<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
CSX CORPORATION
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
R.R. DONNELLEY FINANCIAL
------------------------------------------------------------------------
(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:
<PAGE>
CSX
CORPORATION
March 14, 1995
Dear CSX Shareholder:
You are cordially invited to attend our Annual Meeting of Shareholders on
Tuesday, April 25, 1995, at 10:00 a.m. (EDT), at The Greenbrier, White Sulphur
Springs, West Virginia.
If you plan to attend the meeting, please complete and mail the form
included in the brochure containing information about the meeting and The
Greenbrier. An admission card will be sent to you about two weeks prior to
the meeting date.
Whether or not you are able to attend the meeting, it is important that
your shares be represented, no matter how many shares you own. Therefore, you
are urged to mark, sign, date and mail your proxy promptly in the envelope
provided.
/s/ JOHN W. SNOW
John W. Snow
Chairman of the Board,
President and Chief Executive Officer
<PAGE>
Notice of Annual Meeting of Shareholders
Richmond, Virginia
March 14, 1995
To Our Shareholders:
The Annual Meeting of Shareholders of CSX Corporation will be held at The
Greenbrier, White Sulphur Springs, West Virginia, on Tuesday, April 25, 1995, at
10:00 a.m. (EDT), for the purpose of considering and acting upon the following
matters:
1. Election of thirteen directors;
2. Appointment of Ernst & Young LLP as independent certified public
accountants for 1995;
3. Shareholder proposal concerning equal opportunity reporting; and
4. Such other matters as may properly come before the meeting.
The above matters are described in the Proxy Statement. You are urged, after
reading the Proxy Statement, to mark, sign, date and return the Proxy to assure
that your shares are represented at the meeting.
Only shareholders of record at the close of business on February 24, 1995,
will be entitled to vote at the meeting, either in person or by proxy. This
Proxy Statement is being mailed to those shareholders on or about March 14,
1995.
By Order of the Board of Directors
/s/ ALAN A. RUDNICK
Alan A. Rudnick
Vice President - General Counsel
and Corporate Secretary
1
<PAGE>
PROXY STATEMENT
General Information
The enclosed Proxy is solicited by the Board of Directors of CSX Corporation
("CSX" or the "Company"). A Proxy may be revoked by a shareholder at any time
before it is voted by notice in writing delivered to the Corporate Secretary, by
submission of another proxy bearing a later date or by voting in person at the
Annual Meeting.
CSX is the parent of CSX Transportation, Inc. ("CSXT"); Sea-Land Service,
Inc. ("Sea-Land"); American Commercial Lines, Inc.; CSX Intermodal, Inc.;
Customized Transportation, Inc.; and The Greenbrier Resort Management Company.
The address of CSX's principal executive offices is One James Center, 901 East
Cary Street, Richmond, Virginia 23219-4031.
Shares Outstanding and Voting Rights
As of February 24, 1995, CSX had outstanding 105,098,736 shares of common
stock entitled to one vote per share. A majority of the shares entitled to vote,
represented in person or by proxy, will constitute a quorum for the transaction
of business. Only shareholders of record at the close of business on February
24, 1995, will be entitled to vote.
CSX is not aware of any matters to come before the meeting other than those
set forth in the accompanying Notice and this Proxy Statement.
1. ELECTION OF DIRECTORS
Thirteen directors are to be elected to hold office until the next Annual
Meeting of Shareholders is held and their successors are elected, except that
the term of any director who is also a CSX officer ends if he or she ceases to
be an employee of the Company. Votes will be cast, unless otherwise specified,
for the election of those named below. If, at the time of the meeting, any
nominee should be unable to serve as a director, such votes will be cast for
such substitute nominee as may be nominated by the Board of Directors. All of
the nominees listed were previously elected directors by the shareholders.
As of the date of this Proxy Statement, the Board of Directors has no reason
to believe that any of the nominees named will be unable or unwilling to serve.
There are no family relationships among any of these nominees or among any of
these nominees and any officer, nor any arrangement or understanding between any
nominee and any other person pursuant to which the nominee was selected.
In the election of directors, those receiving the greatest number of votes
shall be elected, even if such votes do not constitute a majority. Certain
information regarding each nominee follows. Each nominee has consented to being
named in the Proxy Statement and to serve if elected.
2
<PAGE>
[PHOTO OF EDWARD L. ADDISON APPEARS HERE]
Edward L. Addison, 65, is retired Chairman and Chief Executive Officer of
The Southern Company, an electric utility holding company. He is a director of
Georgia Power Company; Phelps Dodge Corporation; Protective Life Corporation;
and Wachovia Bank of Georgia, NA. Mr. Addison has been a director of CSX since
March 1987, and is a member of the Board's Executive Committee, Compensation
Committee and Organization and Corporate Responsibility Committee.
[PHOTO OF ELIZABETH E. BAILEY APPEARS HERE]
Elizabeth E. Bailey, 56, is the John C. Hower Professor of Public Policy and
Management, The Wharton School of the University of Pennsylvania. Prior to July
1991, she was Visiting Research Scholar, Yale School of Organization and
Management, and Professor, Graduate School of Industrial Administration,
Carnegie Mellon University; prior to 1991, she was Dean of the Graduate School
of Management at Carnegie Mellon University. She is a director of Honeywell,
Inc.; College Retirement Equities Fund; Philip Morris Companies, Inc.; and
National Westminster Bancorp, Inc. Dr. Bailey has been a director of CSX since
November 1989, and is a member of the Board's Audit Committee and Pension
Committee.
[PHOTO OF ROBERT L. BURRUS APPEARS HERE]
Robert L. Burrus, Jr., 60, is a partner in and Chairman of McGuire, Woods,
Battle & Boothe, a law firm. Mr. Burrus is a director of Heilig-Meyers Company;
S&K Famous Brands, Inc.; and Concepts Direct, Inc. Mr. Burrus has been a
director of CSX since April 1993, and is a member of the Board's Organization
and Corporate Responsibility Committee and Pension Committee.
[PHOTO OF BRUCE C. GOTTWALD APPEARS HERE]
Bruce C. Gottwald, 61, is Chairman and Chief Executive Officer of Ethyl
Corporation, a worldwide producer of petroleum additives. He is a director of
Albemarle Corporation; First Colony Corporation; First Colony Life Insurance
Co,; James River Corporation; and Tredegar Industries, Inc. Mr. Gottwald has
been a director of CSX since April 1988, and is a member of the Board's
Organization and Corporate Responsibility Committee and Pension Committee.
[PHOTO OF JOHN R. HALL APPEARS HERE]
John R. Hall, 62, is Chairman and Chief Executive Officer of Ashland Oil, Inc.,
a diversified energy company with operations in petroleum refining and
marketing, chemicals, highway construction, oil and gas exploration and coal. He
is a director of Banc One Corporation; The Canada Life Assurance Company; Humana
Inc.; and Reynolds Metals Company. Mr. Hall has been a director of CSX since May
1994, and is a member of the Board's Audit Committee.
[PHOTO OF ROBERT D. KUNISCH APPEARS HERE]
Robert D. Kunisch, 53, is Chairman, President and Chief Executive Officer of PHH
Corporation, a provider of integrated business services, including vehicle
management services, relocation and real estate services and mortgage banking
services. He is a director of Mercantile Bankshares Corporation and GenCorp. Mr.
Kunisch has been a director of CSX since October 1990, and is Chairman of the
Board's Compensation Committee and a member of the Executive Committee.
[PHOTO OF HUGH L. McCOLL, JR. APPEARS HERE]
Hugh L. McColl, Jr., 59, is Chairman and Chief Executive Officer of NationsBank
Corporation, a bank holding company. Previously, Mr. McColl was Chairman and
Chief Executive Officer of NCNB Corporation, a bank holding company and a
predecessor of NationsBank Corporation. He is a director of Jefferson-Pilot
Corporation; Jefferson-Pilot Life Insurance Company; Ruddick Corporation; and
Sonoco Products Co. Mr. McColl has been a director of CSX since February 1992,
and is a member of the Board's Audit Committee and Pension Committee.
