UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DCD.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
☑ | ![]() | Filed by the Registrant | ![]() | Filed by a |
![]() | Preliminary Proxy Statement | |
![]() | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
![]() | Definitive Proxy Statement | |
![]() | Definitive Additional Materials | |
![]() | Soliciting Material under §240.14a-12 |
CSX Corporation
(Name of Registrant as Specified in itsIn Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Thanother than the Registrant)
![]() | No fee | |
![]() | Fee paid previously with preliminary materials | |
☐ | Fee computed on table | |
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2022
Proxy Statement
About CSX and the
Value We Create
Our Vision To be the best-run railroad in North America Our Purpose To capitalize on the efficiency of rail transportation to serve America Our Business Our network connects every major metropolitan area in the eastern United States, as well as more than 230 short line railroads and more than 70 port terminals along the Atlantic and Gulf Coasts, the Mississippi River, the Great Lakes and the St. Lawrence Seaway. | CSX Corporation is one of the nation’s leading transportation suppliers, providing rail-based transportation services, including traditional rail service and the transport of intermodal containers and trailers. Our rail network encompasses approximately 19,500 miles of track and connects 23 states, the District of Columbia, and the Canadian provinces of Ontario and Quebec. We serve some of the largest population centers in the nation, with nearly two-thirds of Americans living within CSX’s territory. For nearly 200 years, CSX has played a critical role in North America’s economic expansion and industrial development. We move a broad portfolio of products across the country in a way that minimizes the effect on the environment, takes traffic off of a congested highway system, and minimizes fuel consumption and transportation costs. We also provide key freight services across a broad array of markets, including automotive, agricultural and food products, chemicals, fertilizers, forest products, metals and equipment, and minerals. As the most energy-efficient way to move freight over land, the sustainability and innovation of the rail industry is of the utmost importance to us. Further, we intend to lead the industry in preparing for the next decade, particularly as we see the growth in global demand for quick efficient freight services and the ways technology is becoming more integrated, automated and efficient. |
Letter to
Shareholders
March 22, 2022 Dear Shareholder | ||
The meeting will take place at www.virtualshareholdermeeting.com/CSX2022. To access the meeting, enter the 16-digit control number provided on your proxy card. The number can also be found on the Notice of Availability of Proxy Materials. I encourage you to review the 2021 CSX Annual Report to Shareholders prior to joining the meeting. The report includes CSX’s audited financial statements and additional information about our Company’s business. In compliance with the Securities and Exchange Commission’s “notice and access” rules, we are again providing electronic access to our proxy materials. Electronic distribution has proven to be the most effective and efficient method for enabling shareholders to review important information about CSX while also reducing the environmental impact of our Annual Meeting. These attributes are in keeping with our commitment to both transparency and sustainability. Please refer to the Questions and Answers section of the Proxy Statement or the Annual Meeting of Shareholders section of our Investor Relations website for additional details about accessing information and the conduct of the Annual Meeting. Because every vote is important, I encourage you to promptly submit your proxy to ensure your shares are represented and voted whether or not you plan to attend the 2022 Annual Meeting. You can vote your shares by proxy using one of the following methods: (i) vote via the Internet or by telephone; or (ii) if you request printed proxy materials, complete, sign, date and return your proxy card or voting instruction form if you hold your shares through a broker, bank or other nominee in the postage-paid envelope provided. If you submit your proxy in advance, you can still vote your shares online during the Annual Meeting should you choose to attend virtually. Please review the instructions for each of your voting options described in this Proxy Statement as well as in the Notice of Internet Availability you received in the mail or via email. Along with the CSX Board of Directors and our leadership team, I look forward to your participation in the Annual Meeting. Sincerely, James M. Foote President and Chief Executive Officer |
| Consistent with CSX’s commitment to |
2022 Proxy Statement1
March 25, 2016
Dear Fellow Shareholder:
I am pleased to invite you to join the CSX Corporation BoardTable of Directors, senior management and your fellow shareholders at our 2016Contents
Notice of 2022 Virtual Annual
Meeting of Shareholders (the “Annual Meeting”) on Wednesday, May 11, 2016 at The St. Regis Atlanta, Eighty-Eight West Paces Ferry Road, Atlanta, Georgia 30305.
