote FOR
proposals 2, 3 and 4.

FOR AGAINST ABSTAIN
2. Approve amendment and +++++++ +++++++ +++++++
extension of the Executive + + + + + +
Incentive Plan. + + + + + +
+++++++ +++++++ +++++++

3. Approve amendment of the +++++++ +++++++ +++++++
1993 Stock Option and + + + + + +
Retention Stock Plan. + + + + + +
+++++++ +++++++ +++++++

4. Ratify appointment of +++++++ +++++++ +++++++
Deloitte & Touche as + + + + + +
independent auditors. + + + + + +
+++++++ +++++++ +++++++

Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as an attorney, executor, administrator, trustee or guardian,
please give full title as such.

________________________________________________________

________________________________________________________
SIGNATURE (S) DATE

<PAGE>

[LOGO OF UNION PACIFIC
CORPORATION APPEARS HERE]
P
R MARTIN TOWER
O EIGHTH AND EATON AVENUES
X BETHLEHEM, PA 18018
Y

PROXY
SOLICITED BY BOARD OF DIRECTORS
ANNUAL MEETING APRIL 21, 1995
SALT LAKE CITY, UTAH

Election of Directors

NOMINEES: R. P. Bauman, R. K. Davidson, E. T. Gerry, Jr., L. M.
Jones,R. J. Mahoney, L. W. Matthews, III, J. L. Messman and J. D.
Robinson, III

(OVER)

<PAGE>

[X] Please mark your
vote as in this 1758
example.

FOR WITHHELD
1. Election of +++++++ +++++++
Directors + + + +
(see reverse) + + + +
+++++++ +++++++

For, except vote withhold from the following nominee(s):

________________________________________________________

To distribute your votes on a cumulative basis, write below the name(s) of the
nominee(s) you wish to vote for and the number of votes you wish to cast for
each

________________________________________________________

The Board recommends a vote FOR
proposals 2, 3 and 4.

FOR AGAINST ABSTAIN
2. Approve amendment and +++++++ +++++++ +++++++
extension of the Executive + + + + + +
Incentive Plan. + + + + + +
+++++++ +++++++ +++++++

3. Approve amendment of the +++++++ +++++++ +++++++
1993 Stock Option and + + + + + +
Retention Stock Plan. + + + + + +
+++++++ +++++++ +++++++

4. Ratify appointment of +++++++ +++++++ +++++++
Deloitte & Touche as + + + + + +
independent auditors. + + + + + +
+++++++ +++++++ +++++++

Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as an attorney, executor, administrator, trustee or guardian,
please give full title as such.

________________________________________________________

________________________________________________________
SIGNATURE (S) DATE

<PAGE>

UNION PACIFIC CORPORATION
VOTING INSTRUCTIONS FOR
ANNUAL MEETING APRIL 21, 1995
SALT LAKE CITY, UTAH

To Boatmen's National Bank:

The UNDERSIGNED hereby instructs you to vote, in person or by proxy, all the
shares of stock of UNION PACIFIC CORPORATION which were allocated to my
Missouri Pacific Corporation Employee Stock Ownership Plan account as of
February 10, 1995 at the annual meeting of stockholders to be held on April
21, 1995 or any adjournment thereof as indicated upon all matters referred
to on the reverse side of this card and described in the proxy statement for
the meeting.

Election of Directors

NOMINEES: R. P. Bauman, R. K. Davidson, E. T. Gerry, Jr., L. M.
Jones, R. J. Mahoney, L. W. Matthews, III, J. L. Messman and J. D.
Robinson, III

This card when properly executed will be voted in the manner directed
herein. If no direction is made, this card will be voted FOR all of the
Board of Directors' nominees and FOR proposals 2, 3 and 4. If you do not
return this card, your shares will not be voted by the Trustee.

(OVER)

<PAGE>

[X] PLEASE MARK YOUR
VOTE AS IN THIS
EXAMPLE.

If no direction is made or if you vote "FOR" the election of the nominees
as directors, your votes will be allocated equally among the nominees,
unless otherwise specified.

FOR WITHHELD
1. Election of +++++++ +++++++
Directors + + + +
(see reverse) + + + +
+++++++ +++++++

For, except vote withhold from the following nominee(s):

________________________________________________________

To distribute your votes on a cumulative basis, write below the name(s) of the
nominee(s) you wish to vote for and the number of votes you wish to cast for
each

________________________________________________________

THE UNION PACIFIC BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSALS 2, 3 AND 4.

FOR AGAINST ABSTAIN
2. Approve amendment and +++++++ +++++++ +++++++
extension of the Executive + + + + + +
Incentive Plan. + + + + + +
+++++++ +++++++ +++++++

3. Approve amendment of the +++++++ +++++++ +++++++
1993 Stock Option and + + + + + +
Retention Stock Plan. + + + + + +
+++++++ +++++++ +++++++

4. Ratify appointment of +++++++ +++++++ +++++++
Deloitte & Touche as + + + + + +
independent auditors. + + + + + +
+++++++ +++++++ +++++++

______________________________________ DATE ___________
Signature of Member

<PAGE>

UNION PACIFIC CORPORATION
VOTING INSTRUCTIONS FOR
ANNUAL MEETING APRIL 21, 1995
SALT LAKE CITY, UTAH

To Citibank N.A.:

The UNDERSIGNED hereby instructs you to vote, in person or by proxy, all the
shares of stock of UNION PACIFIC CORPORATION which were allocated to my
Union Pacific Corporation Employee Stock Ownership Plan account as of
February 10, 1995 at the annual meeting of stockholders to be held on April
21, 1995 or any adjournment thereof as indicated upon all matters referred
to on the reverse side of this card and described in the proxy statement for
the meeting.

Election of Directors

NOMINEES: R. P. Bauman, R. K. Davidson, E. T. Gerry, Jr., L. M.
Jones, R. J. Mahoney, L. W. Matthews, III, J. L. Messman and J. D.
Robinson, III

This card when properly executed will be voted in the manner directed
herein. If no direction is made, this card will be voted FOR all of the
Board of Directors' nominees and FOR proposal 2, 3 and 4. If you do not
return this card, your shares will not be voted by the Trustee.

(OVER)

<PAGE>

[X] PLEASE MARK YOUR
VOTE AS IN THIS
EXAMPLE.

If no direction is made or if you vote "FOR" the election of the nominees
as directors, your votes will be allocated equally among the nominees,
unless otherwise specified.

FOR WITHHELD
1. Election of +++++++ +++++++
Directors + + + +
(see reverse) + + + +
+++++++ +++++++

For, except vote withhold from the following nominee(s):

________________________________________________________

To distribute your votes on a cumulative basis, write below the name(s) of the
nominee(s) you wish to vote for and the number of votes you wish to cast for
each

________________________________________________________

THE UNION PACIFIC BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSALS 2, 3 AND 4.

FOR AGAINST ABSTAIN
2. Approve amendment and +++++++ +++++++ +++++++
extension of the Executive + + + + + +
Incentive Plan. + + + + + +
+++++++ +++++++ +++++++

3. Approve amendment of the +++++++ +++++++ +++++++
1993 Stock Option and + + + + + +
Retention Stock Plan. + + + + + +
+++++++ +++++++ +++++++

4. Ratify appointment of +++++++ +++++++ +++++++
Deloitte & Touche as + + + + + +
independent auditors. + + + + + +
+++++++ +++++++ +++++++

______________________________________ DATE ___________
Signature of Member
<PAGE>

UNION PACIFIC CORPORATION
VOTING INSTRUCTIONS FOR
ANNUAL MEETING APRIL 21, 1995
SALT LAKE CITY, UTAH

To Vanguard Fiduciary Trust Company:

The UNDERSIGNED hereby instructs you to vote, in person or by proxy, all the
shares of stock of UNION PACIFIC CORPORATION which were allocated to my
USPCI, Inc., Savings Plan account as of February 10, 1995 at the annual
meeting of stockholders to be held on April 21, 1995 or any adjournment
thereof as indicated upon all matters referred to on the reverse side of
this card and described in the proxy statement for the meeting.

Election of Directors

NOMINEES: R. P. Bauman, R. K. Davidson, E. T. Gerry, Jr., L. M.
Jones,R. J. Mahoney, L. W. Matthews, III, J. L. Messman and J. D.
Robinson, III

(OVER)

<PAGE>

[X] PLEASE MARK YOUR
VOTE AS IN THIS 1964
EXAMPLE.

If no direction is made or if you vote "FOR" the election of the nominees
as directors, your votes will be allocated equally among the nominees,
unless otherwise specified.

FOR WITHHELD
1. Election of +++++++ +++++++
Directors + + + +
(see reverse) + + + +
+++++++ +++++++

For, except vote withhold from the following nominee(s):

________________________________________________________

To distribute your votes on a cumulative basis, write below the name(s) of the
nominee(s) you wish to vote for and the number of votes you wish to cast for
each

________________________________________________________

THE UNION PACIFIC BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSALS 2, 3 AND 4.

