<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 [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CSX CORPORATION
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(Name of Registrant as Specified In Its Charter)
CSX 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(4) Date Filed:
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Notes:
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CSX
CORPORATION
March 14, 1996
Dear CSX Shareholder:
You are cordially invited to attend our Annual Meeting of Shareholders on
Thursday, April 25, 1996, at 10:00 a.m. (EDT), at The Greenbrier, White Sulphur
Springs, West Virginia. Your Board of Directors and management look forward to
greeting those shareholders able to attend.
The proposals to be acted upon at the Meeting include the election of
twelve directors, appointment of independent auditors, the approval of an
amended 1991 Stock Purchase and Loan Plan, and the approval of an amendment to
the 1987 Long-Term Performance Stock Plan. The Board of Directors believes that
these proposals are in the best interest of the Company and its shareholders and
recommends a vote for each of the proposals.
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, 1996
To Our Shareholders:
The Annual Meeting of Shareholders of CSX Corporation will be held at The
Greenbrier, White Sulphur Springs, West Virginia, on Thursday, April 25, 1996,
at 10:00 a.m. (EDT), for the purpose of considering and acting upon the
following matters:
1. ELECTION OF TWELVE DIRECTORS;
2. APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS FOR 1996;
3. APPROVAL OF AMENDED AND RESTATED 1991 STOCK PURCHASE AND LOAN PLAN;
4. APPROVAL OF AMENDMENT OF THE 1987 LONG-TERM PERFORMANCE STOCK PLAN; AND
5. 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 23, 1996,
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,
1996.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Alan A. Rudnick
Alan A. Rudnick
Vice President - General Counsel
and Corporate Secretary
<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 23, 1996, CSX had outstanding 211,376,803 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
23, 1996, 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
Twelve 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
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[PHOTO HERE]
ELIZABETH E. BAILEY, 57, 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. She is a director of Honeywell, Inc.; 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 HERE]
ROBERT L. BURRUS, JR., 61, is a partner in and Chairman of McGuire, Woods,
Battle & Boothe, a law firm. Mr. Burrus is a director of Concepts Direct, Inc.;
Heilig-Meyers Company; O'Sullivan Corporation; and S&K Famous Brands, 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 HERE]
BRUCE C. GOTTWALD, 62, 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 HERE]
JOHN R. HALL, 63, is Chairman and Chief Executive Officer of Ashland 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.; Reynolds Metals Company; and UCAR International Inc. Mr. Hall has been a
director of CSX since May 1994 and is a member of the Board's Audit Committee.
[PHOTO HERE]
ROBERT D. KUNISCH, 54, is Chairman, President and Chief Executive Officer of PHH
Corporation, a provider of value-added business services, including vehicle
management services 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 HERE]
HUGH L. MCCOLL, JR., 60, 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
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[PHOTO HERE]
JAMES W. MCGLOTHLIN, 55, 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 HERE]
SOUTHWOOD J. MORCOTT, 57, is Chairman and Chief Executive Officer of Dana
Corporation, a manufacturer of automotive and truck parts and provider of
commercial credit. Previously, Mr. Morcott was Chairman, President and Chief
Executive Officer of Dana Corporation. He is a director of 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
Audit Committee and the Executive Committee.
[PHOTO HERE]
CHARLES E. RICE, 60, 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 Compensation Committee and the Executive
Committee.
[PHOTO HERE]
WILLIAM C. RICHARDSON, 55, has been President and Chief Executive Officer of the
W.K. Kellogg Foundation, a major philanthropic institution, since 1995.
Previously, he was 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 HERE]
FRANK S. ROYAL, M.D., 56, 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 HERE]
JOHN W. SNOW, 56, is Chairman of the Board, 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 1995, there were seven 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. McColl
attended eight of the 12 meetings of the Board, Audit Committee and Pension
Committee held during 1995. Mr. Edward L. Addison, an incumbent director who is
not standing for reelection, and who is a member of the Compensation Committee
and the Organization and Corporate Responsibility Committee, attended 12 of the
17 meetings of the Board, the Compensation Committee and the Organization and
Corporate Responsibility Committee held during 1995.
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CORPORATE GOVERNANCE
The CSX Board of Directors is committed to governance principles and
practices which permit the Board to fulfill its fiduciary duties to shareholders
and to the Company. Much of the Board's work is conducted through committees as
described below. The role and jurisdicition of each committee is carefully
articulated, and the appropriateness of the committee structure is reviewed
regularly. The Board has established and maintains qualification guidelines for
candidates for director. Reviews of each director's performance and continuing
qualification for Board membership and the Board's performance as a working
group are conducted on a regular basis.
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
entitled "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 1995.
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 promulgated pursuant to Internal Revenue Code Section 162(m). It
held four meetings in 1995.
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 held two meetings in 1995.
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 five members. It held no meetings in 1995.
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, committee structure, director qualification, and
director compensation and retirement. This Committee also conducts regular
evaluations of director performance and of the effectiveness of the Board as a
working group. 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, 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 in 1995.
5
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DIRECTORS' COMPENSATION
For services rendered during a year, non-employee directors receive a
retainer fee of $35,000 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. In addition, directors can
annually elect to increase the Designated Percentage up to as much as 100
percent of the remaining portion of their annual retainer and meeting fees in
stock. Payments made in stock pursuant to the Stock Plan also can 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 also are covered by an additional $10,000 death
benefit. The balances in the Phantom Stock Accounts represent cash balances
equal to the value of such CSX stock, including reinvested dividends, which
would have been in the account had the deferred cash compensation actually been
used to purchase CSX stock. Messrs. Addison and Morcott and Dr. Royal have
directed deferred compensation to be invested in the Phantom Stock Account where
the cash balances accumulated as of December 29, 1995, represent the equivalent,
respectively, of 1,385 shares, 816 shares and 168 shares of CSX stock.
The Retirement Plan and the Deferred Compensation Plan provide that if the
Board determines that a change of control of CSX has occurred, as defined in the
plans, 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. With respect
to the Deferred Compensation Plan, deferred compensation under the Stock Plan,
and the Retirement Plan, directors may elect, within a specified period of time
prior to any change of control event, to continue participation in the plans as
if a change of control had not occurred. Once such an election has been made and
a change of control occurs, the election can be revoked, subject to a 5 percent
penalty on distribution.
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 totaling $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 funds the
charitable contributions through company-owned life 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 Mr. Addison, Dr. Bailey and Messrs. Gottwald, Kunisch,
McGlothlin, Morcott, Rice, and Snow.
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In 1995, the Company made available to directors personal excess liability
insurance, an "umbrella" policy. Messrs. Addison, Hall, Kunisch, McColl, Morcott
and Rice and Drs. Richardson and Royal all enrolled for coverage for which
imputed income of $1,231 was realized by each participating director.
In 1995, in recognition that the Retirement Plan and the Deferred
Compensation Plan are non-qualified benefit plans and are unfunded obligations
of CSX, CSX reimbursed directors for the premium cost of an individual insurance
policy. The policy, named "Executive Edge Deferred Income Insurance" ("EDII"),
provides security against repudiation of benefit payments. The policy would not,
however, make payments in the event that CSX fails to meet its obligations due
to bankruptcy. The insurance policy is owned by the director and has a five-year
term, renewable each year for an additional year of coverage. CSX also has paid
the directors for the federal, state and Medicare taxes incurred as a result of
the premium reimbursement. Total amounts reimbursed to each director for EDII as
described were as follows: Mr. Addison - $23,743; Dr. Bailey -$5,315;
Mr. Burrus -$1,955; Mr. Gottwald - $15,290; Mr. Hall - $837; Mr. Kunisch-
$9,492; Mr. McColl -$2,597; Mr. McGlothlin - $13,751; Mr. Morcott -$7,935;
Mr. Rice -$11,805; Dr. Richardson - $6,267; and Dr. Royal - $2,330.
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 that can be
matched in any year is $25,000 per director. Directors who participated in the
Matching Gift Program during 1995 and the amounts matched by the Company for
contributions made by these directors in 1995 are as follows: Dr. Bailey - $750;
Mr. Burrus - $7,619; Mr. Hall - $18,383; Mr. Kunisch - $2,500; Mr. McColl -
$25,000; Mr. Morcott - $5,714; Mr. Rice - $10,000; Dr. Richardson - $500; Dr.
Royal - $10,000; and Mr. Snow - $2,500.
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 has
provided bridge financing for employee home purchases that will be guaranteed by
Sea-Land in a total amount not to exceed $10 million. As part of the relocation
program, NationsBank provided mortgage loans to relocated Sea-Land employees,
and, in connection with the program, Sea-Land paid $166,000 in loan fees to
NationsBank. NationsBank also participated in a syndicated credit facility to a
joint venture in which a subsidiary of the Company is a party. NationsBank's
portion of this facility is $40 million.
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 that 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 29,
1995, the total outstanding indebtedness was $800,000.
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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Alvin R. Carpenter, President and Chief Executive Officer of CSXT, is an
executive officer of CSX for proxy reporting purposes. Mr. Carpenter is a
director of Barnett Banks, Inc. Charles E. Rice, a director of the Company and a
member of the Compensation Committee, is the Chairman and Chief Executive
Officer of Barnett Banks, Inc.
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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 30-day period following
the first anniversary of the change of control, the executive is entitled to
receive "severance benefits." Severance benefits include 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 on certain change of control
payments.
In change of control transactions subject to regulatory review by the
Surface Transportation Board, 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 30-day period
following the first anniversary of the regulatory approval.
In February 1994, the Company entered into an incentive agreement with Mr.
Snow awarding him 1,000,000 (as adjusted for the stock split described in Note 1
of Security Ownership of Certain Beneficial Owners, Directors, and Executive
Officers on page 9) non-qualified employee stock options with an exercise price
of $44.9375 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 $50
to $60 per share. The options may be forfeited in whole or in part at the time
of termination of employment.
In April 1990, the Company entered into a Special Stock Award Agreement
with Mr. Carpenter. Under the terms of the Agreement, 20,000 shares of CSX
common stock were awarded, conditioned on continued employment, to Mr.
Carpenter, one-half of the shares issued on the fifth anniversary, and the
balance (which will be adjusted for the December 1995 stock split) to be issued
on the 10th anniversary of the Agreement. In April 1995, 10,000 shares were
issued to Mr. Carpenter pursuant to that Agreement. To assist Mr. Carpenter in
paying the income tax obligations associated with the award in April 1995, CSX
made an interest free loan to Mr. Carpenter of $377,200 which is expected to be
outstanding for a total of approximately 12 months. Upon repayment, CSX will
provide Mr. Carpenter with a payment to compensate him for income taxes
associated with the interest free character of the loan.
