<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
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
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
CSX
CORPORATION
March 16, 1999
Dear CSX Shareholder:
You are cordially invited to attend our Annual Meeting of Shareholders on
Tuesday, April 27, 1999, 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 14
directors and the appointment of independent auditors. The Board of Directors
believes that these proposals are in the best interests of the Company and its
shareholders and recommends a vote for each of these proposals.
Also to be acted upon at the Meeting is one shareholder proposal regarding
the Company's Shareholder Rights Plan. The Board of Directors believes that this
proposal is not in the best interests of the Company and its shareholders. The
Board of Directors recommends a vote against this proposal.
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 one week 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 vote promptly.
/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 16, 1999
To Our Shareholders:
The Annual Meeting of Shareholders of CSX Corporation will be held at The
Greenbrier, White Sulphur Springs, West Virginia, on Tuesday, April 27, 1999, at
10:00 a.m. (EDT), for the purpose of considering and acting upon the following
matters:
1. Election of 14 directors;
2. Appointment of Ernst & Young LLP as independent certified public
accountants for 1999;
3. Shareholder proposal regarding Shareholder Rights Plan; and
4. Such other matters as may properly come before the Meeting.
The above matters are described in the Proxy Statement. You are urged,
after reading the Proxy Statement, to vote your shares by one of the following
methods: vote over the Internet or by telephone using the instructions on the
enclosed proxy card (if these options are available to you), or mark, sign, date
and return the enclosed Proxy to assure that your shares are represented at the
Meeting.
Only shareholders of record at the close of business on February 26, 1999,
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 16,
1999.
By Order of the Board of Directors
/s/ Alan A. Rudnick
Alan A. Rudnick
Vice President - General Counsel
and Corporate Secretary
1
<PAGE>
PROXY STATEMENT
GENERAL INFORMATION
The enclosed Proxy is solicited by the Board of Directors of CSX
Corporation ("CSX" or the "Company"). A Proxy may be revoked by a shareholder at
any time before it is voted by notice in writing delivered to the Corporate
Secretary, by timely receipt of another proxy (including an internet or
telephone vote), or by voting in person at the Annual Meeting.
CSX is the parent of CSX Transportation, Inc. ("CSXT"); Sea-Land Service,
Inc. ("Sea-Land"); 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 26, 1999, CSX had outstanding 217,319,374 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
26, 1999, 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
Fourteen 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, except H. Furlong Baldwin, Claude S. Brinegar and E.
Bradley Jones, were previously elected directors by the shareholders.
As of the date of this Proxy Statement, the Board of Directors has no
reason to believe that any of the nominees named will be unable or unwilling to
serve. There are no family relationships among any of these nominees or among
any of these nominees and any officer, nor any arrangement or understanding
between any nominee and any other person pursuant to which the nominee was
selected.
In the election of directors, those receiving the greatest number of votes
shall be elected, even if such votes do not constitute a majority. Certain
information regarding each nominee follows. Each nominee has consented to being
named in the Proxy Statement and to serve if elected.
2
<PAGE>
[PHOTO OF ELIZABETH E. BAILEY]
ELIZABETH E. BAILEY, 60, is the John C. Hower Professor of Public Policy and
Management, The Wharton School of the University of Pennsylvania. She is a
director of Honeywell, Inc.; Philip Morris Companies, Inc.; and Teachers
Insurance and Annuity Association-College Retirement Equities Fund. Dr. Bailey
has been a director of CSX since November 1989. She is Chairman of the Board's
Audit Committee and a member of the Nominating and Organization Committee and
the Executive Committee.
[PHOTO OF H. FURLONG BALDWIN]
H. FURLONG BALDWIN, 67, is Chairman, President and Chief Executive Officer of
Mercantile Bankshares Corporation, a bank holding company. He is also a director
of Baltimore Gas & Electric Company; GRC International, Inc.; and The Saint Paul
Companies. Mr. Baldwin was a director of Conrail Inc. through August 22, 1998.
Mr. Baldwin has been a director of CSX since October 6, 1998, and is a member of
the Board's Audit Committee.
[PHOTO OF CLAUDE S. BRINEGAR]
CLAUDE S. BRINEGAR, 72, is retired from Unocal Corp., a high technology earth
resources company, where he served as Vice Chairman from August 1989 to June
1995. Until 1997, he was a visiting scholar at Stanford University. Mr. Brinegar
is a director of Maxicare Health Plans, Inc. Mr. Brinegar was a director of
Conrail Inc. through August 22, 1998. He has been a director of CSX since
October 6, 1998, and is a member of the Board's Nominating and Organization
Committee.
[PHOTO OF ROBERT L. BURRUS JR.]
ROBERT L. BURRUS, JR., 64, is a partner in and Chairman of McGuire, Woods,
Battle & Boothe, LLP, a law firm. Mr. Burrus is a director of Concepts Direct,
Inc.; Heilig-Meyers Company; O'Sullivan Corporation; S&K Famous Brands, Inc.;
and Smithfield Foods, Inc. Mr. Burrus has been a director of CSX since April
1993 and is a member of the Board's Nominating and Organization Committee and
Pension Committee.
[PHOTO OF BRUCE C. GOTTWALD]
BRUCE C. GOTTWALD, 65, is Chairman and Chief Executive Officer of Ethyl
Corporation, a worldwide producer of petroleum additives. Mr. Gottwald has been
a director of CSX since April 1988 and is Chairman of the Board's Pension
Committee and a member of the Compensation Committee and Executive Committee.
[PHOTO OF JOHN R. HALL]
JOHN R. HALL, 66, was Chairman of Arch Coal, Inc., a coal mining company, from
July 1997 to December 1998. Prior to February 1997, he was 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 Arch Coal, Inc.; Bank One
Corporation; The Canada Life Assurance Company; Humana Inc.; Reynolds Metals
Company; UCAR International Inc.; and United States Enrichment Corp. He is also
President of the Board of Trust of Vanderbilt University. Mr. Hall has been a
director of CSX since May 1994 and is a member of the Board's Compensation
Committee and Nominating and Organization Committee.
[PHOTO OF E. BRADLEY JONES]
E. BRADLEY JONES, 71, is a private consultant and former Chairman and Chief
Executive Officer of LTV Steel Company. He is a director of Birmingham Steel
Corporation; RPM, Inc.; and TRW Inc. and a trustee of FMR Corp. Mr. Jones was a
director of Conrail Inc. through August 22, 1998. He has been a director of CSX
since October 6, 1998, and is a member of the Board's Pension Committee.
3
<PAGE>
[PHOTO OF ROBERT D. KUNISCH]
ROBERT D. KUNISCH, 57, has been Vice Chairman of Cendant Corporation, a global
provider of consumer and business services primarily in the membership, travel
and real estate services segments, since December 1997. Previously, he was
Chairman, President and Chief Executive Officer of PHH Corporation, a provider
of value-added business services, including vehicle management, real estate, and
mortgage banking services. He is a director of GenCorp. Mr. Kunisch has been a
director of CSX since October 1990 and is a member of the Board's Compensation
Committee and Nominating and Organization Committee.
[PHOTO OF JAMES W. McGLOTHLIN]
JAMES W. MCGLOTHLIN, 58, 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 a
member of the Board's Audit Committee and Pension Committee.
[PHOTO OF SOUTHWOOD J. MORCOTT]
SOUTHWOOD J. MORCOTT, 60, has been Chairman of the Board of Dana Corporation, a
manufacturer of automotive and truck parts and provider of commercial credit,
since February 1999. Previously, Mr. Morcott was Chairman and Chief Executive
Officer of Dana Corporation. He also was President of Dana Corporation until
1995. 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 a member of the
Board's Audit Committee and Pension Committee.