FOR AGAINST ABSTAIN
2. Approve amendment and +++++++ +++++++ +++++++
extension of the Executive + + + + + +
Incentive Plan. + + + + + +
+++++++ +++++++ +++++++

3. Approve amendment of the +++++++ +++++++ +++++++
1993 Stock Option and + + + + + +
Retention Stock Plan. + + + + + +
+++++++ +++++++ +++++++

4. Ratify appointment of +++++++ +++++++ +++++++
Deloitte & Touche as + + + + + +
independent auditors. + + + + + +
+++++++ +++++++ +++++++

______________________________________ DATE ___________
Signature of Member

<PAGE>

UNION PACIFIC CORPORATION
VOTING INSTRUCTIONS FOR
ANNUAL MEETING APRIL 21, 1995
SALT LAKE CITY, UTAH

To Vanguard Fiduciary Trust Company:

The UNDERSIGNED hereby instructs you to vote, in person or by proxy, all the
shares of stock of UNION PACIFIC CORPORATION which were allocated to my
Union Pacific Motor Freight Company Employee 401(k) Retirement Thrift Plan
account as of February 10, 1995 at the annual meeting of stockholders to be
held on April 21, 1995 or any adjournment thereof as indicated upon all
matters referred to on the reverse side of this card and described in the
proxy statement for the meeting.

Election of Directors

NOMINEES: R. P. Bauman, R. K. Davidson, E. T. Gerry, Jr., L. M.
Jones,R. J. Mahoney, L. W. Matthews, III, J. L. Messman and J. D.
Robinson, III

(OVER)

<PAGE>

[X] PLEASE MARK YOUR
VOTE AS IN THIS 5486
EXAMPLE.

If no direction is made or if you vote "FOR" the election of the nominees
as directors, your votes will be allocated equally among the nominees,
unless otherwise specified.

FOR WITHHELD
1. Election of +++++++ +++++++
Directors + + + +
(see reverse) + + + +
+++++++ +++++++

For, except vote withhold from the following nominee(s):

________________________________________________________

To distribute your votes on a cumulative basis, write below the name(s) of the
nominee(s) you wish to vote for and the number of votes you wish to cast for
each

________________________________________________________

THE UNION PACIFIC BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSALS 2, 3 AND 4.

FOR AGAINST ABSTAIN
2. Approve amendment and +++++++ +++++++ +++++++
extension of the Executive + + + + + +
Incentive Plan. + + + + + +
+++++++ +++++++ +++++++

3. Approve amendment of the +++++++ +++++++ +++++++
1993 Stock Option and + + + + + +
Retention Stock Plan. + + + + + +
+++++++ +++++++ +++++++

4. Ratify appointment of +++++++ +++++++ +++++++
Deloitte & Touche as + + + + + +
independent auditors. + + + + + +
+++++++ +++++++ +++++++

______________________________________ DATE ___________
Signature of Member

<PAGE>

UNION PACIFIC CORPORATION
VOTING INSTRUCTIONS FOR
ANNUAL MEETING APRIL 21, 1995
SALT LAKE CITY, UTAH

To Vanguard Fiduciary Trust Company:

The UNDERSIGNED hereby instructs you to vote, in person or by proxy, all the
shares of stock of UNION PACIFIC CORPORATION which were allocated to my
Union Pacific Fruit Express Company Agreement Employee 401(k) Retirement
Thrift Plan account as of February 10, 1995 at the annual meeting of
stockholders to be held on April 21, 1995 or any adjournment thereof as
indicated upon all matters referred to on the reverse side of this card and
described in the proxy statement for the meeting.

Election of Directors

NOMINEES: R. P. Bauman, R. K. Davidson, E. T. Gerry, Jr., L. M.
Jones,R. J. Mahoney, L. W. Matthews, III, J. L. Messman and J. D.
Robinson, III

(OVER)

<PAGE>

[X] PLEASE MARK YOUR
VOTE AS IN THIS 1965
EXAMPLE.

If no direction is made or if you vote "FOR" the election of the nominees
as directors, your votes will be allocated equally among the nominees,
unless otherwise specified.

FOR WITHHELD
1. Election of +++++++ +++++++
Directors + + + +
(see reverse) + + + +
+++++++ +++++++

For, except vote withhold from the following nominee(s):

________________________________________________________

To distribute your votes on a cumulative basis, write below the name(s) of the
nominee(s) you wish to vote for and the number of votes you wish to cast for
each

________________________________________________________

THE UNION PACIFIC BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSALS 2, 3 AND 4.

FOR AGAINST ABSTAIN
2. Approve amendment and +++++++ +++++++ +++++++
extension of the Executive + + + + + +
Incentive Plan. + + + + + +
+++++++ +++++++ +++++++

3. Approve amendment of the +++++++ +++++++ +++++++
1993 Stock Option and + + + + + +
Retention Stock Plan. + + + + + +
+++++++ +++++++ +++++++

4. Ratify appointment of +++++++ +++++++ +++++++
Deloitte & Touche as + + + + + +
independent auditors. + + + + + +
+++++++ +++++++ +++++++

______________________________________ DATE ___________
Signature of Member

<PAGE>

UNION PACIFIC CORPORATION
VOTING INSTRUCTIONS FOR
ANNUAL MEETING APRIL 21, 1995
SALT LAKE CITY, UTAH

To Vanguard Fiduciary Trust Company:

The UNDERSIGNED hereby instructs you to vote, in person or by proxy, all the
shares of stock of UNION PACIFIC CORPORATION which were allocated to my
Union Pacific Resources Company Employees Thrift Plan PAYSOP account as of
February 10, 1995 at the annual meeting of stockholders to be held on April
21, 1995 or any adjournment thereof as indicated upon all matters referred
to on the reverse side of this card and described in the proxy statement for
the meeting.

Election of Directors

NOMINEES: R. P. Bauman, R. K. Davidson, E. T. Gerry, Jr., L. M.
Jones,R. J. Mahoney, L. W. Matthews, III, J. L. Messman and J. D.
Robinson, III

(OVER)

<PAGE>

[X] PLEASE MARK YOUR
VOTE AS IN THIS 3030
EXAMPLE.

If no direction is made or if you vote "FOR" the election of the nominees
as directors, your votes will be allocated equally among the nominees,
unless otherwise specified.

FOR WITHHELD
1. Election of +++++++ +++++++
Directors + + + +
(see reverse) + + + +
+++++++ +++++++

For, except vote withhold from the following nominee(s):

________________________________________________________

To distribute your votes on a cumulative basis, write below the name(s) of the
nominee(s) you wish to vote for and the number of votes you wish to cast for
each

________________________________________________________

THE UNION PACIFIC BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSALS 2, 3 AND 4.

FOR AGAINST ABSTAIN
2. Approve amendment and +++++++ +++++++ +++++++
extension of the Executive + + + + + +
Incentive Plan. + + + + + +
+++++++ +++++++ +++++++

3. Approve amendment of the +++++++ +++++++ +++++++
1993 Stock Option and + + + + + +
Retention Stock Plan. + + + + + +
+++++++ +++++++ +++++++

4. Ratify appointment of +++++++ +++++++ +++++++
Deloitte & Touche as + + + + + +
independent auditors. + + + + + +
+++++++ +++++++ +++++++

______________________________________ DATE ___________
Signature of Member

<PAGE>

UNION PACIFIC CORPORATION
VOTING INSTRUCTIONS FOR
ANNUAL MEETING APRIL 21, 1995
SALT LAKE CITY, UTAH

To Vanguard Fiduciary Trust Company:

The UNDERSIGNED hereby instructs you to vote, in person or by proxy, all the
shares of stock of UNION PACIFIC CORPORATION which were allocated to my
Skyway Retirement Savings Plan account as of February 10, 1995 at the annual
meeting of stockholders to be held on April 21, 1995 or any adjournment
thereof as indicated upon all matters referred to on the reverse side of
this card and described in the proxy statement for the meeting.

Election of Directors

NOMINEES: R. P. Bauman, R. K. Davidson, E. T. Gerry, Jr., L. M.
Jones,R. J. Mahoney, L. W. Matthews, III, J. L. Messman and J. D.
Robinson, III

(OVER)

<PAGE>

[X] PLEASE MARK YOUR
VOTE AS IN THIS 5471
EXAMPLE.

If no direction is made or if you vote "FOR" the election of the nominees
as directors, your votes will be allocated equally among the nominees,
unless otherwise specified.

FOR WITHHELD
1. Election of +++++++ +++++++
Directors + + + +
(see reverse) + + + +
+++++++ +++++++

For, except vote withhold from the following nominee(s):

________________________________________________________

To distribute your votes on a cumulative basis, write below the name(s) of the
nominee(s) you wish to vote for and the number of votes you wish to cast for
each

________________________________________________________

THE UNION PACIFIC BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSALS 2, 3 AND 4.

