<PAGE> PAGE 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------- --------
Commission file number 1-8339
NORFOLK SOUTHERN CORPORATION
- -------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Virginia 52-1188014
- ---------------------------------------- -------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Three Commercial Place
Norfolk, Virginia 23510-2191
- ---------------------------------------- -------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (804) 629-2680
----------------------
No Change
- -------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. (X) Yes ( ) No
The number of shares outstanding of each of the registrant's classes of
Common Stock, as of the last practicable date:
Class Outstanding as of July 31, 1996
----- --------------------------------
Common Stock (par value $1.00) 126,040,258 shares (excluding
7,252,634 shares held by
registrant's consolidated
subsidiaries)
<PAGE> PAGE 2
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES (NS)
INDEX
Page
----
Part I. Financial Information:
Item 1. Consolidated Statements of Income
Three Months and Six Months Ended
June 30, 1996 and 1995 3
Consolidated Balance Sheets
June 30, 1996, and December 31, 1995 4
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1996 and 1995 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-14
Part II. Other Information:
Item 4. Submission of Matters to a Vote of
Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
Index to Exhibits 18
<PAGE> PAGE 3
PART I. FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements.
- ------ --------------------
<TABLE>
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(In millions of dollars except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
TRANSPORTATION OPERATING REVENUES:
Railway (Note 6):
Coal $ 328.5 $ 318.0 $ 652.3 $ 624.9
Merchandise 593.1 578.7 1,167.2 1,156.3
Intermodal 116.4 119.7 235.2 234.4
-------- -------- -------- --------
Total railway 1,038.0 1,016.4 2,054.7 2,015.6
Motor carrier 179.3 173.8 324.1 313.3
-------- -------- -------- --------
Total operating revenues 1,217.3 1,190.2 2,378.8 2,328.9
-------- -------- -------- --------
TRANSPORTATION OPERATING EXPENSES:
Railway:
Compensation and benefits 351.3 356.6 728.6 731.9
Materials, services and rents 158.4 162.7 310.3 325.8
Depreciation 101.6 96.7 201.9 191.1
Diesel fuel 56.7 47.0 112.1 95.7
Casualties and other claims 30.9 28.8 65.6 61.0
Other 39.1 40.9 74.3 76.4
-------- -------- -------- --------
Total railway 738.0 732.7 1,492.8 1,481.9
Motor carrier 168.8 167.4 314.5 307.8
-------- -------- -------- --------
Total operating expenses 906.8 900.1 1,807.3 1,789.7
-------- -------- -------- --------
Income from operations 310.5 290.1 571.5 539.2
Other income (expense):
Interest income 5.1 8.6 10.9 14.8
Interest expense on debt (28.0) (28.6) (55.6) (56.9)
Other - net 18.8 21.0 46.4 70.5
-------- -------- -------- --------
Total other income (4.1) 1.0 1.7 28.4
-------- -------- -------- --------
Income before income taxes 306.4 291.1 573.2 567.6
Provision for income taxes 106.9 109.9 205.6 215.7
-------- -------- -------- --------
NET INCOME $ 199.5 $ 181.2 $ 367.6 $ 351.9
======== ======== ======== ========
<S> <C> <C> <C> <C>
Per share amounts (Note 5):
Net income $ 1.57 $ 1.38 $ 2.88 $ 2.67
Dividends 0.56 0.52 1.12 1.04
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> PAGE 4
Item 1. Financial Statements. (continued)
- ------ --------------------
<TABLE>
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In millions of dollars)
(Unaudited)
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 52.7 $ 67.7
Short-term investments 184.8 261.3
Accounts receivable - net 736.0 703.5
Materials and supplies 62.5 61.7
Deferred income taxes 150.4 144.7
Other current assets 94.2 103.9
--------- ---------
Total current assets 1,280.6 1,342.8
Investments 261.7 231.7
Properties less accumulated depreciation 9,441.1 9,258.8
Other assets 70.0 71.5
--------- ---------
TOTAL ASSETS $11,053.4 $10,904.8
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 45.2 $ 45.2
Accounts payable 747.8 732.8
Income and other taxes 204.1 190.8
Other current liabilities 151.3 151.3
Current maturities of long-term debt (Note 3) 82.2 85.7
--------- ---------
Total current liabilities 1,230.6 1,205.8
Long-term debt (Note 3) 1,637.8 1,553.3
Other liabilities 985.6 965.5
Minority interests 49.8 52.2
Deferred income taxes 2,313.6 2,299.0
--------- ---------
TOTAL LIABILITIES 6,217.4 6,075.8
--------- ---------
Stockholders' equity:
Common stock $1.00 per share par value 133.7 136.3
Other capital 452.0 430.9
Retained income 4,270.9 4,282.4
Less treasury stock at cost, 7,252,634 shares (20.6) (20.6)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 4,836.0 4,829.0
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,053.4 $10,904.8
========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> PAGE 5
Item 1. Financial Statements. (continued)
- ------ --------------------
<TABLE>
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In millions of dollars)
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 367.6 $ 351.9
Reconciliation of net income to net cash
provided by operating activities:
Special charge payments (9.0) (7.0)
Depreciation 212.8 203.6
Deferred income taxes 9.1 35.2
Nonoperating gains and losses on properties
and investments (24.3) (49.0)
Changes in assets and liabilities
affecting operations:
Accounts receivable (32.5) (3.9)
Materials and supplies (0.8) (7.8)
Other current assets 27.6 17.5
Current liabilities other than debt 51.8 70.4
Other - net 8.1 12.8
------- -------
Net cash provided by operating activities 610.4 623.7
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (Note 3) (337.4) (332.7)
Property sales and other transactions 55.9 53.6
Investments and loans (41.6) (39.6)
Investment sales and other transactions 14.4 24.2
Short-term investments - net 74.1 33.4
------- -------
Net cash used for investing activities (234.6) (261.1)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends (143.1) (137.7)
Common stock issued - net 16.0 4.7
Purchase and retirement of common stock (Note 4) (246.0) (153.7)
Proceeds from long-term borrowings (Note 3) 9.6 7.6
Debt repayments (27.3) (36.5)
------- -------
Net cash used for financing activities (390.8) (315.6)
------- -------
Net increase (decrease) in cash
and cash equivalents (15.0) 47.0
CASH AND CASH EQUIVALENTS:*
At beginning of year 67.7 57.0
------- -------
At end of period $ 52.7 $ 104.0
======= =======
- ------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest (net of amounts capitalized) $ 67.4 $ 56.6
Income taxes $ 161.1 $ 127.5
* Cash equivalents are highly liquid investments purchased three months
or less from maturity.
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> PAGE 6
Item 1. Financial Statements. (continued)
- ------ --------------------
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. In the opinion of Management, the accompanying unaudited interim
financial statements contain all adjustments (consisting of normal
recurring accruals) necessary to present fairly the financial
position as of June 30, 1996, and the results of operations and
cash flows for the six months ended June 30, 1996, and 1995.
While Management believes that the disclosures presented are
adequate to make the information not misleading, these consolidated
financial statements should be read in conjunction with the
financial statements and notes included in the Corporation's latest
Annual Report on Form 10-K.
2. Contingencies
There have been no significant changes since year-end 1995 in the
matters as discussed in NOTE 17, CONTINGENCIES, appearing in the
NS Annual Report on Form 10-K for 1995, Notes to Consolidated
Financial Statements, beginning on page 74.
3. Capital Lease Obligations
During the first half of 1996 and 1995, an NS rail subsidiary
entered into capital leases covering new locomotives. The related
capital lease obligations totaling $107.8 million in 1996 and
$104.5 million in 1995 were reflected in the Consolidated Balance
Sheets as debt and, because they were non-cash transactions, were
excluded from the Consolidated Statements of Cash Flows. The lease
obligations carry stated interest rates between 6.20 percent and
6.75 percent for those entered into in 1996, and between
8.23 percent and 8.60 percent for those entered into in 1995. All
were converted to variable rate obligations using interest rate
swap agreements. The interest rates on these obligations are based
on the six-month London Interbank Offered Rate and are reset every
six months with realized gains or losses accounted for as an
adjustment of interest expense over the terms of the leases. As a
result, NS is exposed to the market risk associated with
fluctuations in interest rates. To date, the effects of the rate
fluctuations have been favorable. Counterparties to the interest
rate swap agreements are major financial institutions believed by
Management to be credit-worthy. NS' use of interest rate swaps has
been limited to those discussed above.
<PAGE> PAGE 7
Item 1. Financial Statements. (continued)
- ------ --------------------
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
4. Stock Purchase Programs
In January 1996, the Board of Directors authorized the purchase and
retirement of up to 30 million shares of common stock. NS
completed its purchases (45 million shares) under a 1989
authorization on March 8, 1996. Combined with the initial program
for 20 million shares which began in 1987 and was completed in
1989, total shares purchased and retired under the closed programs
totaled 65 million shares. The new program is expected to be
completed by the end of the year 2000. Since the first purchases
in December 1987 through June 30, 1996, NS has purchased and
retired 66,921,200 shares of its common stock at a cost of
$3.1 billion. Future purchases are dependent on market conditions,
the economy, cash needs and alternative investment opportunities.
5. Earnings Per Share
<TABLE>
"Earnings per share" is computed by dividing net income by the
weighted average number of common shares outstanding as follows:
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C>
Average number of
shares outstanding 126,915 131,525 127,565 132,009
</TABLE>
Recent decreases in the average number of outstanding shares of NS
common stock are the result of the stock purchase program described
in Note 4.
6. Reclassification of Railway Revenues
Beginning in 1996, revenues previously reported as "Other railway
revenues" (principally switching and demurrage) are included in
each of the respective commodity groups. 1995 revenues have been
reclassified to conform with the current presentation.
7. Lease Commitments
On July 29, 1996, implementation of the Lease Extension Agreement
between Norfolk Southern Railway Company (NS Rail) and North
Carolina Railroad Company (NCRR) was enjoined by a federal court,
which ruled that a quorum of private stockholders was not present
at the NCRR stockholders' meeting at which the Agreement was
approved. While the parties seek to resolve this matter, NS Rail
continues to discharge its common carrier obligations by operating
over the lines of NCRR. As reported in the past, final resolution
is not expected to have a material effect on NS' consolidated
financial position.
<PAGE> PAGE 8
Item 2. Management's Discussion and Analysis of Financial Condition
- ------ -----------------------------------------------------------
and Results of Operations.
-------------------------
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
RESULTS OF OPERATIONS
Net Income
- ----------
"Net income" for the second quarter of 1996 was a record
$199.5 million, up $18.3 million, or 10 percent, compared with
$181.2 million in last year's second quarter. "Net income" for the
six months ended June 30, 1996, was also a record $367.6 million,
a $15.7 million, or 4 percent, increase. Increased "Income from
operations," up 7 percent for the second quarter and 6 percent for
the first six months, and a lower effective income tax rate (see
"Income Taxes") were responsible for the improvements.
<TABLE>
Railway Operating Revenues
- --------------------------
Second-quarter "Railway operating revenues" were a record $1.04 billion,
a $21.6 million, or 2 percent, increase over the same period last year.
"Railway operating revenues" for the first six months were $2.05 billion,
up $39.1 million, or 2 percent, compared with the same period last year.
The increases in operating revenues were due to:
<CAPTION>
Second Quarter First Six Months
1996 vs. 1995 1996 vs. 1995
Increase (Decrease) Increase (Decrease)
------------------ ------------------
(In millions of dollars)
<S> <C> <C>
Traffic volume (carloads) $ 16.6 $ --
Revenue per unit 5.0 39.1
------- -------
$ 21.6 $ 39.1
======= =======
</TABLE>
<PAGE> PAGE 9
Item 2. Management's Discussion and Analysis of Financial Condition
- ------ -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------
<TABLE>
The principal revenue commodity groups were as follows (see Note 6 on
page 7 for a discussion of revenue reclassifications):
<CAPTION>
Revenues
-------------------------------------------
Second Quarter Six Months
1996 1995 1996 1995
-------- -------- -------- --------
($ in millions)
<S> <C> <C> <C> <C>
Coal $ 328.5 $ 318.0 $ 652.3 $ 624.9
Paper/forest 128.7 138.3 258.4 271.8
Chemicals 138.9 134.0 279.3 274.6
Automotive 133.7 118.8 252.0 238.5
Agriculture 97.1 97.5 198.7 194.7
Metals/construction 94.7 90.1 178.8 176.7
-------- -------- -------- --------
General merchandise 593.1 578.7 1,167.2 1,156.3
Intermodal 116.4 119.7 235.2 234.4
-------- -------- -------- --------
Total $1,038.0 $1,016.4 $2,054.7 $2,015.6
======== ======== ======== ========
</TABLE>
<TABLE>
The principal revenue commodity carloads were as follows:
<CAPTION>
Carloads
-------------------------------------------
Second Quarter Six Months
1996 1995 1996 1995
-------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C>
Coal 334.5 313.6 654.1 632.0
Paper/forest 108.4 117.9 218.2 233.9
Chemicals 91.4 92.0 186.9 187.3
Automotive 95.8 87.7 179.6 174.4
Agriculture 90.8 96.6 183.9 195.1
Metals/construction 97.7 97.7 181.5 187.7
-------- -------- -------- --------
General merchandise 484.1 491.9 950.1 978.4
Intermodal 323.2 317.3 642.4 624.2
-------- -------- -------- --------
Total 1,141.8 1,122.8 2,246.6 2,234.6
======== ======== ======== ========
</TABLE>
<PAGE> PAGE 10
Item 2. Management's Discussion and Analysis of Financial Condition
- ------ -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------
Coal
- ----
Second-quarter coal revenues were $10.5 million, or 3 percent, above
second quarter 1995, and were $27.4 million, or 4 percent, higher for
the first six months. Increased traffic volume was principally
responsible for the improvements, as carloads were 7 percent and
3 percent ahead of last year's second quarter and first six months,
respectively. Lower average revenue per car, largely the result of an
increased proportion of utility traffic, offset some of the revenue
increase generated by improved second-quarter traffic volume. Domestic
utility coal led the volume gains, as customers rebuilt depleted
stockpiles. Second-quarter export and industrial coal traffic volumes
were also strong, continuing the first quarter's favorable trend.
Additional gains in domestic utility coal traffic are expected in the
second half of 1996, as customers continue to rebuild stockpiles and
demand increases during the customary peak electricity-generating
months of July and August. NS' export coal volume is projected to
fluctuate in the coming months, but is expected to trend upward overall
for the remainder of the year.
General Merchandise
- -------------------
Second-quarter general merchandise revenues increased $14.4 million, or
2 percent, over last year and were $10.9 million, or 1 percent, above
the first six months of 1995. Higher revenue yields in all five major
merchandise commodity groups produced the improvements.
Automotive, which was the only commodity group also to report increased
traffic volume, led the growth, climbing $14.9 million, or 13 percent,
for the quarter and $13.5 million, or 6 percent, for the first six
months. NS' automotive revenues benefited from a combination of
increased production at selected plants that produce popular cars and
trucks, production at the GM assembly plant in Wentzville, Mo., which
was down two years for retooling, and new BMW production at Greer, S.C.
Automotive revenues for 1996 are expected to surpass 1995's levels,
barring disruptions which could result from the expiration in September
of the current labor contract between the Big Three automakers and the
United Auto Workers' Union.
Revenues in the chemicals group were up $4.9 million, or 4 percent, for
the quarter and $4.7 million, or 2 percent, for the first six months.
Higher average revenues more than offset small declines in traffic
volume for both the second quarter and first six months. Chemical
revenues are expected to remain ahead of last year, benefiting from
increasing demand. Revenues from metals/construction traffic were up
$4.6 million, or 5 percent, for the quarter and $2.1 million, or
1 percent, for the first six months. Traffic volume, which was down
7 percent in the first quarter, began improving in the second quarter
and is expected to continue to pick up in the third quarter as a result
of higher overall construction activity and increased metals production,
<PAGE> PAGE 11
Item 2. Management's Discussion and Analysis of Financial Condition
- ------ -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------
including the new SDI steel mini-mill located on NS' line in Butler, Ind.
Revenues in the agriculture group were flat in the second quarter and
were $4.0 million, or 2 percent, higher for the first six months. Higher
average revenues due to longer hauls and a profitability improvement
program more than offset volume declines in grain, soybeans and feed
traffic for the first six months. Paper/forest revenues decreased
$9.6 million, or 7 percent, for the quarter and were $13.4 million,
or 5 percent, lower for the first six months. Declines in NS'
paper/forest traffic reflected the overall softness in the U.S. paper
industry during the first half of the year. Some recovery in this
market is projected for the second half of 1996, although revenues
in this group are expected to continue to lag last year's performance.
Intermodal
- ----------
Second-quarter intermodal revenues declined $3.3 million, or 3 percent,
compared with last year, but were $0.8 million higher for the first six
months. Traffic volume was up 2 percent and 3 percent for the quarter
and six months, respectively; however, these volume gains were more
than offset by lower average revenue per unit. The decline in average
revenues was largely due to a change in traffic mix from trailers to
containers which have lower average revenues but generally produce
higher margins. NS' intermodal traffic is expected to continue the
first half's positive growth trend into the third quarter.