3
<PAGE>
[PHOTO OF JAMES W. McGLOTHLIN APPEARS HERE]
James W. McGlothlin, 54, is Chairman and Chief Executive Officer of The United
Company, a diversified energy company. He is a director of Bassett Furniture
Industries, Inc. He has been a director of CSX since November 1989, and is
Chairman of the Board's Organization and Corporate Responsibility Committee and
a member of the Executive Committee.
[PHOTO OF SOUTHWOOD J. MORCOTT APPEARS HERE]
Southwood J. Morcott, 56, is Chairman, President and Chief Executive Officer of
Dana Corporation, a manufacturer of automotive and truck parts and provider of
commercial credit. He is a director of Hayes-Dana, Inc.; Johnson Controls,
Inc.; and Phelps Dodge Corporation. Mr. Morcott has been a director of CSX since
July 1990, and is Chairman of the Board's Pension Committee and a member of the
Executive Committee.
[PHOTO OF CHARLES E. RICE APPEARS HERE]
Charles E. Rice, 59, is Chairman and Chief Executive Officer of Barnett Banks,
Inc., a bank holding company. He is a director of Sprint Corporation. Mr. Rice
has been a director of CSX since April 1990, and is Chairman of the Board's
Audit Committee and a member of the Executive Committee.
[PHOTO OF WILLIAM C. RICHARDSON APPEARS HERE]
William C. Richardson, 54, is President of The Johns Hopkins University. He is
a director of Mercantile Bankshares Corporation and Mercantile Safe Deposit &
Trust Company. Dr. Richardson has been a director of CSX since December 1992,
and is a member of the Board's Compensation Committee.
[PHOTO OF FRANK S. ROYAL, M.D. APPEARS HERE]
Frank S. Royal, M.D., 55, is a physician in private practice in Richmond, Va.,
and a health care expert. He is a director of Columbia/HCA Healthcare
Corporation; Crestar Financial Corporation; Chesapeake Corporation; and Dominion
Resources, Inc. Dr. Royal has been a director of CSX since January 1994, and is
a member of the Board's Compensation Committee.
[PHOTO OF JOHN W. SNOW APPEARS HERE]
John W. Snow, 55, became Chairman of the Board, President and Chief Executive
Officer of CSX in February 1991. From April 1989 to February 1991, Mr. Snow was
President and Chief Executive Officer of CSX. Mr. Snow is a director of
NationsBank Corporation; Bassett Furniture Industries, Inc.; Textron, Inc.; and
USX Corporation. Mr. Snow has been a director of CSX since April 1988, and is
Chairman of the Board's Executive Committee.
During 1994, there were six meetings of the Board of Directors of CSX. Each
director of the Company other than those identified below attended more than 75
percent of the meetings of the Board of Directors and committees on which he or
she served during the period he or she was a director. Mr. Gottwald attended
nine of the 13 meetings of the Board, Pension Committee and Organization and
Corporate Responsibility Committee which were held during 1994. Mr. McColl
attended seven of the 10 meetings of the Board, Audit Committee and Pension
Committee which were held during 1994.
4
<PAGE>
Committees of the Board
CSX's Board of Directors has the following committees to assist it in the
discharge of its responsibilities. The biographical information in the section
"Election of Directors" includes committee memberships currently held by each
nominee.
The Audit Committee's basic functions are to approve and to recommend to the
shareholders management's selection of independent auditors and to satisfy
itself on behalf of the Board that the Company's internal control structure,
policies, procedures and external and internal auditing activities assure
reliable and informative accounting and financial reporting. Specifically, the
Committee, through meetings with management, the auditors, or both, reviews the
scope of the auditors' examination, audit reports and CSX's internal auditing
procedures, reviews and monitors policies established to prohibit unethical,
questionable or illegal activities by those associated with CSX, and reviews the
compensation paid to the auditors for annual audit and non-audit services and
the effect of such compensation and services on the independence of the
auditors. The Audit Committee has five members, none of whom is a Company
employee. It held three meetings in 1994.
The primary functions of the Compensation Committee are to establish the
Company's compensation philosophy and to review and approve compensation and
compensation plans, including certain fringe benefits, for employees at certain
organizational levels (as determined by this Committee from time to time), to
establish performance objectives for certain executives, and to certify the
attainment of those objectives in connection with the payment of performance-
based compensation within the meaning of Internal Revenue Code Section 162(m).
In addition, it monitors the administration of certain executive compensation
and benefit programs. The Compensation Committee has five members, none of whom
is a Company employee and all of whom are "outside directors" within the meaning
of regulations currently proposed pursuant to Internal Revenue Code Section
162(m). It held two meetings in 1994.
The Pension Committee monitors funding and administration of certain tax-
qualified benefit plans of the Company. The Committee recommends amendments to
certain tax-qualified plans to the Board. The Pension Committee has five
members, and it held one meeting during 1994.
Prior to May 1994, the functions of the Compensation Committee and the
Pension Committee were combined in the Compensation and Pension Committee. The
four members of that Committee were Mr. William B. Sturgill, Chairman, Messrs.
Kunisch and Morcott and Dr. Richardson. The Compensation and Pension Committee
met three times during 1994 prior to its reorganization.
The Executive Committee meets only on call and has authority to act for the
Board on most matters during the intervals between Board meetings. The Executive
Committee has seven members. It held no meetings in 1994.
The Organization and Corporate Responsibility Committee of the Board
recommends candidates for election to the Board and also reviews and recommends
changes in board composition, qualifications, compensation and retirement. In
fulfilling this responsibility, the Committee will review recommendations as to
possible nominees received from shareholders and other qualified sources.
Shareholder recommendations must be in writing addressed to the Chairman of the
Organization and Corporate Responsibility Committee, c/o Corporate Secretary,
CSX Corporation, P.O. Box 85629, Richmond, Virginia 23285-5629 or One James
Center, 901 East Cary Street, Richmond, Virginia 23219-4031, and should include
a statement setting forth the qualifications and experience of the proposed
candidate and basis for nomination. This Committee also reviews changes in
corporate structure, succession in top management and other internal matters of
broad corporate significance. In addition, this Committee reviews CSX's
relationship to the broader social environment in which CSX operates and legal
aspects of CSX's operations, including litigation, legislation and other
governmental actions that could affect CSX. The Committee has five members, none
of whom is a Company employee. It held six meetings during 1994.
5
<PAGE>
Directors' Compensation
For services rendered during a year, non-employee directors receive a
retainer fee of $30,000 per year, a portion of which is paid in CSX stock as
described below. Chairmen of Board committees receive an additional annual
retainer fee of $5,000. Retainers are prorated for service of less than a full
year. Each non-employee director also receives $1,000 for each Board and
committee meeting attended and is reimbursed for expenses incurred in connection
with services as a director.
CSX directors must participate in the CSX Stock Plan for Directors (the
"Stock Plan"). Pursuant to the Stock Plan, directors are paid not less than 40
percent of their annual retainer in CSX common stock (the "Designated
Percentage") issued to them immediately following the Company's Annual Meeting
of Shareholders. In addition, directors can annually elect to increase the
Designated Percentage up to as much as 100 percent of their annual retainer and
meeting fees. Any election to increase or to decrease the Designated Percentage
cannot take effect until six months plus one day following the last business day
of the month in which the Annual Meeting of Shareholders occurs. Payments made
in stock pursuant to the Stock Plan can also be deferred for income tax purposes
into a trust established for that purpose.
Non-employee directors who have served on the Board of CSX or a predecessor
company for 10 years or more, or whose years of service plus their age total at
least 75, will receive for life, upon retirement, an annual payment equal to
one-half of the total compensation received during the last year of service on
the Board pursuant to the Special Retirement Plan for CSX Directors (the
"Retirement Plan"). If a director has served less than 10 years, or if his or
her years of service plus age do not total at least 75, payments computed in the
same manner will be paid upon retirement for a period equal to the number of
years of service on the Board.
A director may elect to participate in a Corporate Director Deferred
Compensation Plan (the "Deferred Compensation Plan"), under which he or she can
defer all or a portion of cash compensation paid by CSX until he or she ceases
to be a director and has attained age 65, after which he or she will be paid in
installments over a period not to exceed 15 years. The Deferred Compensation
Plan also provides for payment to a designated beneficiary in the event of death
prior to receipt of the full amount due. Amounts so deferred may be designated
by the director to be credited to an Interest Account, a CSX Phantom Stock
Account, or a combination of both. The Interest Account accrues interest,
compounded quarterly, at rates that are reviewed and adjusted from time to time.
