<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BURLINGTON NORTHERN SANTA FE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO
BURLINGTON NORTHERN SANTA FE CORPORATION
- -------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
- -------------------------------------------------------------------------------
The annual meeting of stockholders of Burlington Northern Santa Fe
Corporation will be held at the Worthington Hotel in the Grand Ballroom, 200
Main Street, Fort Worth, Texas 76102, on Thursday, April 17, 1997, at 9:00
a.m., for the following purposes:
(1)To elect fifteen directors, each to hold office for a term of one year;
and
(2) To transact such other business as is properly brought before the
meeting and is in order and at any adjournment or postponement
thereof, including the stockholder proposals referred to under "Other
Business" in the accompanying proxy statement, if such proposals are
properly presented at the meeting and are in order.
Stockholders of record at the close of business on February 28, 1997, are
entitled to notice of the meeting and are entitled to vote at the meeting and
any adjournment thereof. A list of such stockholders will be kept at the
offices of the Company at 2650 Lou Menk Drive, Second Floor, Fort Worth, Texas
76131-2830 for a period of ten days prior to the meeting.
By order of the Board of Directors.
MARSHA K. MORGAN
Vice President--Investor Relations
and
Corporate Secretary
2650 Lou Menk Drive
Second Floor
Fort Worth, Texas 76131-2830
March 5, 1997
YOUR VOTE IS IMPORTANT
PLEASE MARK, SIGN, AND DATE YOUR PROXY AND RETURN
IT PROMPTLY IN THE ENCLOSED ENVELOPE WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING.
<PAGE>
BURLINGTON NORTHERN SANTA FE CORPORATION
2650 LOU MENK DRIVE
SECOND FLOOR
FORT WORTH, TEXAS 76131-2830
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PROXY STATEMENT
MARCH 5, 1997
- -------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS, APRIL 17, 1997
The second annual meeting of stockholders of Burlington Northern Santa Fe
Corporation (the "Company") will be held at 9:00 a.m. on April 17, 1997, in
Fort Worth, Texas. The enclosed proxy card is solicited by the Board of
Directors of the Company, and your execution and prompt return of the card is
requested. Every stockholder, regardless of the number of shares held, should
be represented at the annual meeting. Whether or not you expect to be present
at the meeting, please mark, sign, and date the enclosed proxy card and return
it in the enclosed envelope. Any stockholder giving a proxy has the power to
revoke it at any time before it is voted at the meeting by delivering to the
Company written notification of revocation or a proxy bearing a later date, or
by attending the meeting in person and casting a ballot.
The shares represented by your proxy will be voted in accordance with the
specifications made on the proxy card. Unless otherwise directed, it is
intended that such shares will be voted:
(1) For the election as directors of the fifteen nominees named below;
and
(2) In accordance with the best judgment of the persons acting under
the proxy concerning other matters that are properly brought before
the meeting and are in order and at any adjournment or postponement
thereof.
Stockholders of record at the close of business on February 28, 1997, are
entitled to notice of the meeting and are entitled to vote at the meeting in
person or by proxy. Each share of common stock of the Company is entitled to
one vote. The Company's common stock is the only issued and outstanding class
of stock. At the close of business on January 31, 1997, the Company had
154,218,693 shares of common stock outstanding and entitled to vote. The
Company anticipates first sending this proxy statement and the enclosed proxy
card to stockholders on or about March 5, 1997.
ELECTION OF DIRECTORS
In accordance with the By-Laws of the Company, the number of directors
constituting the Board is currently fixed at seventeen, but the Board of
Directors has voted to reduce the size of the Board to fifteen effective as of
the annual meeting on April 17, 1997. Pursuant to the Board's retirement
policy, two incumbent directors--Mr. Daniel P. Davison, a director since 1976,
and Mr. Ben F. Love, a director since 1990 and from 1986 through 1988--will
not stand for re-election. It is proposed to elect fifteen Directors, each to
hold office for a term of one year and until his or her successor shall have
been elected and qualified. Directors are elected by a plurality of the votes
cast in the election of directors at the annual meeting of stockholders at
which a quorum consisting of a majority of the total number of the outstanding
shares of common stock of the Company entitled to vote is present in person or
represented by proxy. Shares represented at the meeting in person or by proxy
but as to which a vote on directors is withheld or otherwise not cast for the
election of directors, such as broker non-votes,
<PAGE>
will have no effect on the outcome of the election. Holders of the Company's
common stock may not cumulate their votes in the election of directors.
All incumbent directors initially became directors of the Company on
September 22, 1995, with the business combination of Burlington Northern Inc.
("BNI") and Santa Fe Pacific Corporation ("SFP") pursuant to the Agreement and
Plan of Merger dated June 29, 1994, as amended, among BNI, SFP, and the
Company. With the exception of Messrs. Davison and Love who have reached
retirement age, all incumbent directors have been nominated for re-election at
the annual meeting of stockholders.
The nominees for whom the shares represented by the enclosed proxy are
intended to be voted, unless such authority is withheld, are set forth below.
It is not contemplated that any of these nominees will be unavailable for
election, but if such a situation should arise, the proxy will be voted in
accordance with the best judgment of the persons acting under it unless the
stockholder has directed otherwise. Unless otherwise indicated, each director
listed below has served in his present occupation for at least five years. The
indicated periods of service as a director of the Company include prior
service as directors of BNI, SFP and predecessor companies. No director, other
than Mr. Krebs, is or has been employed by or served as an executive officer
of the Company or its affiliates or subsidiaries.
NAME, AGE, AND BUSINESS EXPERIENCE
OF THE COMPANY'S NOMINEES FOR DIRECTORS
<TABLE>
<CAPTION>
Served as
Director Since
--------------
<S> <C>
JOSEPH F. ALIBRANDI, 68......................................... 1982
Chairman and a director of Whittaker Corporation, Los Angeles, California
(aerospace and communications) since December 1985, and Chairman and a director
of BioWhittaker, Inc. (biotechnology) since October 1991; also Chief Executive
Officer of Whittaker Corporation from November 1975 to December 1994, and from
September 1996 to present, and Chief Executive Officer of BioWhittaker, Inc.
from October 1991 to September 1992. Also a director of Catellus Development
Corporation, BankAmerica Corporation, and Jacobs Engineering Group Inc. Member
of Executive Committee and Compensation Committee.
JACK S. BLANTON, 69............................................. 1989
Chairman and Chief Executive Officer of Houston Endowment, Inc., Houston, Texas
(private charitable foundation) since December 1990. From December 1986 to
present, President and Chief Executive Officer of Eddy Refining Company
(petroleum products). Also a director of Ashland, Inc., Baker Hughes
Incorporated, SBC Communications Inc. and Pogo Producing Company. Member of
Compensation Committee and Directors and Corporate Governance Committee.
JOHN J. BURNS, JR., 65.......................................... 1995
President and chief executive officer of Alleghany Corporation, New York, New
York (holding company with title insurance, investment management, reinsurance,
industrial minerals, and steel fastener operations) since July 1992. From May
1977 to July 1992, President and Chief Operating Officer of Alleghany Corpora-
tion. Also a director of Alleghany Corporation and Armco Inc. Member of Execu-
tive Committee and Compensation Committee.
GEORGE DEUKMEJIAN, 68........................................... 1991
Partner of Sidley & Austin, Los Angeles, California (law firm) since February
1991. Formerly, Governor of the State of California from January 1983 until
January 1991. Also a director of Health Systems International, Inc. and Whitta-
ker Corporation. Member of Audit Committee and Directors and Corporate Gover-
nance Committee.
</TABLE>
2
<PAGE>
NAME, AGE, AND BUSINESS EXPERIENCE
OF THE COMPANY'S NOMINEES FOR DIRECTORS
<TABLE>
<CAPTION>
Served as
Director Since
--------------
<S> <C> <C>
DANIEL J. EVANS, 71......................................... 1991
Chairman, Daniel J. Evans Associates, Seattle, Washington (consulting)
since 1989. Also a director of Puget Sound Power & Light Company, Flow
International, Inc., Tera Computer Company, and Washington Mutual, Inc.
Member of Executive Committee and Compensation Committee.
ROBERT D. KREBS, 54......................................... 1983
President and Chief Executive Officer of the Company since September 1995.
Also Chairman, President and Chief Executive Officer of Santa Fe Pacific
Corporation since June 1988. Also a director of Phelps Dodge Corporation,
Northern Trust Corporation, and Santa Fe Pacific Gold Corporation.
BILL M. LINDIG, 60.......................................... 1993
President and Chief Executive Officer of SYSCO Corporation, Houston, Texas
(marketer and distributor of foodservice products) since January 1995. From
November 1985 to January 1995, President and Chief Operating Officer of
SYSCO Corporation. Also a director of SYSCO Corporation and Fibreboard
Corporation. Member of Executive Committee and Directors and Corporate
Governance Committee.
ROY S. ROBERTS, 57.......................................... 1993
Vice President of General Motors Corporation (manufacturer of motor
vehicles) and General Manager, Pontiac-GMC Division, Pontiac, Michigan
since February 1996. From October 1992 to February 1996, General Manager,
GMC Truck Division, and from January 1990 to October 1992, Manufacturing
Manager of General Motors Corporation's North American Operations Flint
Automotive Division. Also a director of Volvo/GM Heavy Truck Co. U.S.A.