Railway Operating Expenses
- --------------------------
"Railway operating expenses" increased $5.3 million, or 1 percent, in
the second quarter of 1996, and $10.9 million, or 1 percent, for the
first six months, compared with the same periods last year.
The largest increase was in "Diesel fuel," which was up $9.7 million,
or 21 percent, for the quarter and $16.4 million, or 17 percent, for
the first six months. The increases were primarily due to higher price
per gallon, up 16 percent and 14 percent for the quarter and six
months, respectively. The price of diesel fuel, which peaked in April
of this year at the highest level since the Persian Gulf crisis in
1991, began to decline during the second quarter.
"Depreciation" increased $4.9 million, or 5 percent, for the quarter
and $10.8 million, or 6 percent, for the first six months due to a
combination of investment in additional depreciable assets and higher
overall depreciation rates.
<PAGE> PAGE 12
Item 2. Management's Discussion and Analysis of Financial Condition
- ------ -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------
"Casualties and other claims" were up $2.1 million, or 7 percent, in
the second quarter and $4.6 million, or 8 percent, for the first six
months. These increases were largely due to the effect of a
$3.0 million favorable adjustment made to the personal injury reserve
in June of 1995. Absent this adjustment, 1996's casualties and other
claims expenses were comparable with last year, as increases in
environmental-related accruals offset reductions in personal injury
costs.
The largest decrease was in expenses for "Materials, services and
rents" which were $4.3 million, or 3 percent, and $15.5 million, or
5 percent, below last year's second quarter and first six months,
respectively. The reductions were primarily attributable to: (1) lower
locomotive maintenance costs, largely resulting from the replacement of
older locomotives with new units and (2) lower freight car maintenance
costs, reflecting favorable results from ongoing programs both to
reduce the number of cars in the fleet and to reengineer freight car
maintenance practices. "Other" expense declined $1.8 million, or
4 percent, for the quarter and $2.1 million, or 3 percent, for the first
six months. The favorable comparisons were due to relocation costs
related to last year's shop closings which are reflected in 1995's
expenses.
Motor Carrier Operating Revenues
- --------------------------------
"Motor carrier operating revenues" of $179.3 million for the second
quarter and $324.1 million for the first six months were $5.5 million
and $10.8 million, or 3 percent, ahead of the same periods last year.
The High Value Products (HVP) Division was responsible for these
improvements, as increased revenues were recorded in the Division's
logistics, European operations and trucking operations.
Motor Carrier Operating Expenses
- --------------------------------
"Motor carrier operating expenses" were $1.4 million, or 1 percent,
higher for the second quarter and were $6.7 million, or 2 percent,
higher for the six months. Both variances were principally a result of
increased volume, with lower claims costs in both HVP and RS partially
mitigating the volume-related increases.
Other Income (Expense)
- ----------------------
"Interest income" was $3.5 million, or 41 percent, lower for the quarter
and $3.9 million, or 26 percent, lower for the six months. The declines
were principally due to a combination of: (1) last year's $1.7 million
of interest related to a settlement in June 1995 between the major
railroads and the Internal Revenue Service regarding a Supplemental
Annuity Tax (man-hour) issue, and (2) lower interest rates in 1996 on
invested balances.
<PAGE> PAGE 13
Item 2. Management's Discussion and Analysis of Financial Condition
- ------ -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------
"Other-net" declined $2.2 million, or 10 percent, for the quarter and
$24.1 million, or 34 percent, for the first six months. The unfavorable
comparison for the quarter was largely attributable to lower income from
corporate-owned life insurance, while the unfavorable first six months'
variance was due to a $30.5 million ($18.8 million after-tax) gain
recorded in first-quarter 1995 resulting from the partial redemption of a
real estate partnership interest.
Income Taxes
- ------------
The effective income tax rate for the second quarter was 34.9 percent,
compared with second-quarter 1995's effective rate of 37.8 percent. For
the first six months, the effective rate was 35.9 percent versus
38.0 percent for the first six months of 1995. The lower effective rate
in 1996 results from investments in coal-seam gas properties, favorable
adjustments for settlement of federal income tax years 1990 through 1992
and reductions in state income tax accruals.
<TABLE>
FINANCIAL CONDITION AND LIQUIDITY
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
(Dollars in millions)
<S> <C> <C>
Cash and short-term investments $237.5 $329.0
Working capital $ 50.0 $137.0
Current assets to current liabilities 1.0 1.1
Debt to total capitalization 26.7% 25.9%
</TABLE>
CASH PROVIDED BY OPERATING ACTIVITIES is NS' principal source of
liquidity and was sufficient to cover cash outflows for dividends, debt
repayments and capital spending (see Consolidated Statements of Cash
Flows on page 5). The decline in cash provided by operations, compared
with the first six months of 1995, was attributable to tax and interest
payments made as a result of the federal income tax settlement in 1996
(see "Income Taxes"). The greater use of cash in accounts receivable
was primarily attributable to higher rail freight receivables
commensurate with increased railway operating revenues.
CASH USED FOR INVESTING ACTIVITIES was affected principally by capital
spending for property additions, which included $33 million and
$30 million in 1996 and 1995, respectively, related to locomotives
under capital leases (see Note 3). "Investments and loans" consists
primarily of premium payments related to corporate-owned life insurance
(COLI), while "Investment sales and other transactions" principally
reflects borrowing on COLI.
<PAGE> PAGE 14
Item 2. Management's Discussion and Analysis of Financial Condition
- ------ -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------
CASH USED FOR FINANCING ACTIVITIES primarily reflects uses of cash
with the largest amount having been spent on the stock purchase
program (see Note 4). "Common stock issued" in the first half of
1996 reflects substantially higher-than-usual stock option exercises.
"Proceeds from long-term borrowings" represents amounts received in
connection with capital lease transactions (see Note 3).
NEW ACCOUNTING PRONOUNCEMENT
Effective January 1, 1996, NS adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of" (SFAS 121).
This standard establishes the accounting and reporting requirements
for recognizing and measuring impairment of long-lived assets to be
either held and used or held for disposal. SFAS 121 did not have a
material effect on NS' financial statements.
ENVIRONMENTAL MATTERS
During 1995, the EPA alleged that The Alabama Great Southern Railroad
Company ("AGS"), a subsidiary of NS' rail subsidiary, was responsible,
along with several other entities believed to be financially solvent,
for past and future clean-up and monitoring costs at the Bayou Bonfouca
NPL Superfund site located in Slidell, Louisiana. The site was owned
by the parent of an AGS predecessor from 1882 until 1902. Some of the
bridge timbers used in the 1882 construction of the predecessor's
bridge across Lake Pontchartrain were treated at the site. The United
States and the State of Louisiana filed suit to recover all costs
incurred (estimated in the complaint at around $100 million) and
unspecified amounts to be incurred. Defendants in that suit include
AGS and all other entities the EPA earlier identified as potentially
responsible parties. AGS believes it never owned, operated or had any
other culpable connection to the site and denies responsibility;
however, because the amount of liability, if any, that ultimately may
be assessed against NS or AGS cannot be estimated reliably at this
time, the materiality of such amount to NS' financial position, results
of operation or liquidity in a particular quarter or year cannot be
evaluated.
<PAGE> PAGE 15
PART II. OTHER INFORMATION
---------------------------
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Item 4. Submission of Matters to a Vote of Security Holders
- ------ ---------------------------------------------------
Registrant's annual meeting of stockholders was held on May 9,
1996, at which meeting three directors were elected to the class whose
term will expire in 1999, and one director was elected to the class whose
term will expire in 1997; and the appointment of independent public
accountants was ratified.
The four nominees for directors, who were uncontested, were
elected by the following vote:
THREE-YEAR TERM
--------------------------------------------------------------------
FOR AUTHORITY WITHHELD
--- ------------------
Gerald L. Baliles 105,698,370 votes 1,637,256 votes
Gene R. Carter 101,341,682 votes 5,993,944 votes
E. B. Leisenring, Jr. 106,101,823 votes 1,233,803 votes
ONE-YEAR TERM
--------------------------------------------------------------------
FOR AUTHORITY WITHHELD
--- ------------------
Arnold B. McKinnon 105,716,116 votes 1,619,510 votes
The appointment of KPMG Peat Marwick, LLP, independent public
accountants, was ratified by the following vote:
FOR: 106,484,425 shares AGAINST: 382,499 shares
ABSTAINED: 468,702 shares
<PAGE> PAGE 16
PART II. OTHER INFORMATION
---------------------------
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Item 6. Exhibits and Reports on Form 8-K.
- ------ --------------------------------
(a) Exhibits:
Bylaws as amended effective May 9, 1996
Material Contracts:
The Directors' Deferred Fee Plan
Form of Certain Change-in-Control Agreements
Supplemental Benefit Plan
Directors' Charitable Award Program
Directors' Pension Plan
Outside Directors' Deferred Stock Unit Program
Computation of Per Share Earnings
Financial Data Schedule
(b) Reports on Form 8-K:
A report on Form 8-K dated May 9, 1996, was filed
electronically on May 17, 1996, reporting that the Board of
Directors amended the Corporation's Bylaws to require
advance written notice to the Corporate Secretary by
stockholders wishing, at any stockholders' meeting, (a) to
offer for stockholder vote a proposal otherwise appropriate
for stockholder action or (b) to nominate one or more
persons for election to the Board of Directors.
<PAGE> PAGE 17
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
NORFOLK SOUTHERN CORPORATION
-----------------------------------------
(Registrant)
Date: August 9, 1996 /s/ Dezora M. Martin
------------------- -----------------------------------------
Dezora M. Martin
Corporate Secretary (Signature)
Date: August 9, 1996 /s/ John P. Rathbone
------------------- -----------------------------------------
John P. Rathbone
Vice President and Controller
(Principal Accounting Officer) (Signature)
<PAGE> PAGE 18
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
INDEX TO EXHIBITS
-----------------
Electronic
Submission
Exhibit
Number Description Page Number
- ----------- ----------------------------------------- -----------
3(ii) Bylaws of Norfolk Southern Corporation
as amended effective May 9, 1996 19-26
10 Material Contracts -
(f) The Directors' Deferred Fee Plan of
Norfolk Southern Corporation, effective
June 1, 1982, as amended effective
May 9, 1996 27-32
(h) Form of Change-in-Control Agreement,
dated as of June 1, 1996, between the
Corporation and certain executive officers,
including those named in the Summary
Compensation Table in the Proxy Statement
for the Corporation's 1996 Annual Meeting
of Stockholders, which was filed
electronically on March 27, 1996 33-66
(i) The Norfolk Southern Corporation
Supplemental (formerly, Excess) Benefit
Plan, as amended effective May 9, 1996 67-71
(j) The Norfolk Southern Corporation Directors'
Charitable Award Program, effective
February 1, 1996 72-74
(k) The Norfolk Southern Corporation Directors'
Pension Plan, as amended effective
June 1, 1996 75-76
(l) The Norfolk Southern Corporation Outside
Directors' Deferred Stock Unit Program,
effective May 9, 1996 77-79
11 Statement re Computation of Per Share
Earnings 80-81
27 Financial Data Schedule (This exhibit
is required to be submitted electronically
pursuant to the rules and regulations of
the Securities and Exchange Commission
and shall not be deemed filed for purposes
of Section 11 of the Securities Act of
1933 or Section 18 of the Securities
Exchange Act of 1934). 82
<PAGE> PAGE 19
EXHIBIT 3(ii) TITLE PAGE
B Y L A W S
OF
NORFOLK SOUTHERN CORPORATION
AS AMENDED
MAY 9, 1996
<PAGE> PAGE 20
EXHIBIT 3(ii) Page 1 of 7
BYLAWS
OF
NORFOLK SOUTHERN CORPORATION
______________________
ARTICLE I
Stockholders' Meetings
SECTION 1. Annual Meeting. The annual meeting of the
stockholders of the corporation shall be held on such date in March,
April, May or June as the board of directors may designate. If the date
of the annual meeting shall be a legal holiday, the meeting shall be held
on the next succeeding day not a legal holiday.
SECTION 2. Special Meetings. Special meetings of the
stockholders shall be held whenever called by the chief executive officer
or by a majority of the directors.
SECTION 3. Time and Place. All meetings of the stockholders
shall be held at the time and place stated in the notice of meeting.
SECTION 4. Quorum. The holders of a majority of the
outstanding shares of capital stock entitled to vote, represented in
person or by proxy, shall constitute a quorum at any meeting of the
stockholders. If less than a quorum is present at an annual or special
meeting, then a majority in interest of the stockholders present in
person or by proxy may from time to time adjourn the meeting to a fixed
time and place, no further notice of any adjourned meeting being
required. Each stockholder shall be entitled to one vote in person or by
proxy for each share entitled to vote then outstanding in his name on the
books of the corporation.
SECTION 5. Record Date. The board of directors may fix in
advance a date as the record date for a determination of stockholders for
any purpose, such date to be not more than seventy days before the
meeting or action requiring a determination of stockholders.
SECTION 6. Conduct of Meetings. The chief executive officer,
or any officer or director he may designate, shall preside over all
meetings of the stockholders. The secretary of the corporation, or an
assistant secretary, shall act as secretary of all the meetings, if
present. If the secretary or an assistant secretary is not present, the
chairman of the meeting shall appoint a secretary.
The board of directors, prior to the annual meeting of the
stockholders each year, shall appoint one or more inspectors of election
to act at such annual meeting and at all other meetings of stockholders
held during the ensuing year. In the event of the failure of the board
to make such appointment or if any inspector of election shall for any
reason fail to attend and to act at such meeting, an inspector or
inspectors of election, as the case may be, may be appointed by the
chairman of the meeting. The inspectors of election shall determine the
qualification of voters, the validity of proxies and the results of
ballots.
<PAGE> PAGE 21
BYLAWS OF NORFOLK SOUTHERN CORPORATION EXHIBIT 3(ii) Page 2 of 7
AS AMENDED MAY 9, 1996
SECTION 7. Proposals by Stockholders. No business may be
transacted at an annual or special meeting of stockholders other than
business that is either (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the board of
directors, (b) otherwise properly brought before the meeting by or at the
direction of the board of directors or (c) otherwise properly brought
before the meeting by a stockholder (i) who is a stockholder on the date
of the giving of the notice provided for in this Section 7 and on the
record date for the determination of stockholders entitled to vote at
such meeting and (ii) who gives to the corporation notice in writing of
the proposal, provided that such written notice is received at the
principal executive office of the corporation, addressed to the Corporate
Secretary, (A) in the case of an annual meeting, not less than ninety
(90) nor more than one hundred sixty (160) calendar days prior to the
anniversary date of the immediately preceding annual meeting and, (B) in
the case of a special meeting, not later than the tenth calendar day next
following the date on which notice of the holding of the special meeting
is mailed to stockholders or public disclosure of the date of the special
meeting was made, whichever first occurs. The written notice given to
the corporation shall include (i) the specific language on which
stockholders will be asked to vote, (ii) the name and address of such
stockholder, (iii) the class or series and number of shares of the
capital stock of the corporation which are owned beneficially and/or of
record by such stockholder, (iv) a representation as to the existence and
nature of any agreement or understanding between the proposing
stockholder and any other person or persons (including their identities)
in connection with bringing the proposal, and (v) a representation as to
any material interest of the proposing stockholder (and the other person
or persons) in the subject matter of the proposal. The requirements of
this Section 7 are in addition to any other applicable requirements.
ARTICLE II
Board of Directors
SECTION 1. Election, Number and Term. The board of directors
shall be chosen at the annual meeting of the stockholders. The number
of the directors shall be ten, and the directors shall be classified
and shall hold office for terms as provided in the articles of
incorporation. This number may be increased or decreased at any time
by amendment of these bylaws, but shall always be a number of not less
than three. Directors need not be stockholders. Directors shall hold
office until their successors are elected.
SECTION 2. Quorum. A majority of the number of directors
fixed by these bylaws shall constitute a quorum. If less than a quorum
is present at a meeting, then a majority of those present may adjourn the
meeting to a fixed time and place, no further notice of any adjourned
meeting being required.
<PAGE> PAGE 22
BYLAWS OF NORFOLK SOUTHERN CORPORATION EXHIBIT 3(ii) Page 3 of 7
AS AMENDED MAY 9, 1996
SECTION 3. Vacancies. Any vacancy arising among the
directors, including a vacancy resulting from an increase by not more
than thirty percent in the number of directors last elected by the
stockholders, may be filled by a majority vote of the remaining directors
though less than a quorum unless sooner filled by the stockholders.
SECTION 4. Meetings. Meetings of the board of directors
shall be held at times fixed by resolution of the board or upon the call
of the chief executive officer or of one-third of the members of the
board. Notice of any meeting not held at a time fixed by a resolution of
the board shall be given to each director at least two days before the
meeting at his residence or business address or by delivering such notice
to him or by telephoning or telegraphing it to him at least one day
before the meeting. Any such notice shall contain the time and place of
the meeting. Meetings may be held without notice if all the directors
are present or those not present waive notice before or after the
meeting. The chief executive officer, or any director he may designate,
shall preside over all meetings.
SECTION 5. Committees. The board of directors may by
resolution designate an executive committee and one or more other
committees, each of which shall consist of two or more directors. Any
such committee, to the extent provided in the resolution of the board of
directors and except as otherwise provided by law, shall have and may
exercise the powers and authority of the board of directors in the
management of the business and affairs of the corporation.