An Enhanced Interest Account, to which deferrals could be directed in 1986,
1987, 1989 and 1990, accrues interest at a higher than market rate compounded
annually. The rate may be adjusted from time to time. Participants in the
Enhanced Interest Account are also covered by an additional $10,000 death
benefit. Amounts deferred to the Phantom Stock Account are treated as if they
had been used to purchase CSX stock at the closing price on the date the fees
would otherwise have been paid to the director. Messrs. Addison and Morcott and
Dr. Royal have directed deferred compensation to be invested in the Phantom
Stock Account where they had accumulated, as of December 30, 1994, the
equivalent, respectively, of 1,354 shares, 798 shares and 165 shares.
The Directors' Retirement Plan and the Deferred Compensation Plan provide
that if the Board determines that a change of control of CSX has occurred, plan
participants may elect to receive, within seven days of such determination, a
lump sum cash payment equal to the present value of accrued benefits in the case
of the Retirement Plan or a lump sum cash payment equal to the balance credited
to directors' accounts in the case of the Deferred Compensation Plan. The Stock
Plan provides that upon a change of control, shares whose receipt was deferred
and held in trust will be distributed.
CSX directors participate in the CSX Directors' Charitable Gift Plan ("Gift
Plan"). Participation in the Gift Plan begins when an individual has completed
five consecutive years of service as a CSX director. Under the Gift Plan, the
Company will make, on behalf of each participant, contributions totalling $1
million to charitable institutions designated by that participant. Contributions
to designated charities are made in installments, with $100,000 payable upon the
director's retirement and the balance payable in installments of $100,000 per
year, commencing at the time of the participant's death. The Company is
reimbursed for the charitable contributions as beneficiary under policies of
insurance on the lives of certain participants. Premiums on the life insurance
policies are paid by the Company. The directors who, as of the date of this
Proxy Statement, have completed five years of consecutive service and thus are
eligible to participate in the Gift Plan are Dr. Bailey and Messrs. Addison,
Gottwald, McGlothlin, Snow and Sturgill.
6
<PAGE>
Directors also can participate in a CSX Directors' Matching Gift Program.
Directors' contributions to colleges and universities and to certain
organizations providing support to such institutions are matched on a one-to-one
basis, up to $5,000 per year, per institution. The maximum amount which can be
matched in any year is $25,000 per director. Directors who participated in the
Matching Gift Program during 1994 and the amounts matched by the Company for
contributions made by these directors in 1994 are as follows: Dr. Bailey - $600;
Mr. Burrus - $7,500; Mr. Hall - $15,496; Mr. McColl - $25,000; Mr. Morcott -
$500; Mr. Rice - $10,000; Dr. Richardson - $2,500; Dr. Royal - $10,000;
Mr. Snow - $500; and Mr. Sturgill - $5,000.
Certain Relationships and Related Transactions
Hugh L. McColl, Jr., a director of the Company, is Chairman and Chief
Executive Officer of NationsBank Corporation. The Company has a $100 million
credit facility with an affiliate of NationsBank Corporation. In addition, in
connection with relocation of certain employees of Sea-Land, NationsBank will
provide up to $5 million in bridge financing for employee home purchases which
will be guaranteed by Sea-Land.
Charles E. Rice, a director of the Company, is Chairman and Chief Executive
Officer of Barnett Banks, Inc. The Company has a $20 million credit facility
with an affiliate of Barnett Banks, Inc. In addition, in January 1992 an
affiliate of Barnett Banks, Inc., purchased the stock of CSX Commercial
Services, Inc., from the Company for approximately $7.5 million in cash, subject
to subsequent balance sheet adjustments. CSX Commercial Services, Inc., which
after its sale was renamed BTI Services, Inc., is headquartered in Jacksonville,
Fla., and is engaged in the business of servicing student loans. The Company
agreed, as part of the sale, to indemnify the Barnett affiliate against certain
contingent liabilities.
In 1987, prior to the time of James W. McGlothlin's election as a director
of CSX, The United Company, of which Mr. McGlothlin is Chairman and Chief
Executive Officer, purchased from a wholly owned subsidiary of the Company a
used Gulfstream aircraft at a cost of $6 million, with a down payment in the
amount of $1.2 million and an additional $800,000 which was paid upon delivery.
The balance of $4 million, in the form of a promissory note bearing interest at
the prime rate set by NationsBank of North Carolina, N.A., was payable in 10
consecutive annual installments beginning December 31, 1988. As of December 30,
1994, the total outstanding indebtedness was $1.6 million.
Robert L. Burrus, Jr., a director of the Company, is a partner in and
Chairman of McGuire, Woods, Battle & Boothe, a law firm which regularly provides
legal services to the Company and its subsidiaries.
Robert D. Kunisch, a director of the Company, is Chairman, President and
Chief Executive Officer of PHH Corporation. During 1994, a subsidiary of PHH
provided advisory services to a subsidiary of the Company, for which
remuneration of approximately $105,000 was paid.
Contractual Obligations
To ensure that the Company will have the continued dedicated service of
certain executives notwithstanding the possibility, threat or occurrence of
changes in control, the Company has entered into change of control employment
agreements with certain executives, including those named in the Summary
Compensation Table. The agreements generally provide that if the executive is
terminated other than for cause within three years after a change of control of
the Company, or if the executive terminates his employment for good reason
within such three-year period or voluntarily during the thirty-day period
following the first anniversary of the change of control, the executive is
entitled to receive "severance benefits." Those would be a lump sum severance
payment equal to three times the sum of his base salary and highest annual
bonus, together with certain other payments and benefits, including continuation
of employee welfare benefits and an additional payment to compensate the
executive for certain excise taxes imposed upon payments under the agreements.
In change of control transactions subject to regulatory review by the
Interstate Commerce Commission, or any successor regulatory body, the agreements
generally provide somewhat different treatment. During the period of regulatory
review, the executive would only be entitled to severance benefits if he is
constructively terminated by the Company. If a transaction were to receive
regulatory approval, then the executive generally would be entitled to severance
benefits if he is terminated other than for cause within one year after the
regulatory approval or if the executive terminates his employment for good
reason within such one year period or voluntarily during the thirty-day period
following the first anniversary of the regulatory approval.
7
<PAGE>
Pursuant to a June 1989 letter agreement with Mr. Jerry R. Davis, who during
the last fiscal year was Executive Vice President and Chief Operating Officer of
CSXT, upon completion of 10 years of service with CSXT, the years of Mr. Davis'
prior service with Union Pacific Corporation will be included in the calculation
of his CSX pension. Any benefits payable by CSX pension plans will be reduced by
benefits paid by Union Pacific Corporation. Mr. Davis retired from employment
with the Company and its affiliates, including CSXT, in February 1995.
In April 1990, the Company entered into Special Stock Award Agreements with
Messrs. Alvin R. Carpenter and Jerry R. Davis. Under the terms of the
Agreements, 20,000 shares of CSX common stock were awarded, conditioned on
continued employment, to each of Messrs. Carpenter and Davis, one-half of the
shares to be issued on the fifth anniversary, and the balance to be issued on
the 10th anniversary of each agreement. In February 1994, the Company entered
into a similar agreement with Mr. John P. Clancey pursuant to which 10,000
shares of CSX common stock were awarded, conditioned on continued employment,
with one-half of the shares to be issued on the fifth anniversary of the
agreement, and the balance to be issued on the 10th anniversary of the
agreement. In the case of all three agreements, the value of all dividends
declared and payable during the period between award and issuance will be paid
at the time the share awards are payable. All three agreements will be
accelerated in the event of a change of control.
Compliance With Exchange Act Filing Requirements
The Securities Exchange Act of 1934 requires the Company's executive
officers and directors, and any persons owning more than 10 percent of a class
of the Company's stock, to file certain reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC") and the New York
Stock Exchange.
Based solely on its review of the copies of Forms 3, 4 and 5 received by it,
the Company believes that with two exceptions the Company's executive officers
and directors complied with all such filing requirements. Prior to 1994, Mr.