Member of Audit Committee and Directors and Corporate Governance Committee.
MARC J. SHAPIRO, 49......................................... 1995
Chairman and Chief Executive Officer, Texas Commerce Bank National
Association, Houston, Texas (banking) since 1989. Also a director of
Browning-Ferris Industries, Inc., Santa Fe Energy Resources, Inc., Texas
Commerce Bank National Association, and a trustee of Weingarten Realty
Investors. Member of Audit Committee and Directors and Corporate Governance
Committee.
ARNOLD R. WEBER, 67......................................... 1986
Chancellor, Northwestern University, Evanston, Illinois (higher education)
since January 1995. From February 1985 to December 1994, President of
Northwestern University. Also a director of PepsiCo., Inc., Inland Steel
Industries, Inc. and its subsidiary, Inland Steel Company, Tribune Company,
Aon Corporation and Deere & Company. Member of Executive Committee and
Audit Committee.
ROBERT H. WEST, 58.......................................... 1980
Chairman of the Board of Butler Manufacturing Company, Kansas City,
Missouri (manufacturer of pre-engineered building systems and specialty
components) since May 1986. Also a director of Butler Manufacturing
Company, Commerce Bancshares, Inc. and Kansas City Power & Light Company.
Chairman of Audit Committee and member of Compensation Committee.
</TABLE>
3
<PAGE>
NAME, AGE, AND BUSINESS EXPERIENCE
OF THE COMPANY'S NOMINEES FOR DIRECTORS
<TABLE>
<CAPTION>
Served as
Director Since
--------------
<S> <C>
J. STEVEN WHISLER, 42........................................... 1995
President, Phelps Dodge Mining Company, a division of Phelps Dodge Corporation,
and Senior Vice President, Phelps Dodge Corporation, Phoenix, Arizona (mining
and manufacturing) since November 1991. From October 1988 to November 1991,
Senior Vice President and General Counsel, Phelps Dodge Corporation. Also a
director of Unocal Corporation, Southern Peru Copper Corporation and Phelps
Dodge Corporation. Member of Audit Committee and Directors and Corporate
Governance Committee.
EDWARD E. WHITACRE, JR., 55..................................... 1993
Chairman of the Board and Chief Executive Officer, SBC Communications Inc., San
Antonio, Texas (telecommunications) since January 1990. Also a director of
Anheuser-Busch Companies, Inc., Emerson Electric Co., The May Department Stores
Company, and SBC Communications Inc. Chairman of Directors and Corporate
Governance Committee and member of Executive Committee.
RONALD B. WOODARD, 53........................................... 1995
President of Boeing Commercial Airplane Group, a division of The Boeing Company
(aerospace) since December 1993. From March 1993 to December 1993, Executive
Vice President-Boeing Commercial Airplane Group; and from April 1991 to March
1993, Vice President-General Manager, Renton Division, Boeing Commercial
Airplane Group. Member of Audit Committee and Compensation Committee.
MICHAEL B. YANNEY, 63........................................... 1989
Chairman and Chief Executive Officer, America First Companies, Omaha, Nebraska
(investments) since 1984. Also a director of C-TEC Corporation, Forest Oil
Corporation, Mid America Apartment Communities, Inc. and MFS Communications
Company, Inc. Chairman of Compensation Committee and member of Executive
Committee.
</TABLE>
OTHER INFORMATION CONCERNING DIRECTORS
The Board of Directors has elected Mr. Krebs, the President and Chief
Executive Officer of the Company, to the additional positions of Chairman of
the Board and Chairman of the Board's Executive Committee, effective following
the April 17, 1997 annual meeting of stockholders. Mr. Krebs also serves as
Chairman, President and Chief Executive Officer and as a director of SFP and
The Burlington Northern and Santa Fe Railway Company, which are subsidiaries of
the Company. Mr. Krebs also is a director of Santa Fe Pacific Pipelines, Inc.,
which is a subsidiary of the Company and the general partner of Santa Fe
Pacific Pipeline Partners, L.P., a Delaware limited partnership. Santa Fe
Pacific Pipelines, Inc. owns a two percent general partner interest and a 42
percent limited partnership interest in Santa Fe Pacific Pipeline Partners,
L.P.
In 1996, the Board met five times. Each incumbent member of the Board
attended 75 percent or more of the aggregate of the total number of meetings of
the Board and the total number of meetings held by all committees of the Board
on which he served.
Board Committees. The Board has established Executive, Compensation,
Directors and Corporate Governance, and Audit Committees. No member of any
committee is presently an employee of the Company or its subsidiaries.
Following are brief descriptions of the functions of its standing committees.
4
<PAGE>
The Executive Committee, which met three times in 1996, may exercise the
powers and the authority of the Board in the management of the business and
affairs of the Company subject to certain limitations of Delaware law. The
Committee is also empowered to monitor and recommend action with respect to:
the Company's capital structure, sources of funds, and financial position;
delegations of authority to management on financial commitments; terms and
conditions of financing plans; and dividend policies.
The Compensation Committee met five times during 1996. The functions of the
committee are to review and make recommendations to the Board with respect to:
the compensation of the President and other officers of the Company;
performance of the trustee of the Company's pension trust fund; proposed
employee benefit and stock plans, and Company compensation systems and
practices; and the evaluation of the performance of the Company's officers and
the selection of individuals for appointment or promotion as officers to
ensure management effectiveness and continuity. The Committee is also
responsible for grants of stock awards.
The Directors and Corporate Governance Committee met twice in 1996. The
functions of the committee are to review and make recommendations to the Board
with respect to: the size and composition of the Board; nominees for election
as directors; evaluation of the performance of the Board; and compensation and
benefits for directors. The Committee will consider nominations of candidates
for election as director recommended by stockholders. Any such recommendation,
together with the nominee's qualifications and consent to being considered as
a nominee, should be sent in writing to the Corporate Secretary of the Company
on or before November 30 of the year preceding the annual meeting to permit
adequate time for review by the Committee.
The Audit Committee met five times during 1996. The functions of the
committee are to assist the Board in overseeing the Company's accounting,
auditing, and financial policies and practices and its internal control
policies and procedures, including specifically to recommend to the Board the
engagement of an independent accounting firm and to review with management and
the independent accountants the Company's financial statements, basic
accounting and financial policies and practices, audit scope, and competence
of control personnel.
Directors' Compensation. Directors who are not employees of the Company or
its subsidiaries receive an annual retainer fee of $36,000 paid in quarterly
installments; for services as a Committee Chairman, a supplemental annual
retainer fee of $5,000 is paid; and for attendance at each Board or Committee
meeting, a meeting fee of $1,000 is paid, plus expenses for each Board or
Committee meeting attended. Messrs. Davison and Love are each paid a
supplemental annual retainer fee of $100,000 for services as the non-executive
Chairman of the Board and the Chairman of the Executive Committee,
respectively. Mr. Weber also receives $10,000 annually in payment for his
services as an economic advisor to the Board of Directors.
Under the Board's corporate governance standards, no individual may serve as
a director beyond the annual meeting of stockholders on or following his or
her seventy-second birthday; individual Directors who change the
responsibility they held when they were elected to the Board should volunteer
to resign from the Board to afford the Board the opportunity, via the
Directors and Corporate Governance Committee, to review the continued
appropriateness of Board membership under the circumstances. The Board's
corporate governance standards call for director who is also an employee of
the Company to retire from the Board upon his or her termination of
employment.
On January 18, 1996, the Board of Directors adopted the Burlington Northern
Santa Fe Directors' Retirement Plan ("Directors' Retirement Plan"). An
individual who is a member of the Board and who is not an employee of the
Company in the period immediately preceding termination of service on the
Board is eligible for benefits under the Directors' Retirement Plan if he or
she: (i) has served as a member of the Board for ten consecutive years; or
(ii) has attained mandatory retirement age; or (iii) is
5
<PAGE>
designated by the Directors and Corporate Governance Committee of the Board as
eligible for benefits. The annual benefit under the Directors' Retirement Plan
is an amount equal to the amount of the annual retainer fee for services as a
Board member at the time of termination of service and will cease upon the
individual's death. For purposes of the ten consecutive years of service
requirement, service as a member of the boards of BNI or SFP and their
predecessor companies are taken into account.
Directors Alibrandi, Blanton, Burns, Davison, Deukmejian, Evans, Lindig,
Love, Roberts, Shapiro, Weber, West, Whisler, Whitacre, Woodard, and Yanney
each received a one-time grant of 1,000 shares of restricted Company common
stock in 1996 pursuant to the Burlington Northern Santa Fe Non-Employee
Directors' Stock Plan ("Directors' Stock Plan"). These shares vest ratably
upon the third, fourth, and fifth anniversary of the award subject to the
attainment of a 12% compound annual growth rate in the fair market value of a
share of common stock (as defined in the Directors' Stock Plan) maintained for
a 30 consecutive day period immediately prior to or following the anniversary
date of the grant. Also in 1996, each of these directors was granted non-
qualified stock options to purchase 1,000 shares of Company common stock at
$83.5625 per share, the fair market value on the date of grant, pursuant to
the Directors' Stock Plan. These options vest on April 18, 1997 (unless
earlier terminated pursuant to the plan) and expire on April 18, 2006, or
earlier if a director leaves the Board. Each individual who is elected to the
Board of Directors at the April 17, 1997, annual meeting and at each
subsequent annual meeting and who is not an employee of the Company will
automatically be granted non-qualified stock options to purchase 1,000 shares
of the Company's common stock (subject to adjustment as provided in the
Directors' Stock Plan) at 100% of the fair market value of such shares on the
date that the options are granted. Each option will become exercisable
commencing on the first anniversary date of the grant for a period of ten
years from the date of grant.