The attached Notice of Annual Meeting of Shareholders and Proxy Statement include information about the matters to be voted upon at the Annual Meeting. Proxy materials for the Annual Meeting, which include CSX Corporation’s (“CSX” or the “Company”) 2016 Proxy Statement and 2015 Annual Report to Shareholders, are available online to offer important Company information and reduce the environmental impact of the Annual Meeting.
In 2015, CSX delivered solid performance for its shareholders despite a challenging business environment in which low commodity prices, a strong U.S. dollar and the transition in the energy markets significantly impacted many of our markets. Improving service, efficiency gains, and right-sizing our resources and costs with the lower demand environment helped to offset the loss of nearly $550 million in coal. We are taking necessary actions to manage our business in this difficult market, which include structural and network-wide changes to match resources and costs with business demand and drive further efficiency gains. In addition, we remain focused on pricing that reflects the value of CSX’s service.
As we look forward, the Company’s superior network reach and diverse market mix position CSX to continue delivering shareholder value into the future. We are confident that CSX will continue to be a preferred service provider for customers who face a growing population, a more integrated global economy and the need for more reliable and sustainable supply chains.
CSX also remains committed to sound corporate governance and leadership practices, including continuous board and management succession planning. In this regard, CSX has proactively adopted bylaw amendments that provide shareholders with proxy access.
We hope that you will participate in the Annual Meeting, either by attending to vote in person or by submitting your proxy via the Internet, by phone, or by signing, dating and returning the enclosed proxy card (or voting instruction form, if you hold shares through a broker). Please review the instructions on each of your voting options described in this Proxy Statement, as well as in the Notice of Internet Availability of Proxy Materials you received in the mail or via email.
On behalf of the Board of Directors, our management team and our 29,000 CSX colleagues around the country, thank you for your investment in CSX. I look forward to seeing you at the Annual Meeting.
Sincerely,
Michael J. WardChairman of the Board and Chief Executive Officer
NOTICE OF 2016 ANNUAL MEETING OF SHAREHOLDERS
To Our Shareholders:Shareholders
The Annual Meeting of Shareholders (the “Annual Meeting”) of CSX Corporation (“CSX”(together with its subsidiaries, “CSX” or the “Company”) will be held at 10:00 a.m. (EDT) on Wednesday, May 11, 20164, 2022. If you plan to participate in the Annual Meeting, please see the instructions in the Question and Answer section of the Proxy Statement. Shareholders will be able to listen, vote electronically and submit questions during the Annual Meeting online. There will be no physical location for shareholders to attend. Shareholders may only participate online at The St. Regis Atlanta, Eighty-Eight West Paces Ferry Road, Atlanta, Georgia 30305 forwww.virtualshareholdermeeting.com/CSX2022.
Items of Business
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To elect the 11 director nominees named in the attached Proxy Statement to the Company’s Board of Directors | To ratify the appointment of Ernst & Young LLP as the Independent Registered Public Accounting Firm for 2022 | To vote on an advisory (non-binding) resolution to approve the compensation for the Company’s named executive officers |
As discussed in Annual Meeting Questions & Answers (What happens if other matters are properly presented at the purpose of considering Annual Meeting?) and acting uponOther Matters below, the following matters:
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The personsperson named as proxiesproxy will use theirhis discretion to vote on other matters that may properly come before the Annual Meeting.
The above matters are described in the attached Proxy Statement. You are urged, after reading the attached Proxy Statement, to vote your shares by proxy using one of the following methods: (i) vote by telephone or via the Internet;Internet or by telephone; or (ii) if you requested printed proxy materials, complete, sign, date and return your proxy card or voting instruction form if you hold your shares through a broker, bank or other nominee in the postage-paid envelope provided. This proxy is being solicited on behalf of the Company’s Board of Directors.
Only shareholders of record at the close of business on March 14, 2016,8, 2022, which is the record date for the Annual Meeting, are entitled to vote. The Notice of Internet Availability of Proxy Materials (the “Notice”), the Proxy Statement and the Annual Report on Form 10-K for the fiscalfiscal year ended December 25, 201531, 2021 (the “Annual“2021 Annual Report”) are being mailed or made available to those shareholders on or about March 28, 2016.22, 2022.