FOR AGAINST ABSTAIN
2. Approve amendment and +++++++ +++++++ +++++++
extension of the Executive + + + + + +
Incentive Plan. + + + + + +
+++++++ +++++++ +++++++

3. Approve amendment of the +++++++ +++++++ +++++++
1993 Stock Option and + + + + + +
Retention Stock Plan. + + + + + +
+++++++ +++++++ +++++++

4. Ratify appointment of +++++++ +++++++ +++++++
Deloitte & Touche as + + + + + +
independent auditors. + + + + + +
+++++++ +++++++ +++++++

______________________________________ DATE ___________
Signature of Member

<PAGE>

UNION PACIFIC CORPORATION
VOTING INSTRUCTIONS FOR
ANNUAL MEETING APRIL 21, 1995
SALT LAKE CITY, UTAH

To Vanguard Fiduciary Trust Company:

The UNDERSIGNED hereby instructs you to vote, in person or by proxy, all the
shares of stock of UNION PACIFIC CORPORATION which were allocated to my
Union Pacific Resources Company Employees Thrift Plan account as of February
10, 1995 at the annual meeting of stockholders to be held on April 21, 1995
or any adjournment thereof as indicated upon all matters referred to on the
reverse side of this card and described in the proxy statement for the
meeting.

Election of Directors

NOMINEES: R. P. Bauman, R. K. Davidson, E. T. Gerry, Jr., L. M.
Jones,R. J. Mahoney, L. W. Matthews, III, J. L. Messman and J. D.
Robinson, III

(OVER)

<PAGE>

[X] PLEASE MARK YOUR
VOTE AS IN THIS 6146
EXAMPLE.

If no direction is made or if you vote "FOR" the election of the nominees
as directors, your votes will be allocated equally among the nominees,
unless otherwise specified.

FOR WITHHELD
1. Election of +++++++ +++++++
Directors + + + +
(see reverse) + + + +
+++++++ +++++++

For, except vote withhold from the following nominee(s):

________________________________________________________

To distribute your votes on a cumulative basis, write below the name(s) of the
nominee(s) you wish to vote for and the number of votes you wish to cast for
each

________________________________________________________

THE UNION PACIFIC BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSALS 2, 3 AND 4.

FOR AGAINST ABSTAIN
2. Approve amendment and +++++++ +++++++ +++++++
extension of the Executive + + + + + +
Incentive Plan. + + + + + +
+++++++ +++++++ +++++++

3. Approve amendment of the +++++++ +++++++ +++++++
1993 Stock Option and + + + + + +
Retention Stock Plan. + + + + + +
+++++++ +++++++ +++++++

4. Ratify appointment of +++++++ +++++++ +++++++
Deloitte & Touche as + + + + + +
independent auditors. + + + + + +
+++++++ +++++++ +++++++

______________________________________ DATE ___________
Signature of Member

<PAGE>

UNION PACIFIC CORPORATION
VOTING INSTRUCTIONS FOR
ANNUAL MEETING APRIL 21, 1995
SALT LAKE CITY, UTAH

To Vanguard Fiduciary Trust Company:

The UNDERSIGNED hereby instructs you to vote, in person or by proxy, all the
shares of stock of UNION PACIFIC CORPORATION which were allocated to my
Union Pacific Agreement Employee 401(k) Retirement Thrift Plan account as of
February 10, 1995 at the annual meeting of stockholders to be held on April
21, 1995 or any adjournment thereof as indicated upon all matters referred
to on the reverse side of this card and described in the proxy statement for
the meeting.

Election of Directors

NOMINEES: R. P. Bauman, R. K. Davidson, E. T. Gerry, Jr., L. M.
Jones,R. J. Mahoney, L. W. Matthews, III, J. L. Messman and J. D.
Robinson, III

(OVER)

<PAGE>

[X] PLEASE MARK YOUR
VOTE AS IN THIS 6323
EXAMPLE.

If no direction is made or if you vote "FOR" the election of the nominees
as directors, your votes will be allocated equally among the nominees,
unless otherwise specified.

FOR WITHHELD
1. Election of +++++++ +++++++
Directors + + + +
(see reverse) + + + +
+++++++ +++++++

For, except vote withhold from the following nominee(s):

________________________________________________________

To distribute your votes on a cumulative basis, write below the name(s) of the
nominee(s) you wish to vote for and the number of votes you wish to cast for
each

________________________________________________________

THE UNION PACIFIC BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSALS 2, 3 AND 4.

FOR AGAINST ABSTAIN
2. Approve amendment and +++++++ +++++++ +++++++
extension of the Executive + + + + + +
Incentive Plan. + + + + + +
+++++++ +++++++ +++++++

3. Approve amendment of the +++++++ +++++++ +++++++
1993 Stock Option and + + + + + +
Retention Stock Plan. + + + + + +
+++++++ +++++++ +++++++

4. Ratify appointment of +++++++ +++++++ +++++++
Deloitte & Touche as + + + + + +
independent auditors. + + + + + +
+++++++ +++++++ +++++++

______________________________________ DATE ___________
Signature of Member

<PAGE>

UNION PACIFIC CORPORATION
VOTING INSTRUCTIONS FOR
ANNUAL MEETING APRIL 21, 1995
SALT LAKE CITY, UTAH

To Vanguard Fiduciary Trust Company:

The UNDERSIGNED hereby instructs you to vote, in person or by proxy, all the
shares of stock of UNION PACIFIC CORPORATION which were allocated to my
Union Pacific Corporation Thrift Plan account as of February 10, 1995 at the
annual meeting of stockholders to be held on April 21, 1995 or any
adjournment thereof as indicated upon all matters referred to on the reverse
side of this card and described in the proxy statement for the meeting.

Election of Directors

NOMINEES: R. P. Bauman, R. K. Davidson, E. T. Gerry, Jr., L. M.
Jones,R. J. Mahoney, L. W. Matthews, III, J. L. Messman and J. D.
Robinson, III

(OVER)

<PAGE>

[X] PLEASE MARK YOUR
VOTE AS IN THIS 6348
EXAMPLE.

If no direction is made or if you vote "FOR" the election of the nominees
as directors, your votes will be allocated equally among the nominees,
unless otherwise specified.

FOR WITHHELD
1. Election of +++++++ +++++++
Directors + + + +
(see reverse) + + + +
+++++++ +++++++

For, except vote withhold from the following nominee(s):

________________________________________________________

To distribute your votes on a cumulative basis, write below the name(s) of the
nominee(s) you wish to vote for and the number of votes you wish to cast for
each

________________________________________________________

THE UNION PACIFIC BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSALS 2, 3 AND 4.

FOR AGAINST ABSTAIN
2. Approve amendment and +++++++ +++++++ +++++++
extension of the Executive + + + + + +
Incentive Plan. + + + + + +
+++++++ +++++++ +++++++

3. Approve amendment of the +++++++ +++++++ +++++++
1993 Stock Option and + + + + + +
Retention Stock Plan. + + + + + +
+++++++ +++++++ +++++++

4. Ratify appointment of +++++++ +++++++ +++++++
Deloitte & Touche as + + + + + +
independent auditors. + + + + + +
+++++++ +++++++ +++++++

______________________________________ DATE ___________
Signature of Member

<PAGE>

UNION PACIFIC CORPORATION
VOTING INSTRUCTIONS FOR
ANNUAL MEETING APRIL 21, 1995
SALT LAKE CITY, UTAH

To Vanguard Fiduciary Trust Company:

The UNDERSIGNED hereby instructs you to vote, in person or by proxy, all the
shares of stock of UNION PACIFIC CORPORATION which were allocated to my
Union Pacific Corporation Thrift Plan PAYSOP account as of February 10, 1995
at the annual meeting of stockholders to be held on April 21, 1995 or any
adjournment thereof as indicated upon all matters referred to on the reverse
side of this card and described in the proxy statement for the meeting.

Election of Directors

NOMINEES: R. P. Bauman, R. K. Davidson, E. T. Gerry, Jr., L. M.
Jones,R. J. Mahoney, L. W. Matthews, III, J. L. Messman and J. D.
Robinson, III

(OVER)

<PAGE>

[X] PLEASE MARK YOUR
VOTE AS IN THIS 6381
EXAMPLE.

If no direction is made or if you vote "FOR" the election of the nominees
as directors, your votes will be allocated equally among the nominees,
unless otherwise specified.

FOR WITHHELD
1. Election of +++++++ +++++++
Directors + + + +
(see reverse) + + + +
+++++++ +++++++

For, except vote withhold from the following nominee(s):

________________________________________________________

To distribute your votes on a cumulative basis, write below the name(s) of the
nominee(s) you wish to vote for and the number of votes you wish to cast for
each

________________________________________________________

THE UNION PACIFIC BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSALS 2, 3 AND 4.

