Executive compensation plan adjustments
address shareholder feedback and hold management accountable to
deliver on key objectives
ATLANTA, April 4,
2024 /PRNewswire/ -- Norfolk Southern
Corporation (NYSE: NSC) provided an update Thursday on its plan to
accelerate progress on its strategy and deliver long-term
shareholder value.
Alan Shaw, Norfolk Southern
president and chief executive officer, said, "The initiatives
announced today will help us progress toward our strategic goals
and close the margin gap with our peers. Our network enhancements
and improvements to our reporting structure will empower our new
chief operating officer, John Orr,
with the scope to implement his scheduled railroading plans and
accelerate our operational improvements. This positions Norfolk
Southern to become a more productive, resilient, and efficient
railroad, and drive long-term value creation."
Accelerating Operational Performance
- Operations Reporting Changes: Intermodal and Automotive
Operations, previously under the company's Marketing division, is
now reporting to Orr. This change will instill additional
operational rigor, enhance opportunity for further productivity,
and improve alignment and coordination across the business,
including in Merchandise and Bulk. This organization joins Car
Management, which has also been moved into Operations.
- Near-Term Operational Priorities: Since Orr's
appointment as COO on March 20, 2024,
he has been streamlining operational processes and enhancing
safety, productivity, and service. These initiatives include:
- Executing a 'Safety Blitz' to reinforce best practices;
- Assembling a task force and war room in the Network Operations
Center to assess network-wide asset utilization;
- Developing a network heat map to identify blockages and
increase speed; and
- Classifying two hump yards as 'High Performance Terminals',
where he anticipates achieving 33% improvement in dwell time over
the next 60 days at those locations.
Together, these changes are helping to increase
the speed of the Merchandise network and open the door for broader
network fluidity and efficiency. In just two weeks, tangible
results have already been realized, including:
-
- Improved Terminal Dwell by 8%;
- Increased Merchandise Train Speed by 8%; and
- Decreased Active Train Count by 8%.
- Lane Rationalization: A comprehensive review and
optimization of the Intermodal network has eliminated lanes that do
not have the density to meet productivity targets. To date, this
has removed 53 low-volume lanes with limited growth prospects,
comprising 15% of all our Intermodal lanes. This effort reduces
network complexity, supporting the company's efforts to drive
fluidity and productivity. It frees resources to improve service in
lanes that are of greater strategic value to customers, driving
growth and accelerating profitability improvement, while reducing
conflict to the speed and efficiency of the Merchandise
network.
- Implementing Intermodal Reservation System: A new driver
appointment system has been deployed at two of the company's major
international terminals. With drayage arriving at scheduled times,
terminals are prepared to quickly hand off freight, reducing driver
dwell and increasing fluidity. Norfolk Southern has also launched
new stack optimization technology at the terminals that manage
containers, allowing the overall facility to operate cohesively.
The combination enables crews to handle additional volumes and
reduce ground traffic, creating the opportunity for further
growth.
Ensuring Performance Accountability through Changes in the
Compensation Program
Norfolk Southern also announced that the human capital
management and compensation committee of its board of directors has
approved changes to the company's 2024 annual incentive
compensation plan. The changes include the addition of Operating
Ratio (OR) as a performance metric to replace the margin modifier
as part of the plan for 2024. This will further align management
incentives with the company's financial and operational goals and
strategy, which include safety, service, productivity, and
growth.
The 2024 OR targets also align with the improvements needed to
achieve the company's long-term objectives of achieving a sub-60%
OR in three to four years and delivering an industry-competitive
OR.
TYPE OF METRIC
|
PRIOR 2024 ANNUAL INCENTIVE
PERFORMANCE MEASURES
|
UPDATED 2024 ANNUAL INCENTIVE
PERFORMANCE MEASURES
|
|
|
|
|
|
|
FINANCIAL
70%
|
|
30 %
|
Operating
Ratio
|
Operating
Income
40%
|
Operating
Income
25%
|
Revenue
30%
|
Revenue
15%
|
CUSTOMER SERVICE
20%
|
Merchandise On-Time
Delivery
10%
|
Merchandise On-Time
Delivery
10%
|
Intermodal
Composite
10%
|
Intermodal
Composite
10%
|
SAFETY
10%
|
FRA Reportable Injury
Rate
5%
|
FRA Reportable Injury
Rate
5%
|
FRA Reportable Train
Accident Rate
5%
|
FRA Reportable Train
Accident Rate
5%
|
MARGIN PERFORMANCE MODIFIER
|
+/-15%
|
|
John R. Thompson, chair of the
human capital management and compensation committee, said,
"Following extensive shareholder feedback, the board determined to
explicitly include OR improvements as a component of our 2024
compensation plans in line with our commitment to hold management
accountable. As management continues to drive productivity
throughout Norfolk Southern's network, OR improvements will be a
key component of our long-term success and enable us to achieve our
objective of delivering best-in-class value to shareholders."
