<PAGE>
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Norfolk Southern Corporation
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(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF NORFOLK SOUTHERN]
- -------------------------------------------------------------------------------
Notice and Proxy Statement
Annual Meeting of Stockholders
NORFOLK SOUTHERN CORPORATION
Three Commercial Place, Norfolk, Virginia 23510-2191
Notice of Annual Meeting
of Stockholders to be Held
on Thursday, May 11, 2000
- -------------------------------------------------------------------------------
The Annual Meeting of Stockholders of Norfolk Southern Corporation will be
held at The Norfolk Waterside Marriott and Waterside Convention Center, 235
East Main Street, Norfolk, Virginia, on Thursday, May 11, 2000, at 10:00 A.M.,
Eastern Daylight Time, for the following purposes:
1. Election of three directors to the class whose term will expire in
2003.
2. Ratification of the appointment of KPMG LLP, independent public
accountants, as auditors.
3. If properly presented at the meeting, consideration of a
stockholder proposal concerning the Board's reporting to
stockholders on the Corporation's activities and efforts related to
global warming.
4. Transaction of such other business as properly may come before the
meeting.
Stockholders of record at the close of business on March 3, 2000, will be
entitled to vote at such meeting.
By order of the Board of Directors,
DEZORA M. MARTIN,
Corporate Secretary.
Dated: March 31, 2000
If you do not expect to attend the meeting, you are urged to mark, date and
sign the enclosed proxy card and return it in the accompanying envelope--or to
vote by telephone or Internet, as more particularly described on the enclosed
proxy materials.
<PAGE>
Norfolk Southern Corporation
Three Commercial Place
Norfolk, Virginia 23510-2191
March 31, 2000
PROXY STATEMENT
On March 9, we began mailing to you and other stockholders the Corporation's
Annual Report for 1999, which contains important financial and narrative
information. On March 31, 2000, we expect to begin mailing to you and other
stockholders this Proxy Statement and the accompanying proxy card, both of
which relate to the Board of Directors' solicitation of your proxy for use at
the Annual Meeting of Stockholders to be held May 11, 2000 ("2000 Annual
Meeting"). Only stockholders of record on March 3, 2000, are entitled to vote
at the 2000 Annual Meeting. As of February 29, 2000, the Corporation had
issued and outstanding 404,580,806 shares of Common Stock, of which
382,952,904 shares were entitled to one vote per share.
As a convenience to you, we are introducing telephone and Internet voting.
The enclosed proxy card describes how to use these new services. Or, you
may continue to vote by mail; if you properly mark, sign and date the
enclosed proxy card and timely return it to The Bank of New York, the
shares represented by that proxy card will be voted in accordance with its
terms.
Any stockholder may revoke a signed and returned proxy card (or a proxy
given by telephone or Internet) at any time before the proxy is voted by:
(a) giving prior notice of revocation in any manner to the Corporation; (b)
delivering a subsequent proxy by any means; or (c) attending the 2000
Annual Meeting and voting in person.
The cost of soliciting these proxies will be paid by the Corporation,
including the reimbursement, upon request, of brokerage firms, banks and other
institutions, nominees and trustees for the reasonable expenses they incur to
forward proxy materials to beneficial owners. Officers and other regular
employees of the Corporation may solicit proxies by telephone, telegram or
personal interview; they receive no additional compensation for doing so.
CONFIDENTIALITY
We have put policies in place to safeguard the confidentiality of proxies
and ballots. The Bank of New York, New York, N.Y., which has been retained at
an estimated cost of $20,500 to assist in soliciting proxies, directly or
through others, and to tabulate all proxies and ballots cast at the 2000
Annual Meeting, is contractually bound to maintain the confidentiality of the
voting process. In addition, each Inspector of Election will have taken the
oath required by Virginia law to execute duties faithfully and impartially.
<PAGE>
Members of the Board of Directors and employees of the Corporation do not
have access to proxies or ballots and therefore do not know how individual
stockholders vote on any matter. However, when a stockholder writes a question
or comment on the proxy card or ballot, or when there is need to determine the
validity of a proxy or ballot, Management and/or its representatives may be
involved in providing the answer to the question or in determining such
validity.
BUSINESS TO BE CONDUCTED AT THE ANNUAL MEETING
FOR WHICH YOUR PROXY IS SOUGHT
1. ELECTION OF DIRECTORS
At the 2000 Annual Meeting, the terms of four directors will expire: those
of Carroll A. Campbell, Jr., David R. Goode, Arnold B. McKinnon and Harold W.
Pote.
Effective the date of the 2000 Annual Meeting, Mr. McKinnon will retire
under the terms of the Corporation's retirement policy for directors and
accordingly will not be a candidate for reelection. The Board of Directors, at
its meeting held on January 25, 2000, adopted a resolution--to be effective
the date of the 2000 Annual Meeting--to amend the Corporation's Bylaws to
decrease the number of directors from ten to nine.
Unless you instruct otherwise when you give us your proxy, it will be voted
in favor of the reelection of Messrs. Campbell, Goode and Pote as directors
for three-year terms that expire in 2003.
If any nominee becomes unable to serve--something we have no reason to
believe will occur--your proxy will be voted for a substitute nominee to be
designated by the Board of Directors, or the Board of Directors will reduce
the number of directors.
So that you have information concerning the independence of the process by
which nominees and directors whose terms will continue after the 2000 Annual
Meeting were selected, we confirm, as required by the Securities and Exchange
Commission, that (1) there are no family relationships among any of the
nominees or directors or among any of the nominees or directors and any
officer and (2) that there is no arrangement or understanding between any
nominee or director and any other person pursuant to which the nominee or
director was selected.
Vote Required to Elect a Director: Under Virginia law and under the
Corporation's Restated Articles of Incorporation and Bylaws, directors are
elected at a meeting, so long as a quorum exists, if the votes cast favoring
the election of that director exceed the votes cast opposing the election.
Abstentions or shares that are not voted, such as those held by a broker or
other nominee who does not vote in person or by proxy, are not "cast" for this
purpose.
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Nominees--for terms expiring in 2003
Mr. Campbell, 59, Georgetown, S.C., and Alexandria, Va.,
has been a director since 1996. He has been President and
Chief Executive Officer of American Council of Life
Insurers, a trade association for the life insurance
industry, since 1995, having served prior thereto as
Governor of South Carolina. He is also a director of AVX
Corporation, Fluor Corporation and Wackenhut Corporation.
[PICTURE OF CARROLL A. CAMPBELL, JR.]
Carroll A. Campbell, Jr.
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Mr. Goode, 59, Norfolk, Va., has been a director since
1992. He has been Chairman, President and Chief Executive
Officer of the Corporation since 1992. He is also a
director of Caterpillar, Inc., Delta Air Lines, Inc.,
Georgia-Pacific Corporation and Texas Instruments
Incorporated.
[PICTURE OF DAVID R. GOODE]
David R. Goode
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Mr. Pote, 53, New York, N.Y., has been a director since
1988. He has been a partner of The Beacon Group, a
private investment partnership, since 1993.
[PICTURE OF HAROLD W. POTE]
Harold W. Pote
(See information under the "Certain Relationships and
Related Transactions" caption on page 15.)
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Continuing Directors--those whose terms expire in 2001
Mr. Coleman, 69, Grantham, N.H., has been a director
since 1982. Now pursuing graduate studies at Dartmouth
College, he was Chairman of The Lubrizol Corporation, a
diversified specialty chemical company, until his
retirement in 1996, having served prior thereto as
Chairman and Chief Executive Officer. He is also a
director of Harris Corporation.
[PICTURE OF L.E. COLEMAN]
L. E. Coleman
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3
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Directors (continued)
Mr. Hilliard, 60, New York, N.Y., has been a director
since 1992. He has been a partner in Brown Brothers
Harriman & Co., a private bank in New York City, since
1979. He is also a director of Owens-Corning Corporation
and Western World Insurance Company.
[LOGO OF LANDON HILLIARD]
Landon Hilliard
(See information under the "Certain Relationships and
Related Transactions" caption on page 15.)
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Ms. O'Brien, 46, St. Mary's City, Md., has been a
director since 1994. She has been President of St. Mary's
College of Maryland since 1996, having served prior
thereto as President of Hollins College, Roanoke, Va.
[LOGO OF JANE MARGARET O'BRIEN]
Jane Margaret O'Brien
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Continuing Directors--those whose terms expire in 2002
Mr. Baliles, 59, Richmond, Va., has been a director since
1990. He has been a partner since 1990 in the law firm of
Hunton & Williams, a business law firm with offices in
several major U. S. cities and international offices in
Vienna, Austria, Brussels, Belgium, Warsaw, Poland,
Bangkok, Thailand, London, England, and Hong Kong. He is
also a director of Newport News Shipbuilding Inc.
[LOGO OF GERALD L. BALILIES]
Gerald L. Baliles
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(See information under the "Certain Relationships and
Related Transactions" caption on page 15.)
Mr. Carter, 60, Alexandria, Va., has been a director
since 1992. He has been Executive Director of the
Association for Supervision and Curriculum Development,
among the world's largest international education
associations, since 1992.
[LOGO OF GENE R. CARTER]
Gene R. Carter
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Directors (continued)
Mr. Leer, 47, St. Louis, Mo., has been a director since
January 26, 1999. He has been President and Chief
Executive Officer of Arch Coal, Inc., a company engaged
in coal mining and related businesses, since 1992. He is
also a director of Arch Coal, Inc. and Mercantile Trust
Company, N.A.