[PHOTO OF CHARLES E. RICE]
CHARLES E. RICE, 63, has been the Vice Chairman, Corporate Development, of Bank
of America Corp., a bank holding company, since December 1998. From January 1998
through October 1998, he was Chairman of NationsBank, Inc., a bank holding
company. Previously, he was Chairman and Chief Executive Officer of Barnett
Banks, Inc., a bank holding company. He is a director of Post Properties, Inc.,
and Sprint Corporation. Mr. Rice has been a director of CSX since April 1990 and
is Chairman of the Board's Compensation Committee and a member of the Executive
Committee.
[PHOTO OF WILLIAM C. RICHARDSON]
WILLIAM C. RICHARDSON, 58, is President and Chief Executive Officer of the W.K.
Kellogg Foundation, a major philanthropic institution, a position he has held
since 1995. Previously, he was President of The Johns Hopkins University. He is
a director of The Bank of New York Company, Inc., and The Kellogg Company. Dr.
Richardson has been a director of CSX since December 1992 and is Chairman of the
Board's Nominating and Organization Committee and a member of the Executive
Committee.
[PHOTO OF FRANK S. ROYAL M.D.]
FRANK S. ROYAL, M.D., 59, 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 Audit Committee and Compensation Committee.
[PHOTO OF JOHN W. SNOW]
JOHN W. SNOW, 59, is Chairman of the Board, President and Chief Executive
Officer of CSX. Mr. Snow is a director of Circuit City Stores, Inc.; GTE
Corporation; Johnson & Johnson; and USX Corporation. Mr. Snow has been a
director of CSX since April 1988 and is Chairman of the Board's Executive
Committee.
4
<PAGE>
During 1998, there were six meetings of the CSX Board of Directors. With
the exception of Messrs. Jones and McGlothlin, each director of the Company
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.
CORPORATE GOVERNANCE
The CSX Board of Directors is committed to governance principles and
practices that 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 jurisdiction 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 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 1998.
The Audit Committee approves and recommends independent auditors to the
Board and to the shareholders. Its primary functions include satisfying 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; receives reports from internal
and outside auditors on matters that could impact the Company's internal control
and financial reporting and integrity; 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 1998.
The primary functions of the Compensation Committee are to establish the
Company's compensation philosophy and to review and approve or recommend
approval of compensation and compensation plans, including certain 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, the Committee 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 five meetings in 1998.
The Pension Committee monitors funding and administration of certain
tax-qualified benefit plans of the Company. The Committee has authority to amend
certain tax-qualified plans. The Pension Committee has five members and held
three meetings in 1998.
The Nominating and Organization Committee of the Board, previously known
as the Organization and Corporate Responsibility Committee, recommends
candidates for election to the Board and reviews and recommends changes in board
composition, committee structure, director qualification, and director
compensation and retirement. This Committee recommends and monitors corporate
governance practices and also conducts regular evaluations of director
performance and of the effectiveness of the Board as a working group. In
fulfilling its responsibility for making nominations to the Board of Directors,
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 Nominating
5
<PAGE>
and Organization 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 the Company operates and
legal aspects of CSX's operations, including litigation, legislation and other
governmental actions that could affect CSX. The Committee has six members, none
of whom is a Company employee. It held six meetings in 1998.
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 Corporation 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 receive up to 100 percent of the remaining
portion of their retainers and meeting fees in stock. Payments made in stock
pursuant to the Stock Plan also can be deferred for income tax purposes into the
CSX Directors' Stock Trust ("Directors' Trust"), a trust established for that
purpose. The Directors' Trust is subject to the claims of creditors of CSX
Corporation. In 1998, each director received a stock grant of 200 shares of CSX
common stock with a market value on date of grant of $41.25 per share, the
average between the high and low prices reported on the New York Stock Exchange
on December 9, 1998. Receipt of these shares and the income tax thereon were
deferred for all directors, and the stock was issued to the Directors' Trust.
Each non-employee director also received 1,000 stock options, with an exercise
price of $41.25 and a term of 10 years.
For all deferred stock compensation, each director elects, in accordance
with Internal Revenue Service requirements, a distribution schedule for such
deferred stock compensation. Distributions of deferred stock compensation cannot
occur before the later of the director's retirement from the Board or reaching
age 65, and distribution periods cannot exceed 20 years.
A director may elect to participate in the 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 reached age 65, after which he or she will be paid in
installments over a period not to exceed 15 years. Amounts so deferred may be
designated by the director to be credited to an Interest Account, a CSX Phantom
Stock Account, or a combination. 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 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. Mr.
Jones, Mr. Morcott and Dr. Royal have directed deferred cash compensation to be
invested in the Phantom Stock Account where the cash balances accumulated as of
December 25, 1998, represent the equivalent of 149 shares, 1,747 shares, and 360
shares of CSX stock, respectively.
6
<PAGE>
The Deferred Compensation Plan provides that if the Board determines that a
change of control of CSX has occurred, as defined in the Plan, Plan participants
will receive, within seven days of such determination, a lump sum cash payment
equal to the balance credited to directors' accounts. The Stock Plan provides
that upon a change of control, shares, the receipt of which was deferred and
held in trust, will be distributed unless the Participant has elected to remain
in the Plan. Upon a change of control of CSX, amounts sufficient to pay any
undistributed payments pursuant to the Deferred Compensation Plan and the Stock
Plan will be put into a trust until distribution under the terms of the plans
and participants' distribution elections. The trust will be subject to claims of
creditors of CSX Corporation. Directors may elect, within a specified period of
time prior to any change of control event, to continue participation in the
Deferred Compensation Plan and the Stock Plan 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: Dr. Bailey, Dr. Richardson, Dr. Royal, and Messrs. Burrus,
Gottwald, Kunisch, McGlothlin, Morcott, Rice, and Snow.
Directors also can participate in a CSX Directors' Matching Gift Program.
Directors' contributions to organizations exempt from taxation pursuant to
Section 501(c)(3) of the Internal Revenue Code, and which qualify for support
under internal guidelines for CSX charitable contributions, are matched on a
two-for-one basis. The maximum amount of contributions that can be matched in
any year is $25,000 per director. Directors who participated in the Matching
Gift Program during 1998 and the amounts paid by the Company for contributions
made by these directors in 1998 are: Dr. Bailey - $6,000; Mr. Burrus - $36,900;
Mr. Brinegar - $8,390; Mr. Hall - $50,000; Mr. Jones - $50,000; Mr. Kunisch -
$23,500; Mr. Morcott - $2,000; Mr. Rice - $50,000; Dr. Richardson - $29,250; and
Mr. Snow - $50,000. Mr. Hugh L. McColl, Jr., a director of the Company through
April 28, 1998, also participated in the Matching Gift Program in 1998, and the
amount paid by the Company for Mr. McColl's contributions was $50,000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1987, prior to the election of James W. McGlothlin as a director of CSX,
The United Company, of which Mr. McGlothlin is Chairman and Chief Executive
Officer, purchased a used Gulfstream aircraft from a wholly owned subsidiary of
the Company at a cost of $6 million, with a down payment of $1.2 million plus 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. The remaining balance of $400,000 plus accrued interest was paid
in January 1998.
Robert L. Burrus, Jr., a director of the Company, is a partner in and
Chairman of McGuire, Woods, Battle & Boothe, LLP, a law firm that regularly
provides legal services to the Company and its subsidiaries.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During January 1998, Mr. Snow was a member of the Compensation Committee of
NationsBank Corporation, whose name has since been changed to BankAmerica
Corporation. Mr. Hugh L. McColl, Jr., who served as a director of the Company
through April 28, 1998, is Chief Executive Officer of BankAmerica Corporation.