In February 1994, the Company entered into a Special Stock Award Agreement
with Mr. John P. Clancey pursuant to which 10,000 (20,000 following the December
1995 stock split) 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 the Special Stock Award Agreements with both Messrs.
Carpenter and Clancey, 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. In the event of certain changes of control, the awards under the
agreements with Messrs. Snow, Carpenter and Clancey will be accelerated and the
recipients will be entitled to compensation for certain excise taxes imposed on
certain change of control payments.
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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").
Based solely on its review of the copies of Forms 3, 4 and 5 received by
it, the Company believes that the Company's executive officers and directors
complied with the SEC's requirements with respect to transactions during the
last fiscal year.
<TABLE>
<CAPTION>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS, AND EXECUTIVE OFFICERS
Amount and Nature of Beneficial Ownership
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 1) (Note 2) Owned (Note 3) Ownership (Note 4)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CSX Corp. Edward L. Addison (Note 5) N/A 5,813 N/A 5,813 *
Common Stock Elizabeth E. Bailey N/A 4,421 N/A 4,421 *
$1 Par Value Robert L. Burrus, Jr. N/A 2,960 N/A 2,960 *
Bruce C. Gottwald N/A 14,004 N/A 14,004 *
John R. Hall N/A 3,325 N/A 3,325 *
Robert D. Kunisch N/A 5,010 N/A 5,010 *
Hugh L. McColl, Jr. N/A 3,421 N/A 3,421 *
James W. McGlothlin (Note 6) N/A 219,907 N/A 219,907 *
Southwood J. Morcott N/A 4,492 N/A 4,492 *
Charles E. Rice N/A 6,414 N/A 6,414 *
William C. Richardson N/A 1,205 N/A 1,205 *
Frank S. Royal N/A 2,235 N/A 2,235 *
John W. Snow 263,920 362,233 1,018,408 1,644,561 *
Alvin R. Carpenter 104,414 167,198 128,000 399,612 *
John P. Clancey 81,740 85,319 93,200 260,259 *
Gerald L. Nichols 46,890 99,698 79,402 225,990 *
Paul R. Goodwin 63,162 81,084 161,276 305,522 *
Executive officers as a
group (19 persons, including
those named above) and
all directors 1,107,402 1,793,134 2,814,203 5,714,739 2.6%
FMR Corp. (Note 7)
82 Devonshire Street
Boston, MA 02109 N/A 31,867,340 N/A 31,867,340 14.4%
</TABLE>
Notes to Security Ownership of Certain Beneficial Owners, Directors, 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 6, 1996. A two-for-one split of CSX common
stock occurred for shareholders of record on December 4, 1995, effective
December 21, 1995. Shareholdings reflect the results of the stock split.
9
<PAGE>
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 have been 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 ($24.1625 following the stock
split), and the purchase price for shares issued in 1992 was $64.325 per
share ($32.1625 following the stock split). 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 participant's commitment to purchase had to be
made.
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, Clancey, Nichols, and Goodwin, the number
of shares purchased pursuant to the SPLP, the purchase price for those
shares, and the aggregate loan balances as of December 29, 1995, both
with and without the adjustments described above, are indicated in the
following table. Messrs. Snow, Carpenter, Clancey, Nichols and Goodwin
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 12/29/95/(i) 12/29/95/(ii) 12/29/95/(iii) 12/29/95/(iv)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John W. Snow 263,920 $ 6,376,967 $ 7,384,697 $ 448,325 $ 4,463,877 $ 318,848
Alvin R. Carpenter 104,414 2,704,295 3,082,122 184,579 1,893,007 135,215
John P. Clancey 81,740 2,253,843 2,533,891 149,933 1,577,690 112,692
Gerald L. Nichols 46,890 1,132,980 1,312,020 79,653 793,086 56,649
Paul R. Goodwin 63,162 1,526,152 1,767,324 107,294 1,068,306 76,308
All executive officers as a
group (19 persons, including
those named above) 1,107,402 $27,400,657 $31,555,230 $1,906,718 $19,180,460 $1,370,033
</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.
10
<PAGE>
(iii) Adjusted Purchase Loan balances reflect reduction of the
Unadjusted Purchase Loan Balance by the Interest Spread and 25
percent 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.
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 6, 1996, which was $45.75.
Note 4 Based on number of shares outstanding of 221,677,742 on March 6, 1996,
including 10,283,612 shares deemed outstanding for which beneficial
ownership can be acquired within 60 days. An asterisk (*) indicates
that ownership is less than 1 percent of class.
Note 5 Mr. Addison will retire as a director on April 25, 1996.
Note 6 Mr. McGlothlin's ownership includes 202,000 shares of common stock as a
result of stock holdings by affiliates of Mr. McGlothlin in which he
shares voting and investment power.
Note 7 Information reported is derived from a Schedule 13G of FMR Corporation
dated February 14, 1996, and filed with the Securities and Exchange
Commission. As reported in the Schedule 13G, the person filing the
statement has the sole power to vote or to direct the vote of 1,643,524
shares, and has the sole power to dispose or to direct the disposition
of 31,867,340 shares.
Executive Compensation
The individuals named below (the "Named Executives") include the Company's
Chief Executive Officer and the other four executive officers of the Company who
were the most highly compensated executive officers of the Company as of the end
of the fiscal year ending December 29, 1995. Information is provided for the
fiscal years ending on December 29, 1995, December 30, 1994, and December 31,
1993.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
-------------------------------------
Annual Compensation Awards Payouts
----------------------------------------- ------------------------- ---------------------
Other Securities
Annual Restricted Underlying LTIP All Other
Compensation Stock Options/ Payouts Compensation
Name and Bonus ($) ($) Award(s)($) SARs (#) ($) $
Principal Position Year Salary (Note 1) (Note 2) (Note 1) (Note 3) (Note 4) (Note 5)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John W. Snow 1995 $895,698 $ 0 $488,577 $1,687,500 152,400 $1,786,000 $132,682
Chairman, President 1994 814,590 1,070,304 68,033 0 1,152,400 1,415,000 114,381
& CEO 1993 746,758 850,894 56,146 0 152,400 1,585,395 98,605
Alvin R. Carpenter 1995 521,872 55,504 242,215 885,008 48,000 1,515,600 25,548
President & CEO, 1994 432,600 464,498 N/A 0 48,000 580,150 22,024
CSXT 1993 432,475 417,094 63,400 0 48,000 647,280 18,986
John P. Clancey 1995 409,884 211,600 101,410 264,500 36,000 592,200 0
President & CEO, 1994 359,019 276,675 N/A 0 36,000 480,393 0
Sea-Land 1993 333,833 254,142 N/A 0 33,200 614,296 0
Gerald L. Nichols 1995 320,824 390,578 94,612 0 28,000 535,800 5,556
Executive Vice
President 1994 252,354 218,127 N/A 0 18,000 293,613 4,790
and COO, CSXT 1993 252,282 154,937 N/A 0 18,000 361,298 4,129
Paul R. Goodwin 1995 289,980 36,751 85,956 376,250 28,000 535,800 8,465
Executive Vice President- 1994 252,354 218,127 N/A 0 25,800 445,725 7,298
Finance and CFO 1993 252,349 219,512 N/A 0 25,800 523,881 6,291
</TABLE>
11
<PAGE>
NOTES TO SUMMARY COMPENSATION TABLE
- -----------------------------------
Note 1 In 1995, management employees whose annual cash bonuses were paid
pursuant to CSX's Management Incentive Compensation Plan or the Senior
Management Incentive Compensation Plan were permitted to elect to
receive all or a portion of their bonuses in CSX stock. Bonuses paid in
stock and deferred for tax purposes included a premium of 25 percent,
also paid in stock, but conditioned on a restriction against selling
such stock until employment with CSX terminates, but not before a
minimum of three years has passed following the stock issuance except in
cases of death, disability, or change of control. The amounts shown in
the Restricted Stock Award(s) column reflect the cash value of such
bonuses paid in stock for Messrs. Snow, Carpenter, and Goodwin, and, for
Mr. Clancey, that portion of his bonus he elected to have paid in stock.
Cash bonuses shown for Messrs. Carpenter, Nichols, and Goodwin in 1995
include payment of a special bonus to management employees of CSXT for
achievement and maintenance of an operating ratio of 80 percent or less
for an entire year. These special bonuses reflected achievement over a
period of years, and they were paid in 1995. The amounts of such bonuses
for Messrs. Carpenter, Nichols, and Goodwin, were $55,504, $32,400 and
$36,751, respectively.
Note 2 The perquisites or other personal benefits exceeding 25 percent of the
total perquisites and other personal benefits afforded to named officers
were for the years and in the cases of individuals as follows: (a)
During 1995, for Mr. Snow, $421,145 for Executive Edge Deferred Income
Insurance; Mr. Carpenter, $110,514 for Executive Edge Deferred Income
Insurance and $77,800 for dividend equivalent payments pursuant to his
Special Stock Award Agreement (see page 8); Mr. Clancey, $38,599 for
club dues; Mr. Nichols, $43,126 for Executive Edge Deferred Income
Insurance; Mr. Goodwin, $58,599 for Executive Edge Deferred Income
Insurance. Because of increased limitations on the extent to which
benefits may be paid from qualified plans, CSX arranged Executive Edge
Deferred Income Insurance for payment of unfunded benefit obligations.
Executives paid the insurance premiums and were then reimbursed by the
Company for premiums and compensation taxes incurred. The amounts so
paid are indicated. (b) During 1994, for Mr. Snow, $34,107 for life
insurance premiums. (c) During 1993, for Mr. Snow, $31,657 for life
insurance premiums; for Mr. Carpenter, $26,290 for club dues.
Note 3 This column represents the number of employee stock options granted.
Stock appreciation rights ("SARs") were not granted in 1995, 1994 or
1993.
Note 4 LTIP ("Long-Term Incentive Plan") payouts for 1995 represent the fair
market value of $47.00 per share of performance shares awarded pursuant
to 1987 Long-Term Performance Stock Plan ("1987 Plan") on February 14,
1996, the date of the award. Tax valuation may differ. (See the Long-
Term Incentive Plans --Awards in Last Fiscal Year table on page 14 and
Note 2 to the Security Ownership Certain Beneficial Owners, Directors,
and Executive Officers table on page 10, regarding the SPLP and awards
made pursuant to it.) Mr. Carpenter's LTIP payouts for 1995 included
$820,000 representing payment of stock pursuant to his Special Stock
Award Agreement with CSX. (See description of agreement and distribution
on page 8.)
Note 5 Amounts shown are comprised of the above-market portion of earnings on a
deferred compensation program available to executives only during 1985,
1986, 1988, and 1989.