[PICTURE OF STEVEN F. LEER]
Steven F. Leer
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(See information under the "Certain Relationships and
Related Transactions" caption on page 15.)
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of its Audit Committee, has
appointed the firm of KPMG LLP, independent public accountants ("KPMG"), to
audit the books, records and accounts of the Corporation for the year 2000.
This firm has acted as auditors for the Corporation (and for one of its
predecessor companies, Norfolk and Western Railway Company) since 1969, and
the Board of Directors recommends that the firm's appointment be ratified by
the stockholders.
In 1999, KPMG performed audit services which consisted of the annual audit
of the consolidated financial statements of the Corporation and its
subsidiaries, including annual reports of the Corporation to the stockholders
and the Securities and Exchange Commission, audits of the financial statements
of various subsidiaries, audits of the financial statements of various
employee benefit plans, limited reviews of quarterly financial statements and
review of internal controls not directly related to the audit of the financial
statements. The firm also provided accounting and other management consulting
services in connection with the Conrail transaction and other matters.
All services rendered by KPMG to the Corporation in 1999 were approved in
advance or ratified by the Audit Committee which was determined that none
jeopardized KPMG's independence.
KPMG has represented to the Audit Committee that its fees are customary and
that no agreement exists to limit current or future years' audit fees.
Representatives of KPMG are expected to be present at the 2000 Annual
Meeting with the opportunity to make a statement if they so desire and
available to respond to appropriate questions.
Vote Required to Ratify Appointment: Under Virginia law and under the
Corporation's Restated Articles of Incorporation and Bylaws, actions such as
the ratification of the appointment of auditors are approved, so long as a
quorum exists, if the votes cast favoring the action exceed the votes cast
opposing the action. Abstentions or shares that are not voted, such as those
held by a broker or other nominee who does not vote in person or by proxy, are
not "cast" for this purpose.
3. STOCKHOLDER PROPOSAL
The Sisters of the Humility of Mary ("Sisters"), whose mailing address is 52
Old Swartswood Station Road, Newton, New Jersey 07860-5103, and who are
beneficial owners of 14,199 shares of
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<PAGE>
the Corporation's Common Stock, have submitted the following proposal, which
we are including in this Proxy Statement for stockholder vote as required by
Rule 14a-8 promulgated by the Securities and Exchange Commission. The Sisters
also have provided a "Supporting Statement," which appears immediately after
the text of the proposal. Your "Directors' Statement in Opposition" appears
after the Sisters' Supporting Statement.
Text of Proposal
WHEREAS:
The overwhelming majority of independent, peer-reviewed atmospheric
scientists agree that global warming is a real, existing problem posing
serious challenges to our country;
The Intergovernmental Panel on Climate Change, composed of more than 2000
government selected scientists, warns that global warming caused by burning
fossil fuels and emitting greenhouse gases is already under way;
More frequent and deadly heat waves have claimed the lives of increasing
numbers of poor, asthmatic and elderly people nationwide;
Spring comes a week earlier across the northern hemisphere than it did 30
years ago;
Severe rainstorms have grown by almost 20%;
The Arctic ice sheet is in many places 40 inches thinner than its normal
10 ft;
Warmer waters have bleached coral reefs around the globe;
Glaciers are melting;
Sea levels are rising.
WE BELIEVE:
In order to leave the children of the world a safe and healthy environment,
and protect threatened plants and animals, it is time for Norfolk Southern to
live up to its responsibility as a producer of the pollution which causes
global warming. A variety of companies including Enron, BP Amoco, 3M, Toyota
and others have stated that they "accept the views of most scientists that
enough is known about the science and environmental impacts of climate change
for us to take actions to address its consequences." These companies are
preparing for the future now by taking the concrete steps necessary to assess
their opportunities for reducing the amount of carbon pollution they produce.
Failing to rise to the challenge set by these industry leaders will hurt our
company's competitiveness and cost our shareholders increasing amounts of
money.
RESOLVED: that the shareholders of Norfolk Southern request that the Board of
Directors report (at reasonable costs and omitting proprietary information),
to shareholders by August 2000, on the greenhouse gas emissions from our
company's own operations and products, including (with dollar amounts where
relevant) (i) what our company is doing in research and/or action to reduce
those emissions and ameliorate the problem, (ii) the financial exposure of our
company and its shareholders due to the likely costs of reducing those
emissions and potential liability for damages associated with climate change,
and (iii) actions by our company, or by the industry associations to which it
pays
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<PAGE>
dues, promoting the view that the issue of climate change is exaggerated, not
real, or that global warming may be beneficial.
Supporting Statement
We believe that Norfolk Southern is exposing its shareholders to financial
risk by continuing to produce unnecessary amounts of the pollution which
causes global warming, even as the problem of climate change becomes more
severe, more widely understood, and more likely to lead to legislation that
will penalize excessive carbon polluters. Furthermore, we believe that our
company is using shareholder money for advertising and lobbying to suggest
that the problem of global warming is exaggerated, not real, or too costly to
deal with; and thus using our prestige and influence to obstruct efforts to
address climate change.
Directors' Statement in Opposition
The proposal calls on the Board to report to shareholders by August 2000 on
emissions of greenhouse gasses from operations and products with emphasis on
abatement research, financial exposure and efforts by the Corporation and its
industry partners to promote certain views on climate change.
In focusing on Norfolk Southern, the proponents of the proposal
inappropriately target an environmentally friendly transportation mode.
Railroads have inherent environmental advantages over highway transportation
from the standpoint of emissions, safety and use. Rail carriers actively seek
to lessen the already low emission levels generated by their operations.
Compared with trucks, the principal competitor of railroads for land
transport of goods, railroad operations emit one-tenth the hydrocarbons and
particulates for every billion ton-miles of transportation, and just one-third
the nitrogen oxide and carbon monoxide. The U.S. Environmental Protection
Agency has found that locomotives are about three times cleaner than trucks on
the basis of air emissions per ton moved. In fact, it is estimated that the
diversion from truck to rail of even a small percentage of intercity freight
now moving by highway would result in a large decline in annual carbon dioxide
emissions. Furthermore, railroad fuel efficiency has increased 61 percent
since 1980; today, railroads can move a ton of freight an average of 379 miles
on each gallon of diesel fuel used.
Neither NS nor the railroad industry has rested on these favorable
statistics. Over the past three years, railroads have invested several billion
dollars to acquire more than 2,500 locomotives that are more fuel efficient
and less polluting than older models. Railroads also have committed themselves
to further substantial reductions in atmospheric emissions, including
endorsement of an Environmental Protection Agency regulation that calls for a
60 percent reduction in NOx emissions on new locomotives manufactured
beginning in 2005 and for reductions in the emissions of existing locomotives
as they are remanufactured during their useful lives. In addition, NS itself
evaluates new and evolving technologies that may reduce emissions.
Accordingly, there is no reason to commit Corporation resources to studying
and reporting on the issues outlined in the stockholder proposal. Moreover,
given the complex interrelationship between measures to reduce emissions and
the nation's economy, it would be premature and unwise
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to limit the Corporation's ability to join others in calling for appropriate,
measured evaluations of the best scientific data on the issue of global
warming, consistent with the best economic interests of the stockholders of
the Corporation.
Your directors recommend a vote AGAINST this proposal.
Vote Required to Approve Stockholder Proposal: Under Virginia law and under
the Corporation's Restated Articles of Incorporation and Bylaws, stockholder
proposals are approved, so long as a quorum exists, if the votes cast favoring
the action exceed the votes cast opposing the action. Abstentions or shares
that are not voted, such as those held by a broker or other nominee who does
not vote in person or by proxy, are not "cast" for this purpose.
4. OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
2000 Annual Meeting other than as noted in this paragraph and elsewhere in
this Proxy Statement. Under applicable provisions of the Securities and
Exchange Commission's Rule 14a-8, one stockholder proposal is not included in
this Proxy Statement. If that or any other proposal comes before the 2000
Annual Meeting for a vote, the holders of proxies solicited hereby intend to
exercise their discretionary authority to vote against it or them. If any
other matters come before the meeting, the proxies received pursuant to this
solicitation will be voted thereon in accordance with the judgment of the
holders of such proxies.
SUPPLEMENTAL INFORMATION
Applicable rules of the Securities and Exchange Commission require that we
furnish you the following information relating to the oversight and management
of your Corporation and to certain matters concerning its Board of Directors,
its directors and its officers.
BENEFICIAL OWNERSHIP OF STOCK
Based solely upon information in the most recent Schedule 13G filings with
the Securities and Exchange Commission, the following table sets forth
information concerning the persons or groups known to the Corporation to be
the beneficial owners of more than five percent of the Corporation's Common
Stock, its only class of voting securities.
<TABLE>
<CAPTION>
Title
Of Name and Address Amount and Nature Percent
Class of Beneficial Owners of Beneficial Ownership of Class
----- -------------------- ----------------------- --------
<S> <C> <C> <C>
Common Sanford C. Bernstein & Co. 33,995,040* 8.9*
Stock 767 Fifth Avenue
New York, NY 10153-0185
Capital Research and Management 26,779,400** 7.0**
333 South Hope Street
Los Angeles, Ca 90071-1447
</TABLE>
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*Sanford C. Bernstein & Co. ("Bernstein") reported in its Schedule 13G
filing that it beneficially owned 8.9% of the Corporation's Common Stock as of
December 31, 1999. Bernstein reported that as of that date it had sole voting
power with respect to 17,183,980 such shares and shared voting power with
respect to 3,871,660 such shares.