Robert D. Kunisch, a director of the Company, purchased 40 shares of stock
through the CSX Shareholder Dividend Reinvestment Plan in 12 transactions. The
purchases were subsequently reported in an amended Form 5. The only other
exception relates to certain dispositions of CSX stock made by gift or sale by
Mr. Paul Goodwin, Executive Vice President-Finance and Administration of CSXT,
and his wife prior to 1994. A late filed Form 4 reported 10 transactions.
8
<PAGE>
<TABLE>
<CAPTION>
Security Ownership of Directors, Nominees and Executive Officers
Amount and Nature of Beneficial Ownership (Note 1)
Shares for which
Stock Beneficial
Purchase Other Ownership can Percent
and Shares be Acquired Total of
Name of Loan Plan Beneficially within 60 Days Beneficial Class
Title of Class Beneficial Owner (Note 2) Owned (Note 3) Ownership (Note 4)
- - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CSX Corp. Edward L. Addison N/A 2,513 N/A 2,513 *
Common Stock Elizabeth E. Bailey N/A 2,031 N/A 2,031 *
$1 Par Value Robert L. Burrus, Jr. N/A 1,054 N/A 1,054 *
Bruce C. Gottwald N/A 6,571 N/A 6,571 *
John R. Hall N/A 1,312 N/A 1,312 *
Robert D. Kunisch N/A 2,054 N/A 2,054 *
Hugh L. McColl, Jr. N/A 1,531 N/A 1,531 *
James W. McGlothlin (Note 5) N/A 109,487 N/A 109,487 *
Southwood J. Morcott N/A 1,951 N/A 1,951 *
Charles E. Rice N/A 2,727 N/A 2,727 *
William C. Richardson N/A 428 N/A 428 *
Frank S. Royal N/A 835 N/A 835 *
William B. Sturgill (Note 6) N/A 2,612 N/A 2,612 *
John W. Snow 131,960 145,917 377,802 655,679 *
Alvin R. Carpenter 52,207 57,697 24,000 133,904 *
Jerry R. Davis (Note 7) 40,870 34,870 16,600 92,340 *
John P. Clancey 40,870 47,494 16,600 104,964 *
James Ermer 31,581 61,829 80,197 173,607 *
Executive officers as a
group (17 including
those named above) and all
directors and nominees 548,030 746,523 969,605 2,264,158 2.08%
FMR Corp. (Note 8)
82 Devonshire Street
Boston, MA 02109 N/A 10,221,716 N/A 10,221,716 9.40%
</TABLE>
Notes to Security Ownership of Directors, Nominees and Executive Officers
Note 1 Except as otherwise noted, the persons listed have sole voting power as
to all shares listed, including shares held in trust under certain
deferred compensation plans, and have investment power except with
respect to all shares held in trust under deferred compensation plans,
investment of which is governed by the terms of the trust. Ownership
information is as of March 2, 1995.
Note 2 This column reflects grants under the 1991 Stock Purchase and Loan Plan
("SPLP"). There were separate offerings under the SPLP in 1991 and 1992.
There were no awards or stock issuances under the SPLP subsequent to
1992.
Pursuant to the SPLP, the Board's Compensation Committee, as
administrator, granted purchase awards to each participant. Each
participant could subscribe to all, a portion, or none of the purchase
award offered. Upon subscription to the purchase award, the participant
was required to pay to the Company 5 percent of the purchase price of
the shares, which could be borrowed from the Company (the "Downpayment
Loan"). The participant was required to borrow the remaining balance of
95 percent of the purchase price through a loan from the Company (the
"Purchase Loan"). The purchase price for shares purchased pursuant to
the SPLP in 1991 was $48.325 per share, and the purchase price for
shares issued in 1992 was $64.325 per share. These prices were, for each
of the two offerings, the average of the closing price on the New York
Stock Exchange for the five business days preceding commencement of the
period during which any employee's commitment to purchase had to be
made.
9
<PAGE>
In the case of the 1991 offering, each Purchase Loan has a term of five
years, but can be prepaid without penalty after three years. The loans
bear interest at the rate of 7.87 percent per annum, compounded
semiannually. Purchase Loans for shares offered in July 1992 have terms
of four years, but are prepayable without penalty after two years. These
loans bear interest at the rate of 6.74 percent per annum, compounded
semiannually. At the request of the borrower, the Purchase Loans can be
extended one additional year. Purchase Loans are non-recourse to the
borrower, and each is secured by all of the shares of stock purchased.
Dividends paid on shares held as security under the Purchase Loans are
applied against accrued and unpaid interest. The terms of the
Downpayment Loans parallel those of the Purchase Loans except that the
Downpayment Loans are recourse loans and are secured by shares of CSX
stock provided by the borrower. Dividends on the stock held as
collateral under Downpayment Loans are paid directly to the borrower.
Under the terms of the SPLP, as of August 1, 1993, the principal balance
and interest under each Purchase Loan was subject to various adjustments
as a result of the market price of the common stock having equalled or
exceeded certain threshold levels for a period of 10 consecutive
business days. These adjustments on the Purchase Loans consisted of
forgiveness of the Interest Spread (the difference between accrued
interest on the Purchase Loan and any dividends on the shares purchased)
and a reduction of 25 percent of the purchase price. The table below
reflects Purchase Loan balances both before and after such adjustments.
The benefits of the adjustments described are not available to
participants who terminated participation in the SPLP prior to August 1,
1994.
Interest on the Downpayment Loans was forgiven as a result of the market
price of the CSX common stock having equalled or exceeded certain
threshold levels for a period of 10 consecutive business days after
August 1, 1993. The table below reflects Downpayment Loan balances both
before and after adjustments are made.
For Messrs. Snow, Carpenter, Davis, Clancey and Ermer, the number of
shares purchased pursuant to the SPLP, the purchase price for those
shares, and the aggregate loan balances as of December 30, 1994, both
with and without the adjustments described above, are indicated in the
following table. Messrs. Snow, Carpenter, Davis, Clancey and Ermer all
took Downpayment Loans for 5 percent of the purchase price of shares.
<TABLE>
<CAPTION>
Unadjusted Unadjusted Adjusted Adjusted
Number of Purchase Loan Downpayment Purchase Loan Downpayment
Shares Purchase Balances Loan Balances Balances Loan Balances
Name Purchased Price 12/30/94/(i)/ 12/30/94/(ii)/ 12/30/94/(iii)/ 12/30/94/(iv)/
- - - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J.W. Snow 131,960 $ 6,376,967 $ 7,258,338 $ 404,578 $ 4,463,877 $ 318,848
A.R. Carpenter 52,207 2,704,295 3,026,686 163,885 1,893,007 135,215
J.R. Davis 40,870 1,975,043 2,248,017 125,304 1,382,530 98,752
J.P. Clancey 40,870 2,253,843 2,486,388 137,352 1,577,690 112,692
J. Ermer 31,581 1,526,152 1,737,084 96,825 1,068,306 76,308
All executive officers as a
group (17 persons, including
those named above) 548,030 $27,162,270 $30,724,183 $1,705,528 $19,013,589 $1,358,113
</TABLE>
(i) Unadjusted Purchase Loan balances include principal equal to 95 percent of
the actual cost of the common stock and accrued interest net of dividends
applied.
(ii) Unadjusted Downpayment Loan balances include principal equal to 5 percent
of the actual cost of the common stock and accrued interest.
(iii) Adjusted Purchase Loan balances reflect reduction of the Unadjusted
Purchase Loan Balance by the Interest Spread and 25% of the Purchase
Price, as a result of achievement of the thresholds discussed above.
(iv) Adjusted Downpayment Loan balances reflect reduction of the Unadjusted
Downpayment Loan Balance by the accrued interest on the Downpayment Loan
as a result of achievement of the thresholds discussed above.
10
<PAGE>
Note 3 Represents shares under options or stock appreciation rights exercisable
within 60 days, based on the market price of CSX common stock on March
2, 1995, which was $75.9375.
Note 4 Based on number of shares outstanding of 108,736,313 on March 2, 1995,
including 3,633,345 shares deemed outstanding for which beneficial
ownership can be acquired within 60 days. An asterisk (*) indicates that
ownership is less than one percent of class.