Option/SAR Grants in Last Fiscal Year (Note 1)
<TABLE>
<CAPTION>
Grant Date
Individual Grants Value
------------------------------------------------------------------------------------
Number of Securities Percent of Total
Underlying Options/SARs Granted Grant Date
Options/SARs to Employees in Exercise or Present
Granted (#) Fiscal Year Base Price Expiration Value
Name (Note 2) (Note 3) ($/Share) Date $ (Note 4)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John W. Snow 152,400 7.04% $40.25 4/25/05 $2,040,636
Alvin R. Carpenter 48,000 2.22% 40.25 4/25/05 642,720
John P. Clancey 36,000 1.66% 40.25 4/25/05 482,040
Gerald L. Nichols 28,000 1.29% 40.25 4/25/05 374,920
Paul R. Goodwin 28,000 1.29% 40.25 4/25/05 374,920
</TABLE>
Notes to Option/SAR Grants Table
- --------------------------------
Note 1 SARs were not granted during 1995.
Note 2 Stock options granted to employees on April 25, 1995, were granted at an
exercise price of $80.50 ($40.25 following the
12
<PAGE>
stock split), 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 is for 10 consecutive business days at a price per share at or
above, for each tranche respectively, $85.50, $90.50 and $95.50 ($42.75,
$45.25, and $47.75, respectively following the stock split). 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. The exercisability restrictions lapse
after nine years regardless of whether the stock price thresholds have
been satisfied.
Note 3 A total of 2,165,150 employee stock options, adjusted for the stock
split, was granted during 1995.
Note 4 The present value of options granted on April 25, 1995, has been
reported using the Black-Scholes option pricing model. The values
presented are based on the following assumptions: exercise price -
$80.50 (mean price on grant date, $40.25 following the stock split);
market price on grant date - $80.50 ($40.25 following the stock split);
assumed exercise date - April 24, 2005; risk free rate of return - 6.99
percent (10-year U.S. Treasury note yield); dividend yield - 2.8 percent
(5-year quarterly average); volatility assumption - 23.46 percent.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
Value of Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options/SARs at FY-End
Options/SARs at FY-End (Note 1)
----------------------------------------------------------------
Shares Acquired Value Exercisable Unexercisable Exercisable Unexercisable
Name on Exercise (#) Realized ($) (#) (#) ($) ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John W. Snow 0 0 908,960 1,203,227 $18,616,375 $1,756,300
Alvin R. Carpenter 0 0 80,000 64,000 671,000 376,000
John P. Clancey 0 0 57,200 48,000 478,575 282,000
Gerald L. Nichols 0 0 54,732 34,002 679,910 193,500
Paul R. Goodwin 0 0 134,008 36,600 2,553,985 213,650
</TABLE>
Notes to Aggregated Option/SAR Exercise Table
- ---------------------------------------------
Note 1 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 $45.50, the mean value of CSX common stock on
December 29, 1995.
13
<PAGE>
<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 (#) (Notes 1 and 2) Maturation or Payout (#) (#) (#)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John W. Snow 34,000 3 years 17,000 25,500 34,000
Alvin R. Carpenter 18,000 3 years 9,000 13,500 18,000
John P. Clancey 12,000 3 years 6,000 9,000 12,000
Gerald L. Nichols 10,000 3 years 5,000 7,500 10,000
Paul R. Goodwin 10,000 3 years 5,000 7,500 10,000
</TABLE>
Notes to Long-Term Incentive Plan Table
- ---------------------------------------
Note 1 Represents the number of performance shares granted on December 13,
1995, pursuant to the 1987 Long-Term Performance Stock Plan for the
1996-1997-1998 cycle. The final payouts in CSX stock are based on the
financial performance of the participant's business unit as well as the
return to shareholders over a three-year period. Performance will be
based 50 percent on the business unit's return on invested capital as a
percentage of the company's cost of capital and 50 percent on total
shareholder return compared to the S&P 500. The estimated threshold
payout was calculated at 50 percent of the performance shares granted on
December 13, 1995, and represents the number of shares that would be
awarded if a specified minimum level of financial performance by the
participant's business unit and a specified level of total shareholder
return are achieved by CSX. The estimated target payout was calculated
at 75 percent of the performance shares granted and represents the
number of shares that would be awarded if a specified intermediate level
of financial performance by the participant's business unit and a
specified level of total shareholder return are achieved by CSX. The
maximum equals 100 percent of the performance shares granted on December
13, 1995. The levels of financial performance and total shareholder
return that must be achieved were established within the first 90 days
of the three-year cycle. No awards were made under the 1991 Stock
Purchase and Loan Plan during 1995.
Note 2 Prior to 1994, performance shares were generally granted early in the
first year of the three-year performance cycle. However, starting in
December 1994 when grants were made for the 1995-1996-1997 Performance
Period, performance shares were granted in December prior to the
commencement of the affected three-year performance cycle in order to
address the new provisions of Section 162(m) of the Internal Revenue
Code. In 1994, grants were made in February and December. The grants
made in February 1994 for the 1994-1995-1996 performance cycle were
reported in the 1995 proxy statement.
Performance share grants for the 1995-1996-1997 cycle have not
previously been reported. The table below represents the number of
performance shares granted on December 14, 1994, for the 1995-1996-1997
Performance Period 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 as a percentage of the Company's cost of capital. The estimated
threshold payout was calculated at 13 percent of the performance shares
granted on December 14, 1994, 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 percent of the performance
shares granted and represents the number of shares of CSX stock that
would be awarded if a specified intermediate level of financial
performance is achieved by the participant's business unit. The maximum
equals 100 percent of the performance shares granted on December 14,
1994. The levels of financial performance that must be achieved were
established within the first 90 days of the three-year performance
cycle. Information regarding performance share grants made in December
1994 is as follows:
<TABLE>
<CAPTION>
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 (#) Maturation or Payout (#) (#) (#)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John W. Snow 34,000 3 years 4,420 22,780 34,000
Alvin R. Carpenter 13,000 3 years 1,690 8,710 13,000
John P. Clancey 12,000 3 years 1,560 8,040 12,000
Gerald L. Nichols 10,000 3 years 1,300 6,700 10,000
Paul R. Goodwin 10,000 3 years 1,300 6,700 10,000
</TABLE>
14
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
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
2,600,000 585,000 780,000 975,000 1,170,000 1,365,000 1,560,000 1,716,000
2,800,000 630,000 840,000 1,050,000 1,260,000 1,470,000 1,680,000 1,848,000
3,000,000 675,000 900,000 1,125,000 1,350,000 1,575,000 1,800,000 1,980,000
3,200,000 720,000 960,000 1,200,000 1,440,000 1,680,000 1,920,000 2,112,000
</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
11 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 29, 1995, the individuals named in the
Summary Compensation Table had the following credited years of service: Mr.
Snow, 30.0 years; Mr. Carpenter, 40.5 years; Mr. Clancey, 30.8 years; Mr.
Nichols, 44.0 years; and Mr. Goodwin, 37.4 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.
15
<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.
In addition, the Company expects executives to acquire and hold significant
amounts of stock, and the Company's compensation programs are designed to
accomplish that objective. The Company has communicated to executives its
expectation that they achieve and maintain specific minimum amounts of stock
ownership, which are substantially greater than those of comparable U.S.
companies.
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 1995
compensation decisions, the Committee considered compensation paid at companies
with annual revenues generally of $4 to $18 billion, in transportation and other
industries. CSX's 1994 revenues of $9.6 billion closely approximated the $9.8
billion average of this group of comparison companies. 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 compensation, the Committee generally seeks to
provide total compensation (base salary, annual bonus and long-term stock-based
incentives) for senior executives up to the 85th percentile of the comparison
companies if financial, strategic and personal objectives are 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 at
the beginning of the performance period.
The financial performance objectives 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 to 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 1995, the Company and its principal business units successfully
met or exceeded their respective financial objectives, resulting in awards under
the SMICP for those units.
16
<PAGE>
In addition to an annual bonus award under the SMICP, senior executives
may, for exceptional contributions, receive an annual cash bonus award for
accomplishments of strategic and personal objectives. When making awards for
1995, 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 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 1995 were made considering historic grants and stock
price with the objective of bringing total direct compensation, composed of base
salary, bonus and long-term incentives, to approximately the 85th percentile of
the comparison companies. These options vest within one year, but are only
exercisable prior to the ninth anniversary of the grant 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 historic grants,
competitive practices, 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
Present tax law limits 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 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. Generally, the Committee wishes to maximize
deductibility of compensation elements, and it has structured the major
compensation elements to achieve deductibility. The Committee, however, believes
that retaining flexibility to recognize an executive officer's contribution as
appropriate serves the best interests of the Company and its stockholders.
CEO COMPENSATION
In 1995, the Company's most highly compensated officer was Mr. Snow. His
base salary was at the median of the comparison companies. Mr. Snow's 1995
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 ("ROIC") as a percentage of its cost of capital. During 1995,
the Company earned a ROIC of 11 percent, which is substantially greater than the
Company's cost of capital. This performance resulted in the financial portion of
Mr. Snow's bonus being $920,000.
With respect to the strategic portion of Mr. Snow's bonus, the Committee
noted that CSX achieved revenue and operating income records for 1995. The
Company's principal business unit for the first time had operating income of
$1.1 billion. Aggressive efforts to reduce costs and conserve capital succeeded,
enabling the Company to generate free cash flow of $574 million.
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 also recognized his election as Chairman
of the Association of American Railroads. The Committee awarded $430,000 to Mr.
Snow for his strategic leadership and personal accomplishments, so that his
total bonus for 1995 was $1,350,000. Under a deferral program available to
executives of the Company, Mr. Snow elected to receive 100 percent of his total
bonus for 1995 in CSX common stock, rather than cash, and to defer receipt so
long as he is employed by the Company. By doing so, he received additional stock
with a value equal to 25 percent of his deferred bonus under the program.
17
<PAGE>
The largest portion of Mr. Snow's 1995 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 1995 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 non-qualified employee stock options to acquire 1 million shares of
CSX common stock with an exercise price of $44.938 per share (which amounts
reflect the 1995 two-for-one stock split). That agreement is subject to
substantial vesting and other restrictions described in the Option/SAR Grants
Table of this Proxy Statement, including the condition that the Company's stock
achieve certain thresholds ranging from $50 to $60 per share. 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 five-year tenure as Chairman, President, and CEO, the
Company has generated a total shareholder return of about 225 percent. During
his tenure, the Company's average annual return to shareholders, including
dividends, was 27 percent, while the average annual return of the Company's peer
group described in the Performance Graph was 18 percent. This performance added
$7.0 billion to shareholder value during the five-year period. Moreover, in
1995, the Company increased its dividend by about 18 percent, reflecting success
in achieving the key financial objective of generating free cash flow.