7
<PAGE>
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 ("Employment Agreements") with certain executives, including those
named in the Summary Compensation Table. The Employment 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
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 the
executive's 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.
The agreements also generally provide somewhat different treatment in
certain change of control transactions subject to regulatory review by the
Surface Transportation Board, or any successor regulatory body. During the
period of regulatory review, the executive would only be entitled to severance
benefits if he or she 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 or she is terminated other than
for cause within one year after the regulatory approval or if the executive
terminates his or her employment for good reason within such one-year period or
voluntarily during the 30-day period following the first anniversary of the
regulatory approval.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 with one exception the Company's executive officers and directors
complied with the SEC's requirements with respect to transactions during the
last fiscal year. In one transaction during December 1998, Mr. Jones received
the equivalent of 149 shares of phantom stock as a result of an election related
to the deferral of cash compensation. The transaction was reported on a late
filed amendment to his Form 5 for 1998.
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS, AND EXECUTIVE
OFFICERS
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership
------------------------------------------------------------
Shares for which
Beneficial Ownership Percent
Shares can be Acquired Total of
Name of Beneficially within 60 Days Beneficial Class
Title of Class Beneficial Owner (Note 1) Owned (Note 2) Ownership (Note 3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CSX Corp. Elizabeth E. Bailey 7,624 - 7,624 *
Common Stock H. Furlong Baldwin 5,329 - 5,329 *
$1 Par Value Claude S. Brinegar 1,403 - 1,403 *
Robert L. Burrus, Jr. 8,713 - 8,713 *
Bruce C. Gottwald 20,214 - 20,214 *
John R. Hall 14,058 - 14,058 *
E. Bradley Jones 1,200 - 1,200 *
Robert D. Kunisch 11,341 - 11,341 *
James W. McGlothlin (Note 4) 223,835 - 223,835 *
Southwood J. Morcott 10,188 - 10,188 *
Charles E. Rice 12,796 - 12,796 *
William C. Richardson 4,240 - 4,240 *
Frank S. Royal 6,838 - 6,838 *
John W. Snow 1,290,083 (Note 5) 2,196,908 3,486,991 1.6%
Alvin R. Carpenter 566,202 (Note 5) 198,000 764,202 *
Gerald L. Nichols 236,499 (Note 5) 170,000 406,499 *
Paul R. Goodwin 271,951 (Note 5) 184,828 456,779 *
Mark G. Aron 337,612 (Note 5) 184,828 522,440 *
Executive officers as a group 4,274,879 (Note 5) 3,663,198 7,938,077 3.6%
(16 including those named above)
and all directors and nominees
FMR Corp. (Note 6) 12,962,322 - 12,962,322 6.0%
82 Devonshire Street
Boston, MA 02109
Sanford C. Bernstein and Co., Inc. 30,317,318 - 30,317,318 14.0%
(Note 7)
767 Fifth Avenue
New York, NY 10153
Scudder Kemper Investments, Inc. 11,414,801 - 11,414,801 5.3%
(Note 8)
345 Park Avenue
New York, NY 10154
- ------------------------------------------------------------------------------------------------------------------------------------
</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 5, 1999.
Note 2 Represents shares under options or stock appreciation rights
exercisable within 60 days, based on the market price of CSX common
stock on March 5, 1999, expressed as the average of the high and low
prices reported on the New York Stock Exchange, which was $39.25.
Note 3 Based on number of shares outstanding of 217,325,570 on March 5,
1999, plus shares deemed outstanding for which beneficial ownership
can be acquired within 60 days by that individual or group. An
asterisk (*) indicates that ownership is less than 1 percent of
class.
Note 4 Mr. McGlothlin's ownership includes 200,000 shares of common stock as a
result of stock holdings by affiliates of Mr. McGlothlin in which he
shares voting and investment power.
9
<PAGE>
Note 5 This column includes stock purchased by the named executive officer or
group of executive officers pursuant to CSX's Stock Purchase and Loan
Plan ("SPLP"). Under the SPLP, certain officers could purchase shares
of CSX common stock at fair market value on offering dates in 1991,
1992 and 1996. Each provided a down payment that remains at risk. A
portion of the value used for down payment was provided through a full
recourse loan from CSX. The balance of the purchase price was
satisfied through non-recourse loans provided by CSX and secured by
the shares purchased. The loans bear interest at the Applicable
Federal Rate in effect at the time the loans were issued. Participants
can pay the balance due on the loans between July 31, 2001, and August
1, 2003.
Dividends paid on the shares purchased are applied against accrued
interest on the non-recourse loans. The differential between accrued
interest and applied dividend payments is subject to forgiveness under
the term of the SPLP at the time the loans are repaid. The principal
balances of the non-recourse loans are also subject to forgiveness
based on the realization of certain stock price thresholds.
After the end of fiscal year 1998, the Company instituted the CSX
Market Value Cash Plan ("Cash Plan"). The Cash Plan provides for cash
payments when certain stock price thresholds are achieved.
Participation in the Cash Plan by officers and employees who are also
participants in the SPLP is subject to agreement by such participants
to forego loan forgiveness under the SPLP.
Messrs. Snow, Carpenter, Goodwin, and Aron agreed that after fiscal
year 1998 the purchase price of their stock is fixed at $45.13 per
share. Mr. Nichols and nine other executive officers agreed that after
fiscal year 1998 the purchase price of their stock is fixed at $47.50
per share. In consideration for their agreement to forego loan
forgiveness already achieved, these ten participants received a cash
payment in January 1999.
For the executives named below, the number of shares purchased
pursuant to the SPLP and the aggregate loan balances as of December
25, 1998, are indicated in the following table:
<TABLE>
<CAPTION>
Full Recourse Loan Non-Recourse Loan Purchase Price
Number Unadjusted Balance Unadjusted Balance Forgiven
Name of Shares 12/25/98 (i) 12/25/98 (ii) in Fiscal 1998
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John W. Snow 679,775 $ 318,848 $26,335,626 $0.00
Alvin R. Carpenter 308,245 413,679 12,359,626 0.00
Gerald L. Nichols 120,774 56,649 4,678,988 0.00
Paul R. Goodwin 162,685 76,308 6,302,690 0.00
Mark G. Aron 162,685 76,308 6,302,690 0.00
All executive officers as a group 2,233,434 $1,676,732 $88,100,319 $0.00
(10 persons, including those named above)
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(i) For executive officers who participated in the 1991 or 1992
offering, the balances include principal only. For those with
down payment loans for the 1996 offering, balances include
principal and accrued interest. Interest is subject to
forgiveness on payment of loans.
(ii) Balances include principal and accrued interest net of
dividends. Interest is subject to forgiveness on payment of
loans.
Note 6 Information reported is derived from a Schedule 13G of FMR Corporation
dated February 1, 1999, 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 509,622
shares, and has the sole power to dispose or to direct the disposition
of 12,962,322 shares.
Note 7 Information reported is derived from a Schedule 13G of Sanford C.
Bernstein and Co., Inc. dated February 5, 1999, 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 16,386,373 shares, shared power to vote or direct
the vote of 3,530,226 shares, and has the sole power to dispose or to
direct the disposition of 30,317,318 shares.
Note 8 Information reported is derived from a Schedule 13G of Scudder Kemper
Investments, Inc., dated February 12, 1999, 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 direct
the vote of 3,170,841 shares, shared power to vote or direct the vote
of 6,908,932 shares, sole power to dispose or direct the disposition
of 11,285,769 shares, and shared power to dispose or direct the
disposition of 129,032 shares.