By Order of the Board of Directors,
Ellen M. Fitzsimmons
Nathan D. Goldman
Executive Vice President-Law and Public AffairsPresident-Chief Legal OfficerGeneral Counsel and Corporate Secretary
2016
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 4, 2022
The Company’s Notice of Annual Meeting, Proxy Statement4 and Annual Report on Form 10-K for the fiscal year ended
December 31, 2021, are available, free of charge, at www.proxyvote.com.
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TABLE OF CONTENTSTable of Contents
ESG at CSX | 4 | |
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ITEM 1 Election of Directors | 12 |
Criteria for Board Membership | 12 | |
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Transactions with Related Persons and Other Matters | 20 | |
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Annual Evaluation of Board Performance |
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Board of Directors’ Role in Succession Planning |
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Board of Directors’ Role in Risk Oversight | ||
Oversight of ESG |
Shareholder Outreach and Engagement | 23 | |
Principles of Corporate Governance |
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Board Leadership and Committee Structure | ||
Elements of Director Compensation |
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Matching Gift Program and Other Benefits | 27 | |
2021 Directors’ Compensation Table | ||
Stock Ownership Guidelines | 28 |
ITEM 2 Ratification of Independent Registered Public Accounting Firm | 29 |
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Fees Paid to Independent Registered Public Accounting Firm |
Report of the Audit Committee | 31 |
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Report of the Compensation and Talent Management Committee | 35 |
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32Key Business Highlights for 202136 Executive OverviewPrograms 2015 MICP Strategic Performance Goals50
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Benefits |
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2021 Summary Compensation Table | ||
2021 Pension Benefits Table |
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Potential Payouts Under |
CEO Pay Ratio | 66 |
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Equity Compensation Plan Information | 68 |
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Security Ownership of Management and Certain Beneficial Owners | 69 |
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Other Matters | 72 |
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Annual Meeting Questions & Answers | 73 |
2022 Proxy Statement 3
At CSX, we strive to be the best-run railroad in North America, which begins with being the most sustainable mode of land-based freight transportation. By conducting business in a sustainable way, we demonstrate our commitment to industry-leading ESG performance that does right by our customers, employees, communities and shareholders. The Governance and Sustainability Committee of our Board of Directors is responsible for assessing CSX’s progress on sustainability issues and overseeing our sustainability policies, strategies and programs. Additionally, the Compensation and Talent Management Committee ensures an ongoing emphasis on human capital management, including diversity, equity and inclusion initiatives. CSX has a cross-functional Environmental, Social and Governance (“ESG”) team with executive leadership and representation across all areas of the business. This team is tasked with ensuring company-wide alignment for our ESG approach, as well as measuring and monitoring progress against key performance indicators. | ESG Oversight and Management
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ESG Highlights
CSX’s commitment to environmental stewardship, social responsibility and governance best practices are critical to our mission to be the best-run railroad in North America. CSX actively works to be innovative in its approach to sustainability, while setting challenging goals and pursuing opportunities for continued improvement as part of our commitment to responsible business practices.
In early 2021, CSX engaged with internal and external stakeholders for feedback on the Company’s ESG priorities. We conducted a materiality survey that included responses from 693 internal and external stakeholders, including employees, union members, customers, suppliers, investors, nonprofit organizations, and others. This exercise led to a prioritization of the issues most material to our business and stakeholders, which were published in the CSX 2020 ESG Report. Our process also included reviewing multiple ESG reporting frameworks and guidelines, such as the United Nations’ Sustainable Development Goals, Global Reporting Initiative, Sustainability Accounting Standards Board and the Task Force on Climate-related Financial Disclosures.
