<PAGE>
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
SCHEDULE 14D-1
(AMENDMENT NO. 29)
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
---------
CONRAIL INC.
(NAME OF SUBJECT COMPANY)
NORFOLK SOUTHERN CORPORATION
ATLANTIC ACQUISITION CORPORATION
(Bidders)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
208368 10 0
(CUSIP Number of Class of Securities)
SERIES A ESOP CONVERTIBLE JUNIOR
PREFERRED STOCK, WITHOUT PAR VALUE
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
NOT AVAILABLE
(CUSIP Number of Class of Securities)
---------
JAMES C. BISHOP, JR.
EXECUTIVE VICE PRESIDENT-LAW
NORFOLK SOUTHERN CORPORATION
THREE COMMERCIAL PLACE
NORFOLK, VIRGINIA 23510-2191
TELEPHONE: (757) 629-2750
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
---------
with a copy to:
RANDALL H. DOUD, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
TELEPHONE: (212) 735-3000
- -------------------------------------------------------------------------------
<PAGE>
This Amendment No. 29 amends the Tender Offer Statement on Schedule
14D-1 filed on October 24, 1996, as amended (the "Schedule 14D-1"), by Norfolk
Southern Corporation, a Virginia corporation ("Parent"), and its wholly owned
subsidiary, Atlantic Acquisition Corporation, a Pennsylvania corporation
("Purchaser"), relating to Purchaser's offer to purchase all outstanding shares
of (i) Common Stock, par value $1.00 per share (the "Common Shares"), and (ii)
Series A ESOP Convertible Junior Preferred Stock, without par value (the "ESOP
Preferred Shares" and, together with the Common Shares, the "Shares"), of
Conrail Inc. (the "Company"), including, in each case, the associated Common
Stock Purchase Rights, upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated October 24, 1996 (the "Offer to Purchase"), as
amended and supplemented by the Supplement, dated November 8, 1996 (the
"First Supplement"), and the Second Supplement, dated December 20, 1996 (the
"Second Supplement") and in the revised Letter of Transmittal (which, together
with any amendments or supplements thereto, constitute the "Offer"). Unless
otherwise defined herein, all capitalized terms used herein shall have the
respective meanings given such terms in the Offer to Purchase, the First
Supplement, the Second Supplement or the Schedule 14D-1.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 is hereby amended and supplemented by the following:
(a)(77) Parent's Proxy Statement Supplement, including attached
letter to the Company's shareholders, mailed to the
Company's shareholders commencing December 26, 1996.
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: December 26, 1996
NORFOLK SOUTHERN CORPORATION
By: /s/ JAMES C. BISHOP, JR.
------------------------
Name: James C. Bishop, Jr.
Title: Executive Vice President-Law
ATLANTIC ACQUISITION CORPORATION
By: /s/ JAMES C. BISHOP, JR.
----------------------------
Name: James C. Bishop, Jr.
Title: Vice President and General Counsel
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
(a)(77) Parent's Proxy Statement Supplement, including attached letter to
the Company's shareholders, mailed to the Company's shareholders
commencing December 26, 1996.
<PAGE>
NS NORFOLK SOUTHERN LOGO
December 26, 1996
Dear Conrail Shareholder:
SOONER OR LATER, CONRAIL WILL HAVE TO COUNT YOUR VOTE!
PROTECT THE VALUE OF YOUR INVESTMENT
BY VOTING AGAINST CONRAIL'S PROPOSALS TODAY
Once again Conrail has delayed its important Special Meeting seeking
shareholder approval of the proposed charter amendment to "opt-out" of the
Pennsylvania Fair Value Statute. The Special Meeting has now
been rescheduled for January 17, 1997. But don't let Conrail's maneuvering
distract you from taking steps to receive fair value for your shares.