Note 5 Mr. McGlothlin's ownership includes 101,000 shares of common stock as a
result of stock holdings by affiliates of Mr. McGlothlin in which he
shares voting and investment power.
Note 6 Mr. Sturgill will retire as a director on April 25, 1995.
Note 7 Mr. Davis retired from employment with the Company and its affiliates on
February 21, 1995.
Note 8 Information reported is derived from a Schedule 13G of FMR Corporation
dated February 13, 1995, and filed with the Securities and Exchange
Commission. As reported in the Schedule 13G, the person filing the
statement has the sole power to vote or to direct the vote of 593,137
shares, and has the sole power to dispose or to direct the disposition
of 10,221,716 shares.
Executive Compensation
The individuals named below (the "Named Executives") include the Company's
Chief Executive Officer and the other four executive officers of the Company who
were the most highly compensated executive officers of the Company as of the end
of the fiscal year ending December 30, 1994. Information is provided for the
fiscal years ending on December 30, 1994, and December 31, 1993 and 1992.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term Compensation (Note 2)
-------------------------------
Awards Payouts
-------------------------------
Other Securities
Annual Underlying LTIP All Other
Compensation Options/ Payouts Compensation
Name and ($) SARs (#) ($) ($)
Principal Position Year Salary ($) Bonus ($) (Note 1) (Note 3) (Note 4) (Note 5)
- - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
John W. Snow 1994 $815,362 $1,070,304 $68,033 576,200 $1,415,000 $114,381
Chairman, President 1993 746,758 850,894 55,146 76,200 1,585,395 98,605
& CEO 1992 746,758 700,060 50,070 76,200 842,100 85,004
Alvin R. Carpenter 1994 432,600 464,498 N/A 24,000 580,150 22,024
President & CEO, 1993 432,475 417,094 N/A 24,000 647,280 18,986
CSXT 1992 380,988 367,140 N/A 24,000 312,554 16,367
Jerry R. Davis (Note 6) 1994 360,566 345,478 N/A 16,600 495,250 23,192
Executive Vice President 1993 360,566 347,642 N/A 16,600 587,064 19,993
& COO, CSXT 1992 360,471 313,406 N/A 16,600 297,291 17,235
John P. Clancey 1994 411,303 276,675 N/A 18,000 480,393 0
President & CEO, 1993 382,450 254,142 N/A 16,600 614,296 0
Sea-Land 1992 369,004 244,546 N/A 16,600 256,089 0
James Ermer 1994 334,746 279,983 N/A 12,900 445,725 7,306
Senior Vice 1993 309,012 254,134 N/A 12,900 505,817 6,298
President - Finance 1992 309,012 205,958 N/A 12,900 268,645 5,429
</TABLE>
11
<PAGE>
Notes to Summary Compensation Table
Note 1 In 1994, the only perquisites or other personal benefits exceeding 25
percent of the total perquisites and other personal benefits afforded to
a named officer were, in the case of Mr. Snow, premiums for life
insurance of $34,107. In 1993 and 1992, premiums for life insurance for
Mr. Snow were the only such perquisites or other personal benefits
afforded to a named officer and were, respectively $31,657 and $24,639.
Note 2 During 1994, 1993 and 1992, restricted stock was not awarded; therefore,
a "Restricted Stock Award" column has not been included.
Note 3 Represents number of employee stock options granted. Stock appreciation
rights ("SARs") were not granted in 1994, 1993 or 1992.
Note 4 LTIP (Long-Term Incentive Plan) payouts for 1994 represent the fair
market value of $70.75 per share of performance shares awarded pursuant
to 1987 Long-Term Performance Stock Plan on February 8, 1995, the date
of the award. Tax valuation may differ. (See also, the Long-Term
Incentive Plans -- Awards in Last Fiscal Year table on page 13 and Note
2 to the Security Ownership of Directors, Nominees and Executive
Officers table on page 9, regarding the Company's 1991 Stock Purchase
and Loan Plan and awards made pursuant to it.)
Note 5 Amounts shown are comprised of the above-market portion of earnings on a
deferred compensation program available to executives only during 1985,
1986, 1988 and 1989.
Note 6 Mr. Davis retired from employment with the Company and its affiliates on
February 21, 1995.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year (Note 1)
Grant Date
Individual Grants Value
-------------------------------------------------------------------------------------------
Number of Securities Percent of Total
Underlying Options/SARs Granted Grant Date
Options/SARs to Employees in Exercise or Present
Granted (#) Fiscal Year Base Price Expiration Value
Name (Note 2) (Note 3) ($/Share) Date (Note 4)
- - - ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John W. Snow 500,000 31.13% $89.875 2/9/2004 $17,720,000
John W. Snow 76,200 4.74 75.50 5/3/2004 $ 2,385,060
Alvin R. Carpenter 24,000 1.49 75.50 5/3/2004 751,200
Jerry R. Davis 16,600 1.03 75.50 5/3/2004 519,580
John P. Clancey 18,000 1.12 75.50 5/3/2004 563,400
James Ermer 12,900 0.80 75.50 5/3/2004 403,770
</TABLE>
Notes to Option/SAR Grants Table
Note 1 SARs were not granted during 1994.
Note 2 Stock options granted to employees on May 3, 1994, were granted at an
exercise price of $75.50, which was the fair market value as of the date
of the grant. The options are subject to an exercisability restriction,
becoming exercisable in three tranches, each of which equals one-third
of the total grant, at such time as the mean daily price of CSX common
stock has remained for 10 consecutive business days at a price per
share, for each tranche respectively, of $80.50, $85.50 and $90.50.
However, regardless of whether the stock price-related exercisability
restrictions are satisfied, the options may not be exercised until one
year after the date of the grant.
12
<PAGE>
In February 1994, the Company entered into an incentive agreement with
Mr. Snow awarding him 500,000 non-qualified employee stock options with
an exercise price of $89.875 per share, the fair market value as of the
date of the grant. The options are subject to vesting and sale
restrictions and are conditioned upon the Company's common stock
achieving certain threshold levels ranging from $100 to $120 per share.
The options may be forfeited in whole or in part at the time of
termination of employment; they may be immediately exercisable in the
event of certain changes in control.
Note 3 A total of 1,606,300 employee stock options was granted during 1994.
Note 4 The present value of options granted has been reported using the Black-
Scholes option pricing model. For the options granted on February 9,
1994, the values presented are based on the following assumptions:
exercise price -$89.875 (mean price on grant date); closing price -
$91.25; assumed exercise date - February 8, 2004; risk free rate of
return - 5.92% (10 year U.S. Treasury note yield on February 9, 1994);
dividend at the time of grant - $0.44 per share per quarter; volatility
assumption 25.40%.
For the options granted on May 3, 1994 the values presented are based on
the following assumptions: exercise price - $75.50 (mean price on grant
date); closing price - $76.00; assumed exercise date - May 2, 2004; risk
free rate of return - 7.11% (10-year U.S. Treasury note yield on May 2,
1994); dividend at the time of grant - $0.44 per share per quarter;
volatility assumption - 25.58%.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Value of Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options/SARs at FY-End
Options/SARs at FY-End (Note 2)
Shares Value -------------------------------------------------------------
Acquired on Realized ($) Exercisable Unexercisable Exercisable Unexercisable
Name Exercise (#) (Note 1) (#) (#) ($) ($)
- - - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John W. Snow 0 $ 0 403,680 576,200 $9,404,222 $0
Alvin R. Carpenter 0 0 24,000 24,000 0 0
Jerry R. Davis 16,600 436,788 16,600 16,600 0 0
John P. Clancey 16,600 480,363 16,600 18,000 0 0
James Ermer 0 0 86,994 12,900 2,318,785 0
</TABLE>
Notes to Aggregated Option/SAR Exercise Table
Note 1 Value realized represents the difference between the exercise price of
the option or SAR and the fair market value of CSX common stock on the
date of exercise.
Note 2 Value of unexercised options/SARs at fiscal year-end represents the
difference between the exercise price of any outstanding in-the-money
option/SAR grants and $69.375, the mean value of CSX common stock on
December 30, 1994.