FOR AGAINST ABSTAIN
2. Approve amendment and +++++++ +++++++ +++++++
extension of the Executive + + + + + +
Incentive Plan. + + + + + +
+++++++ +++++++ +++++++

3. Approve amendment of the +++++++ +++++++ +++++++
1993 Stock Option and + + + + + +
Retention Stock Plan. + + + + + +
+++++++ +++++++ +++++++

4. Ratify appointment of +++++++ +++++++ +++++++
Deloitte & Touche as + + + + + +
independent auditors. + + + + + +
+++++++ +++++++ +++++++

______________________________________ DATE ___________
Signature of Member

<PAGE> COVER

1993

STOCK OPTION AND RETENTION STOCK PLAN

UNION PACIFIC CORPORATION

(Effective April 16, 1993 -
As Amended September 30, 1993
and July 28, 1994)

<PAGE>
<PAGE> 1
1993 STOCK OPTION AND RETENTION STOCK PLAN
OF UNION PACIFIC CORPORATION

1. PURPOSE

The purpose of the 1993 Stock Option and Retention Stock Plan
of Union Pacific Corporation is to promote and closely align the
interests of employees of Union Pacific Corporation and its
shareholders by providing stock based compensation. The Plan is
intended to strengthen Union Pacific Corporation's ability to
reward performance which enhances long term shareholder value; to
increase employee stock ownership through performance based
compensation plans; and to strengthen the company's ability to
attract and retain an outstanding employee and executive team.

2. DEFINITIONS

The following terms shall have the following meanings:

"Act" means the Securities Exchange Act of 1934, as amended.

"Approved Leave of Absence" means a leave of absence of
definite length approved by the Senior Vice President - Human
Resources of the Company, or by any other officer of the Company to
whom the Committee delegates such authority.

"Award" means an award of Retention Shares pursuant to the
Plan.

"Beneficiary" means any person or persons designated in
writing by a Participant to the Committee on a form prescribed by
it for that purpose, which designation shall be revocable at any
time by the Participant prior to his or her death, provided that,
in the absence of such a designation or the failure of the person
or persons so designated to survive the Participant, "Beneficiary"
shall mean such Participant's estate; and further provided that no
designation of Beneficiary shall be effective unless it is
received by the Company before the Participant's death.

"Board" means the Board of Directors of the Company.

"Code" means the Internal Revenue Code of 1986, as amended, or
the corresponding provisions of any successor statute.

"Committee" means the Committee designated by the Board to
administer the Plan pursuant to Section 3.

"Common Stock" means the Common Stock, par value $2.50 per
share, of the Company.

"Company" means Union Pacific Corporation, a Utah corporation,
or any successor corporation.

<PAGE> 2

"Option" means each non-qualified stock option, incentive
stock option and stock appreciation right granted under the Plan.

"Optionee" means any employee of the Company or a Subsidiary
(including directors who are also such employees) who is granted an
Option under the Plan.

"Participant" means any employee of the Company or a Subsid-
iary (including directors who are also such employees) who is
granted an Award under the Plan.

"Plan" means this 1993 Stock Option and Retention Stock Plan,
as amended from time to time.

"Retention Shares" means shares of Common Stock subject to an
Award granted under the Plan.

"Restriction Period" means the period defined in Section 9(a).

"Subsidiary" means any corporation of which the Company owns
directly or indirectly at least a majority of the outstanding
shares of voting stock.

"Vesting Condition" means any condition to the vesting of
Retention Shares established by the Committee pursuant to Section
9.

3. ADMINISTRATION

The Plan shall be administered by the Committee which shall be
comprised of not less than three members of the Board, none of whom
shall be employees of the Company or any Subsidiary. The Committee
shall (i) grant Options to Optionees and make Awards of Retention
Shares to Participants, and (ii) determine the terms and conditions
of such Options and Awards of Retention Shares, all in accordance
with the provisions of the Plan. The Committee shall have full
authority to construe and interpret the Plan, to establish, amend
and rescind rules and regulations relating to the Plan, to
administer the Plan, and to take all such steps and make all such
determinations in connection with the Plan and Options and Awards
granted thereunder as it may deem necessary or advisable. The
Committee may delegate its authority under the Plan to one or more
officers or employees of the Company or a Subsidiary, provided,
however, that no delegation shall be made of authority to take an
action which is required by Rule 16b-3 promulgated under the Act to
be taken by "disinterested persons" in order that the Plan and
transactions thereunder meet the requirements of such Rule. Each
Option and grant of Retention Shares shall, if required by the
Committee, be evidenced by an agreement to be executed by the
Company and the Optionee or Participant, respectively, and contain
provisions not inconsistent with the Plan. All determinations of
the Committee shall be by a majority of its members and shall be

<PAGE> 3

evidenced by resolution, written consent or other appropriate
action, and the Committee's determinations shall be final. Each
member of the Committee, while serving as such, shall be considered
to be acting in his or her capacity as a director of the Company.

4. ELIGIBILITY

To be eligible for selection by the Committee to participate
in the Plan an individual must be an employee of the Company or a
Subsidiary. Directors who are not full-time salaried employees
shall not be eligible. In granting Options or Awards of Retention
Shares to eligible employees, the Committee shall take into account
the duties of the respective employees, their present and potential
contributions to the success of the Company or a Subsidiary, and
such other factors as the Committee shall deem relevant in
connection with accomplishing the purpose of the Plan.

5. STOCK SUBJECT TO THE PLAN

Subject to the provisions of Section 11 hereof, the maximum
number and kind of shares as to which Options or Retention Shares
may at any time be granted under the Plan are 16 million shares of
Common Stock. No Participant may receive Options or Awards
aggregating more than 10% of the shares of Common Stock available
under the Plan. Shares of Common Stock subject to Options or
Awards under the Plan may be either authorized but unissued shares
or shares previously issued and reacquired by the Company. Upon
the expiration, termination or cancellation (in whole or in part)
of unexercised Options, shares of Common Stock subject thereto
shall again be available for option or grant as Retention Shares
under the Plan. Shares of Common Stock covered by an Option, or
portion thereof, which is surrendered upon the exercise of a stock
appreciation right, shall thereafter be unavailable for option or
grant as Retention Shares under the Plan. Upon the forfeiture (in
whole or in part) of a grant of Retention Shares, the shares of
Common Stock subject to such forfeiture shall again be available
for option or grant as Retention Shares under the Plan if no
dividends have been paid on the forfeited shares, and otherwise
shall be unavailable for such an option or grant.

6. TERMS AND CONDITIONS OF NON-QUALIFIED OPTIONS

All non-qualified options under the Plan shall be granted
subject to the following terms and conditions:

(a) Option Price. The option price per share with respect to
each option shall be determined by the Committee but shall not be
less than 100% of the fair market value of the Common Stock on the
date the option is granted, such fair market value to be determined
in accordance with the procedures to be established by the
Committee.

<PAGE> 4

(b) Duration of Options. Options shall be exercisable at
such time or times and under such conditions as set forth in the
written agreement evidencing such option, but in no event shall any
option be exercisable subsequent to the tenth anniversary of the
date on which the option is granted.

(c) Exercise of Option. Except as provided in Section 6(h),
6(i) or 8(c), the shares of Common Stock covered by an option may
not be purchased prior to the first anniversary of the date on
which the option is granted (unless the Committee shall determine
otherwise), or such longer period or periods, and subject to such
conditions, as the Committee may determine, but thereafter may be
purchased at one time or in such installments over the balance of
the option period as may be provided in the option. Any shares not
purchased on the applicable installment date may, unless the
Committee shall have determined otherwise, be purchased thereafter
at any time prior to the final expiration of the option. To the
extent that the right to purchase shares has accrued thereunder,
options may be exercised from time to time by written notice to the
Company stating the number of shares with respect to which the
option is being exercised.

(d) Payment. Shares of Common Stock purchased under options
shall, at the time of purchase, be paid for in full. All, or any
portion, of the option exercise price may, at the discretion of the
Committee, be paid by the surrender to the Company, at the time of
exercise, of shares of previously acquired Common Stock owned by
the Optionee, to the extent that such payment does not require the
surrender of a fractional share of such previously acquired Common
Stock. In addition, to the extent permitted by the Committee, the
option exercise price may be paid by authorizing the Company to
withhold Common Stock otherwise issuable on exercise of the option.
Such shares previously acquired or shares withheld to pay the
option exercise price shall be valued at fair market value on the
date the option is exercised in accordance with the procedures to
be established by the Committee. A holder of an option shall have
none of the rights of a stockholder until the shares of Common
Stock are issued to him or her. If an amount is payable by an
Optionee to the Company or a Subsidiary under applicable withhold-
ing tax laws in connection with the exercise of non-qualified
options, the Committee may, in its discretion and subject to such
rules as it may adopt, permit the Optionee to make such payment, in
whole or in part, by electing to authorize the Company to withhold
or accept shares of Common Stock having a fair market value equal
to the amount to be paid under such withholding tax laws.

(e) Restrictions. The Committee shall determine, with
respect to each option, the nature and extent of the restrictions,
if any, to be imposed on the shares of Common Stock which may be
purchased thereunder including restrictions on the transferability
of such shares acquired through the exercise of such option.
Without limiting the generality of the foregoing, the Committee may

<PAGE> 5

impose conditions restricting absolutely or conditionally the
transferability of shares acquired through the exercise of options
for such periods, and subject to such conditions, including
continued employment of the Optionee by the Company or a Subsid-
iary, as the Committee may determine.

(f) Purchase for Investment. The Committee shall have the
right to require that each Optionee or other person who shall
exercise an option under the Plan represent and agree that any
shares of Common Stock purchased pursuant to such option will be
purchased for investment and not with a view to the distribution or
resale thereof or that such shares will not be sold except in
accordance with such restrictions or limitations as may be set
forth in the written agreement granting such option.