The Directors' Stock Plan also permits directors by timely election to
forego up to 25% of their annual retainer and receive a Retainer Stock Award
in the form of restricted stock of 125% (150% beginning December 31, 1997) of
the amount foregone based on the fair market value of the Company's common
stock on the date of grant (December 31 of each calendar year), to vest three
years from date of grant. In 1996, directors Alibrandi, Blanton, Burns,
Deukmejian, Evans, Lindig, Love, Roberts, Shapiro, Weber, West, Whisler,
Woodard, and Yanney each received a Retainer Stock Award of 129 restricted
shares after electing to forego 25% of their annual retainer.
On January 18, 1996, the Company adopted the Deferred Compensation Plan for
directors. Directors may voluntarily defer a portion or all of the fees they
would otherwise receive into a Prime Rate interest account, a Company phantom
stock account, or such other investment options as may be established under
the terms of this plan. Distributions are made in either annual installments
or as a lump sum after service as a director ceases. The Company has assumed
all obligations incurred by BNI through September 22, 1995, under the BNI
Deferred Compensation Plan for Directors, a predecessor plan.
Directors who are also officers or employees of the Company do not receive
any compensation for duties performed as a director of the Company.
Certain Relationships and Related Transactions. Mr. Deukmejian is a partner
of the Sidley & Austin law firm, which firm provided legal services to the
Company in 1996 and is expected to provide legal services in 1997.
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the best of the Company's knowledge, the following is the only person who
owns beneficially five percent or more of its common stock outstanding:
<TABLE>
<CAPTION>
Shares Held
Name and Address and Nature of
of Beneficial Owner Beneficial Ownership Percentage(2)
------------------- -------------------- -------------
<S> <C> <C>
FMR Corp.................................. 9,777,978(1) 6.35%
82 Devonshire Street
Boston, MA 02109
</TABLE>
- --------
(1) Based on share holdings reported in Schedule 13G, Amendment No. 2, dated
February 14, 1997, pursuant to the Securities Exchange Act of 1934 and
provided to the Company for holdings as of December 31, 1996. Schedule 13G
indicates that of the total shares held, the reporting person had sole
voting power for 335,476 shares and shared voting power for no shares, and
had sole investment power for 9,777,978 shares.
(2) Based on 154,008,147 shares of common stock of the Company outstanding as
of December 31, 1996.
7
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows, as of January 31, 1997, unless indicated
otherwise, the number of shares of the Company's common stock beneficially
owned by directors, the executive officers named in the Summary Compensation
Table, and all directors and executive officers of the Company as a group. The
nature of beneficial ownership for shares listed is sole voting and investment
power, unless otherwise indicated in the following notes. As of January 31,
1997, no current individual director or executive officer owned more than one
percent of the outstanding common stock of the Company. No director or
executive officer beneficially owned outstanding units of Santa Fe Pacific
Pipeline Partners, L.P.
<TABLE>
<CAPTION>
Shares Held
and Nature of
Name of Beneficial Owner Position Beneficial Ownership
------------------------ -------- --------------------
<C> <S> <C>
Joseph F. Alibrandi.......................... Director 2,766(1)
Jack S. Blanton.............................. Director 10,129(2)
John J. Burns, Jr............................ Director 3,140(1)(3)
Daniel P. Davison............................ Chairman of the Board,
Director 10,800(2)(4)
George Deukmejian............................ Director 3,434(1)
Daniel J. Evans.............................. Director 8,129(5)
Robert D. Krebs.............................. President and Chief
Executive Officer,
Director 764,481(6)
Bill M. Lindig............................... Director 2,540(1)
Ben F. Love.................................. Director 13,129(2)
Roy S. Roberts............................... Director 2,627(1)
Marc J. Shapiro.............................. Director 3,129(1)
Arnold R. Weber.............................. Director 9,229(2)
Robert H. West............................... Director 3,240(1)(7)
J. Steven Whisler............................ Director 3,540(1)(8)
Edward E. Whitacre, Jr....................... Director 7,000(9)
Ronald B. Woodard............................ Director 2,129(1)
Michael B. Yanney............................ Director 9,129(2)
Donald G. McInnes............................ Senior Vice President
and Chief Operations
Officer 125,979(10)
Denis E. Springer............................ Senior Vice President
and Chief Financial
Officer 163,493(11)
Gregory T. Swienton.......................... Senior Vice President-
Coal and Agricultural
Commodities Business
Unit 65,013(12)
Charles L. Schultz........................... Senior Vice President-
Intermodal and
Automotive Business Unit 134,643(13)
Directors and Executive Officers as a Group.. 1,725,981(14)
</TABLE>
- --------
(1) Includes 1,129 restricted shares and 1,000 shares which may be acquired
within 60 days upon the exercise of stock options.
(2) Includes 1,129 restricted shares and 7,000 shares which may be acquired
within 60 days upon the exercise of stock options.
(3) Mr. Burns is President and chief executive officer and a director of
Alleghany Corporation, which beneficially owns 7,431,414 shares of the
Company's common stock according to its Schedule 13D filed with the
Securities and Exchange Commission and dated September 22, 1995.
(4) Includes 200 shares owned by Mrs. Davison of which Mr. Davison disclaims
beneficial ownership.
8
<PAGE>
(5) Includes 1,129 restricted shares and 6,000 shares which may be acquired
within 60 days upon the exercise of stock options.
(6) Includes 9,466 share equivalents credited under in the Burlington
Northern Santa Fe Investment and Retirement Plan ("Investment and
Retirement Plan") as of December 31, 1996, 485,485 shares which may be
acquired by Mr. Krebs within 60 days upon the exercise of stock options,
48,144 restricted shares, and 9,600 shares plus 170,650 shares which may
be acquired within 60 days upon the exercise of stock options held in a
family partnership as to which Mr. Krebs disclaims beneficial ownership.
(7) Includes 98 shares held in trust for two daughters as to which Mr. West
disclaims beneficial ownership.
(8) Includes 1,411 shares in which Mr. Whisler shares voting and investment
power as co-trustee and co-beneficiary of a family revocable trust.
(9) Includes 1,000 restricted shares and 4,000 shares which may be acquired
within 60 days upon the exercise of stock options.
(10) Includes 1,391 share equivalents credited under the Investment and
Retirement Plan as of December 31, 1996, 86,073 shares which may be
acquired by Mr. McInnes within 60 days upon the exercise of stock
options, and 21,992 restricted shares.
(11) Includes 12,664 shares held jointly with his spouse in which Mr. Springer
shares voting and investment power, 132,592 shares which may be acquired
by Mr. Springer within 60 days upon the exercise of stock options, and
18,237 restricted shares.
(12) Includes 41,700 shares which may be acquired by Mr. Swienton within 60
days upon the exercise of stock options, and 18,722 restricted shares.
(13) Includes 25 shares held by an immediate family member as to which Mr.
Schultz disclaims beneficial ownership, 2,614 share equivalents credited
under the Investment and Retirement Plan as of December 31, 1996, 108,029
shares which may be acquired by Mr. Schultz within 60 days upon the
exercise of stock options, and 15,413 restricted shares.
(14) Includes 19,065 share equivalents credited under the Investment and
Retirement Plan as of December 31, 1996, 1,099,299 shares which may be
acquired within 60 days upon the exercise of stock options, and 189,527
restricted shares.
9
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
1996 EXECUTIVE COMPENSATION. The following report is presented by the
Compensation Committee of the Board (the "Committee") which has responsibility
for reviewing and making recommendations to the Board for executive
compensation. This responsibility includes establishing and reviewing
executive base salaries, administering the annual Incentive Compensation Plan
("ICP") as it relates to executive officers, and administering equity-based
compensation under the Burlington Northern Santa Fe 1996 Stock Incentive Plan
("Stock Plan") and predecessor plans. The Committee consists of independent,
non-employee directors who have no interlocking relationships with the
Company.
The Company's vision is to realize its tremendous potential by providing
transportation services that consistently meet customers' expectations. The
Company has identified benchmarks against which it can measure its success in
meeting the needs of its primary constituencies--customers, stockholders,
employees, and communities. The Company is committed to an executive
compensation program that helps the Company realize its vision and supports
its business strategies.
OVERALL COMPENSATION PHILOSOPHIES AND OBJECTIVES. The Committee believes
that compensation programs should reflect the Company's compensation
philosophy and support specific compensation objectives. The Committee also
believes that programs designed specifically for executives should exemplify
the Company's compensation philosophy and reflect executives' roles as key
decision-makers. The philosophical principles and specific objectives are
noted below.