To learn more, visit VoteNorfolkSouthern.com.
About Norfolk Southern
Since 1827, Norfolk Southern Corporation (NYSE: NSC) and its
predecessor companies have safely moved the goods and materials
that drive the U.S. economy. Today, it operates a customer-centric
and operations-driven freight transportation network. Committed to
furthering sustainability, Norfolk Southern helps its customers
avoid approximately 15 million tons of yearly carbon emissions by
shipping via rail. Its dedicated team members deliver more than 7
million carloads annually, from agriculture to consumer goods, and
Norfolk Southern originates more automotive traffic than any other
Class I Railroad. Norfolk Southern also has the most extensive
intermodal network in the eastern U.S. It serves a majority of the
country's population and manufacturing base, with connections to
every major container port on the Atlantic coast as well as major
ports in the Gulf of Mexico and
Great Lakes. Learn more by visiting www.NorfolkSouthern.com.
Important Additional Information and Where to Find
It
The Company has filed a definitive proxy statement
(the "2024 Proxy Statement") on Schedule 14A and a WHITE proxy card
with the Securities and Exchange Commission (the "SEC") in
connection with the solicitation of proxies for its 2024 Annual
Meeting of Shareholders (the "2024 Annual Meeting"). SHAREHOLDERS
ARE STRONGLY ADVISED TO READ THE COMPANY'S 2024 PROXY STATEMENT
(INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO), THE WHITE PROXY
CARD AND ANY OTHER DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Shareholders may obtain a free copy of the 2024 Proxy Statement,
any amendments or supplements to the 2024 Proxy Statement and other
documents that the Company files with the SEC from the SEC's
website at www.sec.gov or the Company's website at
https://norfolksouthern.investorroom.com as soon as reasonably
practicable after such materials are electronically filed with, or
furnished to, the SEC.
Certain Information Regarding Participants in
Solicitation
The Company, its directors and certain of its
executive officers and employees may be deemed participants in the
solicitation of proxies from shareholders in connection with the
matters to be considered at the 2024 Annual Meeting. Information
regarding the direct and indirect interests, by security holdings
or otherwise, of the persons who may, under the rules of the SEC,
be considered participants in the solicitation of shareholders in
connection with the 2024 Annual Meeting is included in Norfolk
Southern's 2024 Proxy Statement, filed with the SEC on March 20, 2024. To the extent holdings by our
directors and executive officers of Norfolk Southern securities
reported in the 2024 Proxy Statement for the 2024 Annual Meeting
have changed, such changes have been or will be reflected on
Statements of Change of Ownership on Forms 3, 4 or 5 filed with the
SEC. These documents are available free of charge as described
above.
Cautionary Statement on Forward-Looking
Statements
Certain statements in this press release are
"forward-looking statements" within the meaning of the "safe
harbor" provisions of the Private Securities Litigation Reform Act
of 1995, as amended. These statements relate to future events or
our future financial performance, including statements relating to
our ability to satisfy the performance goals set under the 2024
annual incentive plan and to execute on our strategic plan and our
2024 Annual Meeting and involve known and unknown risks,
uncertainties, and other factors that may cause our actual results,
levels of activity, performance, or our achievements or those of
our industry to be materially different from those expressed or
implied by any forward-looking statements. In some cases,
forward-looking statements may be identified by the use of words
like "may," "will," "could," "would," "should," "expect," "plan,"
"anticipate," "intend," "believe," "goals," "estimate,"
"opportunity," "targets," "project," "consider," "predict,"
"potential," "feel," or other comparable terminology. The Company
has based these forward-looking statements on its current
expectations, assumptions, estimates, beliefs, and projections.
While the Company believes these expectations, assumptions,
estimates, and projections are reasonable, such forward-looking
statements are only predictions and involve known and unknown risks
and uncertainties, many of which involve factors or circumstances
that are beyond the Company's control. These and other important
factors, including those discussed under "Risk Factors" in our
Annual Report on Form 10-K for the year ended December 31, 2023, as well as the Company's
subsequent filings with the SEC, may cause actual results,
performance, or achievements to differ materially from those
expressed or implied by these forward-looking statements. The
forward-looking statements herein are made only as of the date they
were first issued, and unless otherwise required by applicable
securities laws, the Company disclaims any intention or obligation
to update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise.
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SOURCE Norfolk Southern Corporation