(g) Non-Transferability of Options. During an Optionee's
lifetime, the option may be exercised only by the Optionee.
Options shall not be transferable, except for exercise by the
Optionee's legal representatives or heirs.

(h) Termination of Employment. Upon the termination of an
Optionee's employment, for any reason other than death, the option
shall be exercisable only as to those shares of Common Stock which
were then subject to the exercise of such option, provided that (I)
in the case of disability as described below, any holding period
required by Section 6(c) shall automatically be deemed to be
satisfied and (II) the Committee may determine that particular
limitations and restrictions under the Plan shall not apply, and
such option shall expire according to the following schedule
(unless the Committee shall provide for shorter periods at the time
the option is granted):

(i) Retirement. Option shall expire, unless exercised,
five (5) years after the Optionee's retirement from the
Company or any Subsidiary under the provisions of the
Company's or a Subsidiary's pension plan.

(ii) Disability. Option shall expire, unless exercised,
five (5) years after the date the Optionee is eligible to
receive disability benefits under the provisions of the
Company's or a Subsidiary's long-term disability plan.

(iii) Gross Misconduct. Option shall expire upon
receipt by the Optionee of the notice of termination if he or
she is terminated for deliberate, willful or gross misconduct
as determined by the Company.

(iv) All Other Terminations. Option shall expire,
unless exercised, three (3) months after the date of such
termination.

<PAGE> 6

(i) Death of Optionee. Upon the death of an Optionee during
his or her period of employment, the option shall be exercisable
only as to those shares of Common Stock which were subject to the
exercise of such option at the time of his or her death, provided
that (I) any holding period required by Section 6(c) shall
automatically be deemed to be satisfied and (II) the Committee may
determine that particular limitations and restrictions under the
Plan shall not apply, and such option shall expire, unless
exercised by the Optionee's legal representatives or heirs, five
(5) years after the date of death (unless the Committee shall
provide for a shorter period at the time the option is granted).

In no event, however, shall any option be exercisable pursuant to
Sections 6(h) or (i) subsequent to the tenth anniversary of the
date on which it is granted.

7. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS

(a) General. The Committee may also grant a stock apprecia-
tion right in connection with a non-qualified option, either at the
time of grant or by amendment. Such stock appreciation right shall
cover the same shares covered by such option (or such lesser number
of shares of Common Stock as the Committee may determine) and
shall, except for the provisions of Section 6(d) hereof, be subject
to the same terms and conditions as the related non-qualified
option.

(b) Exercise and Payment. Each stock appreciation right
shall entitle the Optionee to surrender to the Company unexercised
the related option, or any portion thereof, and to receive from the
Company in exchange therefor an amount equal to the excess of the
fair market value of one share of Common Stock over the option
price per share times the number of shares covered by the option,
or portion thereof, which is surrendered. Payment shall be made in
shares of Common Stock valued at fair market value, or in cash, or
partly in shares and partly in cash, all as shall be determined by
the Committee. The fair market value shall be the value determined
in accordance with procedures established by the Committee. Stock
appreciation rights may be exercised from time to time upon actual
receipt by the Company of written notice stating the number of
shares of Common Stock with respect to which the stock appreciation
right is being exercised, provided that if a stock appreciation
right expires unexercised, it shall be deemed exercised on the
expiration date if any amount would be payable with respect
thereto. No fractional shares shall be issued but instead cash
shall be paid for a fraction or, if the Committee should so
determine, the number of shares shall be rounded downward to the
next whole share. If an amount is payable by an Optionee to the
Company or a Subsidiary under applicable withholding tax laws in
connection with the exercise of stock appreciation rights, the
Committee may, in its discretion and subject to such rules as it
may adopt, permit the Optionee to make such payment, in whole or in

<PAGE> 7

part, by electing to authorize the Company to withhold or accept
shares of Common Stock having a fair market value equal to the
amount to be paid under such withholding tax laws.

(c) Restrictions. The obligation of the Company to satisfy
any stock appreciation right exercised by an Optionee subject to
Section 16 of the Act shall be conditioned upon the prior receipt
by the Company of an opinion of counsel to the Company that any
such satisfaction will not create an obligation on the part of such
Optionee pursuant to Section 16(b) of the Act to reimburse the
Company for any statutory profit which might be held to result from
such satisfaction.

8. TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS.

(a) General. The Committee may also grant incentive stock
options as defined under section 422 of the Code. All incentive
stock options issued under the Plan shall, except for the provi-
sions of Sections 6(h) and (i) and Section 7 hereof, be subject to
the same terms and conditions as the non-qualified options granted
under the Plan. In addition, incentive stock options shall be
subject to the conditions of Sections 8(b), (c), (d) and (e).

(b) Limitation of Exercise. The aggregate fair market value
(determined as of the date the incentive stock option is granted)
of the shares of stock with respect to which incentive stock
options are exercisable for the first time by such Optionee during
any calendar year, under this Plan or any other stock option plans
adopted by the Company, its Subsidiaries or any predecessor
companies thereof, shall not exceed $100,000. If any incentive
stock options become exercisable in any year in excess of the
$100,000 limitation, options representing such excess shall become
non-qualified options exercisable pursuant to the terms of Section
6 hereof and shall not be exercisable as incentive stock options.

(c) Termination of Employment. Upon the termination of an
Optionee's employment, for any reason other than death, his or her
incentive stock option shall be exercisable only as to those shares
of Common Stock which were then subject to the exercise of such
option provided that (I) in the case of disability as described
below, any holding period required by Section 6(c) shall automati-
cally be deemed to be satisfied and (II) the Committee may
determine that particular limitations and restrictions under the
Plan shall not apply, and such option shall expire as an incentive
stock option (but shall become a non-qualified option exercisable
pursuant to the terms of Section 6 hereof less the period already
elapsed under such Section), according to the following schedule
(unless the Committee shall provide for shorter periods at the time
the incentive stock option is granted):

(i) Retirement. An incentive stock option shall expire,
unless exercised, three (3) months after the Optionee's

<PAGE> 8

retirement from the Company or any Subsidiary under the
provisions of the Company's or a Subsidiary's pension plan.

(ii) Disability. In the case of an Optionee who is
disabled within the meaning of section 22(e)(3) of the Code,
an incentive stock option shall expire, unless exercised, one
(1) year after the earlier of the date the Optionee terminates
employment or the date the Optionee is eligible to receive
disability benefits under the provisions of the Company's or
a Subsidiary's long-term disability plan.

(iii) Gross Misconduct. An incentive stock option shall
expire upon receipt by the Optionee of the notice of termina-
tion if he or she is terminated for deliberate, willful or
gross misconduct as determined by the Company.

(iv) All Other Terminations. An incentive stock option
shall expire, unless exercised, three (3) months after the
date of such termination.

(d) Death of Optionee. Upon the death of an Optionee during
his or her period of employment, the incentive stock option shall
be exercisable as an incentive stock option only as to those shares
of Common Stock which were subject to the exercise of such option
at the time of death, provided that (I) any holding period required
by Section 6(c) shall automatically be deemed to be satisfied, and
(II) the Committee may determine that particular limitations and
restrictions under the Plan shall not apply, and such option shall
expire, unless exercised by the Optionee's legal representatives or
heirs, five (5) years after the date of death (unless the Committee
shall provide for a shorter period at the time the option is
granted).

(e) Leave of Absence. A leave of absence, whether or not an
Approved Leave of Absence, shall be deemed a termination of
employment for purposes of Section 8.

In no event, however, shall any incentive stock option be exercis-
able pursuant to Sections 8(c) or (d) subsequent to the tenth
anniversary of the date on which it was granted.

9. TERMS AND CONDITIONS OF AWARDS OF RETENTION STOCK

(a) General. Retention Shares may be granted only to reward
the attainment of individual, Company or Subsidiary goals, or to
attract or retain officers or other employees of the Company or any
Subsidiary, and shall be granted subject to the attainment of
performance goals unless the Committee shall determine otherwise.
With respect to each grant of Retention Shares under the Plan, the
Committee shall determine the period or periods, including any
conditions for determining such period or periods, during which the
restrictions set forth in Section 9(b) shall apply, provided that

<PAGE> 9

in no event, other than as provided in Section 9(c), shall such
restrictions terminate prior to 3 years after the date of grant
(the "Restriction Period"), and may also specify any other terms or
conditions to the right of the Participant to receive such
Retention Shares ("Vesting Conditions"). Subject to Section 9(c)
and any such Vesting Condition, a grant of Retention Shares shall
be effective for the Restriction Period and may not be revoked.