SECTION 6. Nominations of Directors. Except as otherwise
provided in the Articles of Incorporation, only persons who are nominated
in accordance with the following procedures shall be eligible for
election as directors. Nominations of persons for election to the board
of directors may be made at any annual meeting of the stockholders (a) by
or at the direction of the board of directors or (b) by any stockholder
(i) who is a stockholder on the date of the giving of the notice provided
for in this Section 6 and on the record date for the determination of
stockholders entitled to vote at such meeting and (ii) who gives to the
corporation notice in writing of the nomination, provided that such
written notice is received at the principal executive office of the
corporation, addressed to the Corporate Secretary, not less than ninety
(90) nor more than one hundred sixty (160) calendar days prior to the
anniversary date of the immediately preceding annual meeting. The
written notice given to the corporation shall include all the information
about the nominee that would be required by applicable rules and
regulations of the Securities and Exchange Commission to be included for
nominees listed in the proxy statement for such meeting and shall include
(i) the name and address of such stockholder and (ii) the class or series
and number of shares of the capital stock of the corporation which are
owned beneficially and/or of record by such stockholder. Such notice
must be accompanied by a written consent of each proposed nominee to
being named as a nominee and to serve as a director if elected.
<PAGE> PAGE 23
BYLAWS OF NORFOLK SOUTHERN CORPORATION EXHIBIT 3(ii) Page 4 of 7
AS AMENDED MAY 9, 1996
ARTICLE III
Officers
SECTION 1. Election, Number and Term. The board of
directors, promptly after its election in each year, may elect a chairman
of the board and shall elect a president (one of whom shall be designated
chief executive officer), a secretary and a treasurer, and may elect one
or more vice chairmen and vice presidents and may appoint such other
officers as it may deem proper. Any officer may hold more than one
office except that the same person shall not be president and secretary.
Each officer shall hold office until his successor is elected or until
his death or until he resigns or is removed in the manner hereinafter
provided.
SECTION 2. Removal. Any officer may be removed at any time
by the vote of the board of directors and any officer or agent appointed
otherwise than by the board of directors may be removed by any officer
having authority to appoint that officer or agent.
SECTION 3. Vacancies. Vacancies among the officers elected
by the board of directors shall be filled by the directors.
SECTION 4. The Chief Executive Officer. The chief executive
officer, subject to the control of the board of directors, shall in
general supervise and control all of the business and affairs of the
corporation. All officers and agents, other than officers or agents
elected or appointed by the board of directors, shall be appointed by the
chief executive officer or by the heads of departments, subject to the
approval of the chief executive officer. Unless otherwise specifically
provided in these bylaws or by direction of the board of directors, the
chief executive officer or, at his direction, any officer, employee or
agent of the corporation designated by him, may sign and execute all
representations, securities, conveyances of real and personal property,
leases, licenses, releases, contracts and other obligations and
instruments in the name of the corporation.
SECTION 5. The Vice Chairmen and Vice Presidents. The vice
chairmen and the vice presidents shall perform such duties as from time
to time may be assigned to them by the chief executive officer or by the
board of directors. In the absence of the chief executive officer, or in
the event of his death, inability or refusal to act, the officer
designated by the chief executive officer or the board of directors shall
perform the duties of the chief executive officer, and, when so acting,
shall have all the powers of and be subject to all the restrictions upon
the chief executive officer. Any vice chairman or vice president may
sign, with the secretary or an assistant secretary, certificates for
shares of the corporation.
<PAGE> PAGE 24
BYLAWS OF NORFOLK SOUTHERN CORPORATION EXHIBIT 3(ii) Page 5 of 7
AS AMENDED MAY 9, 1996
SECTION 6. The Secretary. The secretary shall: (a) keep the
minutes of the meetings of the stockholders and the board of directors in
one or more books provided for that purpose; (b) see that all notices are
duly given in accordance with the provisions of these bylaws or as
required by law; (c) be custodian of the corporate records and of the
seal of the corporation and see that the seal of the corporation is
affixed to all documents the execution of which on behalf of the
corporation under its seal is duly authorized; (d) keep a register of the
post office address of each stockholder which shall be furnished to the
secretary by such stockholders; (e) sign with the chairman of the board,
a vice chairman, the president, or a vice president, certificates for
shares of the corporation, the issuance of which shall have been
authorized by resolution of the board of directors; (f) have general
charge of the stock transfer books of the corporation; and (g) in general
perform all duties incident to the office of secretary and such other
duties as from time to time may be assigned to him by the chief executive
officer or by the board of directors.
SECTION 7. The Treasurer. If required by the board of
directors, the treasurer shall give a bond for the faithful discharge of
his duties in such sum and with such surety or sureties as the board of
directors shall determine. He shall: (a) have charge and custody of and
be responsible for all funds and securities of the corporation; receive
and give receipts for moneys due and payable to the corporation from any
source whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositaries as shall
be selected in accordance with the provisions of Article IV of these
bylaws; (b) when duly authorized, disperse all moneys belonging or coming
to the corporation; and (c) in general perform all the duties incident to
the office of treasurer and such other duties as from time to time may be
assigned to him by the chief executive officer or by the board of
directors.
SECTION 8. Assistant Secretaries and Assistant Treasurers.
The assistant secretaries, when authorized by the board of directors, may
sign with the chairman of the board, a vice chairman, the president or a
vice president certificates for shares of the corporation the issuance of
which shall have been authorized by a resolution of the board of
directors. The assistant treasurers shall respectively, if required by
the board of directors, give bonds for the faithful discharge of their
duties in such sums and with such sureties as the board of directors
shall determine. The assistant secretaries and assistant treasurers, in
general, shall perform such duties as shall be assigned to them by the
secretary or the treasurer, respectively, or by the chief executive
officer or the board of directors.
SECTION 9. Salaries. The salaries of the officers elected by
the board of directors shall be fixed by the board of directors. The
salaries of all other officers shall be fixed by the chief executive
officer or by the heads of departments, subject to the approval of the
chief executive officer.
<PAGE> PAGE 25
BYLAWS OF NORFOLK SOUTHERN CORPORATION EXHIBIT 3(ii) Page 6 of 7
AS AMENDED MAY 9, 1996
ARTICLE IV
Checks and Deposits
SECTION 1. Checks and Drafts. All checks, drafts or other
orders for the payment of money, notes or other evidences of indebtedness
issued in the name of the corporation, shall be signed by such officer or
officers, agent or agents of the corporation and in such manner as shall
from time to time be determined by resolution of the board of directors.
SECTION 2. Deposits. All funds of the corporation not
otherwise employed shall be deposited from time to time to the credit of
the corporation in such banks, trust companies or other depositories as
may be selected in a manner authorized by the board of directors.
ARTICLE V
Certificate of Stock
Each stockholder shall be entitled to a certificate or
certificates of stock in such form as may be approved by the board of
directors signed by the chairman of the board, a vice chairman, the
president or a vice president and by the secretary or an assistant
secretary or the treasurer or any assistant treasurer.
All transfers of stock of the corporation shall be made upon
its books by surrender of the certificate for the shares transferred
accompanied by an assignment in writing by the holder and may be
accomplished either by the holder in person or by a duly authorized
attorney in fact.
In case of the loss, mutilation or destruction of a
certificate of stock, a duplicate certificate may be issued upon such
terms not in conflict with law as the board of directors may prescribe.
The board of directors may also appoint one or more transfer
agents and registrars and may require stock certificates to be
countersigned by a transfer agent or registered by a registrar or may
require stock certificates to be both countersigned by a transfer agent
and registered by a registrar. If certificates of capital stock of the
corporation are signed by a transfer agent or by a registrar (other than
the corporation itself or one of its employees), the signature thereon of
the officers of the corporation and the seal of the corporation thereon
may be facsimiles, engraved or printed. In case any officer or officers
who shall have signed, or whose facsimile signature or signatures shall
have been used on, any such certificate or certificates shall cease to be
such officer or officers of the corporation, whether because of death,
resignation or otherwise, such certificate or certificates may
nevertheless be issued and delivered as though the person or persons who
signed such certificate or certificates or whose facsimile signature or
signatures shall have been used thereon had not ceased to be such officer
or officers of the corporation.
<PAGE> PAGE 26
BYLAWS OF NORFOLK SOUTHERN CORPORATION EXHIBIT 3(ii) Page 7 of 7
AS AMENDED MAY 9, 1996
ARTICLE VI
Seal
The seal of the corporation shall be a flat-faced circular
die, of which there may be any number of counterparts, with the word
"SEAL" and the name of the corporation and the state and year of
incorporation engraved thereon.
ARTICLE VII
Fiscal Year
The fiscal year of the corporation shall begin on the first
day of January and end on the thirty-first day of December in each year.
ARTICLE VIII
Voting of Stock Held
Unless otherwise ordered by the board of directors, the chief
executive officer, or his designee, shall have full power and authority
in behalf of the corporation to attend and to act and to vote at any
meetings of stockholders of any corporation in which the corporation may
hold stock, and at any such meeting shall possess and may exercise any
and all the rights and powers incident to the ownership of such stock,
which, as the owner thereof, the corporation might have possessed and
exercised if present, and may sign proxies on behalf of the corporation
with respect to any such meeting or sign consents on behalf of the
corporation with respect to corporate actions permitted without a meeting
of stockholders. The board of directors, by resolution, from time to
time, may confer like powers upon any other person or persons.
ARTICLE IX
Amendments
These bylaws may be altered, amended or repealed and new
bylaws may be adopted by the board of directors at any regular or special
meeting of the board of directors.
<PAGE> PAGE 27
EXHIBIT 10(f), Page 1 of 6
DIRECTORS' DEFERRED FEE PLAN
OF
NORFOLK SOUTHERN CORPORATION
(Effective June 1, 1982)
Last Amended May 9, 1996
PURPOSE
The Directors' Deferred Fee Plan (the "Plan") as adopted and
approved by the Board of Directors (the "Board") of Norfolk Southern
Corporation ("NS"), effective June 1, 1982, and as last amended effective
May 9, 1996, makes available to NS directors a deferral election with
respect to the directors' annual compensation and fees to provide for
retirement and death benefits and thereby facilitate individual financial
planning.
SECTION 1. ADMINISTRATION
The Plan shall be administered by the Board. The Board shall from
time to time adopt rules and regulations determined to be necessary to
ensure the effective implementation of the Plan. The Board shall have
the power to interpret the Plan, to supervise the maintenance of the
deferred memorandum accounts of participants in the Plan and the method
of distribution of those amounts credited to the deferred memorandum
accounts pursuant to Section 4.
SECTION 2. ELIGIBILITY
Each NS director shall be eligible to be a participant in the Plan.
SECTION 3. DEFERRED COMPENSATION
An NS director may elect to have all or a specified part of the
annual compensation and fees credited to a deferred memorandum account
established pursuant to Section 4. The director making such an election
(the "Participant") shall do so by filing with the Board by the last day
of March, June, September or December of any year, beginning in 1982, an
election on a form prescribed by the Board for the purpose of specifying
the percent of compensation and fees to be deferred for the succeeding
quarters of the election year and for succeeding years. An election so
made by a Participant shall continue from year to year, unless the
Participant terminates it for succeeding years by written request to the
Board prior to December 31 of any year. In the event of such
termination, the specified part of the Participant's compensation and
fees for the balance of the calendar year following termination and
<PAGE> PAGE 28
DIRECTORS' DEFERRED FEE PLAN OF EXHIBIT 10(f), Page 2 of 6
NORFOLK SOUTHERN CORPORATION
(Effective June 1, 1982)
Last Amended May 9, 1996
previously deferred amounts shall continue to be deferred under the Plan.
Until an election is made by a director during any year, the director
shall be deemed to have elected to receive the entire compensation and
fees for that and the succeeding years in cash.
A person elected to fill a vacancy on the Board and who was not a
director on the last day of the quarter preceding that person's election,
may elect, by filing one of the aforesaid forms with the Board prior to
the beginning of that director's term, to defer all or a specified part
of annual compensation and fees for the balance of the calendar year
following election and for succeeding years.
SECTION 4. DEFERRED MEMORANDUM ACCOUNT
The amount of a Participant's annual compensation and fees which,
pursuant to Section 3, the Participant has elected to receive on a
deferred basis shall by appropriate bookkeeping entries be credited to
that Participant's deferred memorandum account (the "Account"). Unless
otherwise stated herein or determined by the Board, each Participant's
Account shall also be credited at the end of each quarter by appropriate
bookkeeping entries with an amount equivalent to interest ("Interest") on
the amount credited to the Participant's Account at the beginning of the
quarter at a rate determined by the Participant's age at the time the
deferral is made. For purposes of determining the appropriate rates, a
deferral is deemed to occur when the compensation and fees would
otherwise have been paid. Amounts deferred on or after January 1, 1994,
shall accrue Interest based on the Participant's age at the time of
deferral at the rates set forth below:
Age Rate
Under 45 7%
45-54 10%
55-60 11%
Over 60 12%
Amounts deferred on or after January 1, 1992, and prior to
January 1, 1994, shall accrue Interest based on the Participant's age
at the time of deferral at the rates set forth below:
Age Rate
Under 45 13%
45-54 14%
55-60 15%
Over 60 16%
<PAGE> PAGE 29
DIRECTORS' DEFERRED FEE PLAN OF EXHIBIT 10(f), Page 3 of 6
NORFOLK SOUTHERN CORPORATION
(Effective June 1, 1982)
Last Amended May 9, 1996
Amounts deferred on or after January 1, 1987, and prior to
January 1, 1992, shall accrue Interest based on the Participant's age
at the time of deferral at the rates set forth below:
Age Rate
Under 45 15%
45-54 16%
55-60 17%
Over 60 18%
Amounts deferred under the Plan prior to January 1, 1987, shall
accrue Interest at a rate determined by the Participant's age on
January 1, 1987, as if such amounts had been deferred on January 1, 1987.
Interest on each deferral shall continue to accrue at the rate determined
by the Participant's age at the time the deferral is made until all
benefits payable hereunder have been distributed to, or with respect to,
the Participant.
The Board shall have the right to delegate to NS's chief financial
officer the responsibility for supervising the maintenance of the
Participants' respective Accounts and, subject to Section 6, the method
of distribution of the amounts credited to the Accounts.
SECTION 5. RESTRICTIONS
The Participants shall have only those rights in respect of the
amounts credited to their Accounts specifically set forth herein.
No Participant may, prior to the distribution of funds pursuant to
Section 6, sell, assign, transfer (except to a death beneficiary or
beneficiaries by will or descent), distribute, pledge as collateral for a
loan or as security for the performance of any obligation, exchange or
otherwise dispose of any interest in the amounts credited to that
Participant's Account.
The amounts credited to the Accounts shall remain assets of NS until
distributed to Participants pursuant to Section 6.
SECTION 6. DISTRIBUTION
Except as otherwise provided in Section 7, distributions of the
amounts credited to a Participant's Account shall be made in ten annual
cash installments beginning with the first day of the calendar year
immediately following the year when a Participant ceases to be an NS
director by retirement or otherwise. Upon the death of a Participant
prior to the expiration of the period during which the deferred amounts
<PAGE> PAGE 30
DIRECTORS' DEFERRED FEE PLAN OF EXHIBIT 10(f), Page 4 of 6
NORFOLK SOUTHERN CORPORATION
(Effective June 1, 1982)
Last Amended May 9, 1996
are payable, the balance of the deferred fees and interest credited to
his Account shall be payable to his death beneficiary or beneficiaries
in full on the first day of the calendar year following the year in
which the Participant dies.
SECTION 7. CHANGE IN CONTROL
If, on the date of a Change in Control, a Participant who was
serving as a director of NS on the day immediately preceding the date of
a Change in Control has not been nominated and elected a director of the
publicly owned entity that owns directly or indirectly all or
substantially all the assets owned directly or indirectly by NS prior to
the Change in Control (provided, however, that continued service as a
director of NS after any circumstance or event constituting a Change in
Control shall not constitute a waiver of the rights provided in this
Section 7 with respect to any subsequent circumstance or event
constituting a Change in Control), then, notwithstanding the provisions
of Section 6, such Participant shall receive a lump-sum cash payment
equal to the present value on the Participant's last day of service as a
director, using a discount rate of 4.5 percent, of the stream of annual
installment payments that the Participant would have received had the
Participant served as a director until the latest date permitted under
the Retirement Policy for NS directors as in effect on the day before the
Change in Control. This payment will be in full satisfaction of all
amounts credited to the Participant's Account.
A Change in Control shall occur upon any of the following
circumstances or events:
(i) NS consummates a merger or other similar control-type
transaction or transactions (however denominated or
effectuated) with another corporation or other entity
(Combination), and immediately thereafter less than eighty
percent (80%) of the combined voting power of the then-
outstanding securities of such corporation or entity is held
in the aggregate by the holders of securities entitled,
immediately prior to such Combination, to vote generally in
the election of NS directors (Voting Stock);
(ii) NS consummates any stockholder-approved consolidation or
dissolution (however denominated or effectuated) pursuant to
a recommendation of the Board;
(iii) At any time, Continuing Directors (as herein defined)
shall not constitute a majority of the members of the Board
("Continuing Director" means (i) each individual who has been a
director of NS for at least twenty-four (24) consecutive months
before such time and (ii) each individual who was nominated or
elected to be a director of NS by at least two-thirds (2/3) of
the Continuing Directors at the time of such nomination or
election); or
<PAGE> PAGE 31
DIRECTORS' DEFERRED FEE PLAN OF EXHIBIT 10(f), Page 5 of 6
NORFOLK SOUTHERN CORPORATION
(Effective June 1, 1982)
Last Amended May 9, 1996
(iv) NS sells all or substantially all of its assets to any other
corporation or other entity, and less than eighty percent (80%)
of the combined voting power of the then-outstanding securities
of such corporation or entity immediately after such
transaction is held in the aggregate by the holders of Voting
Stock immediately prior to such sale.