The Committee is especially pleased with Mr. Snow's leadership in providing
vision, establishing challenging goals and objectives, focus on performance
improvement, operational excellence and strategic thinking that continue to
enhance shareholder value. Mr. Snow's contributions to the long-term value of
the Company and its shareholders support the compensation paid to him for 1995.
COMPENSATION COMMITTEE
Robert D. Kunisch, Chairman
Edward L. Addison
Charles E. Rice
William C. Richardson
Frank S. Royal
the entire Committee
Richmond, Virginia
February 13, 1996
18
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
CSX CORPORATION, S&P 500, DOW JONES TRANSPORTATION AVERAGE
[CHART APPEARS HERE]
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
CSX Corp $100 $188 $229 $279 $243 $325
S&P 500 $100 $130 $140 $155 $157 $215
Dow Jones Transportation Average $100 $152 $164 $202 $170 $236
* $100 Invested on 12/31/90 in stock or index -- including reinvestment of
dividends.
Fiscal year ending December 31, for the years 1990 through 1993, and
December 30, 1994, and December 29, 1995.
Source: Research Data Group
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 1996. 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 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 also is expected they will be available to respond
to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
3. AMENDMENT AND RESTATEMENT OF THE 1991 STOCK PURCHASE AND LOAN PLAN
The 1991 Stock Purchase and Loan Plan was implemented as part of CSX's
highly aggressive program to increase executive's ownership and retention of
Company stock. This emphasis on executive stock ownership is designed to align
management's and shareholders' economic interests and provide incentives to
management for performance to improve the market price of CSX stock. The SPLP is
summarized in Note 2 to the Security Ownership of Certain Beneficial Owners,
Directors, and Executive Officers table on Page 10 of this Proxy Statement.
19
<PAGE>
The SPLP has been an important part of the Company's strategy to enhance
shareholder value. Over the last five years, CSX stock has generated an average
annual return to shareholders, e.g., stock price appreciation plus reinvestment
----
of dividends, of 27 percent, compared to an annual shareholder return on the S&P
500 of 14 percent. During that period, $3.1 billion in value for CSX
shareholders has been created by stock price performance. A total of 177
employees have participated in the SPLP since its inception.
Unless amended, there are insufficient shares available to make further
offerings under the SPLP, and the plan will effectively come to an end when the
Purchase Loans issued in 1991 and 1992 mature on July 31, 1996, unless
participants elect to extend them for an additional year. This would result in a
reduction in shares owned by management, because many SPLP shares would be
tendered for cancellation to pay Purchase Loans and to satisfy tax withholding.
Because of its success in increasing shareholder value, CSX proposes to amend
the SPLP to permit its continuation and to enable the Corporation to make new
offerings to senior management. The chief substantive amendments proposed to the
SPLP are summarized as follows.
The scope of the SPLP would be extended by adding 4.6 million shares to the
4.4 million shares originally authorized, of which approximately 0.4 million
currently remain unissued, for an aggregate 9.0 million shares. The amended SPLP
will permit shares cancelled by CSX to satisfy withholding taxes and for
repayment of the Purchase Loan and shares repurchased by CSX upon exit from the
SPLP to be issued again to other senior management employees in subsequent
offerings. The SPLP would be extended to terminate on February 13, 2006.
Employees currently participating in the SPLP ("Current Participants") who
continue in the SPLP as amended must use all or part of the equity value of
shares that they purchased under the earlier SPLP offerings (e.g., the market
----
price of the shares minus the balance due on the Purchase Notes) as the down
payment to purchase additional shares. For these employees, the amount of the
down payment required would be increased to between 10 percent and 25 percent of
the Purchase Price of new shares. Dividend equivalents would be paid on the
stock represented by the equity value of the shares used as down payment. For
Current Participants, the exact percentage of this down payment amount would be
determined by the Compensation Committee of the CSX Board of Directors as
administrator of the plan. For employees who do not currently participate in the
SPLP ("New Participants"), the down payment would remain 5 percent of the
Purchase Price.
For Current Participants, the existing Purchase Loans would be replaced by
new loans with a term of five years, extendable by the participant for one
additional year and by the Compensation Committee for two years, not to exceed
seven years in the aggregate. These new Purchase Loans would be collateralized
by shares equal to the equity value of stock acquired under the 1991 and 1992
offerings used as downpayment for the new purchase loans and by newly acquired
shares.
The thresholds, which the stock price must achieve for participants to
realize forgiveness of the Interest Spread and reductions in Purchase Price,
would be substantially increased. For participants to realize the full value of
these adjustments, the market price of CSX common stock must rise to 100 percent
over the Purchase Price.
Under the proposed amendments, any employee whose participation in the SPLP
is terminated as a result of (x) a voluntary termination of employment without
consent or agreement of the Company, or (y) involuntary termination of
employment for Cause, as defined in the SPLP, will not be entitled to the
benefit of Interest Spread forgiveness and reduction of Purchase Price.
In the event of a change of control, restrictions on termination of
participation will lapse, and all interest and purchase price reductions will be
applied as if the stock price has increased 100 percent over the Purchase Price.
In addition, participants may either elect to continue to participate in the
plan or prepay the Purchase Loan. The Compensation Committee will have
discretion to structure awards to address tax consequences for the participant
and the Company in the event of a change of control.
The full SPLP, as proposed for amendment and restatement, is attached to
this Proxy Statement as Appendix A.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
20
<PAGE>
4. AMENDMENT OF THE 1987 LONG-TERM PERFORMANCE STOCK PLAN
The 1987 Long-Term Performance Stock Plan is a shareholder-approved plan
that provides incentive compensation to managers using CSX common stock linked
to realization of specified long-term goals. The 1987 Plan has been an important
means of increasing stock ownership of CSX management and aligning management's
economic interests with those of other CSX shareholders. Currently, there are
approximately 386 active employees who are participants in the 1987 Plan. The
proposed amendment to the 1987 Plan will make three changes.
First, the definition of "Performance Objective," in Section 2(q), would be
amended to add "Total Shareholder Return" as a permitted performance measurement
objective under the Plan. This change would allow the Compensation Committee to
grant incentives more directly linked to actual benefits to stockholders, rather
than to internal indicators of Company performance.
Secondly, Section 10 would be amended to permit Performance Shares to be
awarded to executives in a business unit or in another functionally determined
group for distribution at the conclusion of the performance period to
individuals within that group. Currently, Performance Shares must be granted to
specific individuals at the beginning of the Performance Period. The proposed
change would permit the Compensation Committee greater flexibility in
establishing performance objectives designed to spur team performance and to
reward more accurately those individuals seen as having contributed most
effectively to the achievement of these objectives.
The final change is in response to a Company policy permitting employees to
take all or part of their cash bonuses in the form of Company stock. Employees
making that election would receive a premium in stock value over the cash bonus
but would agree to hold the stock until termination of employment, including
retirement, and for not less than three years, except in cases of death,
disability or change in control. This amendment would permit shares issued for
that purpose to be taken from the 1987 Plan.
The text of the provisions to be amended are printed in Appendix B of this
Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
ADDITIONAL INFORMATION
NEW PLAN BENEFITS
Because the Compensation Committee has not yet designated the employees who
will be invited to participate in the SPLP, it is impossible to calculate with
certainty the future awards under the amended and restated SPLP. If the
assumptions set forth in Note 1 to the New Plan Benefits Table are applied to
the Current Participants in the SPLP, the following share allocation would
apply.
<TABLE>
<CAPTION>
Awards During 1995 Under 1987 Plan
--------------------------------------------------------------------------
Stock Options Performance Shares Incentive
------------------------------ -------------------------
Compensation
SPLP Shares Allocable Grant Date Value Program Shares
Name # (Note 1) # $ (Note 2) # (Note 3) # (Note 4) # (Note 5)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John W. Snow 665,396 152,400 $ 2,040,636 34,000 $1,598,000 35,118
Alvin R. Carpenter 252,147 48,000 642,720 18,000 846,000 18,525
John P. Clancey 189,020 36,000 482,040 12,000 564,000 11,007
Gerald L. Nichols 118,219 28,000 374,920 10,000 470,000 8,142
Paul R. Goodwin 159,244 28,000 374,920 10,000 470,000 7,829
Executive Officers as a
group (19 persons, including
those named above) 2,752,628 510,800 6,839,612 (Note 6) (Note 4) 133,432
Non-executive officer
employee group 5,711,830 1,654,350 22,151,747 (Note 6) (Note 4) 243,778
</TABLE>
21
<PAGE>
NOTES TO AGGREGATED OPTION/SAR EXERCISE TABLE
- ---------------------------------------------
Note 1 Represents number of shares that would be allocable to Current
Participants in the SPLP assuming the participants apply all of the
Equity that they hold in shares currently issued under the SPLP to a 25%
Exchange Award Down Payment and that the Exchange Award Purchase Price
is $45.75 per share. See Note 2 to the Security Ownership of Certain
Beneficial Owners, Directors, and Executive Officers table on page 10 of
this Proxy Statement for a summary of current ownership levels under the
SPLP.
Note 2 This is a hypothetical valuation using a modified Black-Scholes
valuation formula. See Note 4 to the Option/SAR Grants table on page 13
for a detailed description of these awards.
Note 3 Represents the number of performance shares granted on December 13,
1995. See Note 1 to the Long-Term Incentive Plan table on page 14 for a
detailed description of these awards.
Note 4 Represents the fair market value of $47.00 per share of performance
shares awarded on February 14, 1996, for the 1993-94-95 performance
period. Performance shares for that period were awarded from the 1987
Plan to a limited group of employees that did not include all of the
Executive Officers. Awards to other officers were made under the 1990
Stock Award Plan.
Note 5 The shares allocable to the named executive officers and the executive
officers as a group represent the number of shares that would have been
awarded under the 1987 Plan assuming that each officer had elected to
defer 100 percent of his annual Incentive Compensation Program ("ICP")
award for 1995 in shares of Company stock. The shares allocable to the
non-executive officer employee group represents the number of shares
that would have been awarded under the 1987 Plan assuming that the
employees who made an election to defer all or a portion of their ICP
awards for 1995 in Company stock had elected to defer 100 percent of
such award. The allocations are based on a fair market value of $47.00
per share on February 14, 1996, the date that the ICP awards were
approved by the Board of Directors for certain executive officers .
Note 6 In December 1995, 110,600 performance shares were granted pursuant to
the 1987 Plan to eight executive officers for the 1996-97-98 performance
period. Performance shares that may be payable to other officers for the
1996-97-98 performance period are currently reserved under the 1990
Stock Award Plan.