Conrail has stated that because of the December 17, 1996 order by the United
States District Court for the Eastern District of Pennsylvania, it will
not postpone or adjourn the Special Meeting because it has not received
sufficient proxies to assure approval of the "opt-out" amendment. THEREFORE,
IT IS CRITICALLY IMPORTANT THAT YOU VOTE AGAINST THE "OPT-OUT" AMENDMENT
PROPOSAL AND AGAINST THE ADJOURNMENT PROPOSAL BY SIGNING, DATING AND
RETURNING THE ENCLOSED GOLD PROXY CARD TODAY (OR THE GREEN INSTRUCTION CARD
FOR ESOP PARTICIPANTS). REMEMBER, ONLY YOUR LATEST DATED VOTE COUNTS!
MORE VALUE, LESS RISK -- --
NORFOLK SOUTHERN'S OFFER REMAINS SUPERIOR
On December 19, 1996, we announced that we had increased our all-cash
offer from $110 to $115 for each Conrail share that you own. Our offer is
currently valued at almost $16* more per share than CSX's offer, or
approximately $1 billion more for Conrail shareholders than what CSX has
offered.
Norfolk Southern's revised proposal continues to offer significant
benefits to Conrail shareholders. The increased offer provides for an
immediate cash payment for shares purchased through use of a voting trust.
With the Norfolk Southern offer, you know exactly what you will be getting --
YOU WILL BE GETTING $115 IN CASH. On the other hand, with CSX's proposed deal
approximately 75% of your shares will be acquired for CSX stock, the value of
which will be subject to market risk. In addition, even though CSX is
proposing to close through use of a voting trust, we believe the future value
of the CSX stock you would receive will be affected significantly by the STB
approval process.
YOUR VOTE IS IMPORTANT
The choice is clear. But it's going to take a strong shareholder vote to
make Conrail understand that. Make sure your voice is heard. Vote today on
the GOLD proxy card (or GREEN instruction card if you are an ESOP
Participant) AGAINST Conrail's proposals. Even if you have tendered your
shares into CSX's new offer or voted earlier, you can still vote those shares
AGAINST the "Opt-Out" Amendment Proposal and the Adjournment Proposal by
signing and returning the GOLD proxy card (or GREEN instruction card) today.
Sincerely,
/s/ David R. Goode
David R. Goode
Chairman, President and
Chief Executive Officer
- ------------
* Based on the closing price of CSX common stock on December 24, 1996
<PAGE>
- -------------------------------------------------------------------------------
IMPORTANT INFORMATION
If your Conrail shares are held in the name of a bank or broker, only
your bank or broker can vote your shares and only upon receipt of your
specific instructions. Please instruct your bank or broker to vote
AGAINST Conrail's proposals by executing the GOLD proxy card today. If
you have any questions or require any assistance in voting your shares,
please call:
GEORGESON
& COMPANY INC. [LOGO]
Wall Street Plaza
New York, New York 10005
CALL TOLL FREE: 800-223-2064
Banks and Brokers call: 212-440-9800
- -------------------------------------------------------------------------------
<PAGE>
SPECIAL MEETING OF SHAREHOLDERS
OF
CONRAIL INC.
- -----------------------------------------------------------------------------
PROXY STATEMENT SUPPLEMENT
OF
NORFOLK SOUTHERN CORPORATION
- -----------------------------------------------------------------------------
SOLICITATION OF PROXIES
IN OPPOSITION TO THE PROPOSED AMENDMENT TO THE
ARTICLES OF INCORPORATION OF CONRAIL INC.
INTRODUCTION
This Proxy Statement Supplement (this "Supplement") is furnished by
Norfolk Southern Corporation ("Norfolk Southern") and relates to a Special
Meeting of Shareholders of Conrail Inc. ("Conrail" or the "Company") to vote
upon Conrail's proposal (the "Amendment Proposal") to amend its Articles of
Incorporation to "opt out" of Subchapter E (the "Fair Value Statute") of
Chapter 25 of the Pennsylvania Business Corporation Law of 1988, as amended,
and to any adjournments, postponements or reschedulings thereof (the "Special
Meeting"). This Supplement amends and supplements, to the extent set forth
herein, the Proxy Statement of Norfolk Southern, dated November 4, 1996,
which was first mailed to Conrail Shareholders on or about November 4, 1996
and which was subsequently amended and supplemented by a proxy supplement
dated November 8, 1996, and again by a proxy supplement dated December 9,
1996 (as amended to date, the "Proxy Statement"). Capitalized terms used in
this Supplement and not otherwise defined in this Supplement shall have the
respective meanings assigned to such terms in the Proxy Statement. This
Supplement is first being mailed to Conrail Shareholders on or about
December 26, 1996.