<TABLE>
<CAPTION>
Long-Term Incentive Plans - Awards in Last Fiscal Year
Estimated Future Payouts
Under Non-Stock Price-Based Plans
Number of Shares, Performance or -----------------------------------
Units or Other Other Period Until Threshold Target Maximum
Name Rights (#) (Note 1) Maturation or Payout (#) (#) (#)
- - - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John W. Snow 17,000 3 years 2,210 11,390 17,000
Alvin R. Carpenter 6,500 3 years 845 4,355 6,500
Jerry R. Davis 5,500 3 years 715 3,685 5,500
John P. Clancey 6,000 3 years 780 4,020 6,000
James Ermer 5,000 3 years 650 3,350 5,000
</TABLE>
13
<PAGE>
Notes to Long-Term Incentive Plan Table
Note 1 Represents the number of performance shares granted on February 9, 1994,
pursuant to the 1987 Long-Term Performance Stock Plan. The final payouts
in CSX stock are based on the financial performance of the participant's
business unit over a three year period. Performance is measured by the
business unit's return on invested capital. The estimated threshold
payout was calculated at 13% of the performance shares granted and
represents the number of shares of CSX stock that would be awarded if a
specified minimum level of financial performance is achieved by the
participant's business unit. The estimated target payout was calculated
at 67% of the performance shares granted and represents the number of
shares of CSX stock that would be awarded if a specified interim level
of financial performance is achieved by the participant's business unit.
The maximum equals 100% of the performance shares granted on February 9,
1994. The levels of financial performance that must be achieved are
established within the first 90 days of the three-year performance
cycle. No awards were made under the 1991 Stock Purchase and Loan Plan
during 1994.
<TABLE>
<CAPTION>
Pension Plan Table
Average Compensation Gross Annual Pension Payable Before Offset
During Five Consecutive for Railroad Retirement or Social Security
Years of Highest Pay Annuity Based on Creditable Years of Service of:
15 Years 20 Years 25 Years 30 Years 35 Years 40 Years 44 Years
- - - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 400,000 90,000 120,000 150,000 180,000 210,000 240,000 264,000
600,000 135,000 180,000 225,000 270,000 315,000 360,000 396,000
800,000 180,000 240,000 300,000 360,000 420,000 480,000 528,000
1,000,000 225,000 300,000 375,000 450,000 525,000 600,000 660,000
1,200,000 270,000 360,000 450,000 540,000 630,000 720,000 792,000
1,400,000 315,000 420,000 525,000 630,000 735,000 840,000 924,000
1,600,000 360,000 480,000 600,000 720,000 840,000 960,000 1,056,000
1,800,000 405,000 540,000 675,000 810,000 945,000 1,080,000 1,188,000
2,000,000 450,000 600,000 750,000 900,000 1,050,000 1,200,000 1,320,000
2,200,000 495,000 660,000 825,000 990,000 1,155,000 1,320,000 1,452,000
2,400,000 540,000 720,000 900,000 1,080,000 1,260,000 1,440,000 1,584,000
</TABLE>
Retirement benefits from funded and unfunded non-contributory pension plans
("Pension Plans") of CSX and certain of its subsidiaries are based on both
length of service and compensation. The compensation covered by the Pension
Plans is compensation paid by CSX or its subsidiaries to a participant on a
regular monthly or annual salary basis, including bonuses or similar awards for
personal services rendered in a position that is not under the scope of a labor
agreement. (Compensation items listed in the Summary Compensation Table on page
10 covered by the Pension Plans are Base Salary and Bonus.) The benefits are
computed at the time of retirement under a defined benefit formula based on
years of service and average compensation for the highest 60 consecutive months
of service. The formula also takes into account retirement benefits under the
Social Security Act or Railroad Retirement Act attributable to service by the
participant for the employer. The Pension Plans provide for normal retirement at
age 65, and, subject to certain eligibility requirements, early retirement
beginning at age 55 is permitted with reduced pension payments. Certain
participants in the Pension Plans may be eligible to receive an additional year
of unfunded credit for each year of actual service beginning at age 45 and, in
certain instances, such credit for periods prior to employment by CSX or its
subsidiaries, with a 44-year maximum on total service.
The above table sets forth the estimated annual benefits payable, before
offset for the Social Security or Railroad Retirement annuity, by CSX and
certain of its subsidiaries to any officer or salaried employee upon retirement
at the normal retirement age after selected periods of service and in specified
compensation groups. As of December 30, 1994, the individuals named in the
Summary Compensation Table had the following credited years of service: Mr.
Snow, 28.0 years; Mr. Carpenter, 38.5 years; Mr. Davis, 11.0 years; Mr. Clancey,
28.8 years; and Mr. Ermer, 33.1 years.
The Internal Revenue Code imposes certain limitations on compensation and
benefits payable from tax-qualified pension plans. Pension amounts in excess of
such limitations are payable from the non-qualified Special and Supplemental
Plans which are not funded.
14
<PAGE>
Report of the Compensation Committee
Concerning Executive Compensation
Administration of Compensation Programs
The Compensation Committee ("Committee") reviews and approves compensation
for senior executives of CSX, including the Chief Executive Officer and the
other executives whose compensation is described in this Proxy Statement. The
Committee is composed entirely of outside directors.
Compensation Philosophy
The Committee and the Board of Directors of CSX believe that shareholder
value depends upon closely aligning the financial interests of shareholders with
those of the Company's employees, including its senior executives. The Company
relies heavily on incentive compensation programs to motivate employees. These
programs are variable and tied to business unit and individual performance. Paid
in cash and in stock, these plans place "at risk" a major portion of senior
executives' compensation to encourage sharp and continuing focus on building
shareholder value. The Company expects executives to acquire and hold
significant amounts of stock and, in part, the Company's compensation programs
are designed to accomplish that objective.
Components of the Compensation Program
The Committee believes that competitive compensation packages help the
Company attract and retain highly motivated and effective executives. The
compensation package for senior executives is composed of base salary, annual
bonus and long-term incentives, including stock options and performance shares.
The Committee compares the value of total compensation paid to senior
executives to that paid by companies of similar size. In making 1994
compensation decisions, the Committee considered compensation paid at companies
with annual revenues generally of $4 to $18 billion, in transportation and other
industries. The median revenues of the comparison companies for the year 1993
was $8.1 billion, compared with the Company's 1993 revenues of $8.9 billion.
Those approximately 50 companies participate in surveys conducted by nationally
recognized independent consultants and are identified by such consultants as
companies with which CSX may compete for executive talent. The comparison
companies are not identical to those included in the Dow Jones Transportation
Average described in the Performance Graph. When analyzing the components of
compensation, the Committee generally seeks to provide overall compensation for
senior executives up to the 85th percentile of the comparison companies if
business unit financial and strategic objectives are fully met.
Base Salary. Base salaries are targeted around the 50th percentile of
salaries paid for similar positions at the comparison companies. When
determining salary adjustments, the Committee also considers the objective
measures of the Company's performance described elsewhere in this report, such
as return on invested capital and the subjective evaluation of the senior
executive's contribution to that performance and attainment of strategic
objectives.
Annual Bonus. Under the Senior Management Incentive Compensation Plan
("SMICP"), annual cash incentive bonuses are payable to certain senior
executives designated by the Compensation Committee. Award opportunities are
established so that total annual cash compensation (salary plus annual bonus)
will approximate the 75th percentile of the comparison companies if corporate
and business unit objectives are met. A participant's award opportunities for
specific levels of performance are expressed as a percentage of base salary.
The financial performance goals under the SMICP are set each year by the
Compensation Committee. Corporate staff financial goals are based on the
Company's overall return on invested capital compared with its cost of capital.
Similar financial goals are established for each business unit based on its
return on invested capital compared with the Company's cost of capital. For any
bonus paid under the SMICP, all of the award is determined entirely by objective
measures.
During 1994, the Company and its largest business unit, CSX Transportation,
successfully met or exceeded their respective financial objectives, resulting in
maximum awards under the SMICP. Sea-Land Service fell slightly short of
achieving its objective, primarily due to loss of revenue and increased expenses
created by the Teamsters' strike early in the year, and awards reflected that
shortfall.