VOTING PROCEDURES
Votes are tabulated by three Inspectors of Election. The affirmative vote
of the majority of shares represented at the meeting and entitled to vote
therein will be required for adoption of the amendment and restatement of the
SPLP and the amendment of the 1987 Plan. For these purposes, abstentions will be
treated as "no" votes, and broker "non-votes" will not be counted.
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, and
the company's by-laws, directors are elected by a plurality of votes cast by the
shares entitled to vote at a meeting at which a quorum is present. For all other
proposals, abstentions and broker "non-votes" are not considered to be voting
"for" or "against" any proposal or any person nominated for director.
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Shareholder proposals for inclusion in the Proxy Statement for the 1997
Annual Meeting of Shareholders must be received at the principal executive
offices of CSX on or before November 13, 1996.
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, for no additional
compensation, may request the return of proxies by personal conversations or by
telephone or telecopy. It also is expected that, for a fee of $15,000 plus
reimbursement of certain out-of-pocket expenses, additional solicitation will be
made by personal interview, telephone or telecopy under the direction of the
proxy solicitation firm of D. F. King & Co., 77 Water Street, New York, New York
10005.
March 14, 1996
By Order of the Board of Directors
Alan A. Rudnick
Vice President-General Counsel and Corporate Secretary
22
<PAGE>
APPENDIX A
CSX CORPORATION
STOCK PURCHASE AND LOAN PLAN
1. Purpose
The CSX Corporation 1991 Stock Purchase and Loan Plan (the "1991 Plan") was
established to encourage and increase the ownership of the common stock of CSX
Corporation (the "Company") by those employees of the Company or a Subsidiary
who, by virtue of their responsibilities or positions, were most likely to have
the opportunity to enhance long-term performance of the Company and shareholder
value. The Company continues to believe that ownership of the Company's common
stock stimulates the efforts of those employees upon whose judgment and interest
the Company is and will be largely dependent for the successful conduct of its
business and will further the identification of those employees' interests with
those of the Company's shareholders.
Unless the 1991 Plan is extended or replaced, these benefits will generally
end July 31, 1996. Management believes it is in the best interests of the
Company's shareholders to extend the 1991 Plan in order to continue the original
objective of assuring that significant amounts of the Company's common stock are
held by employees whose interests are identified with those of the Company's
non-employee shareholders. Accordingly, the 1991 Plan is amended and restated as
of February 14, 1996 (the "Plan"), to maintain and expand this objective.
Notwithstanding anything contained in this amended and restated Plan, the
provisions of the 1991 Plan in effect prior to the amendment and restatement
reflected herein shall continue to apply with respect to Company Stock acquired
pursuant to a Purchase Award under the 1991 Plan as to which a Participant is
not granted or does not exercise an Exchange Award.
2. DEFINITIONS AND CONSTRUCTION
Unless the content clearly indicates to the contrary, in reading this Plan,
the singular shall include plural and the masculine shall include the feminine.
As used in the Plan, the following terms have the indicated meanings:
(a) "APPLIED DIVIDENDS" means, as provided in Section 6(e), dividends paid
on pledged Company Stock used to reduce Interest.
(b) "BOARD" means the Company's Board of Directors.
(c) "BUSINESS DAY" means, if relevant to a determination of the value of
Company Stock, a day on which shares of Company Stock are or could be
traded on the New York Stock Exchange.
(d) "CAUSE" means a Participant's: (i) act or acts of personal dishonesty
intended to result in substantial personal enrichment at the expense
of the Company or a Subsidiary; (ii) repeated violations of the
Participant's responsibilities which are demonstrably willful and
deliberate and which are not remedied in a reasonable period of time
after receipt of written notice from the Company or a Subsidiary; or
(iii) conviction of a felony involving moral turpitude.
(e) "CHANGE OF CONTROL" means any of the following:
(i) STOCK ACQUISITION. The acquisition, by any individual, entity or
-----------------
group [within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")]
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock"), or (B) the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (i), the
-------- -------
following acquisitions shall not constitute a Change of Control:
(A) any acquisition directly from the Company; (B) any
acquisition by the Company; (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company; or (D) any
acquisition by any corporation pursuant to a transaction which
complies with clauses (A), (B) and (C) of subsection (iii) of
this Section 2(e); or
A-1
<PAGE>
(ii) BOARD COMPOSITION. Individuals who, as of the date hereof,
-----------------
constitute the Board of Directors (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board of
Directors; provided, however, that any individual becoming a
-------- -------
director subsequent to the date hereof whose election or
nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board of Directors; or
(iii) BUSINESS COMBINATION. Approval by the shareholders of the Company
--------------------
of a reorganization, merger, consolidation or sale or other
disposition of all or substantially all of the assets of the
Company or its principal Subsidiary that is not subject, as a
matter of law or contract, to approval by the Surface
Transportation Board or any successor agency or regulatory body
having jurisdiction over such transactions (the "Agency") (a
"Business Combination"), in each case, unless, following such
------
Business Combination:
(A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting
from such Business Combination (including, without
limitation, a corporation which as a result of such
transaction owns the Company or its principal Subsidiary or
all or substantially all of the assets of the Company or its
principal Subsidiary either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be;
(B) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting
from such Business Combination) beneficially owns, directly
or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership
existed prior to the Business Combination; and
(C) at least a majority of the members of the Board of Directors
resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board of Directors,
providing for such Business Combination; or
(iv) REGULATED BUSINESS COMBINATION. Approval by the shareholders of
------------------------------
the Company of a Business Combination that is subject, as a
matter of law or contract, to approval by the Agency (a
"Regulated Business Combination") unless such Business
------
Combination complies with clauses (A), (B) and (C) of subsection
(iii) of this Section 2(e); or
(v) LIQUIDATION OR DISSOLUTION. Approval by the shareholders of the
--------------------------
Company of a complete liquidation or dissolution of the Company
or its principal Subsidiary.
(f) "COMMITMENT DATE" means a date fixed by the Committee which shall be
the first day of the Commitment Period.
(g) "COMMITMENT PERIOD" means a period of twenty (20) Business Days
beginning with the Commitment Date during which a Participant who has
been granted a Purchase Award must purchase all or part of the
underlying Company Stock.
(h) "COMMITTEE" means the Committee of the Board appointed to administer
the Plan as provided in Section 10.
(i) "COMPANY" means CSX Corporation.
A-2
<PAGE>
(j) "COMPANY STOCK" means the common stock of the Company and rights,
options or warrants for the purchase of securities of the Company
which may be issued with shares of common stock pursuant, and subject
to, plans or agreements adopted or entered into from time to time by
the Company.
(k) "DISABILITY" means the inability to perform the services for which a
Participant was employed as a result of a physical or mental
impediment entitling the Participant to begin receiving benefits under
the CSX Salary Continuation and Long-Term Disability Plan.
(l) "EQUITY" means, as of any date, the Exchange Award Purchase Price of a
share of Company Stock less the applicable portion of the unpaid
balance and accrued interest of a Purchase Loan to which such share of
Company Stock is subject.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(n) "EXCHANGE AWARD" means a Purchase Award granted pursuant to Section 4
to a Participant who received a Purchase Award under the 1991 Plan.
(o) "EXCHANGE AWARD DOWN PAYMENT" means a dollar amount computed by taking
a percentage, to be determined by the Committee, of the Exchange Award
Purchase Price of the Company's common stock on the Commitment Date
multiplied by the number of shares in the Exchange Award; provided,
however, such percentage shall not be less than 10% nor more than 25%.
(p) "INSIDER" means any person subject to Section 16(b) of the Exchange
Act.
(q) "INTEREST" means an amount calculated using the Applicable Federal
Rate, as determined for purposes of Section 1274(d) of the IRC.
(r) "INTEREST SPREAD" means, at the time of determination, Interest
accrued on a Purchase Loan reduced by Applied Dividends.
(s) "IRC" means the Internal Revenue Code of 1986, as amended.
(t) "MARKET PRICE" means the average of the high and the low price of a
share of Company Stock on the New York Stock Exchange (or the average
of the bid and asked prices if there were no sales), on any Business
Day as reported in The Wall Street Journal.
(u) "PARTICIPANT" means an employee of the Company or a Subsidiary who is
designated by the Committee, in its sole discretion, as eligible for
and who receives a Purchase Award.
(v) "PURCHASE AWARD" means a right to purchase a specified number of shares
of Company Stock with Purchase Loan rights.
(w) "PURCHASE LOAN" means an extension of credit to a Participant by the
Company evidenced by a non-recourse promissory note for (i) in the
case of a new Purchase Loan, 95% of the Purchase Price of the Company
Stock awarded to the Participant under the Plan, or (ii) in the case
of a Purchase Loan made pursuant to an exchange of Company Stock
pursuant to Section 4, the Purchase Price of the Company Stock awarded
to the Participant under an Exchange Award, less his Exchange Award
Down Payment, and in either case, bearing Interest, and secured by a
pledge of all of the shares of Company Stock purchased by the
Participant.
(x) "PURCHASE NOTE" means a promissory note evidencing the Purchase Loan
for the balance of the Purchase Price without recourse rights against
the maker and with other terms and conditions established by the
Committee consistent with the Plan.
(y) "PURCHASE NOTE REPAYMENT AMOUNT" means the then unpaid balance of the
Purchase Note, accrued and unpaid interest, applicable federal and
state payroll and withholding taxes on income recognized on the
transaction, and any brokerage fees, collection fees and costs
associated with the Purchase Loan.
(z) "PURCHASE PRICE" or "EXCHANGE AWARD PURCHASE PRICE" means, with
respect to a share of Company Stock, the average of the Market Price
for the five (5) consecutive Business Days immediately preceding the
Commitment Date.
A-3
<PAGE>
(aa) "RETIREMENT" means the termination of employment (for reasons other
than Cause) (i) at or after age 65, or (ii) after age 55 with at least
10 years of service with the Company and/or a Subsidiary.
(ab) "SUBSIDIARY" means a corporation more than 50% of the voting shares of
which are owned directly or indirectly by the Company.
3. COMPANY STOCK
There shall be an aggregate of 9,000,000 shares of Company Stock reserved
for issuance under the Plan, subject to Section 9 of the Plan (concerning
changes in the capital structure of the Company). Shares that have been awarded
under the Plan but not issued, or shares that have been issued but are returned
to the Company in conformity with the Plan (including shares of Company Stock
retained, canceled or repurchased by the Company in conjunction with the payment
of a Purchase Loan or withholding taxes), may again be awarded under the Plan.