RECENT DEVELOPMENTS
THE SPECIAL MEETING
On December 19, 1996, Conrail publicly announced that the Special Meeting,
which previously had been scheduled for December 23, 1996, had been
rescheduled for January 17, 1997. In addition, on December 24, 1996, Conrail
filed a supplement to its proxy statement (as amended, the "Conrail Proxy
Statement"), in which Conrail stated that the Special Meeting would be held
at The Main Auditorium at The Academy of Music, Broad and Locust Streets,
Philadelphia, Pennsylvania at 12:00 p.m. Eastern Standard Time. According to
the Conrail Proxy Statement, the Record Date for the Special Meeting
continues to be December 5, 1996. Norfolk Southern is soliciting proxies from
Shareholders to vote AGAINST both (i) the Amendment Proposal and (ii)
Conrail's proposal to adjourn (the "Adjournment Proposal") the Special
Meeting, if necessary, to permit Conrail to further solicit proxies in the
event that there are not sufficient votes at the time of the Special Meeting
to approve the Amendment Proposal.
The proxy cards previously furnished to you by Norfolk Southern remain
valid for Shareholders entitled to vote at the Special Meeting. Nonetheless,
new GOLD proxy cards are being provided to you with this Supplement to vote
AGAINST both the Amendment Proposal and the Adjournment Proposal. ESOP
Participants can instruct the ESOP Trustee to vote their ESOP Preferred
Shares AGAINST the Amendment Proposal and the Adjournment Proposal on the
enclosed GREEN instruction card. In addition, if you have already voted
Conrail's white proxy card (or marked the GREEN instruction card) in favor of
the Amendment Proposal, you may revoke that vote by completing and returning
the GOLD proxy (or marking the GREEN instruction card) and indicating your
vote AGAINST the Amendment Proposal. It is the latest dated proxy which will
be counted.
PLEASE SIGN AND DATE THE ENCLOSED GOLD PROXY CARD (OR FOR ESOP
PARTICIPANTS, THE GREEN INSTRUCTION CARD) TODAY AND VOTE AGAINST THE
AMENDMENT PROPOSAL AND THE ADJOURNMENT PROPOSAL.
<PAGE>
THE NORFOLK SOUTHERN REVISED OFFER
On December 19, 1996, Norfolk Southern announced that the Norfolk Southern
Cash Offer by Atlantic Acquisition Corporation, a wholly-owned subsidiary of
Norfolk Southern, for all outstanding Shares was being increased from $110
per Share to $115 PER SHARE, NET TO THE SELLER IN CASH, without interest
thereon (the "Norfolk Southern Revised Offer"). The Norfolk Southern Revised
Offer will expire at 12:00 midnight, New York City time, on Friday, January
10, 1997, unless extended. The terms of the Norfolk Southern Revised Offer
are set forth in a supplement dated December 20, 1996 to the Norfolk Southern
Offer to Purchase, which has been mailed to Shareholders.
THE AMENDED CSX/CONRAIL MERGER AGREEMENT
The following description is based upon the Schedule 14D-9 filed with the
SEC by Conrail on December 20, 1996, an amendment to a Schedule 14D-1 filed
with the SEC by CSX and dated December 19, 1996, and the Conrail Proxy
Statement, and the following description is qualified in its entirety by
reference to the full text and exhibits of such filings.
On December 19, 1996, Conrail and CSX announced that an amendment to the
CSX/Conrail Merger Agreement (the "Second Amendment") had been entered into
pursuant to which CSX increased the consideration to be paid in the
CSX/Conrail Proposed Merger. Pursuant to the Second Amendment, the 60% of the
Shares expected to be outstanding at the time of the consummation of the
CSX/Conrail Proposed Merger (assuming the CSX/Conrail Proposed Merger is
consummated) and not owned by CSX will be exchanged for (i) CSX common stock
at a rate of 1.85619 shares of CSX common stock for each Share and (ii) an
additional $16 per Share in CSX convertible preferred stock, the terms of
which will be set prior to the CSX/Conrail Proposed Merger so that such
securities would trade at par on a fully distributed basis. Based on the
closing sale price of CSX common stock on the New York Stock Exchange Inc.