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**Capital Research and Management and certain of its subsidiaries
("Capital") reported in its Schedule 13G filing that it beneficially owned
7.0% of the Corporation's Common Stock as of December 31, 1999. Capital also
reports it has sole voting power with respect to none of such shares.
The following table sets forth as of February 29, 2000, the beneficial
ownership of the Corporation's Common Stock (including, in the case of
directors, "Stock Units," and in the case of Board-elected officers, "Deferred
Stock Units," each of which is not actually a share of Common Stock, but
ultimately has a cash value equal to the market price of a share of Common
Stock at the time any such unit is satisfied) for:
(1) each director (including the Chief Executive Officer) and each nominee;
(2) each of the other four most highly compensated executive officers,
based on the sum of 1999 salary and incentive pay for 1999; and
(3) all directors and Board-elected officers of the Corporation as a group.
Unless otherwise indicated by footnote to the data in the table, all such
shares are held with sole voting and investment powers, and no director or
Board-elected officer beneficially owns any equity securities of the
Corporation or its subsidiaries other than the Corporation's Common Stock. No
one director or Board-elected officer, nor all directors and Board-elected
officers as a group, owns as much as 1% of the total outstanding shares of the
Corporation's Common Stock.
<TABLE>
<CAPTION>
Shares of
Name Common Stock
- ---- ------------
<S> <C>
Gerald L. Baliles 13,544/1/,/2/
Carroll A. Campbell,
Jr. 10,461/1/,/2/
Gene R. Carter 14,293/1/,/2/
L. E. Coleman 25,005/1/,/2/,/3/
David R. Goode 1,708,922/4/
Landon Hilliard 17,143/1/,/2/
Steven F. Leer 9,259/1/,/2/
</TABLE>
<TABLE>
<CAPTION>
Shares of
Name Common Stock
- ---- ------------
<S> <C>
Arnold B. McKinnon 614,062/1/,/2/,/5/
Jane Margaret O'Brien 12,059/1/,/2/
Harold W. Pote 14,251/1/,/2/
L. I. Prillaman 441,141/6/
Stephen C. Tobias 435,367/7/
Henry C. Wolf 460,795/8/
R. Alan Brogan 502,128/9/
45 Directors and Board-elected officers
as a group (including the persons named
above)/10/ 8,541,739/11/
</TABLE>
- --------
/1/Includes a one-time grant of 3,000 shares to non-employee directors on
January 1, 1994, or when that director was elected to the Board thereafter.
These grants are made pursuant to the Directors' Restricted Stock Plan; the
director may vote these shares, but has no investment power over them until
they are distributed (see information under the "Board of Directors" caption
on page 11).
/2/Includes:
(a) the grants in each of 1996, 1997, 1998, 1999 and 2000 of Stock Units to
each non-employee director; and
(b) the crediting, effective June 1, 1996, of Stock Units representing the
actuarially determined present value of the retirement benefit that all
non-employee directors serving on the date of the 1996 Annual Meeting of
Stockholders agreed to forego.
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Stock Units are credited to a separate memorandum account maintained for each
director and are administered in accordance with the Corporation's Outside
Directors' Deferred Stock Unit Program (see information under the "Board of
Directors" caption on page 11). As of February 29, 2000, the number of Stock
Units credited to each such director's account was as follows: Mr. Baliles,
10,544; Mr. Campbell, 6,923; Mr. Carter, 11,143; Mr. Coleman, 12,669; Mr.
Hilliard, 11,143; Mr. Leer, 5,059; Mr. McKinnon, 14,390; Ms. O'Brien, 9,059;
and Mr. Pote, 9,751.
/3/Includes 336 shares owned by Mr. Coleman's wife, in which he disclaims
beneficial ownership.
/4/Includes 10,961 shares credited to Mr. Goode's account in the
Corporation's Thrift and Investment Plan; 237,753 shares held by the
Corporation under share retention agreements pursuant to the Corporation's
Long-Term Incentive Plan and over which Mr. Goode possesses voting power but
has no investment power until the shares are distributed; 1,342,500 shares
subject to stock options granted pursuant to the Corporation's Long-Term
Incentive Plan and with respect to which Mr. Goode has the right to acquire
beneficial ownership within 60 days; and 46,902 Deferred Stock Units credited
to Mr. Goode pursuant to the Corporation's Long-Term Incentive Plan.
/5/Includes 5 shares indirectly owned by Mr. McKinnon's wife, in which he
disclaims beneficial ownership.
/6/Includes 21,274 shares credited to Mr. Prillaman's account in the
Corporation's Thrift and Investment Plan; 57,809 shares held by the
Corporation under share retention agreements pursuant to the Corporation's
Long-Term Incentive Plan and over which Mr. Prillaman possesses voting power
but has no investment power until the shares are distributed; 297,000 shares
subject to stock options granted pursuant to the Corporation's Long-Term
Incentive Plan and with respect to which Mr. Prillaman has the right to
acquire beneficial ownership within 60 days; and 12,667 Deferred Stock Units
credited to Mr. Prillaman pursuant to the Corporation's Long-Term Incentive
Plan.
/7/Includes 13,472 shares credited to Mr. Tobias' account in the
Corporation's Thrift and Investment Plan; 59,059 shares held by the
Corporation under share retention agreements pursuant to the Corporation's
Long-Term Incentive Plan and over which Mr. Tobias possesses voting power but
has no investment power until the shares are distributed; 319,500 shares
subject to stock options granted pursuant to the Corporation's Long-Term
Incentive Plan and with respect to which Mr. Tobias has the right to acquire
beneficial ownership within 60 days; and 12,667 Deferred Stock Units credited
to Mr. Tobias pursuant to the Corporation's Long-Term Incentive Plan.
/8/Includes 10,652 shares credited to Mr. Wolf's account in the
Corporation's Thrift and Investment Plan; 67,978 shares held by the
Corporation under share retention agreements pursuant to the Corporation's
Long-Term Incentive Plan and over which Mr. Wolf possesses voting power but
has no investment power until the shares are distributed; 342,000 shares
subject to stock options granted pursuant to the Corporation's Long-Term
Incentive Plan and with respect to which Mr. Wolf has the right to acquire
beneficial ownership within 60 days; and 12,667 Deferred Stock Units credited
to Mr. Wolf pursuant to the Corporation's Long-Term Incentive Plan.
/9/Includes 9,174 shares credited to Mr. Brogan's account in the
Corporation's Thrift and Investment Plan; 84,207 shares held by the
Corporation under share retention agreements pursuant to the Corporation's
Long-Term Incentive Plan and over which Mr. Brogan possesses voting power but
has no investment power until the shares are distributed; 349,500 shares
subject to stock options granted pursuant to the Corporation's Long-Term
Incentive Plan and with respect to which Mr. Brogan has the right to acquire
beneficial ownership within 60 days; and 12,223 Deferred Stock Units credited
to Mr. Brogan pursuant to the Corporation's Long-Term Incentive Plan.
/10/The spouse of one Board-elected officer owns 70 shares of Norfolk
Southern Railway Company Preferred Stock, Series A, in which that officer
disclaims beneficial ownership.
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/11/Includes 278,878 shares credited to Board-elected officers' individual
accounts under the Corporation's Thrift and Investment Plan. Also includes:
1,019,750 shares held by the Corporation for such officers under share
retention agreements pursuant to the Corporation's Long-Term Incentive Plan
and over which the officer possesses voting power but has no investment power
until the shares are distributed; 5,935,000 shares subject to stock options
granted to Board-elected officers pursuant to the Corporation's Long-Term
Incentive Plan, with respect to which the optionee has the right to acquire
beneficial ownership within 60 days; and 221,636 Deferred Stock Units credited
to such officers pursuant to the Corporation's Long-Term Incentive Plan. Also
includes 36,534 shares in which such officers disclaim beneficial ownership.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 requires the Corporation's
directors and executive officers and any persons beneficially owning more than
10 percent of a class of the Corporation's stock, to file certain reports of
beneficial ownership and changes in beneficial ownership (Forms 3, 4 and 5)
with the Securities and Exchange Commission and the New York Stock Exchange.
Based solely on its review of copies of Forms 3, 4 and 5 available to it, or
written representations that no Forms 5 were required, the Corporation
believes that all required Forms concerning 1999 beneficial ownership were
filed on time by all Board-elected officers.
Effective January 25, 2000, only certain Board-elected officers have been
designated "executive officers" for purposes of Section 16.
BOARD OF DIRECTORS
Composition and Attendance
On December 31, 1999, the Board of Directors of the Corporation consisted of
ten members. The Board is divided into three classes; the members of each
class are elected for a term of three years, and each class contains as nearly
as possible an equal number of directors--a requirement of the Corporation's
Restated Articles of Incorporation. The Board met seven times in 1999. Each
director attended not less than 75% of the aggregate number of meetings of the
Board and meetings of all committees on which such director served.
Retirement Policy
Under the Corporation's retirement policy for directors, a director must
retire effective the date of the annual meeting that next follows the date of
that director's 72nd birthday; if a director's 72nd birthday coincides with
the date of the annual meeting, that director retires effective that date.
Compensation
Retainer and Fees: In 1999, each member of the Board of Directors, other
than Mr. Goode, received an annual retainer for services of $32,000 and a fee
of $1,800 for each attendance at a meeting of the Board or of any committee of
the Board, plus expenses in connection with attendance
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<PAGE>
at such meetings. Because Mr. Goode is an officer of the Corporation, he
receives no additional compensation for Board service.