4. EXCHANGE OF SHARES
To encourage, extend and expand the continued ownership of Company Stock,
Participants in the 1991 Plan whose Purchase Loans mature July 31, 1996, without
regard to the one-year extension provided for under Section 6(b), may be given a
one-time irrevocable election to exchange all, or a portion to be determined by
the Committee, of any shares purchased under the 1991 Plan for an enhanced
Purchase Award under the Plan (an "Exchange Award"). To the extent such shares
are exchanged they shall constitute the "Exchanged Shares." Exchange Awards
shall be issued for not more than the number of shares of common stock
determined by dividing the excess of the Exchange Award Purchase Price, as of
the Commitment Date of the Exchange Award, of the number of shares relating to a
Purchase Loan issued pursuant to the 1991 Plan over the outstanding amount due
on the Purchase Loan on such date by 25% of the Exchange Award Purchase Price of
the Company's common stock on such date. In the case of a Participant who
exercises an Exchange Award, his 1991 Purchase Notes shall be canceled.
5. STOCK PURCHASE AWARDS
On or as soon as practicable after a Commitment Date, the Committee shall
give notice to each Participant (or to the class of Participants) eligible for
an award stating (i) the number of shares of Company Stock covered by each such
Purchase Award or a formula for determining the number of shares of Company
Stock covered by each such Purchase Award, and (ii) the price, other terms and
conditions, if any, pertaining to each such Purchase Award and Purchase Loan
that must be satisfied by a Participant in order to exercise the Purchase Award.
A Participant shall exercise a Purchase Award and Purchase Loan rights by
delivering to the Company during the Commitment Period (i) a notice stating the
amount of his down payment (which shall be 5% of the Purchase Price or his
Exchange Award Down Payment in the case of an Exchange Award) and his intention
to deliver a Purchase Note for the balance of the Purchase Price, and (ii) where
applicable, the down payment (which shall be deemed paid in the case of an
Exchange Award) and a Purchase Note.
The grant of a Purchase Award and Purchase Loan to a Participant shall not
obligate the Company or a Subsidiary of the Company to pay the Participant any
particular amount of remuneration, to continue the employment of a Participant
after the grant or to make further grants to a Participant at any time
thereafter.
6. PURCHASE LOANS
The Company shall, subject to paragraph (a) below, upon the Committee's
recommendation, extend a Purchase Loan to a Participant upon exercise of a
Purchase Award subject to the following terms and conditions:
(a) The original principal amount of a new Purchase Loan shall be the
difference between the Participant's down payment (which shall be 5%
of the Purchase Price) and the Purchase Price. In the case of an
Exchange Award, the Purchase Loan shall be the difference between the
Participant's Exchange Award Down Payment and the Exchange Award
Purchase Price. The down payment for a new Purchase Loan shall be in
cash, or, if authorized by the Committee (i) by delivery of shares of
Company Stock having a Market Price equal to the required down payment
on date of transfer to the Company, or (ii) by delivery to the Company
of a promissory note with terms and conditions fixed by the Committee
and with full recourse rights against the maker. The Exchange Award
Down Payment shall be deemed to have been paid by the Equity in a
Participant's Exchanged Shares subject to a Purchase Loan under the
1991 Plan.
A-4
<PAGE>
(b) The Purchase Loan shall be due and payable as provided in the
provisions of the Purchase Note executed by the Participant. The term
of the Purchase Note shall not exceed a period of five (5) years;
provided, however, the Participant, in his discretion, may extend the
Purchase Note for one (1) year; provided, further, that the Committee,
may, in its discretion, extend a Purchase Note for up to two (2)
years. In no event may the Purchase Note term, including extensions,
exceed seven (7) years.
(c) Purchase Notes shall be in the form approved by the Committee and
shall contain such terms and conditions, not inconsistent with the
Plan, as the Committee shall determine in its sole discretion;
provided, that each Purchase Note shall be subject to the terms of the
Plan.
(d) A Participant shall effect a pledge of all shares of Company Stock
acquired by the Participant upon the exercise of the Purchase Award by
delivering to the Company (i) the certificate or certificates for the
acquired shares of Company Stock, accompanied by a duly executed stock
power in blank, and (ii) a properly executed stock pledge agreement in
the form approved by the Committee.
(e) Dividends paid on shares of Company Stock pledged as security for a
Purchase Loan shall be first treated as Applied Dividends and then
applied to repay the Purchase Note. At the discretion of the
Committee, the Company shall also pay (i) dividend equivalents on the
number of shares purchased pursuant to a Purchase Note equal to the
number of shares representing the Participant's Equity in the
Exchanged Shares, and (ii) only after all interest and Purchase Price
reductions are realized under Section 6(g), dividend equivalents on
the number of shares purchased pursuant to a Purchase Note in excess
of the number of shares in (i), above, if any.
(f) Within ten (10) Business Days after the maturity date of a Purchase
Loan, or on the date or dates, if installments are elected pursuant to
Section 7(c), as of which a Participant elects to prepay a Purchase
Loan and Purchase Note in accordance with Section 7, the Participant
shall repay in full the Purchase Note Repayment Amount or the portion
related to an installment under Section 7(c). If not fully paid when
due, the Participant agrees to sell his pledged Company Stock to the
Company at the Market Price on the maturity date if a Business Day (or
at the Market Price on the Business Day immediately preceding the
maturity date if the maturity date is not a Business Day). The Company
may sell on the Participant's behalf on the open market (except as
hereinafter provided) the number of shares of Company Stock pledged as
collateral necessary to repay the Purchase Note Repayment Amount. If,
pursuant to procedures established by the Company for compliance with
applicable securities laws, the Company believes that the purchase of
pledged shares by the Company in repayment of a Purchase Note, or the
sale by the Company of pledged shares of Company Stock on the open
market to repay a Purchase Note, would violate any provision of
applicable securities laws or cause a Participant to incur a liability
under Section 16(b) of the Exchange Act, the maturity date may be
extended by the Committee until the first day the purchase by the
Company of the pledged shares or a sale of the pledged shares on the
open market can be made without violating such securities laws or the
Participant incurring liability under Section 16(b). If, pursuant to
procedures established by the Company for compliance with applicable
tax laws, the Company believes that the repayment of a Purchase Note,
the purchase of the pledged shares in repayment of a Purchase Note, or
the sale by the Company of pledged shares of Company Stock on the open
market to repay a Purchase Note would cause any portion of a
Participant's compensation under the Plan to be nondeductible under
Section 162(m) of the IRC, the maturity date may be extended by the
Committee until the first day the repayment of a Purchase Note, the
purchase of the pledged shares in repayment of a Purchase Note, or the
sale by the Company of pledged shares of Company Stock on the open
market to repay a Purchase Note can be made without such compensation
being non-deductible under Section 162(m) of the IRC, but in no event
shall such extension of the maturity date be for a period greater than
one (1) year.
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<PAGE>
(g) The Purchase Price and the principal amount of a Participant's
Purchase Loan and Purchase Note, plus accrued and unpaid Interest, as
well as any accrued and unpaid interest on a down payment loan
referenced in Section 6(a), shall be adjusted as follows if at any
time after the first anniversary date of a Purchase Note the Market
Price of Company Stock equals or exceeds the Purchase Price of the
Participant's Company Stock by the amount specified below for a period
of ten (10) consecutive Business Days:
<TABLE>
<CAPTION>
Stock Price Interest & Purchase Price Reductions
----------- ------------------------------------
<S> <C>
Purchase Price + 10% Interest Spread + Interest on down payment loan
Purchase Price + 20% Interest Spread + 5% + Interest on down payment loan
Purchase Price + 30% Interest Spread + 10% + Interest on down payment loan
Purchase Price + 40% Interest Spread + 15% + Interest on down payment loan
Purchase Price + 50% Interest Spread + 20% + Interest on down payment loan
Purchase Price + 60% Interest Spread + 25% + Interest on down payment loan
Purchase Price + 70% Interest Spread + 30% + Interest on down payment loan
Purchase Price + 80% Interest Spread + 35% + Interest on down payment loan
Purchase Price + 90% Interest Spread + 40% + Interest on down payment loan
Purchase Price + 100% Interest Spread + 50% + Interest on down payment loan
</TABLE>
The provisions of this section and any applicable adjustments to
Interest and a Purchase Note shall be applied at the time of repayment
of a Purchase Note. Decreases in the Market Price of Company Stock
subsequent to the completion of a measuring period shall be
disregarded for purposes of the adjustments authorized by this
section.
(h) In the event of a change in capital structure involving any of the
pledged shares of Company Stock, as provided in Section 9, such newly
acquired shares shall be pledged to the Company as substitute or
additional security.
(i) Notwithstanding anything in this Section 6 to the contrary, the
Company shall not be required to make a Purchase Loan to a Participant
if making such Purchase Loan will (i) cause the Company to violate any
covenant or other similar provision in any indenture, loan agreement,
or other agreement, or (ii) violate any applicable federal, state or
local law.
(J) Upon issuance by the Company of Company Stock purchased pursuant to a
Purchase Award, the affected Participant shall be deemed a shareholder
of the Company and (subject to the terms of the Plan, the Purchase
Loan, the Purchase Note and related documents) shall be entitled to
dividend and voting rights with respect to the Company Stock
purchased.
7. TERMINATION OF EMPLOYMENT; CHANGE OF CONTROL; PREPAYMENT OF PURCHASE LOAN
If before a Purchase Note is repaid a Participant's employment terminates
for any reason, or a Change of Control occurs, the following provisions shall
apply notwithstanding any terms in the Purchase Note to the contrary:
(a) Death or Disability. If a Participant's termination of employment
-------------------
results from death or Disability, the affected Participant (or the
Participant's estate or personal representative) may either (i)
continue to hold the Purchase Note and participate in the Plan for
three years (or, if earlier, until the maturity date of the Purchase
Loan, as extended by either the Participant or the Committee, pursuant
to Section 6(b)), or (ii) within ninety (90) days of said termination
of employment (A) elect to prepay the Purchase Note, or (B) elect to
rescind the Exchange Award or the Purchase Award, as the case may be.
If the Participant elects to prepay the Purchase Note under (ii)(A),
the Purchase Note shall become due and payable on the prepayment date
elected by the Participant. If an election to prepay the Purchase Note
is effective prior to the first anniversary of the execution of the
Purchase Note, Section 6(g) shall not apply; if it is effective on or
after the first anniversary of its execution, Section 6(g) shall
apply. If the Participant elects to rescind the Exchange Award or the
Purchase Award under (ii)(B), the shares of Company Stock acquired by
the Participant upon the exercise of the Exchange Award or Purchase
Award shall be transferred to the Company, the Purchase Note shall be
canceled, the Participant shall have no further rights under the Plan,
A-6
<PAGE>
and the Company shall have no further obligations to the Participant,
except that the Company shall pay to or with respect to the
Participant, in consideration for the cancellation of the
Participant's rights under the Exchange Award or Purchase Award, an
amount equal to his Exchange Award Down Payment, as adjusted under
Section 7(h), or, if applicable, the Purchase Award down payment paid
to the Company pursuant to Section 6(a).