PHILOSOPHICAL PRINCIPLES
. Compensation programs should encourage strong operating and financial
performance.
. Compensation programs should help create a shared sense of direction,
ownership, and commitment.
. The Company should emphasize performance-based compensation ("pay at
risk") through both cash- and equity-based incentives.
SPECIFIC PROGRAM OBJECTIVES
. The compensation programs should attract and retain key employees and
managers by providing competitive opportunities.
. The programs should focus employees on operating performance that will
maximize the value of the Company's rail operations.
. The programs should focus employees on the Company's market performance
by encouraging large equity holdings, thus enabling them to realize
significant gains if the Company attains its performance objectives.
. The programs should provide mechanisms to allow employees to exchange
cash compensation for stock-based awards.
BASE SALARIES. Executive positions will be grouped by salary bands that are
part of the Company's total salary structure. The Company considers various
factors in assigning executives to specific bands, including job content,
level of responsibility, and accountability. Executive salaries will be
reviewed and adjusted periodically within the bands to reflect individual
performance against goals and changes in job responsibility.
SALARY EXCHANGE OPTION PROGRAM. To further enhance the link between stock
price performance and executive compensation, senior executives have the
opportunity to exchange up to 25 percent of their base salary each year for a
grant of nonqualified stock options with an exercise price equal to
10
<PAGE>
the fair market value of the Company's common stock on the date of grant and
with a term of up to ten years from date of grant. For example, for each
$10,000 the executive exchanges, he or she receives a grant of options on
1,500 shares of the Company stock. Senior executives will be able to elect
salary exchanges for up to three consecutive years at one time.
INCENTIVE COMPENSATION PLAN. Executives are eligible for annual performance-
based awards under the Company's Incentive Compensation Plan. The ICP provides
for the establishment of annual performance goals that may include corporate,
departmental, and individual goals. For 1996, goals for executive officers
were weighted 80 percent upon achievement of targeted levels of operating
income, 10 percent upon achievement of safety and on-time performance goals,
and 10 percent upon individual productivity goals, which vary by executive
officer and reflect the Company's strategic objectives. The actual incentives
earned by Messrs. McInnes, Springer, Swienton and Schultz for the achievement
of Company goals were based on the Company's performance as are described
under "CEO Compensation" in this report. All named executive officers with
individual productivity goals achieved 100 percent of their pre-established
standards. For 1997, the weighting will be 80 percent operating income, 10
percent safety performance, and 10 percent on-time performance.
The level of award opportunity under the ICP varies by executive. The
maximum award for each position is based upon 100 percent of the market
reference point, reflecting compensation levels for comparable positions. As
noted below, opportunities generally are established to provide competitive
(50th percentile) cash compensation relative to the market for performance
that meets the Company's targets, and 75th-percentile cash compensation for
superior performance that exceeds the Company's goals.
LONG-TERM INCENTIVES. To further encourage ownership in the Company and
alignment of employees' interests with those of stockholders, the Company
provides equity grants under the Burlington Northern Santa Fe 1996 Stock
Incentive Plan. The Stock Plan supports the Company's compensation philosophy
and objectives, and will encourage employee focus on the types and levels of
performance that lead to increased stock prices and overall returns to
stockholders. The specific programs used under the Stock Plan--the Incentive
Bonus Stock Program, Stock Option Grants, and Performance Share Plan--also
support executive and employee stock ownership.
INCENTIVE BONUS STOCK PROGRAM. To enhance individual stock ownership and
further tie compensation to Company stock price performance, executives and
other key employees are given the opportunity to exchange up to 100 percent of
their ICP awards for a grant of restricted stock. Participants electing the
exchange receive a restricted share grant equal to 150 percent of the ICP
award foregone. Shares generally will vest three years after grant, but may
vest in two years upon attainment of certain prespecified performance goals,
or upon certain other events.
STOCK OPTION GRANTS. Under the Stock Plan, the Company makes periodic grants
of stock options to all salaried employees. Stock options under the Stock Plan
cannot be issued with an exercise price below the market value of the Company
common stock on the date of grant. Thus, recipients will realize benefit only
when the price of the Company's stock appreciates. Stock options for senior
executives and others may also include a reload feature in order to encourage
the achievement of their stock ownership goals. To reinforce the Company's
goal of linking a substantial portion of total compensation to stock value,
the grant sizes for all eligible employees are targeted to provide long-term
incentive opportunities at the 75th percentile of the market. Actual stock
options granted also will reflect each recipient's individual performance and
salary band.
PERFORMANCE SHARE PLAN. To further emphasize teamwork, leadership, and focus
on stock price performance among top management, the Committee approved in
early 1996 a special, one-time grant of 394,310 performance shares to senior
executives and other selected managers. The grant took the form of
performance-based restricted stock, with ultimate vesting of the shares
dependent upon
11
<PAGE>
attainment of prespecified stock price hurdles. These specific performance
share awards were intended to be deductible pursuant to Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code").
The actual number of performance shares that ultimately vest will be based
on the Company's common stock price performance over a six-year measurement
period, relative to pre-established goals. The goals call for ratable vesting
in one-third increments, based upon a 12 percent compound annual growth rate
in price over three, four, and five years. Based on the grant price of $74.50,
the price goals are $104.67, $117.23, and $131.29, respectively. If the
Company's stock price does not reach these performance goals by the end of the
full six-year performance period, the corresponding shares will not vest and
will be forfeited.
MANAGEMENT STOCK DEFERRAL PLAN. To further enhance executives' ability to
attain their stock ownership goals, and to provide management with flexibility
in their retirement and tax planning, the Company implemented the Senior
Management Stock Deferral Plan in 1997. The plan allows senior management to
defer unrealized gains from nonqualified stock option exercises, or the value
of restricted stock to which the employee is entitled, on a pretax basis.
Stock options must be exercised using previously-acquired shares of the
Company's common stock to take advantage of this plan. Executives may elect a
specified date or dates in the future on which to receive their stock,
provided the deferral period is a minimum of three years. All credited shares
will be counted in full toward the Company's stock ownership guidelines.
Dividend equivalents on the deferred shares are paid directly to executives.
COMPETITIVE (EXTERNAL) COMPENSATION OBJECTIVES
The Committee has established external competitive benchmarks for each
element of compensation. The Committee believes these external guidelines
support fully the principles outlined above.
The market for assessing compensation is defined as companies from general
industry with overall revenue sizes that are comparable to the Company. The
group of comparators used for these analyses are broader than that used for
the peer group index reflected in the Performance Graph following this report
in this proxy statement. The Committee believes that the Company's most direct
competitors for executive talent should not be limited to companies used as a
peer group to compare stockholder returns. Rather, the market reflects a
broader group with which the Company competes to attract and retain the most
skilled and talented executives available.
The Committee's external compensation objectives are:
. BASE SALARIES--To manage fixed compensation at a conservative level,
market rates for base salary bands will be set at approximately the 25th
percentile level.
. ANNUAL INCENTIVES--Opportunities under the Incentive Compensation Plan
are intended to provide COMPETITIVE TOTAL CASH COMPENSATION (base salary
plus annual incentives) if Company performance goals are attained, with
the ability to earn higher amounts if performance goals are exceeded.
Likewise, payments will provide total cash that is below competitive
levels if goals are not attained.
-- If the Company attains its targeted performance goals, the Company
will provide cash compensation levels that approximate the 50th
percentile of the Company's comparator group.
-- If the Company attains superior performance levels, cash
compensation will be provided at or near the 75th percentile levels
of the Company's comparator group.
12
<PAGE>
. LONG-TERM INCENTIVES--To place greater emphasis on pay that is tied to
the Company's stock performance over time, opportunities provided under
long-term incentive programs will be targeted at the 75th percentile of
the market.
. EMPLOYEE AND EXECUTIVE BENEFITS--Benefit levels will reflect moderately
competitive market levels (50th percentile).
STOCK OWNERSHIP GOALS FOR SENIOR EXECUTIVES AND MANAGERS. A commitment to
significant stock ownership on the part of the Company management is an
important element of the compensation programs. In 1996, the Committee
established stock ownership guidelines to ensure that the interest of senior
executives and stockholders are closely aligned, and to strengthen the link
between Company performance and compensation. In setting the guidelines, the
Committee took into account the ownership levels of senior management at the
time and the desire to encourage further ownership in the organization. The
guidelines are as follows:
<TABLE>
<CAPTION>
Stock Ownership Goals
Executive Level (As a Multiple of Salary)
--------------- -------------------------
<S> <C>
President and Chief Executive Officer............. 7 x Base Salary
Senior Vice Presidents............................ 4 x Base Salary
Vice Presidents................................... 3 x Base Salary
Nonofficers in Salary Bands 34-36................. 2 x Base Salary
</TABLE>
Beginning in 1996, each senior executive or manager covered by the
guidelines is required to retain the net, after-tax shares obtained through
option exercises, or through vested restricted stock, until he or she
accumulates the required ownership levels. The Committee will monitor total
share holdings on an annual basis. The guidelines are to be achieved by
January 1, 1999, or (for nonofficers) by January 1, 2000. All executive
officers currently meet these guidelines.