Corporation's Directors' Deferred Fee Plan: A director may elect to defer
receipt of all or a portion of compensation. Amounts deferred are credited to
a separate memorandum account maintained in the name of each participating
director; interest is credited to the account at the beginning of each
quarter. For 1994 and later years, the interest rate is determined on the
basis of the director's age at the time of the deferral: under age 45, 7%; age
45-54, 10%; age 55-60, 11%; and over age 60, 12%. The total amount so credited
(including amounts deferred in prior years and interest earned thereon) is
distributed in ten annual installments beginning in the year following the
year in which the participant ceases to be a director. In 1999, six directors
participated in this Plan.
The Corporation's commitment to accrue and pay interest on amounts deferred
is facilitated by the purchase of corporate-owned life insurance on the lives
of directors. If the Board of Directors determines at any time that changes in
the law affect the Corporation's ability to recover the cost of providing the
benefits payable under this Plan, the Board, in its discretion, may reduce the
interest credited on deferrals to a rate not less than one half the rate
otherwise provided for in this Plan.
Directors' Restricted Stock Plan: Each non-employee director serving on
January 1, 1994, was awarded 3,000 restricted shares of the Corporation's
Common Stock ("Restricted Shares"). Any person who is not and never has been
an employee of the Corporation and who is first elected to the Board after
January 1, 1994, also receives a grant of 3,000 Restricted Shares.
Restricted Shares are registered in the name of the director, who has all
rights of ownership (including the right to vote the shares and receive
dividends); however, Restricted Shares may not be sold, pledged or otherwise
encumbered during a restriction period which (a) begins when the Restricted
Shares are granted and (b) ends on the earlier of (i) the date the director
dies or (ii) six months after the director becomes disabled or retires, as
that term is defined in this Plan.
Outside Directors' Deferred Stock Unit Program: Each non-employee director
has been granted the following Stock Units (not shares of Common Stock) which
are valued with respect to the market price of the Corporation's Common Stock:
600 Stock Units, effective the date of the 1996 Annual Meeting of
Stockholders; 750 Stock Units, effective the date of the 1997 Annual Meeting
of Stockholders; 1,000 Stock Units, effective January 27, 1998; 2,000 Stock
Units, effective February 1, 1999; and 3,000 Stock Units effective January 31,
2000. It is anticipated that, from time to time, non-employee directors may be
granted additional Stock Units in an amount sufficient to assure that their
total annual compensation for services is competitive. Stock Units equal in
value to the actuarially determined present value of the terminated pensions
of directors serving on June 1, 1996, also were credited to a separate
memorandum account maintained for each such director.
Stock Units in each director's memorandum account are credited with
dividends as paid on the Corporation's Common Stock, and the amount so
credited is converted into additional Stock Units, including fractions
thereof, based on the mean of the high and low trading prices of the
Corporation's Common Stock on the dividend payment date.
Upon leaving the Board for any reason, a director will receive in cash
(either in a lump sum or in ten annual installments, in accordance with an
election made by each director) an amount
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<PAGE>
determined with respect to the mean of the high and low trading prices of the
Corporation's Common Stock. The amount of a lump-sum payment is determined on
the basis of the mean of the high and low trading prices on the last business
day of the month following the director's cessation of service. The amount of
installment payments is determined annually with respect to the mean of the
high and low trading prices on the third business day following the first
public announcement of earnings for the preceding year. During the ten-year
period over which installments are paid, Stock Units in the memorandum account
at any time that have not been paid in cash will be credited with dividends as
paid on the Corporation's Common Stock.
Directors' Charitable Award Program: Each director serving on February 1,
1996, could nominate one or more tax-exempt institutions to receive up to a
total of $500,000 (payable in five equal annual installments following the
director's death); directors elected after February 1, 1996, are entitled to
designate up to $100,000 per year of service until the $500,000 cap is
reached. Another $500,000 will be paid to the Norfolk Southern Foundation in
the director's name.
This Program supports, in part, the Corporation's long-standing commitments
to contribute to educational, cultural and other appropriate charitable
institutions and to encourage others to do the same. It is funded, and its
costs are expected to be recovered, through corporate-owned life insurance on
the directors.
Because the Corporation makes the charitable contributions (and is entitled
to the related deduction) and is the owner and the beneficiary of the life
insurance policies, directors derive no direct financial benefit from this
Program. Moreover, amounts the Foundation receives from insurance proceeds
under this Program may reduce what the Corporation otherwise would contribute
from general corporate resources to support the Foundation's activities.
Committees
Each year, not later than at its Organization Meeting that usually follows
the Annual Meeting of Stockholders, the Board of Directors appoints the Audit
Committee, the Compensation and Nominating Committee, the Executive Committee
and the Pension and Finance Committee.
The Audit Committee met five times in 1999; at year-end, its members were
Harold W. Pote, Chair, Gerald L. Baliles, Carroll A. Campbell, Jr., Gene R.
Carter, and Jane Margaret O'Brien. Until May 1999, Landon Hilliard also served
as a member of the committee. This committee:
. recommends to the Board of Directors the engagement of, and the fee to
be paid to, the independent public accountants;
. reviews with the independent accountants the annual audit plan;
. receives, reviews and transmits to the Board the annual report and
financial statements of the Corporation and its consolidated
subsidiaries; and
. reviews, in consultation with the independent accountants and the
Corporation's internal audit staff, as deemed necessary, the
Corporation's accounting policies, conflict of interest policy, internal
control systems and financial operations and reporting.
The Compensation and Nominating Committee met six times in 1999; at year-
end, its members were L. E. Coleman, Chair, Landon Hilliard, Steven F. Leer
and Harold W. Pote. T. Marshall Hahn, Jr.,
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<PAGE>
was a member of this committee until his retirement, effective the date of the
1999 Annual Meeting of Stockholders. In addition to making various
determinations under certain compensation plans, this committee makes
recommendations to the Board of Directors concerning:
. executive compensation;
. adoption and administration of any management incentive bonus plan,
deferred compensation plan or other similar plans of the Corporation;
. individuals to be elected as officers of the Corporation; and
. nominees for election to the Board.
The Committee will consider nominees recommended by stockholders for
election to the Board. Such recommendations must be in writing addressed to
the Corporate Secretary, Norfolk Southern Corporation, Three Commercial Place,
Norfolk, Virginia 23510-9219, and shall include sufficient background material
to enable the Committee to consider fully the qualifications of the individual
and any potential conflict of interest or legal restrictions concerning the
person's service in the proposed capacity.
Stockholders wishing to nominate an individual for election as a director at
an annual meeting must comply with specific Bylaw provisions, details of which
are available on request from the Corporate Secretary.
The Executive Committee met two times in 1999; at year-end, its members were
Arnold B. McKinnon, Chair, L. E. Coleman and David R. Goode. T. Marshall Hahn,
Jr., was a member of this committee until his retirement, effective the date
of the 1999 Annual Meeting of Stockholders. Until May 1999, Gerald L. Baliles
also served as a member of the Committee. This committee is empowered to
exercise, to the extent permitted by Virginia law, all the authority of the
Board of Directors when the Board is not in session, including the declaration
of a quarterly dividend upon the Corporation's Common Stock at the rate of the
quarterly dividend most recently declared by the Board. All actions taken by
the Committee are to be reported to the Board at its meeting next following
such action and are subject to revision or alteration by the Board.
The Pension and Finance Committee met five times in 1999; at year-end, its
members were Gerald R. Baliles, Chair, Carroll A. Campbell, Jr.,
Gene R. Carter, Landon Hilliard, Steven F. Leer and Jane Margaret O'Brien. T.
Marshall Hahn, Jr., was Chair of this committee until his retirement,
effective the date of the 1999 Annual Meeting of Stockholders. This committee:
. makes recommendations to the Board of Directors concerning an annual
investment policy for the assets of the Corporation's pension fund and
the engagement of, and the fees to be paid to, firms of investment
managers to manage designated portions of such assets within the
framework of the investment policy;
. reviews the performance of the investment managers;
. receives, reviews and transmits to the Board the annual reports,
financial statements and actuarial valuations of the pension plans; and
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<PAGE>
. develops guidelines, and oversees implementation of policies concerning
the Corporation's capital structure and related costs.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1999, the Corporation paid approximately $888,438 for legal services to
the law firm of Hunton & Williams, in which Mr. Baliles is a partner.
Arch Coal, Inc. (including affiliates and subsidiaries, "Arch"), of which
Mr. Leer is President and Chief Executive Officer, is engaged in coal mining
and related businesses. Prior to Mr. Leer's election as a director of the
Corporation, Norfolk Southern Railway Company ("Railway") had provided
transportation services for Arch at rates fixed in conformity with law or
governmental authority. In 1999, the Railway continued to provide such
services for Arch on those bases, and it expects to do so in succeeding years.
Arch also has entered into leases with various subsidiaries of the
Corporation, generating 1999 rent and royalty income for the subsidiaries of
slightly more than $25.9 million. In the future, the parties (1) may negotiate
the terms and conditions of one or more renewals and of one or more new leases
and (2) may compete to acquire fee, leasehold or other interests in natural
resource properties. Mr. Leer would not participate in the Board's
consideration of these and other similar matters in which Arch is an
interested party.
Norfolk Southern maintains various banking relationships with Brown Brothers
Harriman & Co. ("Brown Brothers"), in which Mr. Hilliard is a partner, on
bases that are consistent with normal financial and banking practices. All
transactions are entered into in the ordinary course of business on
substantially the same terms as those prevailing at the time for comparable
transactions with other banks. Also, Brown Brothers was paid approximately
$112,308 in fees for managing a portion of the assets of the Corporation's
pension fund in 1999.