SECTION 8. RECALCULATION EVENTS
NS's commitment to accrue and pay Interest as provided in Section 4
is facilitated by the purchase of corporate-owned life insurance
purchased on the lives of eligible Participants. If the Board, in its
sole discretion, determines that any change whatsoever in Federal, State
or local law, or in its application or interpretation, has materially
affected, or will materially affect, the ability of NS to recover the
cost of providing the benefits otherwise payable under the Plan, then, if
the Board so elects, a Recalculation Event shall be deemed to have
occurred. If a Recalculation Event occurs, then Interest shall be
recalculated and restated using a lower rate of Interest determined by
the Board, but which shall be not less than one-half (1/2) the rate of
Interest provided in Section 4.
SECTION 9. AMENDMENTS
The Board in its sole discretion may at any time modify or amend any
provisions of the Plan, or suspend or terminate the Plan. However,
except as otherwise provided in Section 8, no modification, amendment,
suspension or termination of the Plan may, without the Participant's
consent, apply to or affect the rights of a Participant in respect of
amounts credited to the Participant's Account for any month ended prior
to the effective date of that modification, amendment, suspension or
termination.
SECTION 10. NATURE AND SOURCE OF PAYMENTS
The obligation to make payments hereunder with respect to each
Participant shall constitute a liability of NS to the Participant and any
death beneficiaries in accordance with the terms of the Plan. All
payments hereunder shall be made from the general funds of NS, and
nothing herein shall be deemed to create a trust of any kind or a
fiduciary relationship between NS and any Participant or other person.
No special or separate fund need be established or other segregation of
assets made to assure payments hereunder, and no Participant or other
beneficiary shall have any interest in any particular asset of NS by
virtue of the existence of the Plan. Participants and beneficiaries
shall stand in the position of unsecured creditors of NS, and all rights
hereunder are subject to the claims of creditors of NS.
<PAGE> PAGE 32
DIRECTORS' DEFERRED FEE PLAN OF EXHIBIT 10(f), Page 6 of 6
NORFOLK SOUTHERN CORPORATION
(Effective June 1, 1982)
Last Amended May 9, 1996
SECTION 11. EXPENSES OF ADMINISTERING PLAN
All expenses of administering the Plan shall be borne by NS, and no
part thereof shall be charged against the benefit of any Participant.
SECTION 12. FACILITY OF PAYMENT
If the Board shall find that any individual to whom any amount is
payable under the Plan is unable to care for his or her affairs because
of illness or accident or is a minor or other person under legal
disability, any payment due such individual (unless a prior claim
therefor shall have been made by a duly appointed guardian, committee, or
other legal representative) may be paid to the spouse, a child, a parent,
or a brother or sister of such individual, or to any other person deemed
by the Board to have incurred expenses of such individual, in such manner
and proportions as the Board may determine. Any such payment shall be a
complete discharge of the liabilities of NS with respect thereto under
the Plan.
SECTION 13. CONTINUED SERVICE
Nothing contained herein or in a deferral agreement shall be
construed as conferring upon any Participant the right nor imposing upon
the Participant the obligation to continue in the service of NS in any
capacity.
SECTION 14. DISPUTED QUESTIONS
Any disputed question arising under the Plan, including questions of
construction and interpretation, shall be determined conclusively and
finally by the Board.
SECTION 15. EFFECTIVE DATE
The Plan became effective on June 1, 1982, and was last amended
effective May 9, 1996.
<PAGE> PAGE 33
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 1 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
AGREEMENT
This agreement, dated as of June 1,1996 (Agreement), between Norfolk
Southern Corporation (Corporation) and _____________ (1) memorializes
your entitlement to certain rights and benefits hereinafter detailed that
mature upon, and only upon, your Termination (this and other terms not
defined in the text are defined in Attachment A hereto) following a
Change in Control and your commitment not to engage in Competing
Employment for certain periods; (2) absent such Termination, is not
intended to affect, and shall not be construed as affecting, the
compensation and benefits you are entitled to receive; and (3) is not
under any circumstances a contract or guarantee of employment with the
Corporation. Moreover, upon the happening of such conditions, your
rights under any and all employee retirement income or welfare benefit
policies, plans, programs or arrangements of the Corporation in which you
participate shall be governed by the terms thereof and, except as herein
expressly provided, shall not be enlarged hereunder or otherwise affected
hereby.
The Agreement's terms and protections reflect the Corporation's beliefs
that, in the event of a potential Change in Control, (1) the best
interests of its stockholders require management focus and continuity;
and (2) such focus and continuity will be enhanced by providing economic
protection to officers and other key employees whose employment is most
likely to be affected adversely by such a change. At the recommendation
of its Compensation and Nominating Committee (Committee), which is
composed entirely of non-employee directors, the Board of Directors of
the Corporation (Board) has directed the Corporation to offer this
Agreement to you.
As consideration for the Corporation's offer of this Agreement, and by
your acceptance of it, you hereby covenant and agree as follows:
(i) for the three-year period that begins on the date of this
Agreement, you will engage in no Competing Employment
(provided, however, that if (a) prior to a Change in Control
your employment with the Corporation is terminated for Cause or
because of your inadequate performance of assigned duties or
for other similar reasons - each as determined by the
Corporation's chief legal officer serving at the time - or (b)
your Termination Date is within such three-year period, the
restriction imposed by this subparagraph (i) shall cease to
apply as of your Termination Date), and your undertaking in
this respect may be enforced by appropriate court orders and
decrees, including without limitation those calling for
injunctions and specific performance;
<PAGE> PAGE 34
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 2 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
(ii) in the event you (a) are Terminated following a Change in
Control and (b) accept any benefits provided for in Article III
or Article IV of this Agreement, you will engage in no
Competing Employment for the one-year period that begins on
your Termination Date;
(iii) you waive, forego and otherwise renounce, on your behalf
and that of any individual or organization that does or may
claim through you, any and all benefits (including without
limitation any prior notice of agreement termination therein
provided) to which you may or would be entitled under and by
virtue of any other agreement, including amendments and
supplements thereto, as in effect on the date hereof between
you and the Corporation affording you benefits in the event of
your Termination, with the result that all and any such
agreements, from and after the date hereof, shall have no force
and effect; and
(iv) if, prior to a Change in Control, a modification in the nature
of your responsibilities with the Corporation (Reassignment)
results in a change in the maximum percentage of your salary
that may be earned as incentive compensation (Participation
Level), upon the effective date of your Reassignment
(Reassignment Date), you will become and be eligible to receive
only those benefits following a Change in Control as are other
individuals at the Participation Level applicable to your new
position, provided, however, that the three-year period
provided for in subparagraph (i) above shall not be extended
because of your Reassignment; the Corporation hereby undertakes
to furnish you a new agreement or to furnish an amendment or
supplement to this Agreement, to reflect your changed benefits,
but its failure or omission to do so shall not affect the
benefits to which, under this subparagraph (iv), you are
entitled upon and after such Reassignment Date.
I. Effective Date and Term
The Agreement is effective and its term (Term) begins on the date hereof;
its Term ends (provided, however, that the three-year prohibition on
engaging in Competing Employment that begins on the date of this
Agreement, including the exceptions, set out in subparagraph (i) of the
third paragraph of the preamble shall continue to apply) on the earliest
of:
(i) the date, prior to a Change in Control, you cease to be an
employee of the Corporation;
<PAGE> PAGE 35
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 3 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
(ii) the date, prior to a Change in Control, you cease to be
eligible to participate in the Corporation's Executive
Management Incentive Plan or Management Incentive Plan, or
any successor plan[s] or program[s]; and
(iii) the date, prior to a Change in Control, that is twenty-
four (24) months after you or the Corporation gives notice to
the other of the termination of this Agreement, provided,
however, that if a Change in Control occurs during the Term
hereof, this Agreement shall terminate after a period of twenty-
four (24) months, beginning on the first day of the month next
following the month in which the Change in Control occurs (such
period - plus the portion of the month, following the Change in
Control, in which the Change in Control occurs - the Change in
Control Period).
II. Binding on Successors
The Corporation shall require any successor (whether direct or indirect,
by purchase, merger, consolidation, reorganization, share exchange or
otherwise) to all or substantially all of the business and/or assets of
the Corporation (Successor; and such result, Succession) by agreement, in
form and substance satisfactory to the Corporation's chief legal officer
or his designee(s), serving immediately prior to the Change in Control,
expressly to assume and agree to perform this Agreement in the same
manner and to the same extent the Corporation would have been required to
perform it had no such Succession occurred. This Agreement shall be
binding upon and inure to the benefit of the Corporation and any
Successor (and, from and after any such Succession, that Successor shall
be deemed the "Corporation" for purposes of this Agreement), but
otherwise the Corporation shall not assign or transfer any of its rights,
or delegate any of its duties or obligations, hereunder.
<PAGE> PAGE 36
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 4 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
III. Protection Afforded by the Agreement During the Change in Con-
trol Period
Except as limited by subparagraph (ix) concerning retirement, in the
event of your Termination during the Change in Control Period, the
Corporation shall (1) pay you within ten (10) business days after your
Termination Date the amounts indicated in subparagraphs (i), (ii), (iii),
(iv) and (vii); (2) continue to provide the Additional Benefits detailed
in subparagraph (v); (3) timely pay, afford or deliver the other amounts,
credits or instruments called for in subparagraphs (vi) and (viii); and
(4) pay and provide the Tax Assistance Payments and other benefits
defined and called for herein:
(i) Severance Pay. In lieu of, and in full satisfaction of any and
all claims you have or may have thereafter to receive cash
compensation or awards under or otherwise to participate in or
under any feature of any compensation policy, plan, program or
arrangement of the Corporation, you shall receive a lump-sum
payment (Severance Pay) equal to three (3) times the sum of:
(a) an amount equal to your Base Pay (determined in accordance
with Item (D)(ii) in Attachment A); and
(b) an amount equal to your Incentive Pay (determined in
accordance with Item (L) in Attachment A).
(ii) Long-Term Compensation
(a) Performance Share Unit Equivalent. In lieu of your
having any entitlement (which entitlement, upon your
receipt of the benefit herein provided, hereby is waived
in full) to receive unearned Performance Share Units (as
that term is defined in the Norfolk Southern Corporation
Long-Term Incentive Plan, or successor plan[s] or
program[s]) that you have been awarded and as to which a
performance cycle has not been completed on your
Termination Date, you shall receive for each incomplete
cycle a cash payment equal to the Performance Share Unit
Equivalent (determined in accordance with Item N in
Attachment A).
(b) Option Equivalent. Except in the case of persons at
the time subject to Section 16 of the Securities Exchange
Act of 1934 (Officers), for each option granted to you by
the Corporation which on your Termination Date is
exercisable but remains unexercised (and by its terms, no
longer can be exercised), you shall receive a cash payment
equal to the Option Equivalent (determined in accordance
<PAGE> PAGE 37
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 5 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
with Item M in Attachment A). To protect and assure to
the full extent practicable the intended value of options
exercisable at the time by Officers, effective on the
date Notice of Termination (for reasons other than Cause)
is given, any requirement contained in any agreement(s)
between such Officer and the Corporation that such
Officer exercise an option only during a specified
period (other than any provision concerning the date
on which the option first is or becomes exercisable)
hereby is waived.
(c) Accelerated Dividend Equivalent. As to each option,
performance share unit or other instrument you hold on the
date Notice of Termination (for reasons other than Cause)
is given as to which the right to receive dividend
equivalents then exists, you shall receive an amount equal
to the Accelerated Dividend Equivalent (determined in
accordance with Item A in Attachment A), provided,
however, that the Corporation's obligation to make the
payment herein provided for shall mature on your
Termination Date.
(iii) Deferred Compensation Equivalent. In lieu of your having any
entitlement to receive payments under the terms of the
Officers' Deferred Compensation Plan (or any successor plan[s]
or program[s]), which entitlement, upon your receipt of the
benefit herein provided, hereby is waived in full, you shall
receive an amount equal to the Deferred Compensation Equivalent
(determined in accordance with Item J in Attachment A).
(iv) Vacation Equivalent. In lieu of your having any entitlement to
receive payments or other compensation for vacation to which
you would have been or might have become entitled in and
following the year that includes your Termination Date, which
entitlement, upon your receipt of the benefit herein provided,
hereby is waived in full, you shall receive an amount equal to
the Vacation Equivalent (determined in accordance with Item T
in Attachment A).
<PAGE> PAGE 38
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 6 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
(v) Additional Benefits. For the thirty-six (36) months next
following your Termination Date, the Corporation shall arrange
to provide you with Additional Benefits substantially similar
to those you were entitled to receive immediately prior to your
Termination Date (and if and to the extent that such benefits
shall not or cannot be paid or provided under any policy, plan,
program or arrangements of the Corporation for whatever reason,
the Corporation shall itself pay or provide for the payment of
such Additional Benefits to you, your dependents and your
beneficiaries). Without otherwise limiting the purposes or
effects of the provisions under the caption "No Mitigation
Obligation," infra, Additional Benefits to which you are
entitled pursuant to the first sentence of this subparagraph
(v) shall be reduced to the extent you actually receive
comparable Additional Benefits from another employer during
such period following your Termination Date, and you shall
report to the Corporation any such benefits actually received.
(vi) Post-Retirement Life Insurance Benefit. If on your Termination
Date you are not eligible - or, if eligible, you have elected
not to - retire pursuant to subparagraph (ix) of this Article
III, in lieu of your entitlement at retirement to receive
benefits of any kind under the Corporation's Executive Life
Insurance Plan, which entitlement, upon your receipt of the
benefit herein provided, hereby is waived in full, you shall
receive, as soon as practicable after your Termination Date, a
fully paid policy in the face amount and determined in
accordance with Item P in Attachment A, and the Corporation
shall pay to or on your behalf the cash benefit, also
determined in accordance with Item P in Attachment A.
If on your Termination Date you are eligible, and elect, to
retire pursuant to subparagraph (ix) of this Article III, you
shall receive the policy and cash benefit determined in
accordance with Item P of Attachment A, provided, however, that
such policy and the related cash payment shall not be
distributed or made until such policy would have been
distributed under the terms of the Executive Life Insurance
Plan or its successor(s), as in effect on the day immediately
preceding the date of the Change in Control.
<PAGE> PAGE 39
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 7 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
(vii) Prorata Incentive Pay. In lieu of your having any entitlement
(which entitlement, upon your receipt of the benefit herein
provided, hereby is waived in full) to receive payments or
other compensation under the terms of the Executive Management
Incentive Plan or the Management Incentive Plan (or successor
plan[s] or program[s]) in respect of your employment during the
year that includes your Termination Date, you shall receive an
amount equal to Prorata Incentive Pay (determined in accordance
with Item Q in Attachment A).
(viii) (a) Creditable Service for Retirement. For purposes of
determining your creditable service under the Corporation's
various retirement plans, including without limitation any
agreement(s) with you providing retirement income, you shall
receive additional creditable service, based on your age on
your Termination Date, as follows:
(1) Age 50 - 54: as if you had been employed until you
were 60;
(2) Age 55 - 59: as if you had been employed until you
were 62; and
(3) All others: three (3) additional years,
provided, however, that such creditable service shall not be
greater than the number that is equal to the number of months
(calculated in accordance with the terms of the applicable
plan) between (i) your Termination Date and (ii) the date on
which you would attain the mandatory retirement age in effect
at the time of the Change in Control. Your rights under such
programs and plans shall be governed by the terms thereof and,
except as herein expressly provided, shall not be enlarged
hereunder or otherwise affected hereby.
(b) Final Average Compensation for Retirement. For
purposes of determining your final average compensation under
the Corporation's various plans (including without limitation
any agreement(s) with you) providing retirement income, the
amount of Severance Pay provided for in subparagraph (i) of
this Article III shall be included, and the payments made
pursuant to subparagraph (i) shall be deemed to have been made
over the number of annual periods equal to the multiple used to
determine the gross amount of your Severance Pay, provided,
however, that your final average compensation shall not include
amounts paid or payable pursuant to subparagraph (iv) (to the
extent they are an Additional Vacation Equivalent) and
subparagraph (vii) of this Article III.
<PAGE> PAGE 40
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 8 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
(ix) Special Proviso for Those Eligible to Retire. If on your
Termination Date you are eligible to retire under the
provisions of any of the Corporation's retirement plans
(excluding any special, temporary early retirement
amendment[s]), as in effect either on the day immediately
preceding the Change in Control or on your Termination Date,
you may elect to retire on your Termination Date by giving the
Corporation written notice as provided in this subparagraph
(ix). Not later than two (2) business days following, but not
including, the date on which Notice of Termination is given
(whether by you or by the Corporation), the Corporation shall
advise you in writing of your right herein provided to elect to
retire. If you wish to exercise that right, you must so advise
the Corporation prior to your Termination Date on an election
form it provides and in the manner prescribed under Article X.