Operating with Innovation at Our Core | ||
| Leveraging new technologies to improve operations, increase efficiency and drive growth is core to CSX’s operating model. Innovative tools and technologies enable us to drive meaningful improvements on safety, customer experience, environmental efficiencies and employee engagement. | |
INNOVATING FOR SAFETY: DOUBLING DOWN ON OUR DRONE PROGRAM | INNOVATING FOR ENVIRONMENTAL EFFICIENCIES: INTRODUCING NEW XGATE FUNCTIONS | |
| In 2020, we introduced new features to our XGate system, which allows us to streamline work for the intermodal drivers thanks to a machine vision technology that expedites driver transaction time by automating the outbound validation. | |
INNOVATING FOR CUSTOMER EXPERIENCE: REBUILDING SHIPCSX’S INTERFACE DESIGN AND EFFICIENCY | INNOVATING FOR EMPLOYEE ENGAGEMENT: SHIFTING TO VIRTUAL COLLABORATION PLATFORMS AND CLOUD STRATEGIES | |
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ESG AT CSX
Environmental
CSX’s commitment to advancing environmental sustainability supports our business strategy and is part of our value proposition. With rail being the most sustainable mode of land-based freight transportation, CSX has an opportunity to not only drive positive environmental outcomes for our customers, but also for our environment, helping divert incremental volumes off the highway without sacrificing reliability.
CSX understands that sound environmental stewardship is essential to address the complex challenge of climate change. As an industry, we are faced with both a considerable advantage and opportunity: on average, freight railroads are three to four times more fuel efficient than trucks and produce 75% fewer greenhouse gas (“GHG”) emissions. CSX is committed to leveraging this opportunity to make sure we are maximizing efficiencies and reducing our footprint.
As part of our environmental strategy, the Company has continued its partnership with the Science Based Targets initiative (“SBTi”) to work toward the target of limiting global warming to 2 degrees above preindustrial levels. CSX is proud to be the first railroad in North America to align with the SBTi at this aggressive level – an important first step toward a lower-carbon economy.
Looking toward the future, CSX is aggressively setting environmental goals to guide our strategy through 2030, building on our success in moving freight with less asset intensity and reducing fuel consumption.
Introducing Our 2030 Environmental Goals: | ||||||
To achieve this goal, we will continue to make network and operational improvements while investing in technologies that will create transformational change in the railroad industry. |
To achieve this goal, we will re-evaluate our purchasing practices, provide training to project managers and utilize product recycling wherever possible. |
To achieve this goal, we will partner with suppliers to create efficiencies and positively impact our businesses, our stakeholders and the environment. | ||||
To achieve this goal, we will develop a viable Scope 2 strategy to include partnerships, energy audits, energy efficiency retrofits and renewable energy. |
To achieve this goal, we will identify those waste streams that can be reused or recycled and expand use of these alternative means of disposal. | |||||
Social
Safety
At CSX, safety encompasses every aspect of our operations, not just for our employees, but for our customers and the communities in which we operate. All employees across the organization are part of the Safety team. By putting health and safety at the center of our day-to-day operations, we strive to foster a safety culture grounded in ownership and accountability. CSX takes a proactive, network approach to safety, whereby we aim to identify and eliminate as many factors as possible that may contribute to the occurrence of accidents, and then share learnings and best practices across the organization. In 2021, we invested nearly $1.8 billion in critical infrastructure improvements to ensure safety, including track, bridges, signals, equipment and detection technology.
To better serve the communities in which we operate, CSX has a multi-year partnership with Operation Lifesaver, an education and awareness organization committed to ending collisions, fatalities and injuries at highway-rail grade crossings and along railroads rights-of-way. In addition to our work with Operation Lifesaver, CSX actively participates in Rail Safety Week, during which CSX conducts awareness activities, including traffic and trespassing enforcement blitzes, school and community presentations, and truck driver outreach.
2022 Proxy Statement 5
ESG AT CSX
Workforce Diversity and Racial Equity
CSX believes strongly that we cannot be the best-run railroad in North America without the best people, and we cannot have the best people without embracing diversity, equity and inclusion in our workforce. We believe that every employee’s contributions and differences help drive our success.
BackAt CSX, service to Contentsour communities is core to who we are and our commitment to people extends beyond our employees. Service is at the heart of every decision we make, for our customers, for ourselves and for our communities. We serve the communities in which we live and operate through monetary and in-kind giving, as well as employee volunteerism opportunities.