15
<PAGE>
In addition to an annual bonus award under the SMICP, senior executives may
receive an annual cash bonus award for accomplishments of strategic and personal
objectives. When making awards for 1994, the Compensation Committee considered
such factors as increased free cash flow, operating ratio improvements, service
reliability, capital market access, successful investor relations and safety
improvements.
Long-term Incentives. Long-term incentives paid under the 1987 Long-Term
Performance Stock Plan ("1987 Plan") generally take the form of stock option
grants and performance share awards. The ultimate value of these long-term
incentives depends entirely on the value of the Company's stock and,
consequently, the creation of shareholder value.
Stock option grants in 1994 were made considering historic grants and stock
price with the objective of bringing total compensation, composed of base
salary, bonus and long-term incentives, to approximately the 85th percentile of
the comparison companies. Those options vest within one year but are only
exercisable if the stock price reaches certain threshold levels that were
established at the time of the option grant.
Performance share grants are established at the beginning of three-year
cycles. When establishing grant levels, the Committee considers historical
grants, stock price and corporate and business unit financial objectives. The
actual award is made at the conclusion of the three-year cycle based on
financial performance of corporate and each business unit as determined by the
average return on invested capital earned during the period.
Tax Considerations
In 1993 Congress enacted legislation that eliminated federal income tax
deductions for certain compensation over $1 million paid to the Chief Executive
Officer and the other four most highly compensated executives required to be
named in the Proxy Statement. Beginning in 1994, the new law generally
eliminated such deductions unless compensation is awarded under plans meeting a
number of requirements based upon formula awards and advance shareholder
approval.
The Company's compensation program for senior executives has both objective
and discretionary elements. While the Committee wishes to maximize deductibility
of certain compensation elements, the Committee does not believe the new tax law
requirements are fully consistent with sound senior executive compensation
policy and incentives to improve shareholder value. The Committee, therefore,
reserves the right to make additional incentive payments that may not qualify
for deduction if the recipient's compensation exceeds the $1 million limit.
In an effort to maximize deductibility of certain compensation payments
under the 1993 law, the Company last year obtained shareholder approval of the
SMICP and amendments to the 1987 Plan. In doing so, the Company relied on
guidelines contained in proposed regulations issued in 1993 by the Internal
Revenue Service to implement the new law. In December 1994, however, amendments
to the proposed regulations were issued, which differed somewhat from the 1993
proposed regulations. Until the regulations implementing the 1993 law are
finalized, the Committee believes it is premature to change its existing
compensation program. The Committee intends to consider possible changes once
these regulations are adopted in final form by the Internal Revenue Service.
The Committee has evaluated and made certifications with respect to
accomplishment of pre-established 1994 performance goals for the SMICP and 1987
Plans, as contemplated by Section 162(m) of the Internal Revenue Code and the
proposed regulations.
CEO Compensation
In 1994, the Company's most highly compensated officer was Mr. Snow. His
base salary was below the median, at approximately the 43rd percentile, of the
comparison companies. This reflects the Committee's focus on pay for performance
and the desire to motivate employees, particularly the Chief Executive Officer,
through performance-based, versus fixed, compensation.
16
<PAGE>
Mr. Snow's 1994 annual bonus has two components, one based on the Company's
financial accomplishments and the other based on the Company's strategic and his
personal accomplishments. The portion representing financial performance was
paid under the shareholder-approved SMICP. Under that plan, the Committee
measures the Company's financial performance against pre-established targets for
return on invested capital as a percentage of its cost of capital. These
comparisons resulted in the financial portion of Mr. Snow's bonus being
$675,072.
With respect to the strategic portion of Mr. Snow's bonus, the Committee
noted that CSX achieved revenue and operating income records for 1994. Moreover,
by continuing to reduce costs and conserve capital, the Company was successful
in generating free cash flow of $486 million. The Committee also considered
business unit improvements in operating ratio, customer satisfaction and safety.
Consideration was also given to Mr. Snow's involvement and leadership in the
business, industry and government communities, including his Chairmanship of the
Business Roundtable. The Committee awarded $395,232 to Mr. Snow for his
strategic leadership and personal accomplishments, so that his total bonus for
1994 was $1,070,304.
The largest portion of Mr. Snow's 1994 compensation was in the form of long-
term incentives (performance shares and stock options). Granted pursuant to the
shareholder-approved 1987 Plan, Mr. Snow's 1994 performance share and stock
option grants were targeted to produce total compensation approximately at the
85th percentile of the comparison companies. The actual long-term value of these
grants depends upon the creation of future shareholder value.
In February 1994, the Company entered into an agreement with Mr. Snow
awarding him 500,000 non-qualified employee stock options with an exercise price
of $89.875 per share. That agreement is subject to vesting and other
restrictions described in the Option/SAR Grants Table of this Proxy Statement.
The agreement is intended to encourage Mr. Snow's continued employment with the
Company and to ensure his ongoing focus on building value for its shareholders.
During Mr. Snow's tenure as CEO, the Company's stock price has increased
from $35.50 to $69.62 per share at the end of 1994, generating total shareholder
returns of 130%. While this reflects 1994 stock performance which resulted in a
15% decline in the price of CSX stock, CSX still retained more value for its
shareholders than the other major railroad-based holding companies as a group.
In addition, long-term performance since Mr. Snow became Chairman, President and
CEO in 1991 has exceeded the S&P 500 and the Dow Jones Transportation Index, as
shown in the Performance Graph, as well as that of the other major railroad-
based holding companies as a group.
The Committee concluded that Mr. Snow's outstanding strategic leadership and
contributions to the long-term value of the Company and to its shareholders
support the compensation paid to him for 1994.
Compensation Committee
Robert D. Kunisch, Chairman
Edward L. Addison
Charles E. Rice
William C. Richardson
Frank S. Royal
the entire Committee
Richmond, Virginia
February 7, 1995
17
<PAGE>
Comparison of Five Year Cumulative Total Return*
CSX Corporation, S&P 500, Dow Jones Transportation Average
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
CSX Corp. $100 $ 92 $174 $212 $258 $224
S&P 500 $100 $ 97 $126 $136 $150 $152
Dow Jones Transportation Average $100 $ 79 $119 $129 $159 $134
</TABLE>
*$100 Invested on 12/31/89 in stock or index - including reinvestment of
dividends. Fiscal year ending December 31 for the years 1989 through 1993, and
December 30 for 1994.
Source: STAR Services, Inc.
2. APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As recommended by the Audit Committee, the Board of Directors designated,
subject to ratification by the shareholders, the firm of Ernst & Young LLP as
independent auditors to audit and report on CSX's financial statements for the
fiscal year 1995. Action by shareholders is not required by law in the
appointment of independent auditors, but their appointment is submitted by the
Board in order to give the shareholders the final choice in the designation of
independent auditors.
Ernst & Young LLP has no direct or indirect financial interest in CSX or in
any of its subsidiaries, nor has it had any connection with CSX or any of its
subsidiaries in the capacity of promoter, underwriter, voting trustee, director,
officer or employee.
Representatives of Ernst & Young LLP will be present at the meeting of
shareholders and will be afforded an opportunity to make a statement if they
desire to do so. It is also expected that they will be available to respond to
appropriate questions.
The Board of Directors recommends a vote FOR this proposal.
18
<PAGE>
3. SHAREHOLDER PROPOSAL CONCERNING EQUAL OPPORTUNITY REPORTING
The Board of Pensions of the Evangelical Lutheran Church in America
("ELCA"), 800 Marquette Avenue, Suite 1050, Minneapolis, Minnesota 55402-2885,
owner of 20,500 shares of common stock of the Company, has informed the Company
that it intends to present the following proposal at the Annual Meeting of
Shareholders:
"Equal Employment Report
"We believe there is a strong need for corporate commitment to equal employment
opportunity. We also believe a clear policy opposing all forms of discrimination
is a sign of a socially responsible corporation. Since a substandard equal
employment opportunity record leaves a company open to expensive legal action,
poor employee morale and even the loss of certain types of business, we believe
it is in the company's and shareholder's interests to have information on our
company's equal employment record available.
"One of the country's largest institutional investors, the California Public
Employees' Retirement System, includes workplace performance guidelines as part
of their corporate performance criteria. The Department of Labor's Glass Ceiling
Commission has for the last four years conducted studies with the help of a
number of corporations and in 1994 held public hearings to ascertain the status
of equality and diversity in Corporate America. In 1995 the Commission will
report to the President their recommendations.