If and only if you make this election, your retirement will be
deemed to have occurred simultaneously with your Termination
Date (provided, however, that the "effective date" of such
retirement for purposes of such retirement plans shall be as
provided under such plans), and, instead of your having the
rights provided in this Article III, your rights shall be
governed by the retiree (or any specific change in control)
provisions of the respective, applicable plans (as to each, on
the terms most favorable to you under such plan [excluding any
special, temporary early retirement amendment(s)] as in effect
either immediately preceding the Change in Control or on your
Termination Date), provided, however, that if you make the
election herein afforded, you shall still receive the payments
called for in subparagraphs (i) and (ii)(a), (ii)(c) and (iii),
and the benefits described in subparagraph (viii).
There shall be no right of setoff or counterclaim in respect of any
claim, debt or obligation against any payment to, or benefit for, you
provided for in this Agreement, except as expressly provided in
subsection (v).
Without limiting your rights to arbitration, at law or in equity, if the
Corporation fails on a timely basis to make any payment required to be
made pursuant to provisions under this Article III, the Corporation shall
pay interest on the amount thereof at an annualized rate of interest
equal to three percent (3%) above the then-applicable Prime Rate ("Prime
Rate" means the rate of interest publicly announced by Morgan Guaranty
Trust Company of New York in New York City from time to time as its prime
rate).
<PAGE> PAGE 41
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 9 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
IV. Certain Tax Payments by the Corporation
Notwithstanding anything in the Agreement to the contrary, in the event
of (a) your Termination during the Change in Control Period and (b) the
determination (as hereinafter provided) that any required payment by the
Corporation to or for your benefit, whether paid or payable pursuant to
the terms of the Agreement or otherwise pursuant to or by reason of any
other agreement, policy, plan, program or arrangement, including without
limitation any stock option, stock appreciation right, or similar right,
or the lapse or termination of any restriction on the vesting or
exercisability of any of the foregoing including without limitation
acceleration of the termination of Share Retention Agreements under the
Corporation's Long-Term Incentive Plan (individually and collectively,
Payment), would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (Code) or any successor
provision thereto by reason of the Payment's being considered "contingent
on a change in ownership or control" of the Corporation within the
meaning of Section 280G of the Code (or any successor provision thereto),
or any interest or penalties with respect to such excise tax
(collectively, Excise Tax), then you shall be entitled to receive an
additional payment or payments (individually or collectively, Tax
Assistance Payment), which shall include an amount such that, after you
pay (1) all taxes (including any interest or penalties imposed with
respect to such taxes) and (2) any Excise Tax imposed upon the Tax
Assistance Payment, you retain so much of the Tax Assistance Payment as
is equal to the Excise Tax imposed on the Payment.
Subject to the provisions hereinafter concerning your providing notice of
a claim by the Internal Revenue Service, all determinations required to
be made under these provisions, including whether an Excise Tax is
payable by you, the amount of such Excise Tax and whether the Corporation
is required to pay you a Tax Assistance Payment and the amount of such
Tax Assistance Payment, if any, shall be made by a nationally recognized
accounting firm you, in your sole discretion, select (Accounting Firm).
You shall direct the Accounting Firm to submit its determination and
detailed supporting calculations to both you and the Corporation within
thirty (30) days after the Termination Date, if applicable, and any such
other time or times as you or the Corporation may request. If the
Accounting Firm determines that any Excise Tax is payable by you, the
Corporation shall pay the required Tax Assistance Payment to you within
ten (10) business days after the Corporation receives such determination
and calculations with respect to any Payment to you.
<PAGE> PAGE 42
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 10 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Any federal tax returns you file shall be prepared and filed on a basis
consistent with the determination of the Accounting Firm with respect to
the Excise Tax payable by you. If the Accounting Firm determines that
you are required to pay no Excise Tax, it shall (at the same time it
makes such determination) furnish you and the Corporation an opinion that
you have substantial authority not to report any Excise Tax on your
federal income tax return. However, in view of uncertainty concerning
application of Section 4999 of the Code (or any successor provision
thereto) at the time of any determination made hereunder by the
Accounting Firm, it is possible that a Tax Assistance Payment that should
have been made by the Corporation will not have been made (Underpayment),
consistent with the calculations required to be made hereunder. In the
event the Corporation exhausts or fails to pursue its remedies pursuant
to the provisions concerning notice of a claim by the Internal Revenue
Service, and you thereafter are required to make a payment of any Excise
Tax, you shall direct the Accounting Firm to determine the amount of the
Underpayment and to submit its determination and detailed supporting
calculations as promptly as possible both to you and to the Corporation,
which shall pay the amount of such Underpayment to you or for your
benefit within ten (10) business days following the Corporation's receipt
of such determination and calculations.
Each of you and the Corporation shall provide the Accounting Firm access
to and copies of any books, records and documents in your or its
possession, as the case may be, reasonably requested by the Accounting
Firm, and shall otherwise cooperate with the Accounting Firm in
connection with the preparation and issuance of the determination and
calculations required or contemplated hereunder.
The Corporation shall bear the fees and expenses of the Accounting Firm
for services hereunder. If, for any reason, you initially pay such fees
and expenses, the Corporation shall reimburse you the full amount of the
same within ten (10) business days following receipt from you of a
statement and reasonable evidence of your payment thereof.
<PAGE> PAGE 43
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 11 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
You shall notify the Corporation in writing of any claim by the Internal
Revenue Service that, if successful, would require the Corporation to pay
a Tax Assistance Payment. You shall give such notification as promptly
as practicable, but in no event later than the tenth (10th) business day
next following your receipt of such claim, and you further shall apprise
the Corporation of the nature of such claim and the date on which it is
required to be paid (in each case, to the extent known to you). You
shall not pay or otherwise satisfy such claim prior to the earlier of (a)
the expiration of the thirty (30)-calendar-day period next following the
date on which you give notice to the Corporation or (b) the date any
payment of the amount with respect to such claim is due. If the
Corporation notifies you in writing prior to the expiration of such
period that it desires to contest such claim, you shall:
(1) provide the Corporation any written records or documents in
your possession relating to such claim and reasonably requested by the
Corporation;
(2) take such action in connection with contesting such claim as
the Corporation reasonably shall request in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by the Corporation;
(3) cooperate with the Corporation in good faith in order
effectively to contest such claim; and
(4) permit the Corporation to participate in any proceedings
relating to such claim, provided, however, that the Corporation
directly shall bear and pay all costs and expenses (including without
limitation, interest and penalties) incurred in connection with such
contest and shall indemnify you and hold you harmless, on an after-tax
basis, from and against any and all Excise Tax or income tax
(including without limitation, interest and penalties with respect
thereto), imposed as a result of such representation and payment of
costs and expenses. Without limiting the foregoing, the Corporation
shall control all proceedings taken in connection with the contest of
any claim contemplated by these provisions and, at its sole option,
may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such
claim (provided, however, that you may participate therein at your own
cost and expense) and may, at its option, either direct you to pay the
tax claimed and sue for a refund or contest the claim in any
permissible manner, and you agree to prosecute such contest to a
determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the
Corporation shall determine; provided, however, that if the
Corporation directs you to pay the tax claimed and to sue for a
refund, the Corporation shall advance the amount of such payment
<PAGE> PAGE 44
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 12 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
to you, and pay on a current basis all costs of litigation, including
without limitation attorneys' fees, on an interest-free basis and
shall agree to and shall indemnify you and hold you harmless, on an
after-tax basis, from any Excise Tax or income tax, including without
limitation, interest and penalties with respect thereto, imposed with
respect to such advance; and provided further, however, that any
extension of the statute of limitations relating to payment of taxes
for your taxable year with respect to which the contested amount is
claimed to be due is limited solely to such contested amount.
Furthermore, the Corporation's control of any such contested claim
shall be limited to issues with respect to which a Tax Assistance
Payment would be payable hereunder, and you shall be entitled to
settle or to contest, as the case may be, any other issue(s)
raised by the Internal Revenue Service or any other taxing
authority.
If, after you receive an amount advanced by the Corporation pursuant to
provisions of the last full paragraph, you receive any refund with
respect to such claim, you shall (subject to the Corporation's complying
with any applicable provisions of the same paragraph) promptly pay to the
Corporation the amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto). If, after you
receive such an amount advanced by the Corporation, a determination is
made that you shall not be entitled to any refund with respect to such
claim and the Corporation does not notify you in writing of its intent to
contest such denial or refund prior to expiration of thirty (30) calendar
days after such determination, then such advance shall be forgiven and
shall not be required to be repaid, and the amount of such advance shall
offset, to the extent thereof, the amount of the Tax Assistance Payment
the Corporation is required to pay you hereunder.
V. No Mitigation Obligation
You and the Corporation agree that payments made by the Corporation
pursuant to this Agreement will be liquidated damages (and in lieu of any
claim for any breach whatsoever of this Agreement by the Corporation) and
that you will not be required to mitigate the amount of any such payment
by seeking other employment or otherwise, nor shall any profits, income,
earnings or other benefits from any source whatsoever, other than from
Competing Employment, create any mitigation, offset reduction or other
obligation on your part hereunder or otherwise, except as expressly
provided in the materials, supra, concerning Additional Benefits.
<PAGE> PAGE 45
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 13 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
VI. Arbitration
Except as otherwise expressly provided under the caption "Certain Tax
Payments by the Corporation," any controversy or claim between you and
the Corporation arising out of or relating to the existence,
enforceability, terms or application of this Agreement or any breach or
alleged breach thereof, shall be settled by three (3) arbitrators, one of
whom shall be appointed by the Corporation, one by you and the third of
whom shall be appointed by the first two arbitrators. If the first two
arbitrators cannot agree on the third arbitrator required to be appointed
hereunder, then such arbitrator shall be appointed by the Chief Judge of
the United States District Court for the district having jurisdiction of
the city or other municipality in which the arbitration is to be held.
The arbitration shall be conducted in accordance with the rules of the
American Arbitration Association, except with respect to the selection of
arbitrators, which shall be as hereinbefore provided. Judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The arbitrators shall have no authority to award
punitive, incidental or consequential damages, and they shall apply the
substantive law of the Commonwealth of Virginia in reaching a decision.
If you determine in good faith to retain legal counsel and/or to incur
other reasonable costs or expenses in connection with any such
arbitration or to enforce any or all of your rights under this Agreement
or under any arbitration award, the Corporation shall pay all such
attorneys' fees, costs and expenses you incur in connection with non-
frivolous applications to interpret or enforce your rights, including
enforcement of any arbitration award in court, regardless of the final
outcome. In addition, during the pendency of such arbitration, the
Corporation will continue to pay you, with the customary frequency, the
greater of your Base Pay as in effect immediately prior to the Change in
Control or immediately prior to your Termination and to provide Benefits
until the controversy or claim finally is resolved in accordance
herewith. These payments and the provision of Benefits hereunder shall
be in addition to, and not in derogation or mitigation of any other
payment or benefit due you under this Agreement.
Notwithstanding any other provision hereof, the parties' respective
rights and obligations under this Caption will survive a termination or
expiration of this Agreement or the Termination of your employment for
any reason whatsoever.
VII. Employment Rights
Nothing expressed or implied in this Agreement shall create any right or
duty on your part or that of the Corporation to have you remain in the
employment of the Corporation prior to or following any Change in
Control.
<PAGE> PAGE 46
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 14 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
VIII. Withholding of Taxes
The Corporation may withhold from any amounts payable under this
Agreement all federal, state, city, local or other taxes as shall be
required pursuant to any law or governmental regulation or ruling.
IX. Personal Nature of Agreement
This Agreement is personal in nature, and neither you nor the Corporation
(except as provided under the caption "Binding on Successors"), without
the prior written consent of the other, shall assign or transfer any of
its rights, or delegate any of its duties or obligations, except as
expressly provided under this caption. Without limiting the generality
and effect of the foregoing, your right to receive payments hereunder
shall not be assignable or transferable, whether by pledge, creation of a
security interest or otherwise, other than by a transfer by will or by
the laws of descent and distribution; in no event shall the Corporation
have any obligation or liability to recognize or honor any attempted
assignment or transfer that is contrary hereto.
X. Notice
For all purposes of this Agreement, except as otherwise expressly
provided in subparagraph (ix) of Article III, all communications,
including without limitation, notices, consents, requests and approvals,
provided for herein shall be in writing and shall be deemed to have been
duly given when (1) actually delivered or (2) if mailed, five (5)
business days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid,
(i) if to the Corporation, to the attention of its Corporate
Secretary at its principal executive office at the time, and
(ii) if to you, at the address at the time on file with the
Corporation as your principal residence address, or
(iii) in either case, to such other address as either the Corporation
or you shall have furnished the other in writing and in accordance
herewith, provided, however, that notices of change of address
hereunder shall be effective only upon actual receipt.
<PAGE> PAGE 47
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 15 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
XI. Governing Law
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of Virginia,
without giving effect to the Commonwealth's principles of conflicts of
law, save those permitting the parties to an agreement to stipulate the
substantive law applicable to the agreement and the procedural law
applicable to suits, actions or proceedings relating to it.
XII. Validity/Severability
If any provision of this Agreement or the application of any provision
hereof to any person (including a Person) or circumstance is held
invalid, illegal or unenforceable, the remainder of this Agreement and
the application of such provision to any other person (including a
Person) shall not be affected, and the provision(s) so held to be
invalid, illegal or unenforceable shall be reformed or excised in good
faith by the Corporation, without the necessity of your agreeing thereto,
to the extent (and only to the extent) necessary to make it or them
valid, legal or enforceable.
XIII. Miscellaneous
No provision of this Agreement may be amended, modified, waived or
discharged unless such amendment, modification, waiver or discharge is
agreed to in a writing signed by you and the Corporation. No waiver by
either party hereto at any time of any breach or of compliance with any
condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to
the subject matter hereof have been made by either party which are not
set forth expressly in this Agreement.
<PAGE> PAGE 48
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 16 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
XIV. Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, and all of which together shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the Board of Directors of the Corporation has
directed that this Agreement be executed and delivered on its behalf by
one or more officers of the Corporation thereunto duly authorized, as of
the day and year first above written, and you have indicated your
acceptance of and intent to be bound by this Agreement in the space
provided below.
NORFOLK SOUTHERN CORPORATION
By
----------------------------------
Name:
--------------------------
Title:
--------------------------
ATTEST
{SEAL}
- ----------------------------------------
Corporate Secretary
Accepted:
By
------------------------------------
Name:
----------------------------------
(Please print full name)
Being the same individual named
in the preamble hereto and re-
ferred to as "You" in the text.
<PAGE> PAGE 49
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 17 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 1 of 18
CERTAIN DEFINITIONS
For purposes of this Agreement:
(A) Accelerated Dividend Equivalent means the lump-sum cash payment
equal to the sum of
(i) the total of all dividend equivalents that, but for your
Termination, you would have received (whether in cash or
on a deferred basis) after your Termination Date on grants
outstanding on your Termination Date; and
(ii) the fair market value of all units, including fractions
thereof, credited or creditable on your Termination Date
to your memorandum account in respect of dividend
equivalents you were not entitled to receive in cash. For
this purpose, "fair market value" shall be determined in
accordance with the methodology identified in Item (N)(i)
of this Attachment A, so that you will receive in exchange
for such units a cash amount calculated with respect to
the mean of the high and low trading prices of the
security from which the unit (on any date required to be
used under Item (N)(i)) derives its value.
In return for this payment, you will be deemed to have waived any
and all rights you otherwise might have to receive payments, in any
form (post-Termination dividend equivalents that would have been
converted to units, will be paid in cash instead) in respect of such
dividend equivalents or such units.
For purposes of (A)(i), the dividend rate per share shall be the
greater of the rate established pursuant to the authority of the
Board of Directors:
(a) on the most recent dividend declaration date
preceding your Termination Date; or
(b) on the dividend declaration date that immediately
precedes the date of the Change in Control.
<PAGE> PAGE 50
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 18 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 2 of 18
Example: On your Termination Date, you hold options to acquire
a total of 6,000 shares of the Corporation's common stock.
Dividend equivalents were awarded with each option grant,
payable (whether in cash or on a deferred basis) during the
first five (5) years next following the date of grant, on
options unexercised on the dividend record date. The dividend
declared immediately prior to the Change in Control was $0.56
per share; the most recent dividend declared is $0.60 per share.
Also, on your Termination Date, 116.916 units have been credited
to your memorandum account, and the Fair Market Value of the
Corporation's common stock is determined to be $85.00.
Accordingly, you will receive a lump-sum cash payment on all
outstanding options - as to each such option, for the entire
remaining period during which you would have been entitled to
receive dividend equivalents on that option - at the rate per
share (option) of $0.60, plus the fair market value of your
units.