Beacon Group Energy Investment Fund L.P.--affiliated with the Beacon Group
in which Mr. Pote is a principal--has purchased Alliance Coal Company
("Alliance"). Prior to Beacon's acquisition of its interest, Norfolk Southern
Railway Company had provided transportation services for Alliance or its
predecessors at rates fixed in conformity with law or governmental authority.
In 1999, the Railway continued to provide such services for Alliance on those
bases, and it expects to do so in succeeding years. Alliance also had entered
into various leases with a natural resources subsidiary of the Corporation,
generating 1999 rent and royalty income for the subsidiary of slightly more
than $2.5 million. In the future, the parties (1) may negotiate the terms and
conditions of one or more renewals of such leases and of such purchases and
(2) may compete to acquire fee, leasehold or other interests in natural
resource properties. Mr. Pote would not participate in the Board's
consideration of these and other similar matters in which Alliance is an
interested party.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation and Nominating Committee during 1999 were
Mr. Coleman, Chair, Mr. Hahn (who was a member of the Committee until his
retirement from the Board effective the date of the 1999 Annual Meeting), Mr.
Leer (who became a member of the Committee following
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the 1999 Annual Meeting) and Mr. Pote. Other than Mr. Leer's relationship with
Arch and Mr. Pote's relationship with Beacon Group and alliance (about which
information is provided under the preceding caption), there were no reportable
business relationships between the Corporation and such individuals.
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table sets forth the cash compensation paid, as well as
certain other compensation accrued or paid, to the Chief Executive Officer and
to each of the other four most highly compensated executive officers of the
Corporation in 1999 (together, the "Named Executive Officers"), for service in
all capacities to both the Corporation and its subsidiaries by the Named
Executive Officers in the fiscal years ending December 31, 1999, 1998 and
1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------------- --------------------
Awards Payouts
---------- ---------
Other Securities
Annual Underlying LTIP All Other
Name and Principal Salary/1/Bonus/1/Compensation/2/Options/3/ Payouts/4/Compensation/5/
Position Year ($) ($) ($) (#) ($) ($)
------------------ ---- -------- ------- -------------- ---------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
David R. Goode 1999 950,000 0 337,490/6/ 365,000 597,047 88,315
Chairman, President and 1998 900,000 887,400 739,809 250,000 1,615,566 82,083
Chief Executive Officer 1997 850,000 850,000 287,972 120,000 2,472,690 85,304
L. I. Prillaman 1999 375,000 0 265,636 90,000 191,055 29,722
Vice Chairman and Chief 1998 360,417 274,231 280,085 60,000 516,981 25,719
Marketing Officer 1997 320,000 240,000 24,411 36,000 309,086 25,619
Stephen C. Tobias 1999 500,000 0 247,076 90,000 191,055 44,448
Vice Chairman and Chief 1998 485,417 382,897 219,885 60,000 516,981 35,877
Operating Officer 1997 400,000 320,000 68,611 36,000 772,715 37,788
Henry C. Wolf 1999 500,000 0 109,030 90,000 191,055 50,359
Vice Chairman and Chief 1998 485,417 382,897 321,915 60,000 516,981 38,425
Financial Officer 1997 400,000 320,000 130,907 36,000 772,715 40,636
R. Alan Brogan 1999 320,000 0 233,561 75,000 191,055 50,524
President Norfolk 1998 320,000 236,640 585,111 60,000 516,981 48,671
Southern Intermodal* 1997 300,000 225,000 143,093 36,000 772,715 51,926
</TABLE>
*Mr. Brogan was Executive Vice President--Corporate until December 1, 1999.
- --------
/1/Includes portion of any salary or bonus award elected to be received on a
deferred basis.
/2/Includes amounts reimbursed for the payment of taxes on personal
benefits. Also includes the amount by which the interest accrued on salary and
bonuses deferred under the Officers' Deferred Compensation Plan exceeds 120%
of the applicable Federal long-term rate provided under Section 1274(d) of the
Internal Revenue Code; for 1999, these amounts were: for Mr. Goode, $109,784;
Mr. Prillaman, $16,107; Mr. Tobias, $72,661; Mr. Wolf, $84,850; and Mr.
Brogan, $219,679. Includes a tax absorption payment in 1997 on the "earn out"
pursuant to the performance share feature of the Corporation's Long-Term
Incentive Plan and for the gain realized upon exercise of certain stock
options (in 1997, for Mr. Wolf; in 1998, for each of the Named Executive
Officers; and in 1999 for Messrs. Prillaman and Tobias).
/3/Options were granted without tandem SARs.
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/4/Represents the value of the "earn out" pursuant to the performance share
feature of the Corporation's Long-Term Incentive Plan for periods ended
December 31, 1999, 1998 and 1997 (for 1999, performance shares were earned for
achievements in the three-year period 1997-1999; for 1998, for achievements in
the three-year period 1996-1998; and for 1997, for achievements in the three-
year period 1995-1997).
/5/Includes for 1999 (i) contributions of $4,800 to the Corporation's 401(k)
plan on behalf of each of the Named Executive Officers; and (ii) total premium
payments (out-of-pocket cash cost) on "split dollar" life insurance policies
for Mr. Goode, $83,515; Mr. Prillaman, $24,922; Mr. Tobias, $39,648; Mr. Wolf,
$45,559; and Mr. Brogan, $45,724.
/6/Includes personal use in 1999, as directed by resolution of the Board of
Directors, of the Corporation's aircraft valued at approximately $152,865--
calculated on the basis of the aggregate incremental cost of such use to the
Corporation.
Long-Term Incentive Plan
The Corporation's Long-Term Incentive Plan, as last approved by stockholders
in 1995, provides for the award of incentive stock options, non-qualified
stock options, stock appreciation rights, restricted stock and performance
share units to officers and other key employees of both the Corporation and
certain of its subsidiaries. The Compensation and Nominating Committee of the
Board of Directors ("Committee") administers the Plan and has sole discretion,
subject to certain limitations, to interpret the Plan; to select Plan
participants; to determine the type, size, terms and conditions of awards
under the Plan; to authorize the grant of such awards; and to adopt, amend and
rescind rules relating to the Plan.
Stock Options
The following table sets forth certain information concerning the grant in
1999 of stock options under the Corporation's Long-Term Incentive Plan to each
Named Executive Officer:
Option/SAR* Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Grant
Date
Individual Grants Value
- ----------------------------------------------------------------- ---------
Number of
Securities % of Total Grant
Underlying Options Date
Options Granted to Exercise or Present
Granted/1/ Employees in Base Price/2/ Expiration Value/3/
Name (#) Fiscal Year ($ Per Share) Date ($)
- ---- ---------- ------------ ------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
D. R. Goode 365,000 7.04% 27.6875 01/31/2009 2,967,450
L. I. Prillaman 90,000 1.74% 27.6875 01/31/2009 731,700
S. C. Tobias 90,000 1.74% 27.6875 01/31/2009 731,700
H. C. Wolf 90,000 1.74% 27.6875 01/31/2009 731,700
R. A. Brogan 75,000 1.45% 27.6875 01/31/2009 609,750
</TABLE>
*No SARs were granted in 1999.
- --------
/1/These options (of which the first 3,611 granted to each Named Executive
Officer are Incentive Stock Options and the remainder are Non-qualified Stock
Options) were granted as of February 1, 1999, and are exercisable one year
after the date of grant. They earn dividend equivalents in an amount equal to,
and commensurate with, dividends as paid on the Common Stock; the dividend
equivalents are converted into Deferred Stock Units, the aggregate fair market
value of which is
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payable in cash to the optionee on the earliest of (a) the five-year
anniversary of the date of option grant; (b) the exercise of the option
(exercises of less than the full option grant result in a prorated cash
payment); and (c) the optionee's death, disability or retirement.
/2/The exercise price (fair market value on the date of grant) may be paid
in cash or in shares of Common Stock (previously owned by the optionee for at
least one year next preceding the date of exercise) valued at fair market
value on the date of exercise.
/3/In accordance with regulations of the Securities and Exchange Commission,
the present value of the option grant on the date of grant was determined
using the Black-Scholes statistical model. The actual amount, if any, a Named
Executive Officer may realize upon exercise depends on the stock price on the
exercise date; consequently, there is no assurance the amount realized by a
Named Executive Officer will be at or near the monetary value determined by
using this statistical model.
In the case of Common Stock, the Black-Scholes model used the following
measures and assumptions:
(a) a stock volatility factor of 0.208: volatility was determined by an
independent compensation consultant using monthly data averaged over the
60-month period January 1, 1994, through December 31, 1998;
(b) a dividend yield of 2.5%: yield was determined monthly and averaged
over the 60-month period January 1, 1994, through December 31, 1998;
(c) a 1998 risk-free rate of return of 5.75%: this represents the monthly
average 10-year Treasury strip rate during 1998, the year prior to the
issuance of these options; and
(d) that the option will be exercised during its ten-year term.
The foregoing produces a Black-Scholes factor of 0.2936 and a resulting
present value of $8.13 for each share of Common Stock subject to the 1999
option grant; that factor and resulting present value have not been adjusted
to reflect that options cannot be exercised during the first year of their 10-
year term, the payment of dividend equivalents on unexercised options or the
deferral of receipt of such dividend equivalents until the related Deferred
Stock Units actually are paid out.