10
<PAGE>
EXECUTIVE COMPENSATION
The individuals named below 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 last day of the fiscal
year ending December 25, 1998. Information is provided for the fiscal years
ending on December 25, 1998; December 26, 1997; and December 27, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------------------------------
Annual Compensation Awards Payouts
-------------------------------------------------------------------------------------
Other Securities
Annual Restricted Underlying LTIP All Other
Compen- Stock Options/ Payouts Compen-
Name and sation ($) Award(s)($) SARs (#) ($) sation ($)
Principal Position Year Salary ($) Bonus ($) (Note 2) (Note 1) (Note 3) (Note 4) (Note 5)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John W. Snow 1998 $1,100,008 $ Note 1 $284,939 $1,303,500 0 $ 654,681 $240,103
Chairman, President 1997 1,000,008 Note 1 245,608 1,875,000 852,400 1,969,875 208,537
& CEO 1996 933,336 Note 1 359,840 1,526,625 152,400 1,570,375 181,911
Alvin R. Carpenter 1998 777,563 Note 1 270,698 775,008 0 368,719 61,003
President & CEO, 1997 700,008 Note 1 221,545 956,250 450,000 753,189 55,377
CSXT 1996 588,179 Note 1 214,155 811,250 50,000 600,438 48,323
Gerald L. Nichols 1998 425,004 306,003 129,612 0 0 204,844 12,750
Vice Chairman, CSXT 1997 412,504 375,000 134,020 0 60,000 955,969 18,101
(Note 6) 1996 333,340 375,000 87,938 0 28,000 531,156 15,914
Paul R. Goodwin 1998 425,008 298,350 73,876 0 0 192,553 25,963
Executive Vice President- 1997 389,174 375,000 62,393 0 178,000 579,375 23,066
Finance and CFO 1996 311,668 Note 1 84,638 470,000 28,000 461,875 19,170
Mark G. Aron 1998 425,000 149,175 161,224 186,469 0 192,553 98,266
Executive Vice President- 1997 370,834 375,000 166,699 0 228,000 579,375 84,954
Law and Public Affairs 1996 333,340 354,000 102,670 0 28,000 461,875 73,645
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO SUMMARY COMPENSATION TABLE
- -----------------------------------
Note 1 Management employees may elect to receive all or a portion of their
bonuses in CSX stock. Employees who elected to receive cash bonuses in
stock and deferred them for tax purposes received a 25 percent premium
paid in stock. Such stock was issued to the CSX Executives Stock Trust
("Executives Trust") and is restricted from sale until employment with
CSX is terminated, 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 and premiums paid in
stock as of the date bonuses were granted for Messrs. Snow, Carpenter,
Goodwin and Aron. The amounts shown in the Restricted Stock Award(s)
column do not reflect amounts withheld to satisfy Medicare and related
tax withholding liabilities. Employees who defer their bonuses in the
form of stock into the Executives Trust receive cash dividend
equivalent payments or may elect to have dividends reinvested by the
Executives Trust in CSX stock. As of December 25, 1998, restricted
stock balances and their corresponding values, based on the closing
price of CSX stock on the NYSE on December 24, 1998, were: Mr. Snow -
103,950 shares ($4,274,944); Mr. Carpenter - 53,189 shares
($2,187,398); Mr. Goodwin - 18,808 shares ($773,479); Mr. Aron - 7,188
shares ($295,606).
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 1998, for Mr. Snow, $35,162 for life insurance
premiums and $23,050 for aircraft usage; for Mr. Carpenter, $14,985
for life insurance premiums and $15,191 for aircraft usage; (b) during
1997, for Mr. Snow, $35,793 for life insurance premiums; for Mr.
Carpenter, $33,244 for Executive Edge Deferred Income Insurance
("EDII"); for Mr. Nichols, $18,645 for life insurance premiums and
$18,295 for EDII; for Mr. Aron, $53,967 for EDII (Because of increased
limitations on the extent to which benefits may be paid from qualified
plans, CSX agreed to provide reimbursement for premiums paid by
executives for EDII 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. The EDII plan was discontinued in 1998); (c)
during 1996, for Mr. Snow, $98,934 for EDII; for Mr. Nichols, $15,877
for life insurance premiums; for Mr. Goodwin, $19,768 for club dues
and $14,889 for EDII; for Mr. Aron, $30,508 for EDII.
11
<PAGE>
Note 3 This column represents the number of employee stock options granted.
Employee stock options were not granted to the named executive
officers during 1998. Stock appreciation rights ("SARs") were not
granted in 1998, 1997, or 1996.
Note 4 LTIP ("Long-Term Incentive Plan") payouts for 1998 represent the fair
market value of $40.9688 per share of performance shares awarded for
the 1996-1998 performance cycle on February 10, 1999, pursuant to the
1987 Long-Term Performance Stock Plan ("1987 Plan"). See the Long-Term
Incentive Plans -- Awards in Last Fiscal Year table and Note 2 to the
Security Ownership of Certain Beneficial Owners, Directors, and
Executive Officers table, regarding the SPLP and awards made pursuant
to it. Mr. Nichol's LTIP payouts for 1997 include $289,688,
representing payment of stock pursuant to an agreement with CSXT.
Note 5 Amounts shown include the above-market portion of earnings on a
deferred compensation program available to executives only during
1985, 1986, 1988, and 1989. For 1998, these amounts are: for Mr. Snow,
$207,103; for Mr. Carpenter, $39,878; for Mr. Goodwin, $13,213; for
Mr. Aron, $85,641. Amounts shown also include the Company's matching
contributions made in conjunction with deferrals of salary or bonuses
to the CSX Tax Savings Thrift Plan and the CSX Supplementary Savings
and Incentive Award Deferral Plan. The amounts contributed for 1998
are: for Mr. Snow, $33,000; for Mr. Carpenter, $21,125; for Mr.
Nichols, $12,750; for Mr. Goodwin, $12,750; for Mr. Aron, $12,625.
Note 6 Mr. Nichols retired effective December 31, 1998.
Stock Options and Stock Appreciation Rights
The following table reflects the number of stock options exercised by the
named executives in 1998, the total gain realized upon exercise, the number of
stock options held at the end of the year, and the realizable gain of the stock
options that are "in-the-money."
Aggregated Option/SAR Exercise in Last Fiscal Year and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options/SARs at FY-End (#) Options/SARs at FY-End ($) (Note 1)
- -----------------------------------------------------------------------------------------------------------------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John W. Snow 74,980 $1,932,297 1,597,180 1,352,400 $10,606,333 $0
Alvin R. Carpenter 96,000 1,533,000 98,002 449,998 43,502 0
Gerald L. Nichols 0 0 111,334 58,666 344,878 0
Paul R. Goodwin 0 0 156,829 177,999 981,174 0
Mark G. Aron 30,560 1,145,043 156,829 227,999 981,174 0
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes to Aggregated Options/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 $41.1563, the mean value of CSX common stock on
December 24, 1998.
12
<PAGE>
LONG-TERM INCENTIVE AWARDS
The following table sets forth information regarding long-term incentive
awards under the 1987 Plan.
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Number of Performance or Estimated Future Payouts
Shares, Units Other Period Until Under Non-Stock Price-Based Plans
-----------------------------------------------
or Other Maturation or Threshold Target Maximum
Name Rights (#) Payout (#) (#) (#)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John W. Snow 50,000 3 years 25,000 35,000 50,000
Alvin R. Carpenter 20,000 3 years 10,000 14,000 20,000
Gerald L. Nichols 0 N/A N/A N/A N/A
Paul R. Goodwin 15,000 3 years 7,500 10,500 15,000
Mark G. Aron 13,000 3 years 6,500 9,100 13,000
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO LONG-TERM INCENTIVE PLAN TABLE
- ---------------------------------------
Note 1 Represents the number of performance shares granted on December 9,
1998, pursuant to the 1987 Long-Term Performance Stock Plan for the
1999-2001 cycle. The final payouts in CSX stock will be based on the
participant's business unit's Return on Invested Capital as a
percentage of the Company's average Cost of Capital over the three-
year period. The estimated threshold payout was calculated at 50
percent of the performance shares granted on December 9, 1998, and
assumes a specified minimum level of financial performance by the
participant's business unit. The estimated target payout was
calculated at 70 percent of the performance shares granted and
represents the number of shares 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 9, 1998.