▸Last year (2021) marked the third full year of our signature community investment initiative, CSX Pride in Service. Pride in Service is a company-wide commitment to honor and serve the nation’s military, veterans and first responders by connecting them and their families with the support they need. CSX understands intimately the sacrifice that comes with military service, as nearly one in five CSX employees have served in some capacity. Oftentimes, our military, veteran and first responder heroes find themselves with various hardships and financial adversity once they are no longer in the line of duty. CSX has contributed more than $9.9 million to causes supporting military, veteran and first responder families since the inception of its Pride in Service initiative. With Pride in Service’s nonprofit partners, CSX makes possible critical financial assistance, community connections and acts of gratitude.
In 2021, CSX contributed more than $9.9 million and nearly 4,000 volunteer hours to communities across our 23-state network. | PRIDE IN SERVICE 350,000+ | |
140 Service Events partnering with the following organizations |
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CSX is also committed to social justice in our communities. As such, CSX developed a cross-functional social justice advisory roundtable of employees and leaders to strategize and execute a plan to combat racial injustice. In addition, we have deployed a wide-ranging action plan, both internally and externally, to help strengthen inclusion in our corporate culture and within the communities we serve. The internal plan is built on four pillars: (i) Awareness, Education and Communication; (ii) Potential or Perceived Inequities; (iii) Employee Development; and (iv) Voter Education. Externally we have partnered with the Congressional Black Caucus Foundation and City Year while also leveraging our Pride in Service community engagement initiative to support equity and bridge the divide between segments of our communities.
PROXY SUMMARYGovernance
This summary highlights information contained elsewhereGood governance practices begin with strong leaders who understand the opportunities and challenges across the business and help make decisions that support the Company’s long-term growth and success. Our Board of Directors and executive team uphold high levels of integrity, transparency and ethical business practices. Together, they are responsible for developing and communicating CSX’s vision and purpose in addition to overseeing the implementation of sound governance practices. Through their leadership, CSX takes a comprehensive approach to governance and compliance, with a robust program that guides how we coordinate and implement Company policies, codes, procedures and values, as well as how we monitor and adhere to laws and regulations.
Business Ethics 2021 ETHICS DATA
Management
Union | Risk Management and Business Disruption Prevention $1.8B in capital expenditures to maintain and improve our existing infrastructure. CYBER AND INFORMATION In 2019, Suzanne M. Vautrinot, a retired U.S. Air Force Major General, joined our Board. Ms. Vautrinot, who led the USAF’s Cyber Command and is currently the president of a cybersecurity strategy and technology consulting firm, provides invaluable expertise and guidance in cyber and information security management. | Human Rights In 2021, CSX adopted a formal Human Rights Policy. In January 2020, CSX joined a U.S. Department of Transportation initiative to fight human trafficking through increased education and public awareness |
Responsible Sourcing 3,713 suppliers, both domestic and international, create a network of partners that contribute to CSX’s responsible value chain. |
To learn more about our commitment to Environment, Social and Governance (ESG) or to view our latest ESG Report, visit our ESG site at https://investors.csx.com/esg. Information on, or that can be accessed through, our website is not, and shall not be deemed to be, a part of this Proxy Statement. This summary does not contain all ofStatement or incorporated into any other filings we make with the information that you should consider,Securities and you should read the entireExchange Commission (“SEC”).
2022 Proxy Statement carefully before voting. For more complete information regarding the Company’s 2015 performance, please review the Company’s 2015 Annual Report.7
Visit our Annual Meeting Website
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Attend our Annual Meeting of Shareholders
Eligibility to Vote
You can vote if you were a shareholder of record at the close of business on March 14, 2016, which is the record date for the Annual Meeting.
Voting Matters and Board Recommendation
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| ![]() | The Board unanimously recommends a voteFOR | |||
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COMMITTEES KEY | ||||||
![]() | Chair | A | Audit | F | Finance | |
CTM | Compensation and Talent Management | GS | Governance and Sustainability |
2022 Proxy Statement | 9 |
PROXY VOTING SUMMARY
ITEM 2 | Ratification of | ![]() | The Board unanimously recommends that the shareholders voteFORthis proposal. | ||
3 | Advisory (Non-Binding) Vote to Approve the Compensation of CSX’s Named Executive |
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How to Cast Your Vote
![]() | The Board unanimously recommends that the shareholders voteFORthis proposal. | ||||
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Elements of the Company’s 2021 Executive Compensation Programs
As an organization focused on pay-for-performance, CSX provides competitive total compensation opportunities in line with similar Comparator Group companies. The Compensation and Talent Management Committee reviews the performance and accomplishments of each executive to ensure incentive compensation payouts are consistent with the Company’s overall executive compensation program objectives.