CEO COMPENSATION. The factors upon which Mr. Krebs' 1996 compensation was
based are the same as described for all executive officers pursuant to the
executive compensation strategy described earlier in this report. Mr. Krebs is
eligible to participate in the same compensation plans available to other
executive officers of the Company.
Based on review by outside consultants of compensation levels at the Company
relative to those of corporations of comparable size, revenues, and employee
base, the Committee raised Mr. Krebs' base salary to $725,000 effective
January 1, 1996, to bring him closer to 25th percentile levels for an
organization of the Company's size as reflected in the competitive study. Mr.
Krebs' base salary was reduced to $544,000 in 1996 as a result of his election
to trade salary for stock options under the Salary Exchange Option Program. To
further align Mr. Krebs' compensation with the interest of stockholders and to
increase overall equity holdings, and in lieu of a salary increase in 1997 and
related retirement benefits, the Committee awarded him a grant of 55,000
nonqualified stock options. The grant was based on the same formula used under
the Salary Exchange Option Program.
Mr. Krebs' 1996 incentive opportunity under the Incentive Compensation Plan
was weighted 80 percent upon the achievement of targeted growth in operating
income, 10 percent upon the achievement of safety and on-time performance
goals, and 10 percent upon the achievement of individual goals. The actual
incentive earned by Mr. Krebs was $523,020. Mr. Krebs exchanged virtually all
of his award for restricted stock under the Incentive Bonus Stock Program. The
award reflected Company revenue from operating income that was 65.6% of the
maximum recognized under the ICP. The award also recognized the Company's
superior performance relative to reportable personal injuries and lost work
time on the system (as measured by Federal Railroad Administration standards)
that exceeded the Company's aggressive goals. The award also reflected the
Company's system-wide on-time performance record for which an aggressive
payout threshold of 90% on-time performance was established which the Company
exceeded in third quarter 1996. The Company fell
13
<PAGE>
slightly short of the threshold for payment in the other quarters. Lastly, the
award recognized successful attainment of specific individual goals, including
development of a Company strategic plan and a recruiting and succession plan.
Along with other executives and employees, Mr. Krebs also was granted options
to purchase Company common stock in early 1997 under the Stock Plan. The size
of the grant (70,000 shares) reflects the general grant criteria outlined
above, Mr. Krebs' total compensation levels (including shares previously
granted), and the Board's recognition of his superior performance and
leadership as President and Chief Executive Officer.
Mr. Krebs also received a grant of 30,990 performance shares in early 1996,
under the special, one-time grant to senior executives and others described
above.
POLICY ON DEDUCTIBILITY OF COMPENSATION. Section 162(m) of the Internal
Revenue Code limits the tax deductibility by a company of compensation in
excess of $1 million paid to any of its most highly compensated executive
officers. However, performance-based compensation that has been approved by
stockholders is excluded from the $1 million limit if, among other
requirements, the compensation is payable only upon attainment of
preestablished objective performance goals and the board committee that
establishes such goals consists only of "outside directors" (as defined for
purposes of 162(m)). All of the members of the Committee qualify as "outside
directors."
The Committee has considered these requirements and the regulations. While
the tax impact of any compensation arrangement is one factor to be considered,
such impact is evaluated by the Committee in light of the Company's overall
compensation philosophy and objectives. The Company has established the Stock
Plan which permits the grant of stock awards which meet the requirements of
Section 162(m) of the Code and hence will maximize the Company's federal income
tax deductions for compensation expense. However, the Committee believes there
are circumstances in which the Company's and stockholders' interests are best
served by providing compensation that is not fully deductible, and that its
ability to exercise discretion outweighs the advantages of qualifying all
compensation under Section 162(m).
COMPENSATION COMMITTEE:
Michael B. Yanney, Chairman
Joseph F. Alibrandi
Jack S. Blanton
John J. Burns, Jr.
Daniel P. Davison
Daniel J. Evans
Robert H. West
Ronald B. Woodard
14
<PAGE>
PERFORMANCE GRAPH
The following graph depicts a five year comparison of cumulative total
stockholder returns, assuming reinvestment of dividends, for the Company, the
Standard & Poor's 500 Stock Index ("S&P 500"), and the Standard & Poor's
Railroad Index ("S&P Rail"). The Company is included within both the S&P 500
and S&P Rail indices. The graph assumes that $100 was invested on December 31,
1991, in the common stock of the Company's predecessor, Burlington Northern
Inc.(/1/), and in the S&P 500 and the S&P Rail.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
December 31 Company S&P 500 S&P Rail
----------- ------- ------- --------
<S> <C> <C> <C>
1991 $100 $100 $100
1992 $111 $108 $112
1993 $151 $118 $139
1994 $128 $120 $120
1995 $212 $165 $176
1996 $238 $203 $209
</TABLE>
- --------
(1) On September 22, 1995, BNI and SFP effected the business combination
pursuant to which each became subsidiaries of the Company. As a result,
each holder of one share of BNI common stock received one share of the
Company's common stock, and each holder of one share of SFP common stock
received 0.41143945 share of the Company's common stock.
15
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table summarizes, for the years indicated, the compensation
paid by the Company and its subsidiaries to the Chief Executive Officer and to
each of the four other most highly compensated executive officers who were
serving as executive officers of the Company at the end of 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual
Compensation Long-Term Compensation
------------------------ -------------------------------
Awards Payouts
---------------------- --------
Securities
Underlying All
Options/ Other
Name and Salary Bonus Other Restricted SARs LTIP Compen-
Principal Position Year (1) (2) Annual Stock(2)(3) (Shares) Payouts sation (4)
- ------------------------ ---- -------- -------- ------ ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert D. Krebs......... 1996 $544,000 $ 16,229 $ 0 $760,187 171,931 $ 0 $32,895
President and 1995 $525,000 $265,147 $ 0 $397,721 124,199 $508,981 $20,375
Chief Executive Officer 1994 $475,000 $239,450 $ 0 $359,175 95,907 $ 0 $24,246
Donald G. McInnes....... 1996 $356,000 $292,303 $ 0 $ 0 55,956 $ 0 $19,894
Senior Vice President 1995 $260,000 $154,618 $ 0 $231,927 32,806 $205,743 $10,209
and Chief Operations 1994 $225,000 $236,131 $ 0 $ 88,534 8,256 $ 0 $13,903
Officer
Denis E. Springer....... 1996 $325,000 $255,462 $ 0 $ 0 21,000 $ 0 $18,017
Senior Vice President 1995 $265,000 $228,662 $ 0 $ 85,748 28,882 $268,169 $13,008
and Chief Financial 1994 $250,000 $264,200 $ 0 $ 0 0 $ 0 $13,950
Officer
Gregory T. Swienton..... 1996 $300,000 $107,005 $ 0 $144,469 15,000 $ 0 $27,112
Senior Vice President-- 1995 $240,084 $255,900 $ 0 $296,875 15,000 $141,575 $11,755
Coal & Agricultural 1994 $127,197 $125,000 $ 0 $150,325 11,700 $ 0 $ 7,121
Commodities
Business Unit
Charles L. Schultz...... 1996 $260,833 $ 75,000 $ 0 $138,726 32,911 $ 0 $10,296
Senior Vice President-- 1995 $185,000 $103,079 $ 0 $154,619 12,658 $166,044 $11,195
Intermodal & Automotive 1994 $175,000 $152,774 $ 0 $ 57,290 0 $ 0 $ 6,630
Business Group
</TABLE>
- --------
(1) Salary excludes amounts foregone under the Salary Exchange Option Program
described in the "Report on Executive Compensation" in this proxy
statement.
(2) The bonus awards for the executive officers named in the table were paid
pursuant to the annual incentive compensation plans described in the
"Report on Executive Compensation" in this proxy statement. Messrs. Krebs
and Schultz and, in 1996, Mr. Swienton, elected to forego all or a portion
of their annual incentive (less any amounts contributed to the plans
identified in note (4) to this table) pursuant to the Incentive Bonus
Stock Program in exchange for a grant of restricted stock (except that
performance units were granted in 1995 relating to the 1994 incentive that
was waived). In 1996, Mr. Krebs' performance units were cancelled and
restricted stock issued in lieu thereof with the original vesting
schedule. The bonuses waived by Messrs. Krebs, Swienton, and Schultz have
been excluded from the Bonus column and the value of the restricted stock
(and in 1994, performance units) included in the Restricted Stock column.
(3) Messrs. Krebs, McInnes, Springer, Swienton, and Schultz owned 16,807;
3,432; 3,097; 5,000; and 3,036 shares of restricted stock with a value of
$1,464,310; $299,013; $269,826; $435,625; and $264,512, respectively based
upon a per share value of $87.125 as of December 31, 1996, reflecting an
aggregate of non-performance based restrictive stock awards for 1996,
1995, and 1994. The shares of Messrs. Krebs, McInnes, Springer, and
Schultz will vest in three years from date of grant or in two years if
certain performance criteria are met, and Mr. Swienton's shares will vest
ratably over three years beginning in 1998. Dividends are paid on
restricted stock awards.
(4) Reflects vested and unvested matching contributions to the Burlington
Northern Inc. Thrift and Profit Sharing Plan I, the Burlington Northern
Inc. Nonqualified 401(k) Restoration Plan, the SFP Retirement and Savings
Plan, and the SFP Supplemental Retirement and Savings Plan.