For instance, if 4,000 of your options called for payment of
dividend equivalents (whether in cash or to be converted into
units) for the six (6) quarters next following your Termination
Date, and the other 2,000 called for such payments (whether in
cash or to be converted into units) over the next ten (10)
quarters, you would receive in a lump sum:
4,000, times $0.60, times 6 dividend dates = $ 14,400.00
2,000, times $0.60, times 10 dividend dates = 12,000.00
-----------
$ 26,400.00
AND
116.916 units @ $85.00 per share (unit) = 9,937.86
-----------
TOTAL $ 36,337.86
<PAGE> PAGE 51
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 19 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 3 of 18
(B) Actual Incentive Pay Percentage means, in any given year, the
percentage actually earned, as determined pursuant to the authority
of the Board of Directors, of the maximum potential bonus amount
potentially payable to participants in the Corporation's Executive
Management Incentive Plan and its Management Incentive Plan, or any
successor plan[s] or program[s] to either or both (respectively,
EMIP and MIP).
(C) Additional Benefits refers to, as to each plan listed herein, the
greater of all those benefits associated with or accruing as a
result of your continued participation in the following plans, or
portions of plans, of the Corporation in which you are participating
or are eligible to participate (whether funded by actual insurance
or self-insured by the Corporation) immediately prior to (a) the
Change in Control or (b) your Termination:
1. Norfolk Southern Corporation Comprehensive Benefits
Plan
[Only Paragraphs E, F and H of Article III, "ChoicePlus,"
providing medical, dental and life insurance benefits],
2. Norfolk Southern Corporation Executive Accident Plan,
The term "Additional Benefits" shall not include benefits of any
type under any other plans, policies or programs.
(D) Base Pay means
(i) in determining whether a Termination has occurred, the gross
amount of your annual salary in effect on the date of a Change
in Control (the gross amount you actually were paid in the pay
period coinciding with or immediately preceding the date of the
Change in Control, multiplied by the number of pay periods in
the year or otherwise determined and expressed as an annual
amount).
(ii) in calculating the amount of Severance Pay, the larger of
(a) the amount calculated under Item (D)(i); or
(b) the amount calculated as provided in Item (D)(i), but
substituting "Termination Date" for "date of a Change in
Control" wherever the latter term appears.
<PAGE> PAGE 52
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 20 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 4 of 18
(E) Beneficial Owner means any Person who, under Rule 13d-3 (or
successor rules or regulations thereto) promulgated under the
Securities Exchange Act of 1934, would be deemed beneficially to own
Voting Stock.
(F) Benefits means any of the perquisites, benefits and service credit
for benefits provided under any and all employee retirement income
or welfare benefit policies, plans, programs or arrangements in
which you participate immediately prior to the Change in Control,
including without limitation any stock option, stock purchase, stock
appreciation, savings, pension, supplemental executive retirement or
other retirement income or welfare benefit, deferred compensation,
incentive compensation, group and/or executive life, health,
medical/hospital or other insurance (whether funded by actual
insurance or self-insured by the Corporation), disability, salary
continuance, severance pay plan, expense or tuition reimbursement or
other employee benefit policies, plans, programs or arrangements
that now exist, or any equivalent successor policies, plans,
programs or arrangements that may be adopted hereafter by the
Corporation providing perquisites, benefits and service credit for
benefits at least as great as are payable thereunder prior to a
Change in Control, provided, however, that your rights under such
policies, plans, programs or arrangements shall be governed by the
terms thereof and shall not be enlarged hereunder or otherwise
affected hereby.
(G) Cause refers to your having engaged in any of the following if the
result of the same is materially harmful to the Corporation:
(i) an intentional act of fraud, embezzlement or theft in
connection with your duties or in the course of your employment
with the Corporation;
(ii) intentional wrongful damage to property of the Corporation;
(iii) intentional wrongful disclosure of secret processes or of
confidential information of the Corporation; or
(iv) intentional violation of the Corporation's Code of
Conduct/Ethics (or any successor[s]) as in effect immediately
prior to a Change in Control.
<PAGE> PAGE 53
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 21 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 5 of 18
For these purposes, an act or failure to act on your part shall be
deemed "intentional" only if you acted or omitted to act otherwise
than in accordance with your good faith business judgment of the
best interests of the Corporation; in determining whether this
standard has been satisfied, you shall be afforded all the
presumptions and be entitled to all the protections available to
directors under Section 13.1-690 of the Virginia Stock Corporation
Act.
(H) A Change in Control occurs upon any of the following circumstances
or events:
(i) The Corporation consummates a merger or other similar control-
type transaction or transactions (however denominated or
effectuated) with another corporation or other Person
(Combination), and immediately thereafter less than eighty
percent (80%) of the combined voting power of the then-
outstanding securities of such corporation or Person is held in
the aggregate by the holders of securities entitled,
immediately prior to such Combination, to vote generally in the
election of directors of the Corporation (Voting Stock);
(ii) The Corporation consummates any stockholder-approved
consolidation or dissolution (however denominated or
effectuated) pursuant to a recommendation of the Board;
(iii) At any time, Continuing Directors (as herein defined)
shall not constitute a majority of the members of the Board
("Continuing Director" means (i) each individual who has been a
director of the Corporation for at least twenty-four (24)
consecutive months before such time and (ii) each individual
who was nominated or elected to be a director of the
Corporation by at least two thirds of the Continuing Directors
at the time of such nomination or election);
(iv) The Corporation sells all or substantially all of its assets to
any other corporation or other Person, and less than eighty
percent (80%) of the combined voting power of the then-
outstanding securities of such corporation or Person
immediately after such transaction is held in the aggregate by
the holders of Voting Stock immediately prior to such sale;
(v) A report is filed on Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), pursuant to the Securities
Exchange Act of 1934, as amended (Exchange Act), disclosing
that any Person has become the Beneficial Owner of twenty (20)
or more percent of the voting power of Voting Stock; or
<PAGE> PAGE 54
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 22 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 6 of 18
(vi) The Board determines by a majority vote that, because of the
occurrence, or the threat or imminence of the occurrence, of
another event or situation with import or effects similar to
the foregoing, those who have accepted an agreement of this
type are entitled to its protections.
Notwithstanding the provisions of the foregoing subparagraph (v),
unless otherwise determined in a specific case by majority vote of
the Board, a Change in Control for purposes of this Agreement shall
not be deemed to have occurred solely because (a) the Corporation,
(b) an entity of which the Corporation is the direct or indirect
Beneficial Owner of 50 or more percent of the voting securities or
(c) any Corporation-sponsored employee stock ownership plan or any
other employee benefit plan of the Corporation either files or
becomes obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K, or Schedule 14A
(or any successor schedule, form or report or item therein) under
the Exchange Act, disclosing beneficial ownership by it of shares of
Voting Stock, whether in excess of 20 percent or otherwise, or
because the Corporation reports that a change in control of the
Corporation has or may have occurred or will or may occur in the
future by reason of such beneficial ownership.
(I) Competing Employment means the provision of services of any type,
kind or nature and in any capacity (whether as a director, partner,
officer, employee, independent contractor, consultant or otherwise),
whether or not for compensation or other remuneration of any type,
kind or nature (current or deferred and whether or not paid or
payable to you, or at your direction), to any organization or person
(i) that is, or
(ii) that controls, or
(iii) that is controlled by, or
(iv) one of whose customers or clients which accounted for 5%
or more of the organization's or person's gross revenues
in the immediately preceding fiscal year or is likely to
account for 5% or more of such gross revenues in the
current or next succeeding fiscal year is:
(a) a Class I railroad operating in the United States,
Canada or Mexico; or
<PAGE> PAGE 55
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 23 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 7 of 18
(b) an interstate trucking company operating in the United
States, Canada or Mexico; or
(c) a provider or arranger (as to either - one incorporated
under the laws of the United States or of any state or
political subdivision of either or both) of intermodal
services of any kind or nature, any portion of which
services is provided or arranged in the United States,
provided however, that the provision of services otherwise
prohibited by the foregoing may be permitted if, in the sole
judgment of the Corporation's chief legal officer at the time, in
providing such services, you do not draw or rely extensively on, or
use for a purpose contrary to the Corporation's business interests,
the experience and expertise you acquired during and as a result of
your employment with, or that you used or employed for the benefit
of, the Corporation.
(J) Deferred Compensation Equivalent means, in respect of all amounts
you have deferred or elected to defer as of your Termination Date
under the terms of the Officers' Deferred Compensation Plan or
successor plan(s) or program(s) (ODCP), as in effect on the day
immediately preceding the Change in Control, a lump-sum cash payment
equal to the present value on your Termination Date, using a
discount rate of 4.5%, of the stream of annual installment payments
that you would have received (a) had you worked until normal
retirement at age 65, or (b) if greater, had you retired on your
Termination Date. In return for this payment, you will have, and
will be deemed to have, waived any and all rights you otherwise
might have to receive payments in respect of such deferrals under
the terms of the ODCP.
Example: You have deferred $70,000 - portions of several
bonuses. It is determined, on the actuarial basis noted above,
that the present value of the stream of annual installment
payments you would have received on $70,000 of deferrals (at
the interest rate in effect for each such deferral immediately
preceding the date of the Change in Control), had you worked to
normal retirement at age 65, is $175,000.
Accordingly, you would receive immediately and in cash a
Deferred Compensation Equivalent of $175,000.
<PAGE> PAGE 56
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 24 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 8 of 18
The actual amount any ODCP participant receives under this
provision will depend on that participant's age on the
Termination Date and the interest rate applicable to each pre-
Termination deferral the participant has made.
In all cases, however, that amount will exceed your account
balance (the sum of all your deferrals, plus interest credited
to the Termination Date).
(K) Incentive Opportunity means the percentage of your salary or other
fixed compensation that, in accordance with all applicable
provisions of the EMIP and MIP - including without limitation
earnings and return targets - in effect immediately prior to the
Change in Control, could be earned as incentive pay.
(L) Incentive Pay means the product of (i) and (ii), where:
(i) is 100% of the larger of your Incentive Opportunity
(a) on your Termination Date; or
(b) immediately preceding the date of the Change in Control;
and
(ii) is your Base Pay.
Example: On your Termination Date, your Incentive Opportunity
is 30% of your base salary; immediately prior to the date of
the Change in Control, your Incentive Opportunity was 45% of
your base salary.
Accordingly, your Incentive Pay will be calculated on the basis
of a 45% Incentive Opportunity - and that percentage will be
applied to your Base Pay. The resulting dollar amount is the
Incentive Pay that will be used in the calculation of your
Severance Pay.
For instance, if your Base Pay is $100,000 and your Incentive
Opportunity is 45%, your Incentive Pay is $45,000. The sum
($145,000) of your Base Pay and Incentive Pay will be
multiplied by the factor indicated in the Severance Pay section
of your Agreement to determine the amount of your Severance
Pay.
<PAGE> PAGE 57
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 25 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 9 of 18
(M) Option Equivalent means that positive number that is the product of
(i) and (ii) where
(i) is the total number of shares of the type of Norfolk Southern
or successor security (Security) that the option entitles you
to acquire; and
(ii) is the number that is equal to the difference between
(a) the Fair Market Value of the type of Security (the mean of
the high and low prices at which shares of that Security
trade on the Applicable Date (as hereinafter defined) as
reported in the Composite Transactions for such date by
The Wall Street Journal) for which the option is
exercisable on your Termination Date, less
(b) the option exercise or strike price on your Termination
Date.
"Applicable Date" means the later of (i) your Termination Date, if
at least 100,000 shares of the Security trade on that date on the
New York Stock Exchange (Exchange) or (ii) the immediately preceding
day on which at least 100,000 shares trade on the Exchange,
provided, however, that if, at the time of the Change in Control or
during the Change in Control Period, the Norfolk Southern security
for which the option could be exercised ceases to be listed on the
Exchange (Cessation Date) and the option is not exercisable for the
number of shares of a successor security into which the Norfolk
Southern security could have been converted, for which it could have
been exchanged or to which it otherwise is equal, then "Applicable
Date" shall be defined (and Fair Market Value determined) with
reference to the Cessation Date rather than "your Termination Date."
(N) Performance Share Unit Equivalent means the number that is equal to
the product of (i) and (ii) where:
(i) is Fair Market Value which means,
(a) if on your Termination Date the security that could be
earned out as Performance Shares (Performance Security) is
listed on the Exchange, the Fair Market Value of each such
unearned Performance Share Unit shall be the larger of the
value of a share of such Performance Security (x) on the
date of the Change in Control or (y) your Termination
<PAGE> PAGE 58
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 26 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 10 of 18
Date; if fewer than 100,000 shares of such Performance
Security were traded on the Exchange on your Termination
Date, then on the next succeeding day on which at least
100,000 shares trade on the Exchange. On any date,
"Value" is the mean of the high and low prices at
which shares of the Performance Security trade on such
date as reported in the Composite Transactions for such
date by The Wall Street Journal; or
(b) if at the time of the Change in Control or during the
Change in Control Period, the Performance Security ceases
to be listed on the Exchange (Cessation Date), Fair Market
Value shall be computed as provided under (i)(a) hereof,
but substituting Cessation Date for Termination Date; and
(ii) is the number of your Equivalent Shares which means the total
number of Performance Share Units granted to you for which the
full performance cycle has not been completed (In-Cycle Units),
multiplied by the mean of the overall earnout percentages for
the two most recently completed performance cycles.
In return for this payment, you will have, and will be deemed to
have, waived any and all rights you otherwise might have to receive
payments, in any form, in respect of such Performance Share Units.
Example: On your Termination Date, you have 7,500 In-
Cycle Units (2,500 granted in each of the prior three
years); in the two most recently completed cycles
preceding your Termination Date, the overall earnout
percentages were 88.30% and 75.80%, respectively - equal
to a mean overall earnout of 82.05%.
To determine the number of Equivalent Shares used to
compute your Performance Share Equivalent, 7,500 In-Cycle
Units are multiplied by 82.05%, giving a deemed earnout of
6,153.75 (Equivalent Shares).
The 6,153.75 Equivalent Shares are multiplied by the Fair
Market Value of the common stock to determine the amount
of your lump-sum cash payment.
<PAGE> PAGE 59
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 27 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 11 of 18
Accordingly, if the Fair Market Value of the common stock
is $85 per share, your Performance Share Equivalent would
be $523,068.75 (6,153.75 shares, multiplied by $85).
(O) Person means any
(i) "person" as that term is used and defined in the attached copy
of Section 14(d)(2) of the Exchange Act as in effect on the
effective date of this Agreement, and
(ii) "affiliate" or "associate" of any person (as defined in Item
(O)(i)) as those terms are used and defined in the attached
copy of Rule 12b-2 of the General Rules and Regulations under
the Exchange Act as in effect on the effective date of this
Agreement.
(P) Post-Retirement Life Insurance Benefit means a fully paid life
insurance policy (Policy), of which you are the sole owner and in
which the Corporation shall have no interest. The Policy shall be
in a face amount equal to the greater of the amount of the post-
retirement life insurance benefit to which you would have been
entitled on your retirement under the Corporation's retirement
policy as in effect for you (a) on your Termination Date or (b)
immediately preceding the date of the Change in Control, provided,
however, that the face amount of such Policy shall be reduced as and
to the extent required under the terms of (i) Appendix L (relating
to Retiree Group Life Insurance) of the Corporation's Comprehensive
Benefits Plan or (ii) the Death Benefit Plan of Norfolk Southern
Corporation and Participating Subsidiary Companies, each as in
effect on May 9, 1996. The Corporation also shall make a cash
payment, either directly to you or on your behalf, in an amount
estimated to be equal (after taking into account any Federal and
states taxes estimated to be applicable to such cash payment) to any
additional Federal and state income taxes that are imposed upon you
as a result of the issuance to you and your receipt of the Policy.
In determining the amount to be paid pursuant to the foregoing
sentence, the Corporation shall not be required to examine the
individual tax liability of any person entitled to receive such
cash payment or on whose behalf it is required to be made.
<PAGE> PAGE 60
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 28 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 12 of 18
(Q) Prorata Incentive Pay means the amount of pay to which, had you been
employed on December 31 of the year that includes your Termination
Date, you would have been entitled to receive under the terms of the
EMIP or the MIP, or the successor plan(s) or program(s) as in effect
for that year, calculated as the product of (i) and (ii), where
(i) is the maximum amount of bonus or incentive pay you
would have been entitled to receive for the full year,
using the larger of (a) your Incentive Opportunity or
(b) the percentage of your base salary that could be
earned as bonus or incentive pay during the year that
includes your Termination Date, and
(ii) is the percentage (carried to three decimal places) that
results from multiplying (a) and (b), where
(a) is the number of calendar days in that year which
immediately precedes, but includes, your Termination
Date, divided by 365; and
(b) is the mean of the last two Actual Incentive Pay
Percentages.
Example: A Change in Control occurs in 1997, and you are
Terminated effective the 183rd day of 1998. Your base salary
for 1998 is $100,000, and the percentage of your base salary
that could be earned as 1998 bonus or incentive pay is 30%; the
percentage of your base salary that could have been earned as
bonus or incentive pay in 1997 was 45%. Consequently, for
purposes of this calculation, the 45% opportunity is used.
<PAGE> PAGE 61
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 29 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 13 of 18
In January 1997, the Actual Incentive Pay Percentage
(attributable to 1996 performance) was determined to be 100%;
in January 1998, that percentage (attributable to 1997
performance) was determined to be 90%. Thus, the mean of the
last two Actual Incentive Pay Percentages is 95%.
the amount calculated under (i) is $45,000 (45% of
$100,000).
the percentage calculated under (ii) is 47.630% (183/365,
multiplied by 95% - the portion of the full year for which
you worked, times the mean of the last two Actual
Incentive Pay Percentages).