(b) Involuntary Termination With Consent of Company. If a Participant's
-----------------------------------------------
employer terminates his employment for reasons other than Cause, the
affected Participant may, within ninety (90) days of said termination
of employment (i) elect to prepay the Purchase Note, or (ii) elect to
rescind the Exchange Award or the Purchase Award, as the case may be.
If the Participant elects to prepay the Purchase Note under (i), the
Purchase Note shall become due and payable on the prepayment date
elected by the Participant. If the Participant elects to rescind the
Exchange Award or the Purchase Award under (ii), the shares of Company
Stock acquired by the Participant upon the exercise of the Exchange
Award or Purchase Award shall be transferred to the Company, the
Purchase Note shall be canceled, the Participant shall have no further
rights under the Plan, and the Company shall have no further
obligations to the Participant, except that the Company shall pay to
or with respect to the Participant, in consideration for the
cancellation of the Participant's rights under the Exchange Award or
Purchase Award, an amount equal to his Exchange Award Down Payment, as
adjusted under Section 7(h), or, if applicable, the Purchase Award
down payment paid to the Company pursuant to Section 6(a). If the
Participant's termination of employment is prior to the first
anniversary of the execution of the Purchase Note, Section 6(g) shall
not apply; if it is on or after the first anniversary of the execution
of the Purchase Note, Section 6(g) shall apply.
(c) Retirement. If a Participant's termination of employment results from
----------
his Retirement, the affected Participant may either (i) continue to
hold the Purchase Note and participate in the Plan for three (3) years
(or, if earlier, until the maturity date of the Purchase Loan, as
extended by either the Participant, or the Committee, pursuant to
Section 6(b)), (ii) prepay the Purchase Note within ninety (90) days
of said termination of employment, or (iii) prepay the Purchase Note
in no more than three (3) installments, due over the remaining term of
the Purchase Note, including extensions. If a Participant elects to
prepay a Purchase Note, the Participant agrees to sell the pledged
Company Stock to the Company for the Market Price on the date of
prepayment. If an election to prepay the Purchase Note under (ii) or
(iii) above is effective prior to the first anniversary of the
execution of the Purchase Note, Section 6(g) shall not apply; if it is
effective on or after the first anniversary of its execution, Section
6(g) shall apply.
(d) Voluntary Termination with Consent of Company or Involuntary
------------------------------------------------------------
Termination. If the Participant's termination of employment is
-----------
voluntary and with the consent of the Company, or, if his employer
terminates his employment for reasons other than Cause and the Company
does not consent to the Participant's termination being treated under
Section 7(b), the maturity date of the Purchase Note shall be
accelerated without further action of the Committee or the Company and
shall be required to be prepaid within ninety (90) days of said
termination of employment, and the Participant agrees to sell the
pledged Company Stock to the Company for the Market Price on the date
of prepayment. If a Participant's termination of employment is prior
to the first anniversary of the execution of the Purchase Note,
Section 6(g) shall not apply; if it is on or after the first
anniversary of the execution of the Purchase Note, Section 6(g) shall
apply.
(e) Termination for Cause or Voluntary Termination Without Consent of
-----------------------------------------------------------------
Company. If the Participant's termination of employment is involuntary
-------
for Cause or a voluntary termination without the consent of the
Company, the maturity date of the Purchase Note shall be accelerated
without further action of the Committee or the Company to the date of
his termination of employment. In such case Section 6(g) shall not
apply and the Participant agrees to sell the pledged Company Stock to
the Company for the lesser of (i) the Market Price on the date of
termination of employment, or (ii) an amount equal to his Exchange
Award Down Payment, as adjusted by Section 7(h), (in any event, less
all related taxes and expenses), and the Company shall have the right
to retain any excess over such amount and the shares' Market Price.
A-7
<PAGE>
(f) Divisive Transaction. If the Participant's employer ceases to be a
--------------------
Subsidiary in a divisive transaction involving a sale of Shares or
substantially all of the assets of the Subsidiary, the affected
Participant may, within ninety (90) days of the closing of such
divisive transaction (i) elect to prepay the Purchase Note, or (ii)
elect to rescind the Exchange Award or the Purchase Award, as the case
may be. If the Participant elects to prepay the Purchase Note under
(i), the Purchase Note shall become due and payable on the prepayment
date elected by the Participant. If the Participant elects to rescind
the Exchange Award or the Purchase Award under (ii), the shares of
Company Stock acquired by the Participant upon the exercise of the
Exchange Award or Purchase Award shall be transferred to the Company,
the Purchase Note shall be canceled, the Participant shall have no
further rights under the Plan, and the Company shall have no further
obligations to the Participant, except that the Company shall pay to
or with respect to the Participant, in consideration for the
cancellation of the Participant's rights under the Exchange Award or
Purchase Award, an amount equal to his Exchange Award Down Payment, as
adjusted under Section 7(h), or, if applicable, the Purchase Award
down payment paid to the Company pursuant to Section 6(a). Section
6(g) shall apply to all Participants affected by a divisive
transaction. The foregoing shall apply whether or not the Participant
continues in the employ of the Subsidiary but shall not apply should
the Participant continue in the employ of the Company or another
Subsidiary not part of the divisive transaction.
(g) Change of Control. If a Change of Control occurs, Sections 7(a)
-----------------
through (f) shall no longer be applicable, the Interest and Purchase
Price Reductions under Section 6(g) shall be applied as if the Stock
Price had increased by 100% and the Participant may either (i)
continue to hold the Purchase Note and participate in the Plan until
the maturity date of the Purchase Note, including any extensions, or
(ii) within ninety (90) days of said Change of Control and, if
applicable, within ninety (90) days of a final Agency action in a
Regulated Business Combination under Section 2(e)(iv), (A) elect to
prepay the Purchase Note, or (B) elect to rescind the Exchange Award
or the Purchase Award, as the case may be. If the Participant elects
to prepay the Purchase Note under (ii)(A), the Purchase Note shall
become due and payable on the prepayment date elected by the
Participant, and the provisions of Section 6(g) shall apply. If the
Participant elects to rescind the Exchange Award or the Purchase Award
under (ii)(B), the shares of Company Stock acquired by the Participant
upon the exercise of the Exchange Award or Purchase Award shall be
transferred to the Company, the Purchase Note shall be canceled, the
Participant shall have no further rights under the Plan, and the
Company shall have no further obligations to the Participant, except
that the Company shall pay to or with respect to the Participant, in
consideration for the cancellation of the Participant's rights under
the Exchange Award or Purchase Award, an amount equal to his Exchange
Award Down Payment, as adjusted under Section 7(h), or, if applicable,
the Purchase Award down payment paid to the Company pursuant to
Section 6(a).
(h) Adjustment of Exchange Award Down Payment. Solely for purposes of
-----------------------------------------
determining the amount available to a Participant under this Section
7, a Participant's Exchange Award Down Payment shall be adjusted as
follows: the dollar amount of the Exchange Award Down Payment computed
as of the date of the Exchange of Shares pursuant to Section 4 shall
be divided by the Market Price on the date of such Exchange of Shares,
to arrive at a number of equivalent shares. On the Purchase Loan
maturity date or prepayment date applicable under this Section 7, the
number of equivalent shares determined in the preceding sentence will
be multiplied by the Market Price on such date to arrive at the
Participant's Exchange Award Down Payment as adjusted.
(i) Certain Terms of Purchase Awards or Exchange Awards. Notwithstanding
---------------------------------------------------
any provision of this Plan to the contrary, in the discretion of the
Committee, a Purchase Award and/or Exchange Award may provide, to the
extent deemed appropriate by the Committee to eliminate or reduce the
applicability or impact of Sections 280G and/or 4999 of the IRC, for:
(i) the cancellation of shares and/or a reduction or increase in the
amount of a Purchase Note, (ii) a limitation of the reduction of the
Purchase Price pursuant to Section 7(g) above, (iii) the elimination
of any acceleration of a Purchase Note or right to prepay such Note,
or (iv) a reduction or limitation of any other benefit under this Plan
or otherwise to a Participant.
8. NON-TRANSFERABILITY OF PURCHASE AWARDS
Except as provided in Section 7(a), neither right of Participation nor
Purchase Awards are assignable or transferable.
A-8
<PAGE>
9. CHANGE IN CAPITAL STRUCTURE
If the number of outstanding shares of Company Stock is increased or
decreased as a result of a subdivision or consolidation of shares, the payment
of a stock dividend, stock split, or any other change in capitalization effected
without receipt of consideration by the Company (including, but not limited to,
the creation or issuance to shareholders generally of rights, options or
warrants for the purchase of common or preferred stock of the Company), the
number and kind of shares of stock or securities of the Company to be subject to
the Plan, the maximum number of shares or securities which may be delivered
under the Plan, and other relevant provisions shall be appropriately adjusted by
the Committee, whose determination shall be binding and conclusive on all
persons.
If there is a Change of Control, the Committee may take such actions, not
inconsistent with the Plan, with respect to outstanding unexercised Purchase
Awards as the Committee deems appropriate.
Notwithstanding anything in the Plan to the contrary, the Committee may
take the foregoing actions without the consent of any Participant, and the
Committee's determination shall be conclusive and binding on all persons for all
purposes.
10. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee, consisting of not less
than three Directors of the Company appointed by the Board. Subject to paragraph
(d) below, the Committee shall be the Compensation Committee of the Board or
such subcommittee appointed by the Compensation Committee consisting of not
fewer than two non-employee directors. The Committee shall at all times consist
of outside directors within the meaning of Section 162(m) of the IRC. The
Committee shall have general authority to impose any limitation or condition
upon a Purchase Award the Committee deems appropriate to achieve the objectives
of the Purchase Award and the Plan, and in addition, and without limitation and
in addition to powers set forth elsewhere in the Plan, shall have the following
specific authority:
(a) The Committee shall have the power and complete discretion to
determine (i) which employees of the Company or a Subsidiary shall be
Participants, (ii) which Participants shall receive a Purchase Award
with Purchase Loan rights, (iii) the number of shares of Company Stock
to be covered by each Purchase Award, (iv) the Market Price of Company
Stock, (v) the time or times when a Purchase Award shall be granted,
(vi) whether a Disability exists, (vii) the manner in which payment
will be made upon the exercise of a Purchase Award, and (viii) any
additional requirements relating to Purchase Awards that the Committee
deems appropriate.
(b) The Committee may adopt rules and regulations for carrying out the
Plan and for the sale or other disposition of Company Stock acquired
pursuant to the Plan. The interpretation and construction of any
provision of the Plan by the Committee shall be final and conclusive.
The Committee may consult with counsel, who may be counsel to the
Company, and shall not incur any liability for any action taken in
good faith in reliance upon the advice of counsel.