16
<PAGE>
STOCK OPTION/SAR GRANTS
The following table sets forth information with respect to the individuals
named in the Summary Compensation Table concerning the grant of options during
1996.
OPTION/SAR GRANTS IN 1996 FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------
Number of
Securities Potential
Underlying % of Total Realizable
Options/ Options/SARs Exercise Value at
SARs Granted to or Base Assumed
Granted Employees in Price Expiration Black-Scholes
Name (Shares) Fiscal Year ($/Share) Date Calculation(5)
---- ---------- ------------ --------- ---------- --------------
<S> <C> <C> <C> <C> <C>
Robert D. Krebs(1)...... 100,000 4.13% $74.5000 01/18/06 $1,332,000
70,650 2.92% $81.2500 01/31/06 $1,411,587
1,281 .05% $86.6250 01/01/04 $ 19,113
Donald G. McInnes(2).... 30,000 1.24% $74.5000 01/18/06 $ 399,600
19,800 .82% $81.2500 01/31/06 $ 395,604
6,156 .25% $80.8750 05/25/03 $ 96,649
Denis E. Springer(3).... 21,000 .87% $74.5000 01/18/06 $ 279,720
Gregory T. Swienton(3).. 15,000 .62% $74.5000 01/18/06 $ 199,800
Charles L. Schultz(4)... 15,000 .62% $74.5000 01/18/06 $ 199,800
16,950 .70% $81.2500 01/31/06 $ 338,661
961 .04% $84.2500 05/25/03 $ 14,088
</TABLE>
- --------
(1) The option grant with an exercise price of $74.50 was granted on January
18, 1996, with a reload option and became exercisable on January 18, 1997.
The option grant with an exercise price of $81.25 was granted on February
1, 1996, with a reload option in exchange for $471,000 of his base salary
over the next three years. This option becomes exercisable proportionally
to the amount of salary that was exchanged for the options in each year.
Mr. Krebs received the option grant with an exercise price of $86.625 in
connection with his use of shares to exercise options based upon the fair
market value of a share of BNSF common stock on the date of grant. This
grant becomes exercisable on June 23, 1997.
(2) The option grant with an exercise price of $74.50 was granted on January
18, 1996, with a reload option and became exercisable on January 18, 1997.
The option grant with an exercise price of $81.25 was granted on February
1, 1996, with a reload option in exchange for $132,000 of his base salary
over the next three years. This option becomes exercisable proportionally
to the amount of salary that was exchanged for the options in each year.
Mr. McInnes received the option grant with an exercise price of $80.875 in
connection with his use of shares to exercise options based upon the fair
market value of a share of BNSF common stock on the date of grant. This
grant becomes exercisable on April 28, 1997.
(3) The option grants with an exercise price of $74.50 were granted on January
18, 1996, with a reload option and became exercisable on January 18, 1997.
(4) The option grants with an exercise price of $74.50 were granted on January
18, 1996, with a reload option and became exercisable on January 18, 1997.
The option grant with an exercise price of $81.25 was granted on February
1, 1996, with a reload option in exchange for $113,000 of his base salary
over the next three years. This option becomes exercisable proportionally
to the amount of salary that was exchanged for the options in each year.
Mr. Schultz received an option grant with an exercise price of $84.25 in
connection with his use of shares to exercise options based upon the fair
market value of a share of BNSF common stock on the date of grant. This
grant became exercisable on October 19, 1996.
17
<PAGE>
(5) The estimated present value at grant date reflected in the table has been
calculated using the Black-Scholes option pricing model, based on the
following assumptions: (a) an exercise price for each option equal to the
fair market value of the underlying stock on the date of grant as
indicated in the table; (b) an option term of three years after the grant
is fully vested, reflecting the Company's experience; (c) an interest rate
representing the interest rate on a U.S. Treasury security on the date of
a grant with a maturity date corresponding to the option term; (d) a
volatility rate of 20% calculated using the daily stock prices for the
Company's common stock for 1995 and 1996; and (e) dividends at the rate of
$1.20 per share representing the annualized dividends paid with respect to
a share of Company common stock at the date of grant. The approach used in
developing the assumptions upon which the Black-Scholes variation was done
is consistent with the requirements of Statement of Financial Accounting
Standard No. 123, "Accounting for Stock Based Compensation." The ultimate
value of these options will depend on the future market price of the
Company's stock. The Black-Scholes model is only one method of valuing
options, and the actual value of the options may be significantly
different. The actual value of an option to an executive, if any, will
depend on the excess of the stock price over the exercise price on the
date the option is exercised.
OPTION/SAR EXERCISES AND HOLDINGS
The following table sets forth information with respect to the individuals
named in the Summary Compensation Table concerning their exercise of stock
options or SARs during 1996 and unexercised stock options and SARs held as of
the end of 1996.
AGGREGATED 1996 STOCK OPTION/SAR EXERCISES
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options/SARs In-the-Money Options/
Shares Aggregate at Year End SARs at Year End
Acquired Value (Shares) (1)(2)
On Realized ------------------------- -------------------------
Name Exercise (1) Exercisable Unexercisable Exercisable Unexercisable
---- -------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert D. Krebs......... 72,968 $4,314,439 295,719 185,691 $14,015,282 $2,120,800
Donald G. McInnes....... 48,721 $2,769,545 47,067 55,956 $ 1,819,102 $ 533,550
Denis E. Springer....... 32,570 $2,204,175 111,592 21,000 $ 6,469,512 $ 265,125
Gregory T. Swienton..... 0 $ 0 26,700 15,000 $ 807,469 $ 189,375
Charles L. Schultz...... 8,370 $ 588,054 92,279 31,950 $ 5,938,206 $ 288,956
</TABLE>
- --------
(1) Dollar values are calculated by determining the difference between the
fair market value of the securities underlying options or SARs and the
exercise price of options or SARs at exercise or at year-end, as
applicable.
(2) Options or SARs are in-the-money if the fair market value of the
underlying securities exceeds the exercise or base price of the option or
SAR.
PERFORMANCE SHARE PLAN
On January 18, 1996, the Board of Directors adopted the Burlington Northern
Santa Fe 1996 Stock Incentive Plan ("Stock Plan") which was approved by the
stockholders at the 1996 annual meeting of stockholders. Messrs. Krebs,
McInnes, Springer, Swienton, and Schultz participate in the Stock Plan and,
pursuant to the plan, received grants of performance shares subject to a
Performance Period. The award will vest ratably beginning on January 1, 1999,
over a three to five year period, if the performance criteria based upon stock
price hurdles over such period are satisfied. Dividends are paid on these
performance shares.
18
<PAGE>
The following table sets forth information with respect to the individuals
named in the Summary Compensation Table concerning the grant of long term
incentive awards.
LONG TERM INCENTIVE PLANS--1996 AWARDS
<TABLE>
<CAPTION>
Performance
Name Shares(1) Period Threshold Maximum
- ---- --------- ---------------- --------- -------
<S> <C> <C> <C> <C>
Robert D. Krebs.................... 30,990 1/18/96-12/31/01 10,330 30,990
Donald G. McInnes.................. 18,560 1/18/96-12/31/01 6,187 18,560
Denis E. Springer.................. 15,140 1/18/96-12/31/01 5,047 15,140
Gregory T. Swienton................ 12,080 1/18/96-12/31/01 4,027 12,080
Charles L. Schultz................. 10,800 1/18/96-12/31/01 3,600 10,800
</TABLE>
- --------
(1) The terms of these awards are described in "Report on Executive
Compensation, Performance Share Plan" in this proxy statement.
PENSION PLANS
The following tables show the estimated pension benefits payable to a
covered participant at normal retirement age (age 65) under the Burlington
Northern Santa Fe Retirement Plan ("Retirement Plan"), as well as under the
nonqualified supplemental pension plan that provides benefits that would
otherwise be denied participants by reason of certain Internal Revenue Code
limitations on qualified plan benefits.
A participant's average yearly compensation under the Retirement Plan is
based upon his or her average base salary and cash bonus earned for the 60
consecutive months during the last 120 months of service for which such
average is the highest or, in the case of a participant who has been employed
for less than five years, the period of his or her employment with the Company
and its subsidiaries. For purposes of the Retirement Plan, covered
compensation for 1996 for Mr. Krebs, Mr. McInnes, Mr. Springer, Mr. Swienton
and Mr. Schultz were $1,248,020, $667,303, $580,462, $503,318 and $433,317
respectively. The estimated years of service for Mr. Krebs, Mr. McInnes, Mr.
Springer, Mr. Swienton, and Mr. Schultz are 31, 27, 14, 3, and 27,
respectively.
Mr. Krebs, Mr. McInnes, Mr. Springer, and Mr. Schultz are grandfathered
under the Santa Fe Pacific Retirement Plan benefit formula that was in place
prior to adoption of the Retirement Plan. Benefit figures shown below are
annual amounts payable based on a straight life annuity under the SFP benefit
formula without regard to any Railroad Retirement, Social Security, or other
offsets, assuming normal retirement in the form of a single life annuity.