Composite Tape on December 24, 1996, the total per Share consideration in the
CSX/Conrail Proposed Merger was worth approximately $95.58.
By reason of the increase in the Norfolk Southern Cash Offer, the
increased punitive effect of the CSX Lockup Option on Norfolk Southern will
be approximately $80 million. On such basis, in the event that the CSX
termination fee is paid and the CSX Lockup Option Agreement is exercised by
CSX, the aggregate additional cost to an acquiror of Conrail (including
Norfolk Southern) by reason of the CSX Lockup Option Agreement and the CSX
termination fee will amount to approximately $660 million (assuming an
acquisition of Conrail at $115 per Share). In the litigation pending in the
District Court for the Eastern District of Pennsylvania (the "District
Court"), Norfolk Southern is contesting the validity of both the CSX Lockup
Option Agreement and the CSX termination fee.
In the CSX/Conrail Merger Agreement, Conrail and CSX agreed, among other
things, to a provision (the "No Negotiation Provision") providing that,
subject to certain exceptions, neither Conrail nor CSX will, nor will they
permit any of their subsidiaries to, nor will they authorize or permit any of
their officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative, retained by them or
any of their subsidiaries to, directly or indirectly through another person,
participate in any conversations, discussions or negotiations, or enter into
any agreement, arrangement or understanding, with any other company engaged
in the operation of railroads (including Norfolk Southern) with respect to
the acquisition by any such other company (including Norfolk Southern) of any
securities or assets of Conrail and its subsidiaries or CSX and its
subsidiaries, or any trackage rights or other concessions relating to the
assets or operations of Conrail and its subsidiaries or CSX and its
subsidiaries, other than with respect to certain sales, leases, licenses,
mortgages or other disposals of assets or properties.
In the Second Amendment, Conrail also agreed to extend the term of the No
Negotiation Provision from July 12, 1997 to December 31, 1998, with the
intended effect of preventing Conrail from considering or otherwise
facilitating any competing proposal to acquire Conrail, such as the Norfolk
Southern Cash Offer and the Proposed Norfolk Southern/Conrail Merger, until
such time. As noted below, Norfolk Southern has challenged the legality of
this provision in the litigation pending in the District Court, and a hearing
has been scheduled for January 9, 1997.
2
<PAGE>
The Second Amendment provides that the CSX/Conrail Proposed Merger will
occur as soon as practicable after the CSX and the Conrail shareholders
meetings are held to consider matters related to the CSX/Conrail Proposed
Merger and that all of the Shares acquired by CSX in the CSX/Conrail Proposed
Merger would be placed in the voting trust holding Shares previously acquired
by CSX pending the outcome of Surface Transportation Board (the "STB")
proceedings relating to the proposed combination of CSX and Conrail.
CERTAIN LITIGATION -- RECENT EVENTS
On December 13, 1996, Plaintiffs filed a Motion for Leave to File their
Third Amended Complaint (the "Third Amended Complaint"), which was granted on
December 17, 1996, and a Motion for a Preliminary Injunction in the District
Court. The Third Amended Complaint withdrew two counts relating to the
originally scheduled November 14, 1996 Special Meeting as moot, and added the
following additional claims: (i) that Defendants' stated intention not to
convene the Special Meeting scheduled for December 23, 1996 constitutes a
breach of fiduciary duties; (ii) that Defendants' stated intention to
successively postpone the vote of Shareholders until the Shareholders submit
to the will of Defendants constitutes fraudulent and fundamentally unfair
conduct; (iii) that Section 5.1(b) of the CSX/Conrail Merger Agreement, as
amended, constitutes a breach of fiduciary duty in that it purports to
delegate the Conrail directors' fiduciary responsibilities relating to the
processes of corporate democracy, and, alternatively, that Section 5.1(b) is
void and ultra vires; (iv) that consummation of the CSX Tender Offer caused a
"control transaction" to occur with respect to Conrail pursuant to Subchapter
E of Chapter 25 of the Pennsylvania Business Corporation Law of 1988, as
amended, thus obligating the group consisting of CSX, the Conrail directors
and certain executive officers of Conrail to pay to each demanding Conrail
Shareholder at least $110 cash per Share; and (v) that Defendants' public
statements suggesting that the consideration payable in the CSX/Conrail
Proposed Merger might be improved are materially misleading and constitute a
violation of federal securities laws.