PENSION PLANS
The following 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 normal retirement age after selected periods of service and in specified
compensation groups.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Average Compensation GROSS ANNUAL PENSION PAYABLE BEFORE OFFSET FOR RAILROAD RETIREMENT OR SOCIAL
During Five Consecutive SECURITY ANNUITY BASED ON CREDITABLE YEARS OF SERVICE OF:
Years of Highest Pay 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years 44 Years
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 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
3,400,000 765,000 1,020,000 1,275,000 1,530,000 1,785,000 2,040,000 2,244,000
3,600,000 810,000 1,080,000 1,350,000 1,620,000 1,890,000 2,160,000 2,376,000
3,800,000 855,000 1,140,000 1,425,000 1,710,000 1,995,000 2,280,000 2,508,000
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
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 covered
by the Pension Plans are base salary and bonus. In the case of employees who
took their bonus in Company Stock, as explained in Note 1 to the Summary
Compensation Table, the amount of the bonus for Pension Plan computations is the
cash value of the bonus prior to addition of the premium for receipt of bonus in
stock. The benefits are computed at the time of retirement under a defined
benefit formula based on years of service and average salary and bonus 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.
As of December 25, 1998, the individuals named in the Summary Compensation
Table had the following credited years of service: Mr. Snow, 44 years; Mr.
Carpenter, 44 years; Mr. Nichols, 44 years; Mr. Goodwin, 43.5 years; and Mr.
Aron, 44 years.
The amounts in the table have not been restricted to those within the
maximum annual retirement benefit that is currently permissible under the
Internal Revenue Code. That limit is $130,000 for 1999. Also, in calculating a
participant's benefit, annual compensation in excess of a limit set annually by
the Secretary of the Treasury may not be considered. That limit is $160,000 for
1999. Pension amounts in excess of such limitations are payable from the
non-qualified Special and Supplemental Plans, which are not funded.
......................................
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
CSX CORPORATION, S&P 500, DOW JONES TRANSPORTATION AVERAGE
Csx Corp (CSX)
<TABLE>
<CAPTION>
CUMULATIVE
TOTAL
RETURN
------------------------------------------
12/93 12/94 12/95 12/96 12/97 12/98
<S> <C> <C> <C> <C> <C> <C>
CSX CORPORATION 100 87 117 110 144 114
S & P 500 100 101 139 171 229 294
DOW JONES TRANSPORTATION 100 84 117 134 199 194
AVERAGE
</TABLE>
* $100 Invested on December 31, 1993, in stock or index -- including
reinvestment of dividends. The graph depicts prices for years ending December 31
for CSX Corporation, rather than the Company's fiscal year-end, in order to be
consistent with the S&P 500 and Dow Jones Transportation Average year-end
valuations.
Source: Research Data Group, Inc.
14
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
This report describes the philosophy, objectives and components of the
Company's executive officer compensation program and the manner in which 1998
compensation determinations were made for the Company's Chief Executive Officer,
Mr. John Snow, and other executive officers, including the executive officers
whose compensation is reported in the Summary Compensation Table of this Proxy
Statement (the "Named Executive Officers").
The Compensation Committee (the "Committee") of the Company's Board of
Directors is composed of the directors named below, none of whom is an officer
or employee of the Company and all of whom are "outside directors" within the
meaning of Section 162(m) of the Internal Revenue Code. The Committee is
responsible for setting and administering the Company's compensation philosophy,
objectives and policies, and for establishing and administering compensation
plans and programs for executive officers of the Company. Based on
recommendations of the Committee, the Board is responsible for approving the
compensation for the Chief Executive Officer.
OVERALL COMPENSATION PHILOSOPHY AND OBJECTIVES
The Company's executive compensation programs are designed to provide
competitive annual and long-term compensation and to encourage executive
officers to focus on maximizing shareholder value through superior performance.
The programs are based on the philosophy that the financial interests of the
Company's executive officers should be aligned closely with those of its
shareholders and that overall compensation should be linked to the sustained
short-term and long-term performance of the Company, of individual business
units of the Company and of the individual executive officer.
Accordingly, the Company's executive compensation programs are structured
and administered applying the following principles:
. Competitiveness. Consistent with the Company's performance, total
compensation for executive officers is targeted to produce pay
comparable to and competitive with the total compensation paid by a
comparison group of companies that compete for executives of similar
talent, including several direct competitors. The Committee believes
that providing competitive total compensation opportunities for
executive officers is an important element in the Company's ability to
attract and retain highly motivated and effective executives.
In determining executive officer compensation for 1998, the Committee
used market data regarding the compensation paid for similar positions
by 76 other companies with annual revenues ranging from $7 billion to
$20 billion as provided through a survey conducted by a nationally
recognized independent compensation consulting firm. These comparison
companies included three companies which, like the Company, form part
of the Dow Jones Transportation Average (described in the Performance
Graph included in this Proxy Statement), and which can be expected to
compete directly with the Company for investors and business. However,
since the job market for the Company's executives is not limited to
the Company's industry and since the Company's most direct competitors
for executive talent are not necessarily all of the companies that
would be included in a peer group established to compare shareholder
returns, the comparison companies are more broadly based and consist
of other corporations with which the Company can be expected to
compete for executive talent. Therefore, the "comparison group" is not
the same as the peer group index in the Comparison of Five Year
Cumulative Total Return graph included in this Proxy Statement.
. Performance Incentives. A substantial portion of the total
compensation package for executive officers is at risk, consisting of
performance-based cash and equity incentives that link executive
compensation to Company, business unit and individual performance.
Performance incentives provide rewards for achieving strong operating
and financial performance, motivate executive officers and encourage a
dedicated focus on building value for shareholders.
15
<PAGE>
. Alignment of Interests with Shareholders. A significant portion of
each executive officer's total compensation is linked directly to the
achievement of specific, measurable performance results which are
intended to create both short- and long-term value for the
shareholders. In addition, executive officers are expected to acquire
and hold amounts of the Company's stock valued at from six to 15 times
their base salary. At year-end, CSX executives and employees owned
directly or beneficially not fewer than 21.5 million shares,
approximately 10 percent of all shares outstanding.
Components of Compensation
The total compensation package for executive officers is composed of three
key elements:
. Base Salary
. Short-Term Incentives
. Long-Term Incentives
In establishing and administering each of these components, the Committee
considers the following factors: (1) current market data regarding the
compensation paid for similar positions by the comparison companies, and (2)
achievement against corporate, business unit and individual performance
objectives that are established for each performance period by the Committee.
The Committee generally seeks to provide a total compensation package for
executive officers (assuming all performance objectives are met) approximating
the 85th percentile of the total compensation paid for similar positions by the
comparison companies.
Base Salary
The Committee determines a salary for each Named Executive Officer and
certain other executive officers based upon the Committee's assessment of the
individual's performance and contribution to the Company's objective performance
goals. Base salaries generally are targeted to be at approximately the 50th
percentile of salaries paid for similar positions by the comparison companies.
Base salaries of executive officers are reviewed every 15 to 24 months to
determine whether adjustments are appropriate in light of then-current market
data for the comparison companies. Increases may also be given to recognize
individual performance by the executive and contributions to the Company's and,
if applicable, the business unit's achievement of its performance objectives.