SFP PENSION PLAN FORMULA
<TABLE>
<CAPTION>
Average Years of Service
Yearly --------------------------------------------------------------
Compensation 10 15 20 25 30 35 40
- ---------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 250,000...... $ 38,344 $ 57,516 $ 76,688 $ 95,860 $115,032 $134,204 $153,376
$ 300,000...... $ 46,344 $ 69,516 $ 92,688 $115,860 $139,032 $162,204 $185,376
$ 400,000...... $ 62,344 $ 93,516 $124,688 $155,860 $187,032 $218,204 $249,376
$ 500,000...... $ 78,344 $117,516 $156,688 $195,860 $235,032 $274,204 $313,376
$ 600,000...... $ 94,344 $141,516 $188,688 $235,860 $283,032 $330,204 $377,376
$ 800,000...... $126,344 $189,516 $252,688 $315,860 $379,032 $442,204 $505,376
$1,200,000...... $190,344 $285,516 $380,688 $475,860 $571,032 $666,204 $761,376
$1,500,000...... $238,344 $357,516 $476,688 $595,860 $715,032 $834,204 $953,376
</TABLE>
19
<PAGE>
Mr. Swienton is grandfathered under the BNI Pension Plan (and related excess
plans) benefit formula that was in place prior to adoption of the Retirement
Plan. Estimated annual benefit levels under the BNI Pension Plan are not
subject to any reduction for Social Security, Railroad Retirement or other
offset amounts. The formula for normal retirement at age 65 is .75% times
final average earnings and years of service to a maximum of 30 years. These
estimated annual benefits are computed in the form of a single life annuity
and are based on average earnings and years of service at retirement as
follows:
BNI PENSION PLAN FORMULA
<TABLE>
<CAPTION>
Average Years of Service
Yearly --------------------------------------------------------------
Compensation 10 15 20 25 30 35 40
- ---------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 250,000...... $ 37,686 $ 56,529 $ 75,372 $ 94,215 $113,058 $113,058 $113,058
$ 300,000...... $ 45,936 $ 68,904 $ 91,872 $114,840 $137,808 $137,808 $137,808
$ 400,000...... $ 62,436 $ 93,654 $124,872 $156,090 $187,308 $187,308 $187,308
$ 500,000...... $ 78,936 $118,404 $157,872 $197,340 $236,808 $236,808 $236,808
$ 600,000...... $ 95,436 $143,154 $190,872 $238,590 $286,308 $286,308 $286,308
$ 800,000...... $128,436 $192,654 $256,872 $321,090 $385,308 $385,308 $385,308
$1,200,000...... $194,436 $291,654 $388,872 $486,090 $583,308 $583,308 $583,308
$1,500,000...... $243,936 $365,904 $487,872 $609,840 $731,808 $731,808 $731,808
</TABLE>
The Company has adopted the Burlington Northern Santa Fe Supplemental
Investment and Retirement Plan to replace similar plans of BNI and SFP
pursuant to which certain matching contributions, which are disallowed under
the Investment and Retirement Plan because of the limitations on qualified
retirement plans imposed by the Internal Revenue Code, are restored to certain
executive officers of the Company by means of credits made to their accounts
in the Supplemental Investment Plan as deferred compensation. Investment
options are similar to those available in the qualified Investment and
Retirement Plan. Messrs. Krebs, McInnes, Springer, Swienton, and Schultz are
covered under the Supplemental Plan.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
The Company has assumed the severance agreements (the "SFP Severance
Agreements") of Messrs. McInnes, Springer, Schultz and certain other salaried
employees. Each SFP Severance Agreement provides following a "change in
control" for the payment of severance benefits if employment is terminated
during the term of the SFP Severance Agreement either by the Company other
than for "Cause" or by the employee for "Good Reason," as those terms are
defined therein. A "change in control" is defined as occurring if: (a) any
"person" becomes the beneficial owner of securities representing 25% or more
of the voting power of the Company's outstanding securities; or (b) during any
period of two consecutive years, individuals who at the beginning of such
period constitute the Board of Directors for the Company cease to constitute
at least a majority of the Board; or (c) the Company's stockholders approve a
merger or consolidation of the Company with another company; or (d) the
Company's stockholders approve a plan of complete liquidation or an agreement
for the sale or disposition by the Company of all or substantially all of its
assets. The approval of the business combination between BNI and SFP by SFP
stockholders on February 7, 1995, constituted a "change in control."
The SFP Severance Agreements for Messrs. McInnes, Springer, Schultz and
certain other salaried employees, which remain in effect, provide for: (a)
lump sum payment equal to two years' base salary or if higher, the base salary
paid in the last twenty-four months or, in lieu thereof, the benefits provided
under a subsidiary's severance program (as described below), and two times the
20
<PAGE>
maximum bonus payment as if all performance objectives have been met in full
with an additional sum so that such benefits are payable on an after-tax
basis; (b) a lapse of restrictions on any outstanding restricted stock grants
and full payout of related Performance Units; (c) a cash payment for each
outstanding option equal to the amount by which either (i) the fair market
value of a share of common stock on the date of termination or, in the case of
Non-Qualified Stock Options, the highest quoted per share price during the
sixty-day period commencing on the date of termination, or (ii) the price paid
in connection with any "change in control," whichever is higher, exceeds the
fair market value of a share of common stock on the date of grant; (d) legal
fees and expenses relating to claims under the Severance Agreements; and (e)
life, disability, and health benefits for a period of up to twenty-four
months. The after-tax payment provided in clause (a) above is limited to the
extent that the value thereof, when aggregated with other benefits or
payments, would equal or exceed three times the "base amount" as defined in
Section 280G of the Code, the base amount approximating the average of five
years' compensation preceding a "change in control."
The Company has assumed certain change in control severance agreements (the
"BNI Severance Agreements") for Mr. Swienton and certain other salaried
employees. These BNI Severance Agreements with amendments provide for certain
severance benefits if the individual's employment with the Company is
terminated for certain reasons subsequent to change in control of the Company.
A "change in control" takes place if (i) a person acquires 20% voting power of
the Company's stock, (ii) during any two-year period individuals who
constitute the Board of Directors at the beginning of such period cease to
constitute a majority thereof or (iii) stockholders approve a merger,
consolidation or sale of substantially all of the Company's assets or a plan
of liquidation or dissolution of the Company ("Merger"). If the employment of
a person covered by a BNI Severance Agreement is terminated during the period
commencing on the date of stockholders' approval of a Merger and ending on the
second anniversary of the Effective Time of a Merger, for reasons other than
death or permanent disability, cause or mandatory retirement or is terminated
by the employee for "good reason" (as defined therein), then the employee
shall be entitled to receive the following benefits: payments of base
compensation (annual salary rate and maximum bonus target) through the date of
termination and all amounts otherwise owed the executive under the terms of
any Company compensation plan, three times the individual's base compensation,
an amount equal to the retirement benefits and the Burlington Northern Inc.
Thrift and Profit Sharing Plan I employer contributions payable, including
employer contributions to the Burlington Northern Inc. Nonqualified 401(k)
Restoration Plan (assuming the individual remained an employee for three more
years or until mandatory retirement, both based on base compensation
increasing 8% per year), certain insurance benefits for 18 months after
termination, waiver of any restricted periods on, and the vesting of, any
outstanding awards of restricted stock or stock options, any legal fees
incurred in enforcing the BNI Severance Agreement and payment of any Federal
excise taxes on certain amounts paid.
In January 1997, the Board of Directors adopted new change of control
arrangements for the Company to replace the SFP Severance Agreements and BNI
Severance Agreements which will provide similar benefits to the SFP Severance
Agreements except in lieu of the benefits described in subsection (a) of this
paragraph, a participant would receive benefits equal to three times base
salary and target bonus on an after-tax basis and in lieu of the stock
benefits described in (b) and (c) above, a vesting of stock awards other than
the Performance Share Plan upon consummation of a future change in control
event. Messrs. McInnes, Springer, Swienton, and Schultz are eligible to
receive this Company severance agreement. Mr. Krebs does not have a SFP
Severance Agreement; he is, however, eligible for this new agreement but only
as to the portion of the severance agreement pertaining to stock awards and,
additionally, payment of life insurance premiums due under the Estate
Enhancement Program.
The Company's subsidiaries maintain severance programs for all full-time
salaried employees, including the executive officers named in the Summary
Compensation Table, who are terminated by
21
<PAGE>
their respective companies other than for Cause as defined in the severance
programs. A participant is generally entitled to an amount based upon a
participant's age, length of service, and current salary, or, in certain
circumstances, supplemental payments provided that the aggregate does not
exceed two years' pay. The program further provides that in the event of a
change in control (which is similar to the definition used in the Severance
Agreements), the program will be maintained for a twenty-four month period.
Benefits under these programs will not be paid if a participant received
payments under a Severance Agreement.
BN Senior Executive Survivor Benefit Plan. The Company has a BN Senior
Executive Survivor Benefit Plan which is a supplemental plan under which
certain executive officers of the Company and its designated subsidiaries are
provided survivor benefit coverage in excess of the coverage generally provided
for employees of the Company under the Company's group life insurance plan. Mr.
Swienton is covered under this plan.