(b) Restrictions. At the time of grant of Retention Shares
to a Participant, a certificate representing the number of shares
of Common Stock granted shall be registered in the Participant's
name but shall be held by the Company for his or her account. The
Participant shall have the entire beneficial ownership interest in,
and all rights and privileges of a stockholder as to, such
Retention Shares, including the right to vote such Retention Shares
and, unless the Committee shall determine otherwise, the right to
receive dividends thereon, subject to the following: (i) subject
to Section 9(c), the Participant shall not be entitled to delivery
of the stock certificate until the expiration of the Restriction
Period and the satisfaction of any Vesting Conditions; (ii) none of
the Retention Shares may be sold, transferred, assigned, pledged,
or otherwise encumbered or disposed of during the Restriction
Period or prior to the satisfaction of any Vesting Conditions; and
(iii) all of the Retention Shares shall be forfeited and all rights
of the Participant to such Retention Shares shall terminate without
further obligation on the part of the Company unless the Partici-
pant remains in the continuous employment of the Company or a
Subsidiary for the entire Restriction Period, except as provided by
Sections 9(a) and 9(c), and any applicable Vesting Conditions have
been satisfied. Any shares of Common Stock or other securities or
property received as a result of a transaction listed in Section 11
shall be subject to the same restrictions as such Retention Shares
unless the Committee shall determine otherwise.

(i) Disability and Retirement. Unless the Committee
shall determine otherwise at the time of grant of Retention
Shares, if (A) a Participant ceases to be an employee of the
Company or a Subsidiary prior to the end of a Restriction
Period, by reason of disability under the provisions of the
Company's or a Subsidiary's long-term disability plan or
retirement under the provisions of the Company's or a
Subsidiary's pension plan either (i) at age 65 or (ii) prior
to age 65 at the request of the Company or a Subsidiary, and
(B) all Vesting Conditions have been satisfied, the Retention
Shares granted to such Participant shall immediately vest and
all restrictions applicable to such shares shall lapse. A
certificate for such shares shall be delivered to the Partici-
pant in accordance with the provisions of Section 9(d).

<PAGE> 10

(ii) Death. Unless the Committee shall determine
otherwise at the time of grant of Retention Shares, if (A) a
Participant ceases to be an employee of the Company or a
Subsidiary prior to the end of a Restriction Period by reason
of death, and (B) all Vesting Conditions have been satisfied,
the Retention Shares granted to such Participant shall
immediately vest in his or her Beneficiary, and all restric-
tions applicable to such shares shall lapse. A certificate
for such shares shall be delivered to the Participant's
Beneficiary in accordance with the provisions of Section 9(d).

(iii) All Other Terminations. If a Participant ceases
to be an employee of the Company or a Subsidiary prior to the
end of a Restriction Period for any reason other than death,
disability or retirement as provided in Section 9(c)(i) and
(ii), the Participant shall immediately forfeit all Retention
Shares then subject to the restrictions of Section 9(b) in
accordance with the provisions thereof, except that the
Committee may, if it finds that the circumstances in the
particular case so warrant, allow a Participant whose employ-
ment has so terminated to retain any or all of the Retention
Shares then subject to the restrictions of Section 9(b) and
all restrictions applicable to such retained shares shall
lapse. A certificate for such retained shares shall be
delivered to the Participant in accordance with the provisions
of Section 9(d).

(iv) Vesting Conditions. Unless the Committee shall
determine otherwise at the time of grant of Retention Shares,
if a Participant ceases to be an employee of the Company for
any reason prior to the satisfaction of any Vesting Condi-
tions, the Participant shall immediately forfeit all Retention
Shares then subject to the restrictions of Section 9(b) in
accordance with the provisions thereof, except that the
Committee may, if it finds that the circumstances in the
particular case so warrant, allow a Participant whose employ-
ment has so terminated to retain any or all of the Retention
Shares then subject to the restrictions of Section 9(b) and
all restrictions applicable to such retained shares shall
lapse. A certificate for such retained shares shall be
delivered to the Participant in accordance with the provisions
of Section 9(d).

(d) Payment of Retention Shares. At the end of the Restric-
tion Period and after all Vesting Conditions have been satisfied,
or at such earlier time as provided for in Section 9(c) or as the
Committee, in its sole discretion, may otherwise determine, all
restrictions applicable to the Retention Shares shall lapse, and a
stock certificate for a number of shares of Common Stock equal to
the number of Retention Shares, free of all restrictions, shall be
delivered to the Participant or his or her Beneficiary, as the case
may be. If an amount is payable by a Participant to the Company or

<PAGE> 11

a Subsidiary under applicable withholding tax laws in connection
with the lapse of such restrictions, the Committee, in its sole
discretion, may permit the Participant to make such payment, in
whole or in part, by authorizing the Company to transfer to the
Company Retention Shares otherwise deliverable to the Participant
having a fair market value equal to the amount to be paid under
such withholding tax laws.

10. REGULATORY APPROVALS AND LISTING

The Company shall not be required to issue to an Optionee,
Participant or a Beneficiary, as the case may be, any certificate
for any shares of Common Stock upon exercise of an option or for
any Retention Shares granted under the Plan prior to (i) the
obtaining of any approval from any governmental agency which the
Company, in its sole discretion, shall determine to be necessary or
advisable, (ii) the admission of such shares to listing on any
stock exchange on which the Common Stock may then be listed, and
(iii) the completion of any registration or other qualification of
such shares under any state or Federal law or rulings or regula-
tions of any governmental body which the Company, in its sole
discretion, shall determine to be necessary or advisable.

11. ADJUSTMENT IN EVENT OF CHANGES IN CAPITALIZATION

In the event of a recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation,
rights offering, separation, spin-off, reorganization or liquida-
tion, or any other change in the corporate structure or shares of
the Company, the Board, upon recommendation of the Committee, may
make such equitable adjustments as it may deem appropriate in the
number and kind of shares authorized by the Plan, in the option
price of outstanding Options, and in the number and kind of shares
or other securities or property subject to Options or covered by
outstanding Awards.

12. TERM OF THE PLAN

No Options or Retention Shares shall be granted pursuant to
the Plan after April 16, 2003, but grants of Options and Retention
Shares theretofore granted may extend beyond that date and the
terms and conditions of the Plan shall continue to apply thereto.

13. TERMINATION OR AMENDMENT OF THE PLAN

The Board may at any time terminate the Plan with respect to
any shares of Common Stock not at that time subject to outstanding
Options or Awards, and may from time to time alter or amend the
Plan or any part thereof (including, but without limiting the
generality of the foregoing, any amendment deemed necessary to
ensure that the Company may obtain any approval referred to in
Section 10 or to ensure that the grant of Options or Awards, the

<PAGE> 12

exercise of Options or payment of Retention Shares or any other
provision or the Plan complies with Section 16(b) of the Act),
provided that no change with respect to any Options or Retention
Shares theretofore granted may be made which would impair the
rights of an Optionee or Participant without the consent of such
Optionee or Participant and, further, that without the approval of
stockholders, no alteration or amendment may be made which would
(i) increase the maximum number of shares of Common Stock subject
to the Plan as set forth in Section 5 (except by operation of
Section 11), (ii) extend the term of the Plan, (iii) change the
class of eligible persons who may receive Options or Awards of
Retention Shares under the Plan or (iv) increase the limitation set
forth in Section 5 on the maximum number of shares that any
Participant may receive under the Plan.

14. LEAVE OF ABSENCE

Unless the Committee shall determine otherwise, a leave of
absence other than an Approved Leave of Absence shall be deemed a
termination of employment for purposes of the Plan. An Approved
Leave of Absence shall not be deemed a termination of employment
for purposes of the Plan (except for purposes of Section 8), but
the period of such Leave of Absence shall not be counted toward
satisfaction of any Restriction Period or any holding period
described in Section 6(c).

15. GENERAL PROVISIONS

(a) Neither the Plan nor the grant of any Option or Award nor
any action by the Company, any Subsidiary or the Committee shall be
held or construed to confer upon any person any right to be
continued in the employ of the Company or a Subsidiary. The
Company and each Subsidiary expressly reserve the right to
discharge, without liability but subject to his or her rights under
the Plan, any Optionee or Participant whenever in the sole
discretion of the Company or a Subsidiary, as the case may be, its
interest may so require.

(b) All questions pertaining to the construction, regulation,
validity and effect of the Plan shall be determined in accordance
with the laws of the State of Utah, without regard to conflict of
laws doctrine.

16. EFFECTIVE DATE

The Plan shall become effective upon approval of the stock-
holders of the Company.

<PAGE> COVER

(LOGO - UNION PACIFIC CORPORATION)

EXECUTIVE INCENTIVE PLAN

UNION PACIFIC CORPORATION

AND SUBSIDIARIES

_____________________________

Effective January 1, 1971

Amended and Restated as of April 15, 1988
Amended October 26, 1989
Amended September 24, 1992
Amended September 30, 1993
Amended April 21, 1995

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EXECUTIVE INCENTIVE PLAN OF UNION PACIFIC CORPORATION
AND SUBSIDIARIES

Effective January 1, 1971

Amended and Restated as of April 15, 1988
Amended October 26, 1989
Amended September 24, 1992
Amended September 30, 1993
Amended April 21, 1995

PURPOSE OF PLAN

The purpose of this Plan is to promote the success of Union Pacific Corporation
and Subsidiaries by providing additional compensation for services rendered
during any year by key executives who contribute in a significant manner to the
operations and business of the Company and such Subsidiaries.