(c) A majority of the members of the Committee shall constitute a quorum,
and all actions of the Committee shall be taken by a majority of the
members present. Any action may be taken by a written instrument
signed by all of the members, and any action so taken shall be fully
effective as if it had been taken at a meeting.
(d) The Board may from time to time appoint or remove members and fill
vacancies, however caused, in the Committee. Insofar as it is
necessary to satisfy the requirements of Section 16(b) of the Exchange
Act and Rule 16b-3 thereunder, no member of the Committee shall be
eligible to participate in the Plan or in any other plan of the
Company or a Subsidiary that entitles participants to acquire stock,
stock options or stock appreciation rights of the Company or a
Subsidiary, and no person shall become a member of the Committee if,
within the preceding one-year period, the person shall have been
eligible to participate in such a plan.
(e) Down payment loans under the 1991 Plan shall be extended on a full
recourse basis for up to seven (7) years in the case of any
Participant who receives and exercises an Exchange Award. To the
extent that a Purchase Note is extended, accelerated or prepaid under
the terms of the Plan, said extension, acceleration or prepayment
shall also apply to the down payment loan.
A-9
<PAGE>
11. EFFECTIVE DATE OF THE PLAN
The 1991 Plan became effective as of December 12, 1990. This amendment and
restatement of the 1991 Plan shall be effective as of February 14, 1996, and
shall be submitted to the shareholders of the Company for approval. Until (i)
the Plan has been approved by the Company's shareholders, (ii) the Company Stock
issuable under the Plan has been registered with the Securities and Exchange
Commission, (iii) the Company Stock is accepted for listing on the New York
Stock Exchange, and (iv) the requirements of any applicable state securities
laws have been met, no Purchase Award shall be granted or Purchase Loan
authorized by the Committee.
12. TERMINATION, MODIFICATION
If not sooner amended or terminated by the Board, this Plan shall terminate
at the close of business on February 13, 2006. No Purchase Awards shall be made
under this Plan after termination. The Board may terminate the Plan or may amend
the Plan in such respects as it shall deem advisable; provided, however, that,
if necessary to satisfy the requirements of Section 16(b) of the Exchange Act,
the New York Stock Exchange or applicable state law, the shareholders of the
Company must approve any amendment that would (i) materially increase the
benefits accruing to Participants under the Plan, (ii) materially increase the
number of shares of Company Stock that may be issued under the Plan, or (iii)
materially modify, the Plan's eligibility requirements. A termination or
amendment of the Plan shall not, without the consent of the affected
Participant, adversely impact a Participant's rights under a Purchase Award
previously granted to him.
13. NOTICE
All notices and other communications required or permitted to be given
under this Plan shall be in writing and shall be deemed to have been duly given
if delivered personally or mailed first class, postage prepaid, as follows: (i)
if to the Company--at its principal business address to the attention of the
Secretary; (ii) if to any Participant--at the last address of the Participant
known to the sender at the time the notice or other communication is sent.
14. GOVERNING LAW
The terms of this Plan shall be governed by the laws of the Commonwealth of
Virginia.
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<PAGE>
APPENDIX B
CSX CORPORATION
1987 LONG-TERM PERFORMANCE STOCK PLAN AMENDMENT
1. Section 2(q), which defines "Performance Objective," is amended by adding
subsection 4 at the end. The amended Section 2(q) will read as follows:
"(q) "Performance Objective": The term Performance Objective shall mean a
performance objective established in writing by the Committee within
ninety (90) days of the commencement of the Performance Period to
which the Performance Objective relates and at a time when the outcome
of such objective is substantially uncertain. Each Performance
Objective shall be established in such a way that a third party having
knowledge of the relevant facts could determine whether the objective
is met. A Performance Objective may be based on one or more business
criteria that apply to the individual Participant, a business unit or
the Company as a whole, and shall state, in terms of an Objective
Standard, the method of computing the amount payable to the
Participant if the Performance Objective is attained. With respect to
Incentives granted to Covered Employees, the material terms of the
Performance Objective shall be disclosed to, and must be subsequently
approved by, a vote of the shareholders of the Company, consistent
with the requirements of Section 162(m) of the Code and the
regulations thereunder. The Performance Objectives for any Performance
Period shall be based on one or more of the following measures, as
determined by the Committee in writing within ninety (90) days of the
commencement of the Performance Period:
1. The achievement by the Company or business unit of specific levels
of Return on Invested Capital ("ROIC"). ROIC for the Company or
business unit means its results of operations divided by its
capital.
2. The generation by the Company or business unit of free cash flow.
3. The creation by the Company or business unit of specific levels of
Economic Value Added ("EVA"). EVA for the Company or business unit
means its ROIC less its cost of capital multiplied by its capital.
4. The creation by the Company of specific levels of Total Shareholder
Return ("TSR"). TSR for the Company means total return to
shareholders as measured by stock price appreciation plus
dividends."
2. Section 10 is amended to permit Performance Unit Awards and Performance
Share Awards to be awarded to executives in a Functional Group. The amended
Section 10 will read as follows:
"10. Performance Unit Awards and Performance Share Awards.
The Committee may grant Performance Unit Awards (PUAs) and Performance Share
Awards (PSAs) under which payment shall be made in shares of the Company's
common stock, in cash, or partly in shares and partly in cash, as the
Committee in its sole discretion shall determine. PUAs and PSAs may be
awarded to individual Participants or to a Functional Group. Awards to a
Functional Group shall be subject to distribution by the Chief Executive
Officer of the Company, or by his designees, to individuals within such
group. At the time of the grant, the Committee shall establish in writing
and communicate to Participants, and to members of a Functional Group who
can be identified, Performance Objectives to be achieved during the
Performance Period. Awards of PUAs and PSAs may be determined by the average
level of attainment of Performance Objectives over multiple Performance
Periods.
Prior to the payment of PUAs and PSAs, the Committee shall determine the
extent to which Performance Objectives have been attained during the
Performance Period or Performance Periods in order to determine the level of
payment to be made, if any, and shall record such results in the minutes of
the meeting of the Committee. In no instance will payment be made if the
Performance Objectives are not attained.
Payment, if any, shall be made in a lump sum or in installments, in cash or
shares of Company common stock, as determined by the Committee, commencing
as promptly as feasible following the end of the Performance Period, except
that (a) payments to be made in cash may be deferred subject to such terms
and conditions as may be prescribed by the Company, and (b) payments to be
made in Company common stock may be deferred pursuant to an
B-1
<PAGE>
election filed on forms prescribed and provided by and filed with the
Company. A Participant may elect annually to defer to a date certain, or the
occurrence of an event, as provided in the form, the receipt of all or any
part of shares of Company common stock he may subsequently become entitled
to receive. On forms provided by and filed with the Company, the Participant
shall also specify whether, when the deferral period expires or the
restrictions below lapse, payment will be in a lump sum or installments over
a period not exceeding twenty (20) years. The Committee shall prescribe the
time periods during which the election must be filed in order to be
effective. Elections to defer, once effective, are irrevocable. Changes
regarding the date of payment, the period over which payments are to be made
and the method of payment are subject to substantial penalties. However, a
One-Time Change of Distribution Election may be made to change the timing or
the form of payment without penalty. Any such election which changes a
distribution election specified "termination of employment" or "the earlier
of termination or a specified age" shall be void in the event the
Participant's employment terminates within twelve months following the date
of the election.
If a Participant has made an effective election to defer the payment of
shares of common stock, the Company shall, within a reasonable period of
time after the deferral election is made, transfer shares of common stock or
other assets equal in value to the number of shares as to which payment is
deferred to the Trust to secure the Company's obligation to pay shares of
common stock to the Participant in the future. However, in any event, the
Company shall make any previously deferred payment of shares to the
Participant upon:
a. the death of the Participant;
b. the Disability of the Participant;
c. the Participant's termination of employment with the Company or a
subsidiary of the Company, subject to the Participant's deferral
election; or
d. a Change in Control."
3. Sections 12 through 22 are renumbered as 13 through 23, and the following
new Section 12 regarding the payment of Incentive Compensation Program
Shares is added:
"12. Incentive Compensation Program Shares
A Participant who receives base compensation in excess of a dollar level to
be determined by the Committee and who is eligible to receive an award
under the Company's Incentive Compensation Program ("ICP") may elect, by
filing the prescribed election form with the Company in accordance with
rules established by the Committee, to receive all or part of his annual ICP
award in shares of the Company's common stock, rather than cash; provided,
however, the Participant must agree that his receipt of the stock will be
deferred until his retirement or termination of employment, with a minimum
deferral period of three (3) years. Elections to defer are irrevocable. A
Participant who makes such election shall, at the time that the stock is
deferred, receive an additional award of stock equal to a percentage,
established by the Committee from time to time, of the amount that he
elected to have deferred, but not to exceed 25% (the "Stock Premium"). The
Participant's election to defer shall also apply to the Stock Premium.
If a Participant made an effective election to defer the payment of shares
of common stock and receive the Stock Premium, the Company shall, within a
reasonable period of time after the deferral election is made, transfer
shares of common stock or other assets equal in value to the number of
shares as to which payment is deferred to the Trust to secure the Company's
obligation to pay shares of common stock to the Participant in the future.
However, in any event, the Company shall make any previously deferred
payment of shares to the Participant upon:
a. the death of the participant;
b. the Disability of the Participant;
c. the Participant's termination of employment with the Company or a
subsidiary of the Company, subject to the Participant's deferral election
and the three (3) year deferral requirement; or
d. a Change in Control."
B-2
<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, 2, 3
and 4. Shares will be so voted unless you otherwise indicate.
<TABLE>
<CAPTION>
<S> <C> <C>
For All
1. Election of Directors For Withheld Except For Against Abstain
Nominees: E. E. Bailey; R. L. Burrus, Jr.; 0 0 0
B.C. Gottwald; J.R. Hall; R.D. Kunisch; H.L. McColl, Jr.; 2. Appointment of Ernst & Young LLP 0 0 0
J.W. McGlothlin; S.J. Morcott; C.E. Rice; as independent certified public
W.C. Richardson; F.S. Royal, M.D.; J.W. Snow accountants.
For Against Abstain
To withhold authority to vote for any individual nominee(s), 3. Approval of amended and restated
write the name(s) on the line below. 1991 Stock Purchase and Loan Plan. 0 0 0
________________________________________ For Against Abstain
Nominee Exception 4. Approval of amendment to 1987
Long-Term Performance Stock Plan. 0 0 0
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.
</TABLE>
<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.
<PAGE>
- -
PROXY
CSX CORPORATION
[CSX CORPORATION LOGO]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON APRIL 25, 1996.
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, 1996, 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.)
- -