"As a major employer we are in a position to take the lead in ensuring that
employees receive fair employment opportunities and promotions. We believe a
report containing the basic information requested in this resolution keeps the
issue high on top management's and the Board of Directors' agenda and reaffirms
our public commitment to equal employment opportunity and programs responsive to
the concerns of all employees. Publicizing our standards is helpful to our
investors and the companies with whom we do business.
"We are requesting that EEO information already gathered for the purpose of
complying with government regulations be made available to company shareholders
on request. The format of the report requested is not the central question. Many
corporations openly release their EEO-1 information in annual reports or public
interest booklets.
"Different companies use different styles in telling their story to
shareholders. Capital Cities/American Broadcasting Company, Bristol Myers Squibb
and Travellers produced a substantial magazine style report. Campbell Soup
produced a straightforward four page document. We feel this request is fair and
reasonable.
"RESOLVED: The shareholders request our company prepare a report at reasonable
cost available to shareholders and employees reporting on the following issues.
This report, which may omit confidential information, shall be available by
September 1995.
"1. A chart identifying employees according to their sex and race in each of
the nine major Equal Employment Opportunity Commission defined job
categories for 1992, 1993, 1994 listing either numbers or percentages in
each category.
"2. A summary description of any Affirmative Action policies and programs to
improve performances, including job categories where women and
minorities are underutilized.
19
<PAGE>
"3. A description of any policies and programs oriented specifically toward
increasing the number of managers, who are qualified females and/or
belong to ethnic minorities.
"4. A description of how our company publicizes our company's affirmative
action policies and programs to merchandise suppliers and service
providers.
"5. A description of any policies and programs directing the purchase of
goods and services to minority-and/or female-owned business
enterprises."
MANAGEMENT RESPONSE
CSX is strongly committed to equal employment opportunity and workplace
diversity. Not only does CSX comply with all applicable legal requirements, it
has an aggressive corporate policy of treating every employee with respect and
dignity and providing each employee with the opportunity to develop and advance
according to his or her abilities. Prohibitions against discrimination are
integral parts of the CSX Code of Ethics, which is communicated to all employees
through workplace postings, internal publications and training programs. CSX's
hiring and employment practices are regularly subject to internal review as well
as audit by government agencies.
CSX has actively and successfully worked to increase the numbers of female
and minority employees, though downsizing efforts have produced a significant
decline in the total number of employees since 1992. Yet the number of female
and minority employees, as well as the percentage of the total CSX workforce
which women and minorities constitute, has steadily risen during the same
period.
Shareholders who wish to know more about the Company's equal employment
opportunity and diversity policies are welcome to contact Alan A. Rudnick, Vice
President-General Counsel and Corporate Secretary, 901 East Cary Street,
Richmond, VA 23219, phone 804-782-1525, for more information. In addition,
statistical information about employment by race, gender, and ethnic background
are contained on the Forms EEO-1 that CSX files annually with the Equal
Employment Opportunity Commission ("EEOC"). These reports are available to the
public either through the EEOC or through CSX.
Negotiations with suppliers are intended to maximize shareholder value. CSX
therefore does not publish information about its suppliers. The Company takes
all actions and files all reports required by government agencies relating to
minority suppliers, although these reports are not available publicly.
The Company believes the reports that the shareholder proposal demands do
not further CSX's objectives to increase diversity. It is the Company's view
that these reports will be duplicative and expensive and will not contribute to
equal opportunity goals. The Company has means to respond to shareholders'
information needs that will be far less burdensome and expensive than the
reports this proposal advocates.
The Board of Directors recommends a vote AGAINST this proposal.
20
<PAGE>
ADDITIONAL INFORMATION
Voting Procedures
Votes are tabulated by three Inspectors of Election. Abstentions and broker
"non-votes" are not considered to be voting "for" or "against" any proposal or
any person nominated for director. The Company's by-laws provide that a majority
of the outstanding shares of stock entitled to vote constitute a quorum at any
meeting of shareholders. In accordance with the law of Virginia, the Company's
state of incorporation, directors are elected by a plurality of votes cast by
the shares entitled to vote at a meeting at which a quorum is present.
Date for Receipt of Shareholder Proposals
Shareholder proposals for inclusion in the Proxy Statement for the 1996
Annual Meeting of Shareholders must be received at the principal executive
offices of CSX on or before November 14, 1995.
Solicitation of Proxies
The cost of soliciting proxies is being paid by CSX. In addition to
solicitation by mail, officers and regular employees of CSX, at no additional
compensation, may request the return of proxies by personal conversations or by
telephone, telecopy or telegraph. It is also expected that, for a fee of $10,000
plus reimbursement of certain expenses, additional solicitation will be made by
personal interview, telephone, telecopy and telegraph under the direction of the
proxy solicitation firm of D. F. King & Co., 77 Water Street, New York, New York
10005.
March 14, 1995
By Order of the Board of Directors
Alan A. Rudnick
Vice President-General Counsel and Corporate Secretary
21
<PAGE>
PROXY PROXY
CSX CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON APRIL 25, 1995.
The undersigned hereby appoints John W. Snow, Mark G. Aron, and Alan A.
Rudnick, or any one of them, with the power of substitution in each, or the
designated Trustee of any applicable employee benefit plan, proxies to vote all
stock of the undersigned on the following proposals and, in their discretion,
upon such other matters as may properly come before the Annual Meeting of
Shareholders to be held at The Greenbrier, White Sulphur Springs, WV, on April
25, 1995, and at all adjournments thereof.
PLEASE SIGN AND DATE ON THE REVERSE AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE>
CSX CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. ()
The Board of Directors of CSX Corporation recommends a vote FOR Items 1 and 2,
and AGAINST Item 3. Shares will be so voted unless you otherwise indicate.
1. Election of Directors
Nominees: E. L. Addison; E. E. Bailey; For All
R. L. Burrus, Jr.; B. C. Gottwald; For Withheld Except
J. R. Hall; R. D. Kunisch; H. L. McColl, Jr.; () () ()
J. W. McGlothlin; S. J. Morcott; C. E. Rice;
W. C. Richardson; F. S. Royal, M.D.;
J. W. Snow.
To withhold authority to vote for any individual nominee(s),
write the name(s) on the line below.
- - - ------------------------------------------
Nominee Exception
2. Appointment of Ernst & Young LLP as For Against Abstain
independent certified public () () ()
accountants.
3. Shareholder proposal concerning equal For Against Abstain
opportunity reporting. () () ()
Date: __________________________________________________________________________
Please Sign: ___________________________________________________________________
Please Sign: ___________________________________________________________________
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS CARD. JOINT OWNERS
SHOULD EACH SIGN PERSONALLY. CORPORATION PROXIES SHOULD BE SIGNED BY AN
AUTHORIZED OFFICER. EXECUTORS, ADMINISTRATORS, TRUSTEES, ETC., SHOULD SO
INDICATE.
<PAGE>
- - - -------------------------------------------------------------------------------
Detach Proxy Card Here
To Our Shareholders:
Whether or not you are able to attend the Annual Meeting of Shareholders, it is
important that your shares be represented, no matter how many shares you own.
Accordingly, please complete and sign the proxy printed above, tear at the
perforation, and mail the above proxy in the enclosed postage paid envelope
addressed to CSX Corporation, c/o Harris Trust and Savings Bank.
If you are planning to attend the Annual Meeting and Luncheon, please fill out
and return the reservation form addressed to Office of Corporate Secretary at
CSX Corporation. When folded and sealed as directed, no separate mailing
envelope is required. Your ticket(s) to the Annual Meeting and Luncheon will be
mailed directly to you within two weeks.
If you are planning to stay at The Greenbrier, you will need
to make your reservations directly with The Greenbrier. Shareholder House Party
information and rates are included on the brochure enclosed herein.
Please note that in order to reduce the number of duplicative mailings of proxy
materials, CSX has consolidated on a single proxy or voting instruction card
all of your holdings in CSX common stock registered in the identically
-----------
registered name and tax identification number, including ownership that may be
- - - ---------------------------------------------
attributed to you through various employee benefit plans.