1. DEFINITIONS

Section 1.01 The following terms shall have the following meanings:

"Accountholder" means any person who has received a Deferred Award.

"Beneficiary" means any person or persons designated in writing by an
Accountholder to the Committee on a form prescribed by it for that purpose,
which designation shall be revocable at any time by the Accountholder prior to
his death, provided that, in the absence of such a designation or the failure of
the person or persons so designated to survive the Accountholder, payments or
distributions shall be made to the Accountholder's estate and provided further
that no payment or distribution shall be made during the lifetime of the
Accountholder to his Beneficiary.

"Board" means the Board of Directors of the Company.

"Code" means the Internal Revenue Code of 1986, as amended, or the corresponding
provisions of any successor statute.

"Committee" means the Committee provided for in Section 2.01.

"Company" means Union Pacific Corporation, a Utah corporation, or any successor
corporation.

"Company Stock" means Common Stock, $2.50 par value per share, of the Company.

"Deferred Award" means an award under the Plan which an Executive to whom the
award is made shall have elected to defer until after Termination or, for awards
made with respect to Years beginning with 1982, the earlier of either (i) a date
or dates certain in any year or years prior to

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Termination (but in no event more often than once in each such year or years),
or (ii) after Termination, all in accordance with Section 4.01 and which
until paid shall, subject to paragraph (1) of Section 7.01, be represented by
Investment Accounts maintained for such Executive in accordance with Section
5.01.

"Executive" means any person who was a regular employee of the Company or a
Subsidiary (including directors who are also such employees) for all or part of
the Year in respect of which awards are made under the Plan and who, in the
judgment of the Committee, contributed in a significant manner to the operations
and business of the Company or a Subsidiary for such Year.

"Immediate Cash Award" means an award under the Plan payable in cash pursuant to
Section 4.02 as promptly as practicable after the close of the Year for which
the award is made or, in the sole discretion of the Committee, in December of
the year for which the award is made.

"Incentive Reserve Account" means the account established by the Company
pursuant to Section 3.01.

"Investment Account" means one of the accounts established by the Company
pursuant to Section 5.01.

"Plan" means this Executive Incentive Plan as amended from time to time.

"Subsidiary" means any corporation of which the Company owns directly or
indirectly at least a majority of the outstanding shares of voting stock and
which by action of its board of directors has adopted the Plan.

"Termination" means termination of employment with the Company and its
Subsidiaries, for any reason, including retirement and death.

"Valuation Date" means the last business day of each calendar quarter and each
other interim date on which the Committee determines that a valuation of
Investment Accounts shall be made.

"Year" means a calendar year.

2. ADMINISTRATION OF THE PLAN

Section 2.01 The Plan shall be administered by a Committee which shall consist
of at least three members designated by the Board to serve at its pleasure.
Such members shall be members of the Board and shall not be officers or
employees of the Company or any Subsidiary. The Committee shall determine the
Executives to whom awards are granted under the Plan and the amounts of awards
payable to such Executives out of the Incentive Reserve Account, and shall
otherwise be responsible for the administration and interpretation of the Plan.
The Committee shall supervise and be responsible for the maintenance of the
various accounts under the Plan and for determining the amounts and, subject to
Sections 4.02 and 6.01, the times of payments or distributions of awards. The
Committee may delegate its authority under the Plan to one or more officers or
employees of the Company or a Subsidiary. All determinations of the Committee
shall be by a majority of its members, and its determinations shall be final.
Each member of the Committee, while serving as such, shall be considered to be
acting in his capacity as a Director of the Company.

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3. INCENTIVE RESERVE ACCOUNT

Section 3.01 The Company shall establish an Incentive Reserve Account to which
amounts available for awards to Executives shall be credited and which shall be
debited as such awards are made by the Committee. The Board may cause to be
credited to such Incentive Reserve Account such amount for each Year, beginning
with 1983 during which the Plan remains in effect as it, in its discretion, may
determine provided that the amount so credited for any Year shall not exceed the
following limitation:

The maximum amount that may be credited to the Incentive Reserve Account
for any Year is 1.5% of Net Income for such Year when the Return on
Average Annual Total Stockholders' Equity is 10.0% and is 3.0% of Net
Income for such Year when the Return on Average Annual Total Stockholders'
Equity is 12.0% or more. At intermediate levels of Return on Average
Annual Total Stockholders' Equity (between 10.0% and 12.0%), the maximum
percentage of Net Income that may be credited to the Incentive Reserve
Account for such Year shall increase 0.075% for each incremental 0.1%
increase in the Return on Average Annual Total Stockholders' Equity. Net
Income is the consolidated net earnings from continuing operations of the
Company (before extraordinary items) determined in conformity with
generally accepted accounting principles before giving effect to
provisions for amounts to be credited to the Incentive Reserve Account for
such year. Average Annual Total Stockholders' Equity is calculated as the
average of (i) total stockholders' equity, including preferred stock, as
shown on the consolidated financial statements of the Company at the
beginning of each year and (ii) total stockholders' equity, including
preferred stock, as shown on the consolidated financial statements of the
Company at the end of such year, adjusted in the case of clause (ii) to
include income from continuing operations before extraordinary items
(determined in conformity with generally accepted accounting principles)
and amounts to be credited to the Incentive Reserve Account under the Plan
for such year.

The amount of Net Income and the percentage Return on Average Annual Total
Stockholders Equity shall be computed and reported to the Board and the
Committee at the end of each Year by the Company. The Committee shall obtain a
report from the Company's independent certified public accountants stating that
the computation of the amount credited to the Incentive Reserve Account at the
end of the Plan Year was made in accordance with the provisions of the Plan and
their report shall be final and binding. Any amounts credited to the Incentive
Reserve Account which are not awarded with respect to such Year may, on
direction of the Committee, be awarded in future Years during which the Plan
remains in effect.

4. AWARDS UNDER THE PLAN

Section 4.01 Prior to September 30 of each Year, beginning with 1984, an
Executive who has been granted awards under the Plan with respect to prior Years
and who has not previously made an election under the Plan, shall file with the
Committee an initial election on a form prescribed by the Committee for such
purpose specifying the percent in multiples of 10% of any award which may be
granted to him with respect to such Year and later Years to be in the form of an
Immediate Cash Award or a Deferred Award in one or more Investment Accounts.
Deferral and investment elections shall be continuing elections for all awards
under the Plan except that:

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(i) Deferral elections shall be subject to change before September 30 of
any Year on a form prescribed by the Committee for such purpose with
respect to any awards which may be granted to him for such Year and later
Years; and

(ii) an Accountholder, whether or not currently employed by the Company or
a Subsidiary, may elect to convert, in multiples of 10%, the value of his
account, if any, in any Investment Account to equivalent value accounts in
any other Investment Accounts as of a Valuation Date, provided that the
Committee has received such notice of the conversion as the Committee may
require, and provided further that, unless the Committee shall in its sole
discretion determine otherwise, an Accountholder may not make more than 12
such conversions in any Year, and may not make any conversion if after
such conversion the number of unused conversions for such Year would be
less than the remaining full calendar quarters in such Year. The
Committee shall cause such conversions to be effected by transferring
equivalent amounts from the one such account to the other, all as of such
Valuation Date; otherwise, such deferral and investment elections, and
such changes therein, shall be irrevocable.

In addition, for awards made with respect to Years beginning with 1982, an
Executive may also specify on a form prescribed by the Committee for such
purpose whether he wishes payment of Deferred Awards to be made on the earlier
of either (i) date or dates certain in any year or years prior to Termination
(but in no event more often than once in each such year or years), such payment
to be in full in cash on such date or dates, or (ii) upon Termination in
accordance with the provisions of Sections 6.01 through 6.04. Elections made as
to dates for the payment of Deferred Awards shall be subject to change by such
Executive before September 30 of any Year on a form prescribed by the Committee
for such purpose with respect to any awards made for such Year and later Years;
otherwise such elections, and such changes therein, shall be irrevocable.

Designation, election or change in election shall not entitle an Executive to
any award for any Year but the form of award, if any, for any Year to such
Executive shall be in accordance with such election. If an Executive has not
been so designated as eligible for Deferred Awards, or an election for Deferred
Awards is not in effect for him, any award granted to him for any Year shall be
in the form of an Immediate Cash Award.

Section 4.02 As soon as practicable after the close of each Year, or in
December of any Year if so determined by the Committee, beginning with 1971, the
Committee may grant awards payable out of the Incentive Reserve Account to such
Executives in such dollar amounts as it in its sole discretion shall determine,
subject to Section 4.03, and the amount of each such award shall be debited to
the Incentive Reserve Account. Except to the extent that Deferred Awards are
elected pursuant to Section 4.01, any award under the Plan granted to an
Executive for any Year shall be paid to him or to his Beneficiary in a lump sum
in cash as promptly as practicable after such award is granted.