Performance | Objective | |||||||
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| Based on assessment of scope of responsibilities, individual performance, experience and long-term shareholder value creation | Recruit, engage and retain talented, high-performing leaders | |||
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n Operating Ratio n Initiative-Based Revenue Growth n Safety n Fuel Efficiency n Trip Plan Compliance Individual performance is also considered for determining the final payout for the executive |
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Board Nominees
eligible employees for driving performance within a one-year period | ||||||||
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n Non-qualified Stock Options (25%) n Restricted Stock Units (25%) |
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n Average Annual Operating Income Growth n Free Cash Flow Formulaic linear Relative Total Shareholder Return modifier of +/- 25% with 250% maximum | Motivate and reward executives to drive strategic initiatives that create shareholder value over a three-year period |
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PROXY VOTING SUMMARY
Alignment with Leading Governance Practices
The Committee has established executive compensation programs that incorporate leading governance principles. Highlighted below are executive compensation practices that drive performance and support strong corporate governance.
CSX Executive Compensation Practices Include: | CSX Executive Compensation Practices Do NOT Include / Allow: | |||||
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Business Highlights for 20152021
CSX’s performance in 2015 illustrated the underlying strength of the Company’s business, as well as its ability to deliver value for customers and shareholders, while preparing for long-term growth. Despite substantial gains in the Company’s intermodal and merchandise business, significant declines in coal volumes impaired top-line growth for the year. Nevertheless,In 2021, CSX delivered a Company-record operating ratio of 69.7% for 2015.55.3%. In addition, CSX returned approximately $1.5$3.725 billion to shareholders in the form of dividends and share repurchases. For more detail on CSX'sCSX’s performance in 2015,2021, please see the 20152021 Annual Report.
Stock Performance Graph
Stock Performance Graph The cumulative five-year shareholder returns on $100 invested at December 31, 2016, assuming reinvestment of dividends, are illustrated on the accompanying graph. The Company references the Standard & Poor’s 500 Stock Index (“S&P 500”), which is a registered trademark of The McGraw-Hill Companies, Inc., and the Dow Jones U.S. Transportation Average Index (“DJT”), which provide comparisons to a broad-based market index and other companies in the transportation industry. | COMPARISON OF FIVE-YEAR CUMULATIVE RETURN |
2022 Proxy Statement | 11 |
2015 Target Compensation Mix for the Named Executive Officers
Information regarding the compensation mix for the Chief Executive Officer (“CEO”) and each of the other executive officers named in the Summary Compensation Table (“Named Executive Officers” or “NEOs”), other than Mr. Munoz, is set forth below. The table indicates that 70% of the CEO’s compensation and an average of 64% of the other Named Executive Officers’ compensation is at risk and subject to the achievement of one or more performance goals.
Executive Compensation Highlights
The table below highlights the 2015 compensation for the Named Executive Officers as disclosed in the Summary Compensation Table.