On December 17, 1996, the District Court held a hearing to consider
Plaintiffs' Motion for a Preliminary Injunction. At the conclusion of the
hearing, the District Court issued an order enjoining the Defendants from
failing to convene, and/or from postponing, and/or from adjourning the
Special Meeting scheduled for Monday, December 23, 1996, by reason of Conrail
or its nominees not having received sufficient proxies to assure approval of
the Amendment Proposal.
On December 19, 1996, the District Court scheduled a hearing for January
9, 1997 to consider Plaintiffs' challenge of the legality of the No
Negotiation Provision, as extended, and the issue of whether CSX now owns 20%
of the Shares, and is an "interested shareholder", under Subchapter E of
Chapter 25 of the Pennsylvania Business Corporation Law of 1988, as amended.
On December 20, 1996, Plaintiffs filed a Motion for Leave to File their
Fourth Amended Complaint (the "Fourth Amended Complaint"). The Fourth Amended
Complaint would update the allegations contained in their earlier complaints
and add the following additional claims: (i) that the extended two-year No
Negotiation Provision in the Second Amendment constitutes an abdication, by
the Conrail directors, of their fiduciary duties and is illegal, ultra vires,
fundamentally unfair and constitutes a breach of those fiduciary duties; (ii)
that the extended two-year No Negotiation Provision purports to restrict the
managerial discretion of future Conrail directors and thus violates
Pennsylvania statutory law, Conrail's By-laws and Articles of Incorporation,
and the Conrail directors' fiduciary duties; and (iii) that Conrail failed to
disclose its number of Shares outstanding as of the Record Date for the
Special Meeting in violation of the federal proxy rules.
In addition, on December 20, 1996, Plaintiffs filed a Motion to Dismiss
the Counterclaim for failure to state a claim pursuant to Rule 12(b) of the
Federal Rules of Civil Procedure and an accompanying brief.
* * *
NORFOLK SOUTHERN CORPORATION
Dated: December 26, 1996
3
<PAGE>
SCHEDULE I
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT OF CONRAIL
In the Conrail Proxy Statement, Conrail provided updated information
concerning the Record Date outstanding Shares, voting securities and
principle holders thereof and ownership of Shares by Conrail officers and
directors. The following information is based solely on the Conrail Proxy
Statement and supersedes the information in Schedule I of the Norfolk
Southern Proxy Statement, dated November 4, 1996, as amended. The following
information is qualified in its entirety by reference to the Conrail Proxy
Statement.
RECORD DATE AND OUTSTANDING SHARES. According to the Conrail Proxy
Statement, as of the close of business on the Record Date, there were issued
and outstanding 82,244,375 Common Shares and 7,303,920 ESOP Preferred Shares.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF. According to the Conrail
Proxy Statement, the only persons (or "groups" as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), who, as
of the Record Date (except as otherwise set forth below), owned beneficially
more than 5% of any class of Conrail's voting securities are listed in the
following table (which also lists shares held by the Employee Benefits
Trust):
<TABLE>
<CAPTION>
TITLE OF AMOUNT AND NATURE OF PERCENT OF
CLASS NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ------------------ ---------------------------------------- ---------------------------- --------------
<S> <C> <C> <C>
Common Stock CSX Corporation 17,860,124(1) 21.7%
One James Center
801 East Cary Street
Richmond, VA 23219
Common Stock FMR Corp. 7,621,404(2) 9.3%
82 Devonshire Street
Boston, MA 02109
Common Stock Wellington Management Company 4,119,510(3) 5.0%
75 State Street
Boston, MA 02109
Common Stock Mellon Bank, N.A. 3,444,500, solely in its 4.2%
Suite 3346 capacity as trustee of
Pittsburgh, PA 15258 the Employee Benefits
Trust(4)
ESOP Preferred Fidelity Management Trust Company 5,646,125, solely in its 77.3%
Shares 82 Devonshire Street capacity as Trustee of
Boston, MA 02109 the ESOP(5)
</TABLE>
- ------------
(1) Based on information set forth on the Amendment No. 10 to the
Schedule 13D filed by CSX with the SEC on December 6, 1996. These
Shares represent approximately 19.9% of Conrail's total voting
securities as of the Record Date.