Section 4.03 No Covered Executive shall receive an award for any Year in excess
of (i) .25% of Covered Income for such Year, in the case of the Chief Executive
Officer of the Company, and (ii) .15% of Covered Income for such Year, in the
case of any other Covered Executive. Covered Executive means an Executive whose
compensation is subject to the limitations on deductibility set forth in Section
162(m) of the Code. Covered Income for a Year is the greater of (a) the
consolidated net earnings from continuing operations of the Company for such
Year, before extraordinary items, special charges and the cumulative effect of
accounting changes, determined in accordance with generally accepted accounting
principles, and (b) such net earnings for the first eleven months of such Year.

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5. DEFERRED AWARDS

Section 5.01 The Company shall from time to time establish on its books one or
more Investment Accounts. In the case of each Executive, if and when a Deferred
Award is granted to him, the Committee shall credit to an account maintained for
him in one or more Investment Accounts the equivalent amount of such award in
accordance with his election. Each Investment Account shall have such name, and
be charged or credited pursuant to such method, as the Committee shall determine
upon establishment of such Investment Account, provided such method is
consistent with the requirements of Section 162(m) of the Code for performance-
based compensation. The Committee may change such names or methods for any
Investment Account, but no such change shall reduce any amount previously
accrued in an Accountholder's account. The Committee shall cause each
Investment Account to be valued as of each Valuation Date by such person or
persons as it in its sole discretion shall determine and such valuation shall be
conclusive for all purposes of the Plan. The value of any Investment Account
for the purpose of making payment of a Deferred Award shall be the value of such
Investment Account as of the Valuation Date last preceding such payment.
Compensation paid in respect of any Investment Account shall result in
corresponding reduction in the value of such accounts. The amounts credited in
Investment Accounts shall represent general liabilities of the Company and shall
not constitute a trust fund or otherwise create any property interest in any
Accountholder or his Beneficiary.

Section 5.02 The provisions of Section 5.01 shall be subject to the provisions
of paragraph (1) of Section 7.01.

6. PAYMENT OR DELIVERY OF DEFERRED AWARDS

Section 6.01 Upon termination of an Executive, the Committee shall cause cash
in respect of any balances in the accounts maintained for such Executive in any
Investment Account to be paid or delivered to him or his Beneficiary in the sole
discretion of the Committee as follows:

(i) in a single distribution, an amount in cash equal to the value of the
accounts maintained for him in all Investment Accounts, all such cash
being paid in the Year of his Termination or in January of the following
Year, as determined by the Committee; or

(ii) over such number of Years as are fixed by the Committee but not
exceeding fifteen, in annual installments of an aggregate amount of cash
equal in value at the time of each installment payment to the value of the
accounts maintained for him in all Investment Accounts at the Valuation
Date next preceding payment divided by the remaining number of such annual
installments, the first of such installments to be paid or delivered in
the month following the month of his Termination, or at the discretion of
the Committee not later than 12 months following the date of Termination
and subsequent installments to be paid or delivered in January of each
subsequent Year; or

(iii) in the event of retirement or death of a currently employed
Executive, at a specified future date not to exceed 15 years from the date
of such retirement or death in a single distribution, an amount of cash
equal to the value of the accounts maintained for him in all Investment
Accounts. Income in respect of Investment Accounts would be paid in cash
quarterly to such Executive or his Beneficiary commencing with the first
day of the month

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subsequent to such Executive's retirement or death. In the case of
retirement, the single distRibution referred to above will be paid on the
date specified or upon death, whichever occurs first.

All payments or distributions attributable to each Deferred Award of an
Executive after his Termination shall be made by the Company on its behalf or on
behalf of the Subsidiary or Subsidiaries by which he was employed during the
Year in which such Deferred Award was earned. The Subsidiary shall reimburse
the Company in the amount of such paid Deferred Awards.

Section 6.02 Deferred Awards elected to be paid on a date or dates certain in
any year or years prior to Termination shall be paid to the Executive in full in
cash on such date or dates.

Section 6.03 At any time before or after Termination of an Executive who shall
have elected to receive one or more Deferred Awards, the Committee, if it finds
in its sole discretion that continued deferral of such Awards would result in
undue hardship to such Executive or his Beneficiary, may accelerate and pay in
cash all or any part of such Deferred Award or Deferred Awards by converting the
value of the accounts maintained for him in Investment Accounts into the cash
equivalent thereof on the same basis as if a payment in cash were being made as
provided in Section 6.01. On the death of an Executive after his Termination,
the Committee, in its sole discretion, may accelerate one or more installments,
and change the form of payment or distribution in accordance with Section 6.01,
of any balance of his Deferred Awards and, in the event of relevant changes in
the Federal income tax laws, regulations and rulings or on termination of the
Plan, the Committee may, in its sole discretion, so accelerate or change the
form of payment or distribution of any or all Deferred Awards.

Section 6.04 The provisions of Sections 6.01, 6.02, and 6.03 shall be subject
to provisions to paragraph (1) of Section 7.01.

7. GENERAL PROVISIONS

Section 7.01 (1) Anything in the Plan otherwise to the contrary
notwithstanding, the Board may at any time under such circumstances as it in its
sole discretion may determine, convert all the accounts of Accountholders in the
Investment Accounts into cash credits, with future credits to the accounts of
Accountholders being made solely in cash. Accounts shall be so converted on the
basis of the value thereof as of the last preceding Valuation Date. Any such
cash credits to the accounts of Accountholders shall, after such conversion,
solely bear interest until paid to the Accountholder or his Beneficiary
compounded annually at such annual rate of interest as may be fixed by the
Board. The granting and payment of Deferred Awards in respect of such cash
credits shall otherwise be in accordance with the other provisions of the Plan
with such adjustments therein as the Committee may deem appropriate.

(2) Neither the Plan nor the payment of benefits hereunder nor any action by the
Company, any Subsidiary or the Committee shall be held or construed to confer
upon any person any right to be continued in the employ of the Company or of a
Subsidiary and the Company and each Subsidiary expressly reserves the right to
discharge, without liability, any Executive whenever in its sole discretion its
interest may so require.

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(3) No member of the Board or the Board of Directors of any Subsidiary or of the
Committee or any person to whom the Committee has delegated its authority
hereunder shall be liable for any action, or action hereunder, whether of
commission or omission, except in circumstances involving his bad faith, for
anything done or omitted to be done by himself.

(4) The Company or any Subsidiary shall not be required to segregate cash for
any Investment Account.

(5) Notwithstanding the fact that an Investment Account may use Company Stock to
determine amounts credited or debited thereto, no Executive shall have voting or
other rights with respect to shares of such Company Stock.

(6) The Company or any Subsidiary shall not, by virtue of any provisions of this
Plan or by any action by any person hereunder, be deemed to be a trustee or
other fiduciary of any property for any Accountholder or any Beneficiary of an
Accountholder and the liabilities of the Company or of any Subsidiary to any
Accountholder or his Beneficiary pursuant to the Plan shall be those of a debtor
only pursuant to such contractual obligations as are created by the Plan, and no
such obligation of the Company or of any Subsidiary shall be deemed to be
secured by any pledge or other encumbrance on any property of the Company or of
any Subsidiary.

(7) Except to the extent of the rights of the Beneficiary of an Accountholder,
no benefit payable under, or interest in, the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any such attempted action shall be void; and no such
benefit or interest shall be in any manner liable for or subject to the debts,
contracts, liabilities, engagements or torts of any Accountholder, former
Accountholder or his Beneficiary. If any Accountholder, former Accountholder or
Beneficiary shall become bankrupt or shall attempt to anticipate, alienate,
sell, transfer, assign, pledge, encumber or charge any benefit payable under, or
interest in, the Plan, then the Committee in its discretion may hold or apply
such benefit or interest or any part thereof to or for the benefit of such
Accountholder, former Accountholder, or his Beneficiary, his spouse, children,
blood relatives or other dependents, or any of them, in such manner and in such
proportions as the Committee may consider proper.

(8) The Company shall on its behalf and on behalf of its Subsidiaries withhold
from payment of distribution of the Awards the required amounts of income and
other taxes.

(9) No member of the Committee shall be eligible for an award under the Plan.

(10) All questions pertaining to the construction, regulation, validity and
effect of the Plan shall be determined in accordance with the laws of the State
of New York.

8. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN

Section 8.01 The Board may from time to time amend, suspend or terminate the
Plan in whole or in part, and, if suspended or terminated, may reinstate any of
or all of its provisions, except that without the consent of the Executive, or,
if he is not living, his Beneficiary, no amendment, suspension or termination of
the Plan shall be made which materially adversely affects his rights with
respect to awards previously made to him and except that the limitations set
forth in Section 3.01 with respect to the amount of awards which may be granted
under the Plan may be increased only with the

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approval of a majority of the stockholders of the Company present, in person or
by proxy, at a meeting of such stockholders at which a quorum is present. In
the absence of action by the stockholders of the Company, no awards shall be
made under the Plan with respect to years after the calendar year 2005 and the
Plan shall automatically terminate after all Deferred Awards made prior thereto
shall have been paid or distributed. Notwithstanding the foregoing, no
amendment which is material for purposes of the shareholder approval requirement
of Section 162(m) of the Code shall be effective in the absence of action by the
stockholders of the Company.