Short-Term Incentives
The short-term compensation incentives available for executive officers of
the Company are composed of annual cash incentive bonuses and, in certain
circumstances, additional discretionary cash bonuses in recognition of
exceptional contributions and performance. These short-term incentives are
established and awarded with the objective of bringing total annual cash
compensation (base salary plus bonus) to approximately the 75th percentile of
the comparison companies, assuming achievement of targeted performance levels.
Named Executive Officers are awarded annual cash incentive bonuses under
the Company's Senior Management Incentive Compensation Plan ("SMICP") based on
the achievement by the Company or the executive's business unit of certain
financial performance objectives for each year as established by the Committee.
For 1998, these performance objectives were measured by the overall Return on
Invested Capital ("ROIC") of the Company or the executive's business unit, as
the case may be, compared to the Company's Cost of Capital ("COC"). Objective
levels of performance were set to insure improvement over the prior year's
results and achievement of ROIC at or above the COC. The bonus amount
potentially available to each Named Executive Officer under the SMICP for the
achievement of specific levels of such performance objectives is expressed as a
percentage of an executive's base salary at the beginning of the performance
period.
The Committee has the authority, in its sole discretion, to make downward
adjustments to bonus awards under the SMICP to reflect the impact of unplanned
events, performance below other financial or strategic objectives, and an
executive's individual performance based on such factors as the Committee deems
appropriate. For 1998, the Committee exercised this discretion to reduce awards
that otherwise would have been payable to Named Executives under the SMICP.
Other executive officers are awarded annual cash incentive bonuses under
the Company's Management Incentive Compensation Plan ("MICP") based on the
Committee's evaluation of the executive's performance and such other objective
measures and subjective factors as the Committee deems appropriate.
16
<PAGE>
During 1998, Messrs. Carpenter and Nichols also received incentive
awards of $63,000 and $33,413, respectively, based on strategic accomplishments
at CSXT. The Company funded the awards with money reserved from the 1997 MICP
award pool.
Named Executive Officers and other executive officers may defer receipt
of their cash incentive bonuses under the SMICP and the MICP by electing to
receive all or a portion of their awards in stock. A stock premium is added to
the amount deferred to further encourage executives to invest in the Company's
Common Stock and thereby align their interests with those of shareholders.
Long-Term Incentives
The long-term compensation incentives available for executive officers
of the Company are composed of equity-based incentive awards which can be
awarded under the 1987 Long-Term Performance Stock Plan (the "1987 Plan"),
including stock options, performance shares, and other equity-based awards. In
addition, beginning in 1999, executive officers may receive cash awards under
the Company's Market Value Cash Plan ("Cash Plan"). These long-term programs are
designed to provide incentives for the creation of shareholder value over the
long term since their value and benefit cannot be realized unless the price of
the Company's Common Stock appreciates over a specified number of years. The
incentives are established and awarded with the objective of bringing total
direct compensation (base salary, short-term incentives, and long-term
incentives) to approximately the 85th percentile of total direct compensation
paid for similar positions by the comparison companies.
Stock Options
The Committee recommended and the Board approved grants of stock options
to executive officers (other than Named Executive Officers) in 1998 based on the
price of the Company's stock, competitive market grant levels for similar
positions made by the comparison companies, and the availability of stock under
the 1987 Plan. Options generally include performance conditions that, if met,
will accelerate their exercisability.
In addition to annual grants, the Committee is authorized to make
special grants of options under the 1987 Plan to executive officers to
approximate the annual option grants that otherwise would be made over a
multi-year period. Such a grant was made in 1997, and these options included
performance conditions, which, if met, will accelerate their exercisability. The
Named Executives did not receive stock option grants during 1998.
Performance Shares
In December 1998, the Committee recommended approval of a grant of
performance shares to the Named Executive Officers for the 1999-2001 performance
period. The grant was based on competitive long-term value delivered by
companies in the comparison group to executives holding similar positions and
the price of the Company's stock. Each performance share granted is equivalent
in value to a share of the Company's Common Stock and payment at the end of a
three-year performance period is made in shares of the Company's Common Stock.
Future payment will be based on the Company's or the executive's business unit's
financial performance for that period as determined by the average ROIC during
that period compared against the Company's average COC.
Performance shares were awarded in February 1999 to the executive
officers for the 1996-1998 performance period based upon two measurements:
Company or business unit achievement of average ROIC against the Company's
average COC and the Company's Total Shareholder Return ("TSR") against the
return of the S&P 500. For performance against these measures, 42 percent of the
performance shares granted to executive officers for that period were paid.
Cash Plan
During 1998, the Company adopted the Cash Plan to allow participants to
receive current cash payments based on sustained increases in the market price
for the Company's Common Stock. The Named Executive Officers and most of the
executive officer group elected to waive their rights to certain benefits
available to them under the Company's Stock Purchase and Loan Plan ("SPLP") in
order to participate in the Cash Plan. Under the Cash Plan, participants are
awarded units that are used to determine the cash amount to be paid when each of
a series of predetermined Company stock price targets are met and sustained for
a period of at least 15 business days.
17
<PAGE>
Stock Ownership Guidelines
In addition to long-term incentive awards, the Committee believes that,
to link the interests of executive officers to those of the Company's
shareholders, it is also necessary to require that executive officers own a
significant amount of the Company's stock. As a result, the Committee has
established the following formal stock ownership guidelines:
Position Minimum Aggregate Value Equivalent
---------------------------------------------------------------------
Chief Executive Officer 15 times base salary
Other Named Executive Officers 10 times base salary
Other Executive Officers 6 - 8 times base salary
These guidelines significantly exceed stock ownership guidelines of the
comparison companies. The Company has adopted certain programs to facilitate
executive officer stock ownership at the required levels. These include the
offer to match cash bonuses deferred into stock with an additional 25 percent
value also in stock; deferral programs that allow for reinvestment of dividends
into additional shares of Company stock; and development of the SPLP described
elsewhere in this Proxy Statement. As of December 25, 1998, each Named Executive
Officer owned more than the required amount of the Company's stock, as did all
the executive officers who have more than three years of Company service.
1998 Compensation for the Chief Executive Officer
For 1998, the Company's most highly-compensated executive was John W.
Snow, Chairman, President, and Chief Executive Officer. Mr. Snow's 1998
performance was reviewed by the Committee and discussed with the non-employee
directors of the Company and Mr. Snow. The Committee's recommendations to the
Board concerning the annual and long-term components of Mr. Snow's compensation
were based on the considerations discussed below, all of which were accepted
without modification by the Board. The performance and other factors on which
Mr. Snow's 1998 compensation was based are the same as described for all
executive officers pursuant to the executive compensation strategy described
earlier in this report. Mr. Snow is eligible to participate in the same
compensation plans available to other Named Executive Officers of the Company.
The Committee considered financial and other strategic results of the
Company in view of the costs incurred to achieve successful integration of
Conrail and other economic factors significantly impacting the rail
transportation and international shipping subsidiaries. Mr. Snow demonstrated
outstanding leadership, steering and focusing the Company through a difficult
transition period and problematic conditions in its major businesses. Largely
through his efforts, support for the Conrail transaction was received from key
legislators, city and state officials, labor and major shippers in the Surface
Transportation Board ("STB") proceedings, providing the foundation for a
favorable outcome. The approval obtained from the STB significantly enhances the
Company's prospects for growth and profitability. Mr. Snow led the Company's
efforts to plan effective technological integration and consolidation of
operations, and to address other transition issues.
Base Salary
Mr. Snow's base salary was reviewed in comparison with the reported base
salary information for the chief executive officers of the comparison companies
and was targeted to be at approximately the 50th percentile of the comparison
companies. As a result of its review and the Committee's assessment of Mr.
Snow's contributions to the Company's long-term strategic efforts, the Committee
recommended, and the Board approved, an increase of Mr. Snow's base salary from
$1,000,000 to $1,100,000 in January 1998.