The following table sets forth certain information concerning the exercise of
options by each Named Executive Officer during 1999 and the number of
unexercised options held by each as of December 31, 1999:
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options/SARs at FY- In-the-Money Options/SARs
Shares End at FY-End/1/
Acquired on Value (#) ($)
Exercise Realized ----------------------------------- ----------------------------
Name (#) ($) Exercisable* Unexercisable Exercisable Unexercisable/4/
- ---- ----------- -------- --------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
D. R. Goode 0 0 977,500 365,000 $311,244 0
L. I. Prillaman 14,274/2/ 305,359/2/ 207,000 90,000 111,561 0
S. C. Tobias 13,368/3/ 202,609/3/ 229,500 90,000 111,561 0
H. C. Wolf 0 0 252,000 90,000 111,561 0
R. A. Brogan 0 0 274,500 75,000 111,561 0
</TABLE>
*Reports, for each Named Executive Officer, the total number of unexercised
options that have passed the first anniversary of their grant date.
- --------
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<PAGE>
/1/Equal to the mean ($20.25) of the high and low trading prices on the New
York Stock Exchange-Composite Transactions of the Common Stock on December 31,
1999, less the exercise prices of in-the-money options, multiplied by the
number of such options.
/2/Mr. Prillaman surrendered 5,286 shares of stock already owned in full
satisfaction of the exercise price of options on 14,274 shares.
/3/Mr. Tobias surrendered 6,059 shares of stock already owned in full
satisfaction of the exercise price of options on 13,368 shares.
/4/Because the market price of the Common Stock on December 31, 1999, was
below the exercise price of options granted in 1999 ($27.6875 per share) and
in a number of earlier years, they are "out-of-the-money" and have no
reportable value.
Performance Share Units ("PSUs")
The following table sets forth certain information concerning the grant in
1999 of PSUs under the Corporation's Long-Term Incentive Plan to each Named
Executive Officer. These PSU grants entitle a recipient to "earn out" or
receive performance compensation at the end of a three-year performance cycle
(1999-2001) based on the Corporation's performance during that three-year
period. Under the 1999 award, corporate performance will be measured using
three predetermined and equally weighted standards; that is, each of the
following performance areas will serve as the basis for "earning out" up to
one third of the total number of PSUs granted: (1) three-year average return
on average invested capital ("ROAIC"), (2) three-year average NS operating
ratio and (3) three-year total return to NS stockholders. A more detailed
discussion of these performance criteria can be found in the Compensation and
Nominating Committee Report under the caption, "Long-Term Incentive Plan,"
beginning on page 23.
Long-Term Incentive Plan--Awards in Last Fiscal Year
(Performance Share Units)
<TABLE>
<CAPTION>
Estimated Future Payouts
Performance under
Number of or Other Non-Stock Price-Based
Shares, Period Plans
Units of Until --------------------------
Other Rights/1/Maturation Threshold Target/2/Maximum
Name (#) or Payout (#) (#) (#)
- ---- -------------- ----------- --------- -------- -------
<S> <C> <C> <C> <C> <C>
D. R. Goode 120,000 01/01/99- 0 93,360 120,000
12/31/01
L. I. Prillaman 30,000 01/01/99- 0 23,340 30,000
12/31/01
S. C. Tobias 30,000 01/01/99- 0 23,340 30,000
12/31/01
H. C. Wolf 30,000 01/01/99- 0 23,340 30,000
12/31/01
R. A. Brogan 25,000 01/01/99- 0 19,450 25,000
12/31/01
</TABLE>
- --------
/1/"Earn outs" may be satisfied in cash or in shares of Common Stock (or in
some combination of the two), with the stock portion being held by the
Corporation for up to 60 months pursuant to a share retention agreement,
unless such requirement is waived by the Committee in its sole discretion.
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<PAGE>
/2/The Long-Term Incentive Plan does not provide a performance target for an
"earn out" under this feature of the Plan; consequently, this column
represents 77.8% of the maximum potential "earn out," which, in accordance
with applicable rules of the Securities and Exchange Commission, is the
percentage actually "earned out" under the Plan at the end of the most
recently completed performance cycle.
Pension Plans
The following table sets forth the estimated annual retirement benefits
payable on a qualified joint-and-survivor-annuity basis in specified
remuneration and years of creditable service classifications under the
Corporation's qualified defined benefit pension plans, as well as nonqualified
supplemental pension plans that provide benefits otherwise denied participants
because of certain Internal Revenue Code limitations on qualified plan
benefits. It is assumed, for purposes of the table, that an individual retired
in 1999 at age 65 (normal retirement age) with the maximum allowable Railroad
Retirement Act annuity. The benefits shown are in addition to amounts payable
under the Railroad Retirement Act.
PENSION PLAN TABLE
Estimated Annual Retirement Benefits
For Years of Service Indicated
<TABLE>
<CAPTION>
Years of Creditable Service
-----------------------------------------
Remuneration 25 30 35 40
- ------------ -------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
$ 300,000 $ 94,482 $ 115,782 $ 137,083 $ 158,383
400,000 131,982 160,782 189,583 218,383
500,000 169,482 205,782 242,083 278,383
600,000 206,982 250,782 294,583 338,383
700,000 244,482 295,782 347,083 398,383
800,000 281,982 340,782 399,583 458,383
900,000 319,482 385,782 452,083 518,383
1,000,000 356,982 430,782 504,583 578,383
1,100,000 394,482 475,782 557,083 638,383
1,200,000 431,982 520,782 609,583 698,383
1,300,000 469,482 565,782 662,083 758,383
1,400,000 506,982 610,782 735,000 818,383
1,500,000 544,482 655,782 767,083 878,383
1,600,000 581,982 700,782 819,583 938,383
1,700,000 619,482 745,782 872,083 998,383
1,800,000 656,982 790,782 924,583 1,058,383
1,900,000 694,482 835,782 977,083 1,118,383
2,000,000 731,982 880,782 1,029,583 1,178,383
2,100,000 769,482 925,782 1,082,083 1,238,383
2,200,000 806,982 970,782 1,134,583 1,298,383
2,300,000 844,482 1,015,782 1,207,500 1,358,383
</TABLE>
Under the pension plans, covered compensation includes salary and bonus;
each officer can expect to receive an annual retirement benefit equal to
average annual compensation for the five
20
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most highly compensated consecutive years out of the last ten years of
creditable service multiplied by the number that is equal to 1.5% times total
years of creditable service, but not in excess of 60% of such average
compensation, less an offset for the annual Railroad Retirement Act annuity.
The respective last five-year average compensation and approximate years of
creditable service, as of January 1, 2000, for each Named Executive Officer
were: Mr. Goode, $1,456,931 and 34 years; Mr. Prillaman, $526,867 and 30
years; Mr. Tobias, $692,288 and 30 years; Mr. Wolf, $692,288 and 27 years; and
Mr. Brogan, $507,765 and 36 years.
Change-in-Control Arrangements
In May 1996, the Compensation and Nominating Committee recommended, and the
Board of Directors approved, the Corporation's entering into new change-in-
control compensation agreements ("Agreements") with each of the Named
Executive Officers and with certain other key employees. These Agreements, the
terms of which were reviewed by outside counsel, were filed as an exhibit to
the Corporation's Report on Form 10-Q for the period ended June 30, 1996, and
provide certain economic protections in the event of an involuntary or other
specified Termination (each term with an initial capital letter is defined in
the Agreements) of a covered individual during a period of twenty-four months
next following a Change in Control of the Corporation. As consideration for
these Agreements and to help encourage management continuity, covered
individuals agreed not to engage in Competing Employment for a period of (a)
three years, in most cases, from the date they execute an Agreement and (b)
one year from their Termination Date, if they accept benefits payable or
provided under the Agreements.
These Agreements are terminable by either the Corporation or a covered
employee on twenty-four months' notice; however, the term of the prohibition
on engaging in Competing Employment is not affected by an Agreement's being
terminated.
Generally, these Agreements provide for (a) severance compensation payments
(not continued employment) equal, in the case of each Named Executive Officer,
to three times the sum of their Base Pay and Incentive Pay (most other covered
employees are entitled to receive a lower multiple of Base Pay and Incentive
Pay); (b) redemption of outstanding Performance Share Units and of
outstanding, exercisable options (subject to restrictions, if any, in the case
of persons, such as each Named Executive Officer, imposed under Section 16 of
the Securities Exchange Act of 1934) and payment of dividend equivalents
foregone as a result of the redemption of such options; (c) payment of an
amount equal to the present value of the projected value of amounts deferred
under the Officers' Deferred Compensation Plan; (d) eligibility for certain
Benefits (principally medical, insurance and death benefits) for up to three
years following Termination; and (e) certain additional service credit under
the Corporation's retirement plans (in the case of any Board-elected officer,
such service credit may not exceed the creditable service that officer would
have had upon reaching mandatory retirement age). The Agreements also provide
for payment of any Federal excise tax that may be imposed on payments made
pursuant to these Agreements.
COMPENSATION AND NOMINATING COMMITTEE REPORT CONCERNING
THE 1999 COMPENSATION OF CERTAIN EXECUTIVE OFFICERS
This Report describes Norfolk Southern Corporation's officer compensation
strategy, the components of its compensation program and the manner in which
1999 compensation
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determinations were made for the Corporation's Chairman, President and Chief
Executive Officer, David R. Goode, and for the other officers (collectively,
including Mr. Goode, also referred to in this report as the "Named Executive
Officers") whose 1999 compensation is reported in the Summary Compensation
Table of this Proxy Statement.