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Name | Salary | Stock Awards | Non-Equity | Change in | All Other | Total | ||||||||||||
Michael J. Ward Chairman and CEO | $ | 1,200,000 | $ | 7,064,833 | $ | 864,000 | -- | $ | 80,728 | $ | 9,209,561 | |||||||
Clarence W. Gooden President | $ | 665,720 | $ | 2,406,455 | $ | 373,432 | -- | $ | 49,362 | $ | 3,494,969 | |||||||
Fredrik J. Eliasson Executive Vice President and Chief Sales and Mktg. Officer | $ | 565,720 | $ | 2,018,535 | $ | 305,489 | $ | 199,435 | $ | 27,174 | $ | 3,116,353 | ||||||
Frank A. Lonegro Executive Vice President and CFO | $ | 365,518 | $ | 706,112 | $ | 173,072 | $ | 27,056 | $ | 18,064 | $ | 1,289,822 | ||||||
Ellen M. Fitzsimmons Executive Vice President, General Counsel, and Corporate Secretary | $ | 550,000 | $ | 1,513,900 | $ | 264,000 | $ | 103,737 | $ | 34,952 | $ | 2,466,589 | ||||||
Cynthia M. Sanborn Executive Vice President and COO – CSX Transportation | $ | 497,456 | $ | 2,741,527 | $ | 266,938 | $ | 91,485 | $ | 32,600 | $ | 3,630,006 | ||||||
Oscar Munoz Former President and COO | $ | 604,207 | $ | 6,083,112 | -- | $ | 141,651 | $ | 46,474 | $ | 6,875,444 |
What is the purposeElection of the Annual Meeting?Directors
At our Annual Meeting, shareholders will act uponCriteria for Board Membership
Overview
Eleven directors are to be elected to hold office until the matters outlined in the Notice of2023 Annual Meeting of Shareholders above, including(the “2023 Annual Meeting”) and their successors are elected and qualified. The Governance and Sustainability Committee has recommended to the Board, and the Board has approved, the persons named below as director nominees. The Board believes that each of these director nominees adds to the overall diversity of the Board. Additionally, these director nominees bring a wide range of experience and expertise in management, railroad operations, financial markets, human capital and risk management. Each of the nominees listed below was elected to the Board at the Company’s 2021 Annual Meeting of Shareholders. Nominees for Board membership are expected to be prominent individuals who demonstrate leadership and possess outstanding integrity, values and judgment. Directors and nominees must be willing to devote the substantial time required to carry out the duties and responsibilities of directors. In addition, each Board member is expected to represent the broad interests of the Company and its shareholders as a group, and not any particular constituency.
Management received notice from a shareholder who intends to present himself for nomination as a director at the Annual Meeting. If this shareholder does properly present himself as a nominee at the Annual Meeting, the number of nominees for director will exceed the number of directors to be elected, and directors will be elected by a plurality of the votes cast, rather than by majority vote. In this situation, the person voting the proxies solicited by the Board for the Annual Meeting will vote as directed by you with respect to the election of the 12 director nominees11 directors named in this Proxy Statement and will vote against or abstain from voting on the ratificationshareholder’s director nominee.
Diversity
CSX strives to cultivate an environment that embraces teamwork and capitalizes on the value of diversity. Although the Board does not have a formal written diversity policy, the Governance and Sustainability Committee has a long-standing commitment to diversity. The Committee recognizes the importance of maintaining a Board with a broad scope of backgrounds and expertise that will expand the views and experiences available to the Board in its deliberations. Many factors are taken into account when evaluating director nominees, including their ability to assess and evaluate the Company’s strategies in the face of changing economic and regulatory environments that may impact customer and shareholder expectations. In addition, the Committee feels that candidates representing varied age, gender, and cultural and ethnic backgrounds add to the overall diversity and viewpoints of the selection of the Independent Registered Public Accounting Firm (the “Independent Auditors”) of CSX,Board.
Board Information and Diversity Highlights
The Governance and Sustainability Committee and the considerationfull Board believe that the director nominees listed below embody the breadth of an advisory (non-binding) vote on executive compensation.backgrounds and experience necessary for a balanced and effective Board.
When and where will the Annual Meeting be held?
The Annual Meeting will be held at 10:00 a.m. (EDT) on Wednesday, May 11, 2016 at The St. Regis Atlanta, Eighty-Eight West Paces Ferry Road, Atlanta, Georgia 30305. The facility is accessible to persons with disabilities. If you have a disability, we can provide assistance to help you participate in the Annual Meeting upon request. If you would like to obtain directions to attend the Annual Meeting and vote in person, you can write to us at CSX Corporation, Office of the Corporate Secretary, 500 Water Street, C160, Jacksonville, FL 32202, or call us at (904) 366-4242.