Short-Term Incentives
Mr. Snow's 1998 annual bonus was paid under the SMICP based on the
Company's achievement of its financial performance objectives as previously set
by the Committee and as measured by the Company's overall ROIC compared to its
COC. Actual results achieved and used in the formulaic calculation of Mr. Snow's
bonus produced an award reflective of financial performance during 1998 and an
amount significantly below that awarded for previous years of performance. The
Committee recommended and the Board approved payment of the calculated award of
$1,042,800.
18
<PAGE>
Long-Term Incentives
Long-term incentives made up the largest portion of Mr. Snow's 1998
compensation and were targeted to bring the total direct compensation (base
salary, short-term incentives, and long-term incentives) for Mr. Snow for 1998
to approximately the 85th percentile of total direct compensation paid to the
chief executive officers by the comparison companies.
In December 1995, the Board approved a grant of 34,000 performance
shares for the 1996-1998 performance period under the 1987 Plan. The actual
number of shares subsequently awarded was based upon ROIC compared to the
Company's average COC and upon Total Shareholder Return during the performance
period. The Committee recommended that an award of 15,980 performance shares be
made to Mr. Snow in February 1999 for the 1996-1998 performance period.
In December 1998, the Committee recommended and the Board approved a
grant of 50,000 performance shares for the 1999-2001 performance period. Final
payment of the shares granted will be determined based upon Company ROIC
compared to the average COC. The Committee also recommended that Mr. Snow be
awarded 67,978 units under the Cash Plan in exchange for his waiver of certain
benefits available to him under the Company's SPLP, as described elsewhere in
this report.
As discussed above, Named Executives did not receive grants of options
during fiscal 1998 under the 1987 Plan.
POLICY ON DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code imposes a $1 million limit
on the amount that the Company may deduct for compensation paid to the Chief
Executive Officer or any Named Executive Officer who is employed on the last day
of the year. However, "performance-based compensation" pursuant to a plan that
has been approved by shareholders is excluded from the $1 million limit if,
among other requirements, the compensation is payable only upon attainment of
pre-established objective performance goals and the Board committee that
establishes such goals consists only of "outside directors" (as defined for
purposes of Section 162(m)). The SMICP and the 1987 Plan have been approved by
the shareholders of the Company.
The Committee and the Board have considered these requirements. While
the tax impact of any compensation arrangement is one factor to be considered,
such impact is evaluated by the Committee and the Board in light of the
Company's overall compensation philosophy and objectives. The Company's
compensation program for Named Executive Officers has both objective and
discretionary elements. Generally, the Committee wishes to maximize the
Company's federal income tax deductions for compensation expense, and,
therefore, has structured the short-term and long-term incentive elements of
executive compensation to meet the requirements of Section 162(m). However, the
Committee and the Board believe that there are circumstances where the provision
of compensation that is not fully deductible may be more consistent with the
compensation philosophy and objectives of the Company and/or may be in the
Company's and its shareholders' best interests. The Committee's ability to
exercise discretion and to retain flexibility in this regard may in certain
circumstances outweigh the advantages of qualifying compensation as deductible
under Section 162(m).
The Committee believes that the compensation of executive officers has
been appropriately structured and administered so that a substantial component
of total compensation is dependent upon, and directly related to, the Company's
performance and total returns to its shareholders.
COMPENSATION COMMITTEE
Charles E. Rice, Chairman
Bruce C. Gottwald
John R. Hall
Robert D. Kunisch
Frank S. Royal,
the entire Committee
Richmond, Virginia
February 9, 1999
19
<PAGE>
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 1999. 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. SHAREHOLDER PROPOSAL REGARDING SHAREHOLDER RIGHTS PLAN
William J. and Mildred A. LaPerch, as Trustees for the LaPerch Family
Trust, 7200 Walnut Canyon Road, Moorpark, CA 93021, owner of 880 shares of
common stock, have informed the Company that they intend to present the
following proposal at the Annual Meeting of Shareholders:
"Resolved that the shareholders recommend to the Board of Directors that
the so called Shareholders Protection Plan be revoked immediately and that the
free market and competition determine the best interests of the shareholders."
"The so called Shareholder Protection Plan is exactly the opposite of what
its title purports to be. It keeps any prospective suitor from offering the
shareholders the maximum price for their shares. What it does protect is the
incumbent officers, directors and executives from having to meet any real
standard of performance and guarantees them permanent employment forever.
Competent executives should depend on their performance as the best guarantee of
future employment and not hide behind this wall of insolence which is an insult
to the intelligence of shareholders."
MANAGEMENT RESPONSE
CSX does not have a "Shareholder Protection Plan," and the Company believes
that Mr. and Mrs. LaPerch refer to CSX's Shareholder Rights Plan ("Rights
Plan"). The Board believes that rights plans can significantly enhance
shareholder value in the event of an acquisition or change of control of the
Company. The Rights Plan provides the Board of Directors with more time to
negotiate and to make decisions in a transaction involving control of the
Company.
Rights Plans are designed to protect and to enhance shareholder value. They
have no relationship to management compensation. Since the introduction of
rights plans in 1984, economists and market analysts have debated the economic
impact of rights plans on the market price of a company's stock, as well as on
takeovers and takeover premiums. Increasingly, empirical data indicates that on
balance shareholders of corporations with rights plans do better in the event of
a change of control than do shareholders whose companies do not have rights
plans. There is also empirical evidence that stock prices of corporations with
rights plans suffer no harm as a result of them. A 1994 study by University of
Rochester economists Robert Comment and G. William Schwert replicated the
analysis of an earlier SEC study. These writers, however, used a database that
was four times the size of the database of the 1986 SEC study and concluded that
adoptions of rights plans have no meaningful price effect on adopting companies.
In addition, a 1997 study prepared by Jamil Aboumeri of the Georgeson and
Company Research Department determined that companies with Rights Plans received
$13 billion in additional takeover premiums during the period from 1992-1996,
and shareholders of companies without Rights Plans may have given up $14.5
billion in value. Virtually every major investment banking firm that has studied
the subject has concluded that adoption of a rights plan has no effect on the
stock prices of companies that are not the subject of takeover speculation.
Thus, the evidence suggests that rights plans
20
<PAGE>
serve their principal objectives--protection against inadequate offers and
abusive tactics and increased bargaining power resulting in higher value for
shareholders.
CSX is organized under the laws of the Commonwealth of Virginia. Virginia's
law requires each director to make decisions based on his or her best business
judgment. Rights plans are specifically authorized under Virginia law. In
adopting the Rights Plan, the Board gave careful consideration to the effect of
the Rights Plan on the Company's shareholders and, after consultation with
outside financial and legal advisors, concluded that the Rights Plan would
benefit the Company's shareholders. The Company continues to hold this view.
Rights plans give corporations and their shareholders more time in which to
make decisions respecting a sale of control, a question of fundamental
importance. Thus, a rights plan strengthens the ability of the Company's
directors to fulfill their duties under Virginia law to act in the best
interests of the company. Further, a rights plan deters coercive takeover
tactics and self-dealing transactions that may not be in the best interests of a
company and its shareholders. A rights plan should not interfere with negotiated
transactions, nor preclude unsolicited takeovers.
For the foregoing reasons the Board recommends that shareholders vote
AGAINST Proposal No. 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
ADDITIONAL INFORMATION
VOTING PROCEDURES
Votes are tabulated by three Inspectors of Election. The Company's bylaws
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 bylaws,
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 2000
Annual Meeting of Shareholders must be received at the principal executive
offices of CSX on or before November 16, 1999. If CSX Corporation does not
receive notice at its principal executive offices on or before January 17, 2000,
of a shareholder proposal for consideration at the 2000 Annual Meeting of
Shareholders, the proxies named by the CSX Board of Directors with respect to
that meeting shall have discretionary voting authority with respect to that
proposal.