Accordingly, your Prorata Incentive Pay would be $21,433.50
($45,000, times 47.630%)
Under the terms of the Agreement, this amount will not be used
to calculate your final average compensation for pension
benefit purposes.
(R) Termination means:
(i) Your decision to leave the employ of the Corporation if,
following a Change in Control and during the Change in Control
Period, any of the following occurs, provided, however, that
your continued employment after the occurrence of one or more
of the following shall not constitute consent to, or a waiver
of rights with respect to, circumstances that empower you to
leave the employ of the Corporation:
(a) You are not elected or reelected to the office of the
Corporation you held immediately prior to the Change in
Control, or - if you were serving as a director of the
Corporation immediately prior to the Change in Control -
you are removed as a director;
(b) Your Base Pay is, or when annualized will be, less than
the amount determined in accordance with (D)(i) herein);
(c) Your Incentive Opportunity is less than that provided for
under (K) herein;
<PAGE> PAGE 62
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 30 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 14 of 18
(d) Without your prior written consent, the Corporation,
except to meet the requirements of applicable federal or
state law, (i) terminates, or (ii) reduces the value or
scope of your rights to any Benefits to which you are
entitled, and the Corporation does not remedy any such
termination or reduction, as the case may be, within ten
(10) calendar days after its receipt of written notice
from you;
(e) You determine in good faith that following a Change in
Control, you have been rendered substantially unable to
carry out or have suffered a substantial reduction in any
of the substantial authorities, powers, functions,
responsibilities or duties attached to the position you
held immediately prior to the Change in Control, which
situation is not remedied within ten (10) calendar days
after receipt by the Corporation of written notice from
you that you have made such a determination;
(f) The liquidation, dissolution, merger, consolidation or
reorganization of the Corporation or the transfer of all
or a significant portion of its business and/or assets,
unless the successor or successors (by liquidation,
merger, consolidation, reorganization or otherwise) to
which all or a significant portion of its business and/or
assets have been transferred (directly or by operation of
law) shall have assumed all the duties and obligations of
the Corporation under this Agreement either by operation
of law or pursuant to the provisions under the Agreement
caption "Binding on Successors";
(g) The Corporation requires you to relocate your principal
location of work outside a circle having (i) as its center
your principal location of work immediately prior to the
Change in Control and (ii) a radius of thirty-five (35)
miles, or requires you to travel away from your office in
the course of discharging your responsibilities or duties
hereunder significantly more (in terms either of
consecutive days or of aggregate days in any calendar
year) than was required of you immediately prior to the
Change in Control, without (in either case) your prior
written consent; or
<PAGE> PAGE 63
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 31 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 15 of 18
(h) Without limiting the generality or the effect of the
foregoing, any material breach of this Agreement by the
Corporation or any successor thereto.
OR
(ii) The termination of your employment by the Corporation, during
the twenty-four months next succeeding a Change in Control, for
any reason except:
(a) Your death;
(b) Your Total Disability, as defined in the Long Term
Disability Plan of Norfolk Southern Corporation and
Participating Subsidiary Companies (or any plan that is
successor or in addition thereto), as then in effect, and
you begin to receive disability benefits pursuant to that
plan;
(c) Your retirement pursuant to any Board-approved policy or
plan, on the terms in effect immediately prior to the
Change in Control, providing for mandatory retirement of
certain personnel; or
(d) Cause.
(S) Termination Date means the date specified in the Notice of Termination
(hereinafter defined), provided, however, that if, prior to the
Termination Date, the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the
Termination, then the Termination Date shall be the date on which the
dispute finally is determined, either by mutual written agreement of
the parties, by a binding arbitration award or by a final judgment,
order or decree of a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom has
expired and no appeal has been perfected); and provided, further, that
the Termination Date shall be extended by a notice of dispute only if
such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
<PAGE> PAGE 64
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 32 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 16 of 18
For these purposes, any purported termination of your employment by
the Corporation or by you shall be communicated by written Notice of
Termination to the other party hereto, delivered in accordance with
the caption concerning "Notice" in the Agreement. The Notice of
Termination shall
(i) indicate the specific Termination provision relied upon;
(ii) set forth in reasonable detail the facts and circumstances
claimed to provide a basis for Termination under the
provision(s) so indicated; and
(iii) shall specify the Termination Date, which:
(a) if the Termination is for Cause, shall be a date not
less than thirty (30) days from the date the Notice of
Termination is given; and
(b) if the Termination is not for Cause, shall be a date
not less than fifteen (15) nor more than sixty (60)
days after such Notice of Termination is given.
(T) Vacation Equivalent is intended to compensate you for your unused
vacation in the year of Termination and for one year of additional
vacation; for these purposes, the term means the cash value
attributable to the sum of
(i) Your Current Vacation Equivalent - the number of full days of
vacation for which you are eligible in the year that includes
your Termination Date, determined using the more generous of the
vacation policy as in effect (a) on your Termination Date or (b)
on the day immediately preceding the date of the Change in
Control, the number of such full days to be reduced by the number
of full days of vacation you have taken prior to your Termination
Date in the year that includes your Termination Date, multiplied
by your Base Pay expressed as a daily rate on the basis of 261
business days per year; and
(ii) Your Additional Vacation Equivalent - the larger of the
number of weeks, determined as of your Termination Date or as of
January 1 of the year next following the year that includes your
Termination Date (or, if greater, for which you would have been
eligible on either date had the Corporation's vacation policy, as
in effect on the day immediately preceding the date of the Change
in Control, been in effect on either date) multiplied by your
Base Pay expressed as a weekly rate.
<PAGE> PAGE 65
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 33 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 17 of 18
In return for this payment, you will have, and will be deemed to
have, waived any and all rights you otherwise might have to
receive payments in respect of vacation to which you would or may
have been entitled in any years or years including or following
that which includes your Termination Date.
Example:
Current Vacation Equivalent - In the year of your Termination,
you are eligible for three (3) weeks' vacation; had the
Corporation's vacation policy as in effect on the day prior to
the Change in Control been continued, in the year that includes
your Termination Date, you would have been eligible for five (5)
weeks' vacation.
For purposes of determining the Current Vacation Equivalent, you
are deemed to be eligible for five week's (25 business days')
vacation.
If your Base Pay (the amount used to compute your Severance Pay)
is $100,000, it would be equivalent to $383.14 per business day
($100,000, divided by 261 business days).
If you have 17 business days of vacation remaining in the year
that includes your Termination Date, your Current Vacation
Equivalent would be $6,513.38, in return for which you will be
deemed to have waived any and all rights you otherwise might have
to receive payments in respect of unused vacation to which you
were entitled in the year that includes your Termination Date.
Additional Vacation Equivalent - Under the vacation policy in
effect in the year of your Termination, you are eligible for
three (3) weeks' vacation, and you would be eligible for four (4)
weeks' vacation had you been employed on the following January 1;
had the Corporation's vacation policy as in effect on the day
prior to the Change in Control been continued, in the year that
includes your Termination Date, you would have been eligible for
five (5) weeks' vacation, and you would be eligible for five (5)
weeks' vacation had you been employed on the following January 1.
<PAGE> PAGE 66
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(h), Page 34 of 34
CHANGE-IN-CONTROL AGREEMENT
FOR OFFICERS
Effective June 1, 1996
Attachment A, Page 18 of 18
For purposes of determining the Additional Vacation Equivalent,
you are deemed to be eligible for five weeks' vacation.
If your Base Pay (the amount used to compute your Severance Pay)
is $104,000, it would be equivalent to $2,000.00 per week
($100,000, divided by 52).
Accordingly, your Additional Vacation Equivalent would be
$10,000.00 ($2,000.00, multiplied by five (5) weeks), in return
for which you will be deemed to have waived any and all rights
you otherwise might have to receive payments in respect of
vacation to which you would have been entitled.
In this example, your Vacation Equivalent would be $16,513.38
(the sum of your Current Vacation Equivalent and your Additional
Vacation Equivalent).
Under the terms of the Agreement, only the portion of this
payment that represents the value of your Current Vacation
Equivalent will be used to calculate your final average
compensation for pension benefit purposes.
<PAGE> PAGE 67
EXHIBIT 10(i), Page 1 of 5
SUPPLEMENTAL BENEFIT PLAN
OF
NORFOLK SOUTHERN CORPORATION
AND
PARTICIPATING SUBSIDIARY COMPANIES
(as last amended May 9, 1996)
ARTICLE I. INTRODUCTION
This Supplemental Benefit Plan ("Plan"), formerly the Excess Benefit
Plan, was established by Norfolk Southern Corporation effective
June 1, 1982, ("Effective Date") to provide retirement benefits to
eligible employees in excess of those provided for by the Retirement
Plan of Norfolk Southern Corporation and Participating Subsidiary
Companies. This Plan is the successor to and supersedes, as
of the Effective Date, the following plans:
Excess Benefit Plan of Norfolk and Western Railway Company
Southern Railway System Supplemental Retirement Plan
Norfolk and Western Railway Company Executives Contingent
Compensation Plan Pension Resolution
ARTICLE II. DEFINITIONS:
NSC Norfolk Southern Corporation, a Virginia
corporation.
Pension The Pension Committee of the Board of Directors
Committee of NSC.
Retirement Retirement Plan of Norfolk Southern Corporation
Plan and Participating Subsidiary Companies.
Member A person entitled to participate in the
Retirement Plan.
Participating Each subsidiary or affiliated company of NSC
Subsidiary which is a Participating Subsidiary in the
Retirement Plan shall automatically participate
in the Plan.
Participant A Member of the Retirement Plan who is eligible
to participate under Article III.
Deferred Amounts the receipt of which a Participant elects
Compensation to defer under the:
Deferred Compensation Plan of Norfolk and
Western Railway Company
Southern Railway System Executive, General or
Middle Management Incentive Plan
Norfolk Southern Corporation Management
Incentive Plan
<PAGE> PAGE 68
SUPPLEMENTAL BENEFIT PLAN OF EXHIBIT 10(i), Page 2 of 5
NORFOLK SOUTHERN CORPORATION AND
PARTICIPATING SUBSIDIARY COMPANIES
(as last amended May 9, 1996)
Norfolk Southern Corporation Executive
Management Incentive Plan
Norfolk Southern Corporation Officers' Deferred
Compensation Plan
NW Pension Resolutions adopted by the Board of Directors of
Resolutions Norfolk and Western Railway Company at its
meetings held on January 23, 1968, June 24, 1969,
November 25, 1969, January 26, 1971, and April 23,
1974, authorizing the respective payments of
additional pension benefits to five Members.
Average Final Compensation as defined in Article II of the
Compensation Retirement Plan.
ARTICLE III. ELIGIBILITY
1. The following Members of the Retirement Plan shall be eligible to
participate in the Plan on or after the Effective Date:
(a) Any Member of the Retirement Plan whose benefit computed under
Article VI of the Retirement Plan without regard to the maximum
limitation on benefits imposed by Section 415 of the Internal
Revenue Code exceeds such maximum limitation on benefits;
(b) Any Member of the Retirement Plan whose benefit computed under
Article VI of the Retirement Plan disregards amounts of
Deferred Compensation in the computation of his Average Final
Compensation;
(c) Any Member of the Retirement Plan entitled to receive a pension
benefit, in excess of the benefit computed under the provisions
of the Retirement Plan, pursuant to an NW Pension Resolution;
(d) Any Member of the Retirement Plan entitled to receive a pension
benefit, in excess of the benefit computed under the provisions
of the Retirement Plan, pursuant to a resolution adopted by the
Board of Directors of NSC;
(e) Any Member of the Retirement Plan whose Compensation exceeds
the limitation contained in Section 401(a)(17) of the Internal
Revenue Code;
(f) Any Member protected by the Pension Benefits Standard Act of
Canada whose benefit computed under Article VI of the
Retirement Plan exceeds $60,000; or
<PAGE> PAGE 69
SUPPLEMENTAL BENEFIT PLAN OF EXHIBIT 10(i), Page 3 of 5
NORFOLK SOUTHERN CORPORATION AND
PARTICIPATING SUBSIDIARY COMPANIES
(as last amended May 9, 1996)
(g) Any Member of the Retirement Plan entitled to receive a pension
benefit in excess of the benefit computed under the provisions
of the Retirement Plan, pursuant to the provisions of any
agreement between a Participant and NSC providing benefits upon
"Termination" of a Participant's employment following a "Change
in Control" (as the terms "Termination" and "Change in Control"
are defined in any such agreement).
2. Any participant of the Excess Benefit Plan of Norfolk and Western
Railway Company or the Southern Railway System Supplemental
Retirement Plan or any individual covered by the Norfolk and Western
Railway Company Executives Contingent Compensation Plan Pension
Resolution, dated September 24, 1968, shall become a Participant on
the Effective Date.
ARTICLE IV. SUPPLEMENTAL BENEFIT
1. A Participant shall, upon retirement under the Retirement Plan, be
entitled to receive a monthly benefit equal to the excess of
(a) the monthly benefit under Article VI of the Retirement Plan if
such benefit had been computed
(i) without regard to the limitation imposed by Section
415 of the Internal Revenue Code and provided for in
Section 1 of Article VII of the Retirement Plan;
(ii) without regard to the limitation of Compensation
imposed by Section 401(a)(17) of the Internal Revenue
Code;
(iii) without regard to the $60,000 limitation on benefits
payable to Members protected by the Pension Benefits
Standard Act of Canada;
(iv) by including in the calculation of Average Monthly
Final Compensation amounts of Deferred Compensation,
if any;
(v) by including service credits and applying any offsets
provided for under any NW Pension Resolution, if any;
and
(vi) by including the service credits and compensation to
which a Participant is entitled pursuant to the
provisions of any agreement providing the benefits
described in Article III, Section 1(g), hereof, over
(b) the monthly benefit actually payable under the Retirement Plan.
<PAGE> PAGE 70
SUPPLEMENTAL BENEFIT PLAN OF EXHIBIT 10(i), Page 4 of 5
NORFOLK SOUTHERN CORPORATION AND
PARTICIPATING SUBSIDIARY COMPANIES
(as last amended May 9, 1996)
2. A Participant shall, upon retirement under the Retirement Plan, be
entitled to receive a monthly benefit, in excess of the benefit
otherwise payable under the Retirement Plan and in addition to any
amount payable pursuant to Section 1 of this Article IV, in an
amount so provided by a resolution adopted by the Board of Directors
of NSC, if any.
3. Any survivorship option which has been elected or is in force under
Article VIII of the Retirement Plan at the time of a Participant's
death shall be deemed to have been elected or be in force under this
Plan.
4. The payment of excess benefits under the Plan shall be made in a
manner consistent with the provisions of the Retirement Plan, and
shall continue for the same period of time.
ARTICLE V. FUNDING
The benefits under the Plan shall be paid in cash from the general
funds of NSC or its Participating Subsidiary, and no special or separate
fund shall be established or other segregation of assets made to assure
such payments. Nothing contained in the Plan shall create or be
construed to create a trust of any kind. To the extent that any person
acquires a right to receive payments under the terms of the Plan, such
right shall be no greater than the right of an unsecured creditor of NSC
or its Participating Subsidiary.
ARTICLE VI. ADMINISTRATION
1. The Plan shall be administered by the Pension Committee, which is
composed of three or more NSC directors appointed by the NSC Board
who are not eligible to participate in the Plan and who shall serve
at the pleasure of the Board. Each member of the Pension Committee,
while serving as such, shall be considered to be acting in his
capacity as a director of NSC.
2. The Pension Committee shall from time to time adopt rules and
regulations determined to be necessary to ensure the effective
implementation of the Plan.
3. The Pension Committee shall have the power to interpret the Plan.
Any disputed question arising under the Plan, including questions of
construction and interpretation, shall be determined conclusively
and finally by the Pension Committee.
<PAGE> PAGE 71
SUPPLEMENTAL BENEFIT PLAN OF EXHIBIT 10(i), Page 5 of 5
NORFOLK SOUTHERN CORPORATION AND
PARTICIPATING SUBSIDIARY COMPANIES
(as last amended May 9, 1996)
ARTICLE VII. RIGHTS AND RESTRICTIONS
1. Participants in the Plan shall have only those rights in respect of
the Plan specifically set forth herein.
2. This Plan shall not be deemed to constitute a contract between NSC
or any Participating Company and any Participant or surviving spouse
of a deceased Participant, nor shall it be construed to be
consideration for or an inducement or condition of the employment of
any Participant. Nothing contained herein shall be deemed to give
any Participant the right to continued employment.
3. Benefits payable hereunder shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt to accomplish any of these
mentioned acts shall be void. Benefits shall not be subjected to
attachment or other legal process or debts of the retired
Participant or surviving spouse.
ARTICLE VIII. AMENDMENTS AND TERMINATIONS
The Plan may be amended at any time, and retroactively, if deemed
necessary or appropriate, by any proper officer of NSC to effect changes
which are, in his or her sole discretion, ministerial, substantively
administrative, or necessary to comply with statutory or other legally
mandated requirements, and the implementation of which does not result in
a material cost to NSC.