Trust Agreements. The Company maintains trust agreements ("Trust Agreements")
to permit funds to be set aside with respect to the Company's obligations to
present and former executives and directors under deferred compensation
programs and agreements, retirement commitments, certain consulting agreements,
and supplemental retirement plans. The trusts provide for funding of benefits
under the supplemental retirement plans and the Directors' Retirement Plan. The
Trust Agreements further provide for a split-dollar life insurance plan
("Split-dollar Plan") for certain key employees including Mr. Krebs. The Split-
dollar Plan provides for the purchase of life insurance policies covering key
employees, and for the payment to each covered employee's beneficiary of a
portion of the death benefit payable under such employee's life insurance
policy, with the remaining value in each policy to be used to fund the other
obligations of the trust established under such trust. The trust retains all
rights to any cash values of the policies and the executive officers pay the
cost of term coverage. In the event of a "change in control" as defined in the
SFP Severance Agreements, the Trust Agreements provide for the payment of
amounts which may become due, subject only to the claims of general creditors
of the Company in the event that the Company became bankrupt or insolvent.
INDEPENDENT PUBLIC ACCOUNTANTS
Price Waterhouse LLP served as the independent public accountant for the
Company for the year ended December 31, 1996. The Company's independent public
accountant for 1997 will be selected by the Board at a regular Board meeting to
be held in 1997. Representatives of Price Waterhouse LLP will be present at the
annual meeting with the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions.
The Company's independent public accountant in 1995 was Coopers & Lybrand
L.L.P., which also served as independent public accountant for Burlington
Northern Inc. in 1995 and prior years. Price Waterhouse LLP served as the
independent public accountant for Santa Fe Pacific Corporation in 1995 and
prior years. Following the business combination of Burlington Northern Inc. and
Santa Fe Pacific Corporation on September 22, 1995, the Company and the Board
began a process to select the Company's independent accountant for 1996. As a
result of this process, the Company engaged Price Waterhouse LLP as its new
independent public accountant as of June 19, 1996, and dismissed Coopers &
Lybrand L.L.P. as of June 19, 1996. The Company's Audit and Executive
Committees participated in and approved the decision to change independent
public accountants.
The reports of Coopers & Lybrand L.L.P. on the Company's consolidated
financial statements for the 1995 and 1994 fiscal years contained no adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope, or accounting principles. In connection with Coopers
& Lybrand L.L.P.'s audits for the fiscal years ended December 31, 1995 and
1994, and
22
<PAGE>
through June 19, 1996, there have been no disagreements with Coopers & Lybrand
L.L.P. on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure which disagreements, if
not resolved to the satisfaction of Coopers & Lybrand L.L.P., would have
caused them to make reference thereto in their report on the financial
statements for such years.
OTHER BUSINESS
If any matters other than those set forth above are properly brought before
the meeting and are in order, it is intended that the persons acting under the
proxy will vote thereunder in accordance with their best judgment.
Stockholders have indicated to the Company that they may present three
proposals at the meeting, which proposals were not included in this proxy
statement because the Company does not believe they complied with the rules of
the Securities and Exchange Commission. These proposals would (1) recommend a
report be given to stockholders on the Company's Positive Train Separation
project, (2) recommend that the Board "nominate and otherwise foster and
encourage" the election to the Board of "persons of diverse economic, racial,
ethnic and gender background," and (3) require the establishment and
maintenance of a "safety education fund" through contributions of 3 1/3% of
the Company's annual pre-tax income. While the Company is in favor of policies
that promote safe train operations, employee safety and diversity, the Company
believes that these issues are currently being addressed by the Company and
that these proposals would require a duplication of effort or an inefficient
use of resources. If these proposals are properly presented and are in order
at the annual meeting, the persons acting under the proxy intend to vote
against them. The Board knows of no other business that may come before the
meeting. The Company also has received notices from stockholders holding an
aggregate of 181 shares that at the meeting they intend to nominate a former
employee of a subsidiary of the Company for election as a director of the
Company.
COST OF PROXY SOLICITATION
The cost of preparing, assembling, and mailing this proxy material will be
borne by the Company. In addition to solicitation by mail, solicitations may
be made by regular employees of the Company or by paid solicitors in person or
by telephone, telecopy, or telegraph. Arrangements may be made with brokerage
houses, custodians, nominees, and fiduciaries to send proxy material to their
principals and the Company will reimburse them for their expense in so doing.
In addition, Kissel-Blake, Inc. has been retained to aid in the solicitation
at an estimated fee of $10,000.
STOCKHOLDER PROPOSALS
In accordance with the proxy rules of the Securities and Exchange
Commission, proposals by stockholders to be considered for inclusion in the
proxy material solicited by the Company for the 1998 annual meeting must be
received at the Company's executive offices no later than November 5, 1997. To
be eligible for inclusion, a proposal must also comply with all applicable
provisions of Regulation 14A under the Securities Exchange Act of 1934.
By order of the Board of Directors.
MARSHA K. MORGAN
Vice President-Investor Relations
and
Corporate Secretary
March 5, 1997
23
<PAGE>
Directions to
Burlington Northern Santa Fe Corporation
Annual Meeting of Stockholders
The Worthington Hotel 200 Main Street Fort Worth, Texas
All major freeways in the Fort Worth area converge on downtown. Take the
downtown exit as marked for each respective freeway and proceed to Main Street
which runs north and south through the center of downtown Fort Worth.
Valet and self-parking are available at the Worthington next to the hotel's main
entrance on 2nd Street between Houston and Main Street.
[MAP APPEARS HERE]
<PAGE>
PROXY
BURLINGTON NORTHERN SANTA FE CORPORATION
2650 Lou Menk Drive, Second Floor
Fort Worth, Texas 76131-2830
This Proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints Douglas J. Babb and Marsha K. Morgan, and
each of them, proxy for the undersigned, with power of substitution, to vote as
specified herein, all Common Stock held by the undersigned, with the same force
and effect as the undersigned would be entitled to vote if personally present,
at the annual meeting of stockholders of the Company to be held at the
Worthington Hotel, 200 Main Street, Fort Worth, Texas 76102, Thursday, April 17,
1997, at 9:00 A.M. and at any adjournment or postponement thereof. In their
discretion, the proxies are authorized to vote upon such other business as is
properly brought before the meeting.
You are encouraged to specify your choices by marking the appropriate box,
SEE REVERSE SIDE, but you need not mark any box if you wish to vote in
accordance with the Board of Directors' recommendation; however, the proxies
appointed above cannot vote your shares unless you sign and return this card.
If you are a participant in any of the following employee benefit plans of
the Company, this card also constitutes voting instructions for any shares held
for the stockholder in the Burlington Northern Santa Fe Investment and
Retirement Plan, Burlington Northern Santa Fe 401(k) Retirement Savings Plan,
Burlington Northern 401(k) Plan for TCU Employees, Burlington Northern Santa
Fe--Brotherhood of Locomotive Engineers 401(k) Retirement Plan, and Burlington
Northern Santa Fe Non-Salaried 401(k) Retirement Plan. If you are a
participant in any of these plans, your shares will be voted in accordance with
the terms of such plan.
IMPORTANT--PLEASE SIGN AND DATE ON REVERSE SIDE
SEE REVERSE SIDE
.FOLD AND DETACH PROXY CARD HERE AND RETURN IN ENCLOSED ENVELOPE.
Burlington Northern Santa Fe Corporation
Annual Meeting of Stockholders
April 17, 1997, 9:00 A.M.
Worthington Hotel
200 Main Street
Fort Worth, Texas 76102
PLEASE NOTE: If you plan to attend the 1997 Annual Meeting of Stockholders,
please mark the appropriate box on the reverse side of the Proxy Card.
<PAGE>
| 6677
[X] Please mark your votes as in this example.
This Proxy, when properly executed, will be voted in the manner directed herein.
If no directions are made, this proxy will be voted "FOR" the Nominees for
Director listed below.
------------------------------------------------------------------------------
| The Board of Directors recommends a vote FOR all Nominees listed below. |
|------------------------------------------------------------------------------|
| FOR WITHHELD If marked, vote is withheld |
| 1. Election of [_] [_] from all nominees listed. |
| Directors. NOMINEES FOR DIRECTOR: |
| For, except vote withheld from the J.F. Alibrandi, J.S. Blanton, |
| following nominee(s): J.J. Burns, Jr., G. Deukmejian, |
| D.J. Evans, R.D. Krebs, B.M. |
| Lindig, R.S. Roberts, M.J. |
| __________________________________ Shapiro, A.R. Weber, R.H. West |
| J.S. Whisler, E.E. Whitacre, |
| Jr., R.B. Woodard, M.B. Yanney. |
- --------------------------------------------------------------------------------
I plan to attend the
Annual Meeting of [_]
Stockholders.
Please sign EXACTLY as name appears hereon, Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title
as such. This proxy votes all shares held in all capacities.
__________________________________
__________________________________
SIGNATURE (S) DATE
.FOLD AND DETACH PROXY CARD HERE AND RETURN IN ENCLOSED ENVELOPE.
Burlington Northern Santa Fe Corporation
Annual Meeting of Stockholders
April 17, 1997, 9:00 A.M.
Worthington Hotel
200 Main Street
Fort Worth, Texas 76102