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 $13,000 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 MacKenzie Partners, Inc., 156 Fifth Avenue, New York,
New York 10010.
March 16, 1999.
By Order of the Board of Directors
Alan A. Rudnick
Vice President-General Counsel and Corporate Secretary
21
<PAGE>
PROXY
[LOGO OF CSX CORPORATION GOES HERE]
CSX CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON APRIL 27, 1999.
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
27, 1999, and at all adjournments thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
TO OUR SHAREHOLDERS:
TO VOTE: 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. ON THE REVERSE SIDE OF THIS CARD ARE INSTRUCTIONS ON HOW TO
VOTE FOR THE ELECTION OF DIRECTORS AND ALL OTHER PROPOSALS. YOU MAY VOTE BY
TELEPHONE, OVER THE INTERNET, OR BY MAIL.
TO ATTEND THE ANNUAL MEETING: 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.
TO STAY AT THE GREENBRIER: 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.
THE GREENBRIER'S TOLL-FREE NUMBER IS 1-800-624-6070.
<PAGE>
[GRAPHIC OMITTED]
CSX CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
[ ]
The Board of Directors of CSX Corporation recommends a vote FOR Items 1 and 2,
and AGAINST Item 3. Shares will be so voted unless you otherwise indicate.
1. Election of Directors
Nominees: 01-E.E. Bailey; 02-H.F. Baldwin; 03-C.S. Brinegar; 04-R.L.
Burrus, Jr.; 05-B.C. Gottwald; 06-J.R. Hall; 07-E.B. Jones; 08-R.D.
Kunisch; 09-J.W. McGlothlin; 10-S.J. Morcott; 11-C.E. Rice; 12-W.C.
Richardson; 13-F.S. Royal, M.D.; 14-J.W. Snow.
To withhold authority to vote for any individual nominee(s), write the name(s)
on the line below.
- -----------------------
Nominee Exception
For All
For Withheld Except
[ ] [ ] [ ]
2. Appointment of Ernst & Young LLP as independent certified public
accountants;
For Against Abstain
[ ] [ ] [ ]
3. Shareholder proposal regarding Shareholder
Rights Plan
For Against Abstain
[ ] [ ] [ ]
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.
- DETACH PROXY CARD HERE -
CONTROL NUMBER
- --------------
[LOGO OF CSX CORPORATION GOES HERE]
NOW YOU CAN VOTE YOUR SHARES BY TELEPHONE OR INTERNET
You can now take advantage of new, convenient ways to vote your shares. This
year you can vote by one of the three methods described below. Your telephone or
Internet vote authorizes the named proxies to vote your shares in the same
manner as if you marked, signed, and returned your proxy card. To vote, read the
accompanying proxy statement, select your voting method, and follow the easy
steps described below:
TO VOTE BY PHONE . Call toll free 1-877-587-0759 in the United
States or Canada prior to 12:00 midnight,
Friday, April 23, 1999, on a touch tone
telephone. There is NO CHARGE for the call.
. Enter the 6-digit CONTROL NUMBER located above
left on these instructions.
. Option #1: To vote as the Board of Directors
recommends on ALL proposals: Press 1. When asked,
please confirm your vote by pressing 1.
. Option #2: If you choose to vote on each proposal
separately, press 0 and follow the simple recorded
instructions.
TO VOTE BY INTERNET . Go to the following website prior to 12:00
midnight, Friday, April 23, 1999:
WWW.HARRISBANK.COM/WPROXY
. Enter the information requested on your computer
screen, including your six-digit CONTROL NUMBER
located above left on these instructions.
. Follow the simple instructions on the computer
screen.
THE ABOVE METHODS ARE AVAILABLE 24 HOURS PER DAY,
7 DAYS A WEEK THROUGH FRIDAY, APRIL 23, 1999
TO VOTE BY PROXY CARD . Complete and sign the proxy printed above
. Tear at the perforation, and mail the proxy card
in the enclosed, postage paid envelope addressed
to CSX in Rockford, Illinois
MAILED PROXIES MUST BE RECEIVED AT HARRIS TRUST CO.
NO LATER THAN MONDAY, APRIL 26, 1999.
PLEASE DO NOT VOTE BY MORE THAN ONE METHOD; THE LAST VOTE RECEIVED,
REGARDLESS OF MEANS OF VOTING, WILL BE THE OFFICIAL VOTE.
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>
A growing America needs a
strong, robust freight rail network.
Today, too many people think of
railroads as a relic of the past.
Here's the reality...
We mean business
^better
Railroads work hard for a growing America.
Inside CSX Transportation boxcars, tankers and specialized high-tech container
cars are many of the essential products we use every day, such as fresh orange
juice for our breakfast tables, newsprint for our morning paper and grain to
make into our favorite cereals. We also ship:
. Household appliances
. Construction materials, such as cement, lime, clay and lumber, for
building our homes, manufacturing plants and roads
. Chemicals used in plastics and other products
. Office supplies to support businesses, large and small
. One-third of all automobiles made in America
. More coal than any other railroad in the nation
We even transport booster rockets to Cape Canaveral for NASA and use
state-of-the-art railcars to safely carry fuel for space missions!
Railroads mean industrial development, new jobs and thriving communities.
CSX Transportation is America's premier industrial development partner, helping
communities seize new economic growth opportunities along its rail lines.
CSXT's industrial development efforts have achieved impressive results since
1994:
. Helping 400 companies locate and expand along its rail lines
. Creating more than 21,000 jobs in communities large and small
. Working with state and local officials, economic development
representatives, customers and developers across the East
. Helping to attract $6.6 billion in industrial development investment
As communities seek a competitive edge, our industrial development professionals
provide important industry contacts and advise communities and industry on new
opportunities.
CSXT also participates in hundreds of initiatives to improve the quality of life
in the communities in which it operates, with children and education as our
primary philantropic focus.
Railroads mean private investment.
Freight railroads continue a remarkable renaissance from the days of regulation,
when the government stifled competition and prevented railroads from
contributing to the nation's economy to their full potential.
<PAGE>
In contrast to our nation's publicly subsidized interstate highway system,
railroads pay the entire cost of building and maintaining our own tracks and
yards. And we own thousands of locomotives and hundreds of thousands of freight
cars. Today, railroads contribute more to the U.S. economy than ever before,
while receiving no federal subsidies. Each year, railroads:
. Move 1.4 million ton-miles of freight (without railroads we would see a
79% increase in vehicle miles of combination truck traffic on our
highways)
. Invest more than $6 billion in the upkeep and replacement of track,
freight cars, locomotives and facilities
. Pay more than $1.8 billion in state and federal income, property and fuel
taxes annually, and $1.9 billion in payroll taxes
. Pay $13 billion in wages and benefits for more than 212,000 employees
Railroads mean a cleaner environment.
Railroads are the most environmentally friendly mode of freight transportation.
. Trains are three times as fuel efficient as trucks
. Truck emissions are about three times greater than rail emissions
. Compared with trucks, railroad locomotives emit one-tenth the hydrocarbons
and particulates, and just one-third the nitrogen oxide and carbon
monoxide.
The railroad industry also works with communities to develop contingency plans
for responding to incidents involving hazardous material spills, and we provide
training for local emergency response teams.
We take our environmental stewardship seriously. Because it is the right thing
to do. And because our employees live in railroad communities across America,
too.
We need you to help us tell a meaningful story about our railroad's strong
contribution.
Please contact:
Suzanne Walston
Corporate Communications
One James Center
901 East Cary Street
Richmond, VA 23210
(804)782-1449
[email protected]