The Compensation and Nominating Committee of the Board of Directors
("Committee") is composed entirely of non-employee directors and met six times
during 1999. Among other things, the Committee is responsible for: (1)
recommending to the Board the salaries of Board-elected officers and (2)
administering the Corporation's Executive Management Incentive Plan, as
approved by the stockholders at their May 1995 Annual Meeting, its Management
Incentive Plan (in which certain non-Board-elected officers participate) and
its Long-Term Incentive Plan, as amended and approved by stockholders at their
May 1995 Annual Meeting, which authorizes, as more particularly described
below, awards of stock options and performance share units.
BASE SALARY: While the Committee believes that a substantial portion of
each Named Executive Officer's total compensation should be "performance-
based," the Committee also seeks to assure that the base salaries of Named
Executive Officers are competitive with those earned by individuals in
comparable positions.
Specifically, the Committee compares Mr. Goode's base salary with salaries
paid to chief executive officers of other holding companies of Class I
railroads (the same companies comprising the S&P Railroad Index included in
the Stock Performance Graph) and of other American corporations of
comparable revenue size. The base salaries of the other Named Executive
Officers--as well as all Board-elected officers of the Corporation--are
evaluated, principally by Mr. Goode, relative to survey data of base
salaries for comparable positions at a large number of American
corporations of comparable revenue size, including but not limited to those
identified in the Stock Performance Graph. These data are compiled by the
Corporation's Human Resources Department and by an outside compensation
consultant. The Committee's general intention is to set the base salaries
of Named Executive Officers at approximately the 50th percentile of their
peers in the respective groups with which they are compared.
Mr. Goode discusses with the Committee the specific contributions and
performance of each of the other Named Executive Officers. Based on such
evaluations, comparative salary data and each Executive Officer's length of
service in current position, Mr. Goode makes base salary recommendations
which are submitted for Committee and Board approval.
Mr. Goode makes no recommendation concerning, nor does he play any role in
determining, his base salary (or other compensation), which is set by the
Board. As noted, the Committee customarily seeks to set the NS Chairman,
President and CEO's base salary at approximately the 50th percentile of the
base salaries paid to CEOs of other American corporations of comparable
revenue size and competitively (within the mid-range of compensation
practice) with those of the chairmen of the other holding companies of
Class I railroads. Mr. Goode's base salary in 1999 approximated the 25th
percentile; the average 1999 base salaries of three of the four other Named
Executive Officers, who have position counterparts in corporations with
comparable revenues, approximated the 34th percentile.
For 1999, Mr. Goode's annual base salary was increased by $50,000, or 5.6%.
This increase, not tied to or reflecting application of any specific
formula, reflects the Corporation's performance in
22
<PAGE>
1998, including its total operating revenues and net income, as well as the
Board's confidence in Mr. Goode's leadership. The base salaries of each of
the other Named Executive Officers remained at the same level as in effect
at the time of the Committee's meeting.
EXECUTIVE MANAGEMENT INCENTIVE PLAN ("EMIP"): The Corporation's EMIP is
designed and administered to ensure that a significant portion of each
Named Executive Officer's total annual cash compensation is based on the
Corporation's annual financial performance. Awards to Named Executive
Officers and other Board-elected officers and to participants in the
Corporation's Management Incentive Plan (MIP) are paid from an annual
incentive fund equal to a percentage (from 0.75% to 1.5%) of the
Corporation's adjusted pretax net income, provided the Corporation's annual
return on average invested capital ("ROAIC") equals or exceeds 10%.
It is the Committee's philosophy that, when the Corporation achieves EMIP
goals, the total of the Named Executive Officers' base salaries and EMIP
awards should be competitive with the total annual cash compensation paid
by comparable organizations. In years in which those goals are not
realized, the Named Executive Officers will receive less (or, as is the
case with respect to 1999, no) incentive pay.
Specifically, incentive pay opportunities for Mr. Goode are determined
annually by the Committee by comparing Mr. Goode's total annual cash
compensation with that paid to the chief executive officers of all other
holding companies of Class I railroads (the same companies comprising the
S&P Railroad Index included in the Stock Performance Graph) and of other
American corporations of comparable revenue size. Incentive pay
opportunities for the other Named Executive Officers are determined
annually by the Committee based on its review of the annual cash
compensation of comparable positions at companies of comparable revenue
size, including but not limited to those identified in the Stock
Performance Graph.
Using those criteria, in November of 1998 the Committee set Mr. Goode's
maximum 1999 incentive opportunity at 120% of his 1999 base salary, Mr.
Prillaman's, Mr. Tobias' and Mr. Wolf's at 80% of 1999 base salary and Mr.
Brogan's at 75% of 1999 base salary. Actual payments, if any, are based on
the total amount in the annual incentive fund.
For 1999, none of Mr. Goode, the other Named Executive Officers, or all
other officers earned an EMIP award, nor did any of 348 key employees earn
an MIP award. As a result, total 1999 cash compensation (1999 base salary
and the 1999 EMIP award that would have been payable in 2000) earned by Mr.
Goode, and by three of the four other Named Executive Officers who have
position counterparts in corporations with comparable revenues, fell below
the 25th percentile.
LONG-TERM INCENTIVE PLAN ("LTIP"): The Committee believes that a
substantial component of the Named Executive Officers' total compensation
should be based on and reflect the Corporation's efficient use of assets,
its profitability and the total returns (stock price appreciation and
dividends) to its stockholders. This is achieved by making annual grants of
stock options and performance share units and through share retention
agreements entered into with the Named Executive Officers.
These LTIP arrangements are intended to ensure that the longer-term
financial interests of the Named Executive Officers are directly aligned
with those of the Corporation's stockholders and
23
<PAGE>
to provide the Named Executive Officers with the opportunity to acquire a
meaningful beneficial stock ownership position in the Corporation.
In determining current LTIP awards, the size of prior grants is analyzed
within a current total compensation framework predicated on a review of
both the long-term awards and the total compensation (base salary, bonus
and long-term awards) of comparable positions in U.S. companies with
comparable revenues. The mix of options and performance share units may
vary from year to year to reflect an analysis of the relative value of each
type of award and other considerations. The number of stock options and
performance share units granted in any year is determined so as to place
the total compensation of Mr. Goode and the other Named Executive Officers,
when corporate performance warrants, above the 75th percentile of total
compensation for their respective peer groups.
At its January 1999 meeting, the Committee granted stock options to each of
the Named Executive Officers and to 328 other key employees with an
exercise price equal to the market value of the shares on the date of
grant. These options are exercisable during a ten-year period following the
date of grant, after a one-year period has elapsed.
At the same meeting, the Committee granted performance share units which
provide the Named Executive Officers and other recipients the opportunity
to earn awards (that will be paid either in cash or in shares of the
Corporation's Common Stock, or in some combination thereof) during the
first quarter of 2002. The number of performance share units actually
earned by recipients is based on criteria approved by stockholders at their
May 1995 Annual Meeting--specifically, the Corporation's three-year (i.e.,
1999-2001) Total Stockholder Return, average Return on Average Invested
Capital and average Operating Ratio evaluated relative to performance
measures established by the Committee and set out in the schedules below.
One third of the performance share units granted in 1999 are available to
be earned based on each of the three performance criteria.
<TABLE>
<CAPTION>
---------------------------------- --------------------------
Total Stockholder Return ("TSR") Return on Average Invested
vs. S&P 500 Capital ("ROAIC")
---------------------------------- --------------------------
Percentage of Three- Percentage of
Three-Year Performance Year Performance
Average TSR Share Units Average Share Units
vs. S&P 500 Earned Out ROAIC Earned Out
---------------------------------- --------------------------
<S> <C> <C> <C>
90th percentile and 20% 100%
above 100% 19% 90%
80th 90% 18% 80%
70th 85% 17% 70%
60th 80% 16% 60%
50th 75% 15% 50%
40th 50% 14% 40%
30th 30% 13% 20%
25th and below 0% Below 13% 0%
---------------------------------- --------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
--------------------------
Operating Ratio ("OpR")
--------------------------
Percentage of
Three-Year Performance
NS Average Share Units
OpR Earned Out
--------------------------
<S> <C>
70% 100%
75% 75%
80% 50%
85% 25%
Above 85% 0%
--------------------------
</TABLE>
All stock options granted in 1999 to Named Executive Officers were subject
to the following terms: For the first five (5) years following the date
stock options are granted, the Corporation credits dividend equivalents on
unexercised options to a separate memorandum account maintained for each
Named Executive Officer, and--based on the fair market value of the
Corporation's Common Stock on the dividend payment date--the dollar amount
of that dividend equivalent is converted into Deferred Stock Units (one
such unit is equal in value to one share of Common Stock). The value of
such Deferred Stock Units is paid in cash to each Named Executive Officer
based on the then-fair market value of the Corporation's Common Stock on
the earliest to occur of (a) the five-year anniversary of the date of
grant; (b) the exercise of the option (exercises of less than the full
option grant result in a prorated cash payment); and (c) the officer's
death, disability or retirement.
All Named Executive Officers have entered into share retention agreements
with the Corporation whereby they have agreed to have the Corporation hold
shares of the Corporation's Common Stock actually earned pursuant to the
performance share feature of the LTIP for a period of five years following
the date such shares are earned.
For 1999, Mr. Goode was granted options (including 3,611 incentive stock
options that may receive capital gains treatment) on 365,000 shares of
Common Stock and the opportunity to earn up to 120,000 performance shares;
the other Named Executive Officers as a group were awarded options
(including in the case of each such officer, 3,611 incentive stock options
that may receive capital gains treatment) on a total of 345,000 shares of
Common Stock and the opportunity to earn up to 115,000 performance shares.