(2) Based on information set forth on the Schedule 13F filed by FMR Corp.
("FMR") with the SEC on November 15, 1996. Assuming that all these
Shares owned by FMR were tendered pursuant to the first CSX Tender
Offer, 23.45% of these Shares (or 1,787,219 Shares) would have been
purchased by CSX prior to the Record Date and reflected in CSX's
beneficial ownership set forth above. These Shares represent
approximately 8.5% (or approximately 6.5% assuming FMR tendered all its
Shares to CSX) of Conrail's total voting securities as of the Record
Date.
(3) Based on information set forth on the Schedule 13F filed by
Wellington Management Company ("Wellington") with the SEC on November
15, 1996. Assuming that all these Shares owned by Wellington were
tendered pursuant to the first CSX Tender Offer, 23.45% of these Shares
(or
4
<PAGE>
966,025 Shares) would have been purchased by CSX prior to the Record
Date and reflected in CSX's beneficial ownership set forth above. These
Shares represent approximately 4.6% (or approximately 3.5% assuming
Wellington tendered all its Shares to CSX) of Conrail's total voting
securities as of the Record Date.
(4) These Common Shares represent approximately 3.8% of Conrail's total
voting securities as of the Record Date. The Employee Benefits Trust is
listed for information purposes only and does not represent a
beneficial owner of more than 5% of the Common Shares as of the Record
Date.
(5) ESOP Preferred Shares are convertible into Common Shares at any time
on a share-for-share basis, subject to certain antidilution
adjustments. As a result, ownership of ESOP Preferred Shares is deemed
to be ownership of an equal number of Common Shares. These ESOP
Preferred Shares represent the unallocated shares of ESOP Preferred
Shares contained in the ESOP. These shares, together with the 1,657,795
ESOP Preferred Shares allocated to participants, constitute an
aggregate of 7,303,920 of ESOP Preferred Shares, which aggregate
represents approximately 8.2% of Conrail's total voting securities as
of the Record Date.
OWNERSHIP BY THE ESOP AND EMPLOYEE BENEFITS TRUST. As set forth in the
table above, as of the Record Date, each of the ESOP and the Employee
Benefits Trust owns Shares representing approximately 8.2% and 3.8%,
respectively, of Conrail's total voting securities. As disclosed in the
Conrail Proxy Statement, the ESOP and the Employee Benefits Trust tendered
substantially all of their Shares, respectively, pursuant to the first CSX
Tender Offer, and the Employee Benefits Trust, pursuant to its terms, used
substantially all the proceeds it received from CSX pursuant to the first CSX
Tender Offer to acquire 964,164 Shares in the market prior to the Record
Date. According to Conrail, the ESOP, pursuant to the authority and fiduciary
responsibility of the Trustee, did not use the proceeds it received from CSX
pursuant to the first CSX Tender Offer to purchase Shares prior to the Record
Date. As set forth in the Conrail Proxy Statement, Shares owned by the
Employee Benefits Trust will be voted by the trustee thereof in the same
manner and proportion as the ESOP Preferred Shares for which valid
instructions are received and instructed to be voted. The trust agreement
governing the ESOP provides that proxies for Shares that have been allocated
to individual participants pursuant to the ESOP will be voted in accordance
with that participant's direction as set forth on the GREEN trustee
instruction card that is enclosed herewith for participants. Participants
cannot vote their ESOP Preferred Shares or instruct the Trustee as to how to
vote their ESOP Preferred Shares by completing the enclosed GOLD proxy. The
trust agreement also provides that all ESOP Preferred Shares that have not
been allocated to an individual participant, and all ESOP Preferred Shares
that have been so allocated but as to which no valid voting instructions have
been received by the Trustee shall be voted in the same manner and proportion
as are the ESOP Preferred Shares for which valid instructions are received.