The Board or Directors of NSC, in its sole discretion, may at any
time modify or amend any provisions of the Plan or may suspend or
terminate the Plan, in whole or in part, but no such action shall
retroactively impair or otherwise adversely affect the rights of any
person to benefits under the Plan which have accrued prior to the date of
such action, as determined by the Pension Committee.
/s/ Paul N. Austin
------------------------------------
P. N. Austin
Vice President Personnel
<PAGE> PAGE 72
EXHIBIT 10(j), Page 1 of 3
NORFOLK SOUTHERN CORPORATION
DIRECTORS' CHARITABLE AWARD PROGRAM
Purpose To promote the interests of Norfolk Southern
Corporation and its Directors in supporting
charitable and educational organizations, and to
provide an additional source of funding for the
Norfolk Southern Foundation (Foundation).
Eligibility All Directors serving on, or elected after,
February 1, 1996.
Contribution Directors serving on February 1, 1996: $500,000;
Amount Directors elected after February 1, 1996: vest in
20% increments over a 5-year period in accordance
with the attached table.
Eligible Educational, scientific, literary, cultural and
Organizations other organizations with similar non-religious
purposes, contributions to which are deductible for
Federal income tax purposes (excluding a private
foundation founded, maintained or operated by a
Director or a member of the Director's immediate
family).
The Corporation reserves the right to decline to
make a contribution to any organization, if (1) the
contribution will not be deductible for Federal
income tax purposes at the time it will be made, or
(2) the Corporation in its sole discretion,
exercised in good faith by persons other than
Directors, determines that making a contribution to
such organization will not be in the Corporation's
best interest.
Number of Each Director may nominate, on forms provided by
Charities the Corporation or its agent, up to five (5)
Eligible Organizations to receive an aggregate
amount up to the Contribution Amount following that
Director's death. The Director may revoke any such
nomination(s), make a new nomination or
nominations, or modify the amount designated for
any nominee at any time.
Payments Following a Director's death, the Corporation will
make ratable payments, in an aggregate annual
amount not to exceed one fifth of the Contribution
Amount, to each of the Eligible Organizations that,
according to records maintained by the Corporation
or its agent, were the deceased Director's nominees
immediately prior to death. Amounts unpaid for
reason of ineligibility will be paid prorata to the
Director's other nominees, or if there are no other
qualified nominees, then to the Foundation.
<PAGE> PAGE 73
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(j), Page 2 of 3
DIRECTORS' CHARITABLE AWARD PROGRAM
Effective February 1, 1996
Funding The Corporation will be the beneficiary of a
$1 million, corporate-owned joint-life insurance
policy on each Director. Death benefits will be
paid to the Corporation, and the Corporation will
donate up to the Contribution Amount to no more
than five Eligible Organizations nominated by the
Director and the balance to the Foundation.
Termination The Corporation reserves the right, in its sole
discretion, to alter, amend, modify or terminate
the program at any time. However, in the event of
a Change in Control of the Corporation (as defined
on Attachment A), the Corporation immediately will
donate in a lump sum the Contribution Amount in
accordance with the then current nominations of
each living Director and the amount of any unpaid
Contribution Amount to eligible nominees of a
deceased Director.
Administration The program will be administered by the
Corporation's Corporate Secretary (or designated
agent) whose interpretations and decisions will be
final and binding on the Corporation and the
Director.
[Table Annexed to Program Description]
DIRECTORS ELECTED
AFTER 2/1/96
Full Contribution
Month of Service Amount
- ---------------- --------------
Less than 12 $ 0
12-23 100,000
24-35 200,000
36-47 300,000
48-59 400,000
60 or more 500,000
<PAGE> PAGE 74
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(j), Page 3 of 3
DIRECTORS' CHARITABLE AWARD PROGRAM
Effective February 1, 1996
Attachment A
[to Directors' Charitable
Award Program]
For purposes of the Directors' Charitable Award Program, a Change in
Control shall occur if:
(i) any person, other than the Corporation or a Subsidiary
Company* or any employee benefit plan sponsored by the
Corporation or a Subsidiary Company, shall become the
beneficial owner of, or obtain voting control over, 20%
or more of the Corporation's outstanding Common Stock;
(ii) the stockholders of the Corporation shall approve (A)
any consolidation or merger of the Corporation in which
the Corporation is not the continuing or surviving
corporation or pursuant to which shares of Common Stock
would be converted into cash, securities, or other
property, other than a merger of the Corporation in
which holders of Common Stock immediately prior to the
merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the
merger as immediately before, or (B) any sale, lease,
exchange, or other transfer (in one transaction or a
series of related transactions) of all or substantially
all the assets of the Corporation; or
(iii) there shall have been a change in the composition of the
Board of Directors such that within any period of two
(2) consecutive years or less individuals who at the
beginning of such period constituted such Board,
together with any new directors whose election, or
nomination for election by the Corporation's
stockholders, was approved by a vote of at least two-
thirds of the directors then in office who were
directors at the beginning of such period, shall for any
reason no longer constitute a majority of the directors
of the Corporation.
_________________________________
* "Subsidiary Company" means a corporation of which at least eighty
percent (80%) of the total combined voting power of all classes of
stock entitled to vote is owned, directly or indirectly, by the
Corporation.
<PAGE> PAGE 75
EXHIBIT 10(k) Page 1 of 2
NORFOLK SOUTHERN CORPORATION
Directors' Pension Plan
-----------------------
I. Effective Date: June 1, 1982, as last amended January 23, 1996,
-------------- to be effective June 1, 1996.
II. Eligible (1) Each outside director of the Corporation
Directors: who has served (i) in such capacity or (ii) in
--------- such capacity and as a director of Norfolk and
Western Railway Company (NW) or Southern Railway
Company (SR), while not also serving as an
officer of NW or SR, for a total of at least
five years, and retires on or after June 1,
1982, but before June 1, 1996, either
(a) at or after age 70, or
(b) because of sickness, disability or other
inability to serve,
shall be eligible to receive a retirement
benefit ("Retirement Benefit") under this
Plan as described in Section III (1) below.
(2) For the purposes of this Plan, an "outside
director" shall be defined as a director of the
Corporation who is not also an officer of the
Corporation.
III. Benefits: (1) Each Eligible Director who retires pursuant to
-------- Section II(1)(a) above shall receive annually
for life a Retirement Benefit equal to the annual
retainer in effect for outside directors at the
time of retirement.
(2) Each Eligible Director who retires because of
sickness, disability or other inability to serve
shall receive annually for life a Retirement
Benefit equal to a percentage of the annual
retainer in effect for outside directors at the
time of retirement, in accordance with the
following schedule:
At least 5 but less than 6 years of service - 50%
At least 6 but less than 7 years of service - 60%
At least 7 but less than 8 years of service - 70%
At least 8 but less than 9 years of service - 80%
At least 9 but less than 10 years of
service - 90%
10 or more years - 100%
<PAGE> PAGE 76
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(k) Page 2 of 2
Directors' Pension Plan
Effective June 1, 1996
(3) The Retirement Benefit under this Plan shall be
payable quarterly on or about the last day of the
last month of each calendar quarter commencing
with the quarter in which the director retires,
and shall terminate with the payment for the
quarter in which the retired director shall die.
(4) Each Eligible Director may elect in writing at
any time up to six months prior to retirement
hereunder to receive a Retirement Benefit under
this Plan in the form of a joint and survivor
annuity payable as a reduced Retirement Benefit
to the director during life and after death to
the surviving spouse during life in an amount,
at the option of the director, equal to 50% or
100% of the reduced Retirement Benefit payable
to the director. A director electing this
option shall have the Retirement Benefit
actuarially reduced to reflect the cost of
this protection.
IV. Director Each outside director of the Corporation serving on
Serving on June 1, 1996, shall have credited to an individual
June 1, 1996: memorandum account maintained pursuant to the Outside
------------ Directors' Deferred Stock Unit Program the present
value of his or her Retirement Benefit under the Plan
as of May 31, 1996, calculated as if the director had
retired on the expected retirement date and discounted
to his or her present age using the PBGC plan
termination rate of 4.5 percent, assuming the
director did not elect a joint-and-survivor annuity
and further assuming an annual pension benefit equal
to the 1996 retainer of $32,000. The present value
of each such director's Retirement Benefit will be
converted into stock units and fractions thereof
(carried out to four decimal places) based on the
mean of the high and low prices at which NS Common
Stock traded May 9, 1996, as reported in the
Composite Transactions for such date by THE WALL
STREET JOURNAL. Thereafter, such outside director
shall have no further benefit under this Plan.
V. Miscellaneous: This Plan may be amended or terminated by the Board
------------- of Directors of the Corporation.
<PAGE> PAGE 77
EXHIBIT 10(l), Page 1 of 3
NORFOLK SOUTHERN CORPORATION
Outside Directors' Deferred Stock Unit Program
I. Effective Date: May 9, 1996 (effective at the Organization
Meeting of the Board of Directors).
II. Purpose: To align further each outside director's
ownership interest in Norfolk Southern
Corporation ("Corporation") with that of
stockholders generally.
III. Eligibility: Each outside director of the Corporation serving
on the Effective Date and any such outside
director whose term as director begins after the
Effective Date ("Eligible Director"). For
purposes of this Program, an "outside director"
is a director who is not an officer of the
Corporation or any of its subsidiaries.
IV. Benefits: (1) Each Eligible Director shall be granted
from time to time such deferred stock units
(each such stock unit representing at the time
of grant the value of one share of Norfolk
Southern Corporation Common Stock) ("Stock
Units"), as the Board of Directors may
authorize. Each Eligible Director's Stock Units
will be recorded in an individual memorandum
account ("Account") maintained by the Corporate
Secretary or designated agent. On each dividend
payment date, an amount equivalent to the
dividend paid on the Common Stock ("Dividend
Equivalent") will be credited for each Stock
Unit and each fraction thereof in the Account
and converted into additional Stock Units and
fractions thereof (rounded to four decimal
places) based on the Fair Market Value of the
Common Stock on the dividend payment date.
For purposes of this Program, "Fair Market
Value" on a particular date is the mean of the
high and low prices at which the Common Stock is
traded on such date as reported in the Composite
Transactions for such date by The Wall Street
Journal or, if Common Stock was not traded on
such date, on the next preceding day on which
the Common Stock was traded.
<PAGE> PAGE 78
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(l), Page 2 of 3
Outside Directors' Deferred
Stock Unit Program
(2) Each outside director of the Corporation
serving on June 1, 1996, also shall have
credited to the Account the number of Stock
Units, including fractions thereof to which such
director is entitled under the Norfolk Southern
Corporation Directors' Pension Plan. Such Stock
Units will be accounted for separately from any
Stock Units credited under paragraph (1) above
but will be treated the same in all other
respects.
(3) Each Eligible Director will have a one-time
irrevocable election for 60 days after the
Effective Date, or, if later, 60 days after
first becoming an Eligible Director to receive
in cash any Stock Units in the Account either in
a lump sum or in 10 annual installments upon
leaving the Board of Directors for any reason.
Failure to make a valid election will result in
the Account being distributed in a lump sum.
Separate elections will be made for Stock Units
credited under paragraphs (1) and (2) above. A
lump-sum payment will be valued based on the
Fair Market Value of Common Stock on the last
market day of the month following a director's
termination of service and will be paid to an
Eligible Director or beneficiary as soon as
practicable thereafter. The first distribution
under an election to receive installment
payments will be made in January following the
year in which the Eligible Director terminates
service; Stock Units at any time remaining in
the Account will be credited with Dividend
Equivalents until the final installment has been
paid. Each annual distribution will be valued
based on the Fair Market Value of the Common
Stock on the third business day after the date
in January that the Corporation first makes
publicly available its most recent regular
annual financial statements. The first such
installment will be an amount equal to one tenth
of the total value of the Stock Units in the
Account at that time; the second installment,
one ninth of the remaining total value; the
third installment, one eighth; and so forth,
until the Account is depleted with payment of
the tenth installment.
<PAGE> PAGE 79
NORFOLK SOUTHERN CORPORATION EXHIBIT 10(l), Page 3 of 3
Outside Directors' Deferred
Stock Unit Program
(4) The Board of Directors may make such
adjustments in the number of Stock Units as may
be required by any change in the corporate
structure or shares of the Corporation,
including but not limited to, recapitalization,
stock splits, stock dividends, combination or
exchange of shares, mergers, consolidations,
rights offerings, separations, reorganizations
and liquidations.
V. Miscellaneous: (1) Each Eligible Director may designate in
writing the person or persons ("Beneficiary")
who shall acquire the rights of the Eligible
Director to the Account in the event of the
Eligible Director's death before final
distribution. In order to be effective, an
Eligible Director's designation of a Beneficiary
must be on file with the Corporate Secretary
before the Eligible Director's death. Any such
designation may be revoked and a new designation
substituted therefor by the Eligible Director at
any time before death.
If the named Beneficiary does not survive the
Eligible Director, or if there is no named
Beneficiary, then the rights with respect to an
Eligible Director's Account shall be acquired by
the person or persons who shall acquire the
Eligible Director's rights to the Account by
bequest or inheritance in accordance with the
applicable laws of descent and distribution.
(2) This Program may be amended or terminated by
the Board of Directors of the Corporation at any
time; however, no such amendment or termination
shall deprive an Eligible Director of any Stock
Units previously credited to his or her Account.
<PAGE> PAGE 80
EXHIBIT 11 Page 1 of 2
<TABLE>
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(In millions except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Computation for Statements of Income
- ------------------------------------
Net income per statements of income $ 199.5 $ 181.2 $ 367.6 $ 351.9
------- ------- ------- -------
Weighted average number of shares
outstanding 126.9 131.5 127.6 132.0
------- ------- ------- -------
Primary earnings per share $ 1.57 $ 1.38 $ 2.88 $ 2.67
======= ======= ======= =======
Additional Primary Computation
- ------------------------------
Net income per statements of income $ 199.5 $ 181.2 $ 367.6 $ 351.9
------- ------- ------- -------
Adjustment to weighted average
number of shares outstanding:
Weighted average number of
shares outstanding per
primary computation above 126.9 131.5 127.6 132.0
Dilutive effect of outstanding
options, stock appreciation
rights (SARs) and performance
share units (PSUs) (as
determined by the application
of the treasury stock
method) (1) 1.5 1.2 1.4 1.2
------- ------- ------- -------
Weighted average number of
shares outstanding,
as adjusted 128.4 132.7 129.0 133.2
======= ======= ======= =======
Primary earnings per share,
as adjusted (2):
Net income $ 1.55 $ 1.37 $ 2.85 $ 2.64
======= ======= ======= =======
(1) See Note 12 of Notes to Consolidated Financial Statements in Norfolk
Southern's 1995 Annual Report on Form 10-K for a description of the
Long-Term Incentive Plan.
(2) These calculations are submitted in accordance with Regulation S-K
item 601(b)(11) although not required by footnote 2 to paragraph 14
of APB Opinion No. 15 because they result in dilution of less than
3 percent.
</TABLE>
<PAGE> PAGE 81
EXHIBIT 11 Page 2 of 2
<TABLE>
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(In millions except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Fully Diluted Computation
- -------------------------
Net income per statements of income $ 199.5 $ 181.2 $ 367.6 $ 351.9
Adjustment to increase earnings
to requisite level to earn
maximum PSUs, net of tax effect 20.8 13.1 38.4 25.4
------- ------- ------- -------
Net income, as adjusted $ 220.3 $ 194.3 $ 406.0 $ 377.3
======= ======= ======= =======
Adjustment to weighted average
number of shares outstanding,
as adjusted for additional
primary calculation:
Weighted average number of
shares outstanding, as
adjusted per additional
primary computation on page 1 128.4 132.7 129.0 133.2
Additional dilutive effect of
outstanding options and SARs
(as determined by the
application of the treasury
stock method using period
end market price) -- 0.1 0.1 0.1
Additional shares issuable at
maximum level for PSUs -- 0.1 -- 0.1
------- ------- ------- -------
Weighted average number of
shares, as adjusted 128.4 132.9 129.1 133.4
======= ======= ======= =======
Fully diluted earnings
per share (3): $ 1.72 $ 1.46 $ 3.14 $ 2.83
======= ======= ======= =======
(3) These calculations are submitted in accordance with Regulation S-K
item 601(b)(11) although they are contrary to paragraph 40 of
APB Opinion No. 15 because they produce an anti-dilutive result.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> $ 53
<SECURITIES> 185
<RECEIVABLES> 752
<ALLOWANCES> 16
<INVENTORY> 62
<CURRENT-ASSETS> 1,281
<PP&E> 13,811
<DEPRECIATION> 4,370
<TOTAL-ASSETS> 11,053
<CURRENT-LIABILITIES> 1,231
<BONDS> 1,638
<COMMON> 134
0
0
<OTHER-SE> 4,702
<TOTAL-LIABILITY-AND-EQUITY> 11,053
<SALES> 0
<TOTAL-REVENUES> 2,379
<CGS> 0
<TOTAL-COSTS> 1,807
<OTHER-EXPENSES> (57)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 56
<INCOME-PRETAX> 573
<INCOME-TAX> 205
<INCOME-CONTINUING> 368
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 368
<EPS-PRIMARY> 2.88
<EPS-DILUTED> 0
</TABLE>