In summary, the Committee believes that the compensation of Named Executive
Officers is competitive with that of similar positions at comparable American
corporations. More important, the Committee believes each Named Executive
Officer's compensation has been appropriately structured and administered so
that a substantial component of total compensation is dependent upon, and
directly related to, the Corporation's efficient use of assets, its
profitability and the total returns to its stockholders.
Regulations of the Securities and Exchange Commission require the Committee
to report to stockholders on the Committee's policy concerning the Revenue
Reconciliation Act of 1993 which amended Section 162 of the Internal Revenue
Code regarding the deductibility of certain executive compensation over $1
million. Based on the requirements of this new legislation and on then-current
interpretive regulations and transition rules, the Committee recommended to
the Board, the Board
25
<PAGE>
approved and recommended to the stockholders, and at their 1995 Annual Meeting
the stockholders approved, modifications to the LTIP and establishment of the
Executive Management Incentive Plan (which was effective as of January 1,
1996, for certain Board-elected officers), all as more particularly described
in the Corporation's 1995 Proxy Statement. The Committee will continue to seek
to offer its Named Executive Officers and other personnel competitive
compensation and, to the extent practicable, to structure such compensation
arrangements to entitle the Corporation to take appropriate related tax
deductions.
L. E. Coleman, Chair
T. Marshall Hahn, Jr. Member (retired
effective the date of the 1999 Annual
Meeting)
Landon Hilliard, Member (appointed May 1999
to succeed Mr. Hahn; did not participate in
the compensation decisions described)
Steven F. Leer, Member
Harold W. Pote, Member
PERFORMANCE GRAPH*
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Corporation's Common Stock, the
cumulative total return of the S&P Composite-500 Stock Price Index and the S&P
Railroad Stock Price Index for the five-year period commencing December 31,
1994, and ending December 31, 1999. This information was furnished by
Bloomberg Financial Markets.
Base
Dec. 94 Dec. 95 Dec. 96 Dec. 97 Dec. 98 Dec. 99
------- ------- ------- ------- ------- -------
Indexed Returns
NSC 100 $134.89 $153.60 $163.74 $174.48 $116.12
SP Rail 100 $146.30 $173.75 $196.07 $179.78 $151.50
S&P 500 100 #137.54 $169.09 $225.48 $289.93 $350.93
- --------
*Assumes that the value of the investment in the Corporation's Common Stock
and each index was $100 on December 31, 1994, and that all dividends were
reinvested.
26
<PAGE>
STOCKHOLDER PROPOSALS
Stockholders are entitled to submit proposals on matters appropriate for
stockholder action consistent with regulations of the Securities and Exchange
Commission and with the Corporation's Bylaws. Any such proposal for the 2001
Annual Meeting of Stockholders must comply with applicable regulations and be
received by the Corporate Secretary, Norfolk Southern Corporation, Three
Commercial Place, Norfolk, Virginia 23510-9219, as follows:
to be eligible for inclusion in the Corporation's proxy statement and form
of proxy, it must be received no later than December 2, 2000; or
to be eligible to be presented from the floor for vote at the meeting (but
not intended for inclusion in the Corporation's proxy materials), it must
be received during the period that begins December 4, 2000, and ends
February 12, 2001.
By order of the Board of Directors,
DEZORA M. MARTIN,
Corporate Secretary.
27
<PAGE>
NORFOLK SOUTHERN CORPORATION
THREE COMMERCIAL PLACE, NORFOLK, VIRGINIA 23510-2191
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Gerald L. Baliles, L. E. Coleman or Landon
Hilliard, and each or any of them, proxy for the undersigned, with full power of
substitution, to vote with the same force and effect as the undersigned at the
Annual Meeting of Stockholders of Norfolk Southern Corporation to be held at The
Norfolk Waterside Marriott and Waterside Convention Center, 235 East Main
Street, Norfolk, Virginia, on Thursday, May 11, 2000, and at any adjournments,
postponements or reschedulings thereof, upon the matters more fully set forth in
the Proxy Statement, dated March 31, 2000, and to transact such other business,
including the matter(s) noted under the caption, "Other Business," as properly
may come before such meeting(s).
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED ON THE
OTHER SIDE BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR ITEM (2), AND AGAINST ITEM (3).
NORFOLK SOUTHERN CORPORATION
P.O. BOX 11145
NEW YORK, N. Y. 10203-0145
(Continued, and to be MARKED, DATED AND SIGNED on the other side)
<PAGE>
Please mark boxes [ ] or [x] in blue or black ink. [ ]
(1) Election of Directors
FOR all nominees listed below, except WITHHOLD AUTHORITY to vote for
as marked to the contrary (see all nominees listed below. [ ]
instruction). [ ]
Carroll A. Campbell, Jr. David R. Goode Harold W. Pote
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, PUT A
LINE THROUGH THAT NOMINEE'S NAME IN THE LIST ABOVE.
(2) Ratification of the appointment of KPMG LLP, independent
public accountants, as auditors. FOR [ ] AGAINST [ ] ABSTAIN [ ]
The Board of Directors recommends a vote FOR.
(3) If properly presented at the meeting, consideration of a stockholder
proposal concerning the Board's reporting to stockholders on the
Corporation's activities and efforts related to global warming.
The Board of Directors recommends a vote AGAINST.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Sign exactly as name appears hereon. Attorney-in-fact,
executors, trustees, guardians, corporate officers, etc.,
should give full title.
Dated: , 2000
----------------------------------
(SIGNATURE)
----------------------------------
(SIGNATURE)
- ------------------------------------------------------
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY
- ------------------------------------------------------
<PAGE>
\/ Detach Proxy Card Here\/
- --------------------------------------------------------------------------------
NORFOLK SOUTHERN CORPORATION
THREE COMMERCIAL PLACE, NORFOLK, VIRGINIA 23510-2191
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Gerald L. Baliles, L. E. Coleman or Landon
Hilliard, and each or any of them, proxy for the undersigned, with full power of
substitution, to vote with the same force and effect as the undersigned at the
Annual Meeting of Stockholders of Norfolk Southern Corporation to be held at The
Norfolk Waterside Marriott and Waterside Convention Center, 235 East Main
Street, Norfolk, Virginia, on Thursday, May 11, 2000, and at any adjournments,
postponements or reschedulings thereof, upon the matters more fully set forth in
the Proxy Statement, dated March 31, 2000, and to transact such other business,
including the matter(s) noted under the caption, "Other Business," as properly
may come before such meeting(s).
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED ON
THE OTHER SIDE BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR ITEM (2), AND AGAINST
ITEM (3).
(Continued, and to be MARKED, DATED AND SIGNED on the other side)
NORFOLK SOUTHERN CORPORATION
P.O. BOX 11145
NEW YORK, N. Y. 10203-0145
<PAGE>
YOUR VOTE IS IMPORTANT
VOTE BY TELEPHONE OR INTERNET
24 HOURS A DAY, 7 DAYS A WEEK
Dear Norfolk Southern Corporation Stockholder(s):
This year, we offer you the convenience of telephone and Internet voting. If you
choose to vote by either of these means, your telephone or Internet vote will
authorize the named proxies to vote your shares in the same manner as if you
marked, signed, dated and returned your proxy card.
VOTE BY PHONE: You will be asked to enter the number located in the box marked
"Control Number."
OPTION A: To vote as the Board of Directors recommends on ALL items, press 1.
OPTION B: If you choose to vote on each item separately, press 2.
Item 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees,
press 2. To WITHHOLD FOR AN INDIVIDUAL nominee, press 3 and listen to
the instructions.
Item 2: To vote FOR, press 1; AGAINST, press 2; ABSTAIN, press 3. The
instructions are the same for Item 3.
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
VOTE BY INTERNET: The Web address is: http://proxy.shareholder.com/nsc
---------------------------------------------
If you have submitted your proxy by
telephone or the Internet, there is
no need for you to mail back your proxy card.
THANK YOU FOR VOTING!
---------------------------------------------
CONTROL NUMBER FOR
TELEPHONE OR INTERNET VOTING
---------------------------------------------
CALL TOLL-FREE ON A TOUCH-TONE TELEPHONE
1-800-520-3785
\/DETACH PROXY HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET\/
- --------------------------------------------------------------------------------
(1) Election of Directors
FOR all nominees listed below, [X] WITHHOLD AUTHORITY to vote for all [X]
except as marked to the contrary nominees listed below.
(see instruction).
Carroll A. Campbell, Jr. David R. Goode Harold W. Pote
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, PUT A
LINE THROUGH THAT NOMINEE'S NAME IN THE LIST ABOVE.
For Against Abstain
(2) Ratification of the appointment of KPMG LLP,
independent public accountants, as auditors.
The Board of Directors recommends a vote FOR. [X] [X] [X]
For Against Abstain
(3) If properly presented at the meeting,
consideration of a stockholder proposal
concerning the Board's reporting to stockholders
on the Corporation's activities and efforts
related to global warming.
The Board of Directors recommends a vote AGAINST. [X] [X] [X]
Address Change and/or [X]
Comments-Mark Here
Sign exactly as name appears hereon.
Attorney-in-fact, executors, trustees,
guardians, corporate officers, etc.,
should give full title.
Dated: , 2000
---------------------------
(Signature)
---------------------------
(Signature)
Votes MUST be indicated [X]
(x) in Black or Blue ink.
- ------------------------------------------------------
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY
- ------------------------------------------------------
- --------------------------------------------------------------------------------
Please Detach Here
YOU MUST DETACH THIS PORTION OF THE PROXY CARD
BEFORE RETURNING IN THE ENCLOSED ENVELOPE