OWNERSHIP BY MANAGEMENT OF VOTING SECURITIES. The following table sets
forth the beneficial ownership, as of the Record Date, of Shares of each
director, each of the six most highly compensated executive officers of
Conrail, and all directors and executive officers as a group. Unless
otherwise indicated, each such person has sole voting and investment power
with respect to such Common Shares and sole voting power with respect to such
ESOP Preferred Shares. The Trustee holds sole investment power with respect
to all ESOP Preferred Shares. As of the Record Date, all Conrail directors
and executive officers as a group owned less than one percent (1%) of the
aggregate outstanding Shares.
5
<PAGE>
<TABLE>
<CAPTION>
AMOUNT PERCENT OF
NAME OF INDIVIDUAL OR GROUP BENEFICIALLY OWNED CLASS
- -------------------------------------------------- ------------------ ----------
<S> <C> <C>
David M. LeVan .................................... 139,112(1) *
Chairman of the Board of Directors, President and
Chief Executive Officer
H. Furlong Baldwin ................................ 2,000 *
Director
Claude S. Brinegar ................................ 1,000 *
Director
Daniel B. Burke ................................... 2,000 *
Director
Kathleen Foley Feldstein .......................... 700 *
Director
Roger S. Hilles ................................... 2,362 *
Director
E. Bradley Jones .................................. 1,000 *
Director
David B. Lewis .................................... 919 *
Director
John C. Marous .................................... 612 *
Director
Gail J. McGovern .................................. 0 *
Director
Raymond T. Schuler ................................ 6,063 *
Director
David H. Swanson .................................. 449 *
Director
Bruce B. Wilson ................................... 28,695(1) *
Senior Vice President--Law
Ronald J. Conway .................................. 34,665(1) *
Senior Vice President--Operations
Timothy P. Dwyer .................................. 12,469(1) *
Senior Vice President--Unit Trains Service Group
John P. Sammon .................................... 23,789(1) *
Senior Vice President--CORE Service Group
George P. Turner .................................. 43,937(1) *
Senior Vice President--Automotive Service Group
Executive Officers and Directors as a Group ...... 574,851(2) *
</TABLE>
- ------------
* Less than one percent.
(1) For Messrs. LeVan, Wilson, Conway, Dwyer, Sammon and Turner,
respectively, includes options exercisable within 60 days to acquire
98,896, 0, 27,375, 0, 18,125 and 34,232 Common Shares and 1,931, 1,910,
1,868, 1,634, 1,642 and 1,668 ESOP Preferred Shares allocated to the
accounts of each of the named officers under the ESOP. ESOP Preferred
Shares are convertible into Common Shares at any time on a
share-for-share basis, subject to certain antidilution adjustments. As
a result, ownership of ESOP Preferred Shares is deemed to be ownership
of an equal number of Common Shares.
(2) Includes (x) options exercisable within 60 days to acquire 351,660
Common Shares and (y) 35,405 ESOP Preferred Shares allocated to the
accounts of individual officers under the ESOP. This number also
includes shares held by all officers of Consolidated Rail Corporation.
6
<PAGE>
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION
If your Shares are held in the name of a bank or broker, only your bank or
broker can vote your Shares and only upon receipt of your specific
instructions. Please instruct your bank or broker to vote AGAINST the
Amendment Proposal and the Adjournment Proposal by executing the GOLD proxy
card today. If you have any questions or require any assistance in voting
your Shares, please call:
GEORGESON
& COMPANY INC. [LOGO]
Wall Street Plaza
New York, New York 10005
Call Toll Free: 800-223-2064
Banks and Brokers call: 212-440-9800
- -------------------------------------------------------------------------------