Why did I receive a notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
In accordance with rules adopted by the Securities and Exchange Commission (the “SEC”), we may furnish proxy materials, including this Proxy Statement and our 2015 Annual Report, to our shareholders by providing access to such documents on the Internet instead of mailing printed copies. Most shareholders will not receive printed copies of the proxy materials unless requested. Instead, the Notice of Internet Availability of Proxy Materials (the “Notice”), which was mailed to most of our shareholders, instructs you as to how you may access and review all of the proxy materials on the Internet. The Notice also instructs you as to how you may submit your proxy on the Internet. If you would like to receive a paper or email copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice.
How do I get electronic access to the proxy materials?
The Notice provides you with instructions on how to:
BOARD OF DIRECTORS DIVERSITY MATRIX
Choosing to receive your future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact of the printing and mailing of these materials on the environment. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until terminated.
Who is soliciting my vote?
The BoardTotal Number of Directors – 11 (as of CSX (the “Board”) is soliciting your vote on matters being submitted for shareholder approval at the Annual Meeting. CSX will pay the costs of preparing proxy materials and soliciting proxies, including the reimbursement, upon request, of trustees, brokerage firms, banks and other nominee record holders for the reasonable expenses they incur to forward proxy materials to beneficial owners. In addition to using mail, proxies may be solicited in person, by telephone or by electronic communication by officers and employees of the Company acting without special compensation.
Who is entitled to vote?March 22, 2022)
Part I. Gender Identity
Only shareholders of record at the close of business on March 14, 2016 (the “Record Date”) are entitled to notice of, and to vote at, the Annual Meeting or any adjournments or postponements thereof, unless a new record date is set in connection with any such adjournments or postponements. On March 14, 2016, there were issued and outstanding 957,310,947 shares of common stock, the only outstanding class of voting securities of the Company.
How many votes do I have?
You will have one vote for every share of CSX common stock you owned at the close of business on the Record Date.
How many shares must be present to hold the Annual Meeting?
The Company’s bylaws provide that a majority of the outstanding shares of stock entitled to vote constitutes a quorum at any meeting of shareholders. If a share is represented for any purpose at the Annual Meeting, it is deemed to be present for the transaction of all business. Abstentions and shares held of record by a broker, bank or other nominee that are voted on any matter are included in determining the number of shares present.
Shares held by a broker, bank or other nominee that are not voted on any matter at the Annual Meeting will not be included in determining whether a quorum is present.
Your vote is important and we urge you to vote by proxy even if you plan to attend the Annual Meeting.
What are the vote requirements for each proposal?
Election of Directors. In an uncontested election, directors are elected by a majority of votes cast for his or her election by the shares entitled to vote at a meeting at which a quorum is present. In accordance with the Company’s Corporate Governance Guidelines, in an uncontested election, any incumbent director nominated for re-election as a director who is not re-elected in accordance with the Company’s bylaws shall promptly tender his or her resignation following certification of the shareholder vote. For more information on the procedures in these circumstances, see Principles of Corporate Governance below.
Other Proposals. For the ratification of the appointment of Ernst & Young LLP as the Company’s Independent Auditors for 2016 (Item 2) and for the approval, on an advisory basis, of the compensation of the Company’s NEOs (Item 3), the proposal will be approved if the votes cast in favor of the proposal exceed the votes cast against the proposal.
Abstentions are not considered votes cast on any proposal. “Broker non-votes” are not considered votes cast on Item 1 or Item 3, and will have no effect on the outcome of the vote. Brokers will have discretionary voting power regarding Item 2 in the event that beneficial owners, who own their shares in “street name,” do not provide voting instructions regarding Item 2.
How do I vote?
You can vote either in person at the Annual Meeting or by proxy without attending the Annual Meeting. The shares represented by a properly executed proxy will be voted as you direct.
To vote by proxy, you must do one of the following:
Vote by Telephone. If you are a shareholder of record, you can vote your shares by telephone 24 hours a day by calling 1-800-690-6903 on a touch-tone telephone. Easy-to-follow voice prompts enable you to vote your shares and confirm that your instructions have been properly recorded. If you are a beneficial owner, or you hold your shares in “street name” (that is, through a bank, broker or other nominee), please check your voting instruction card or contact your bank, broker or nominee to determine whether you will be able to vote by telephone.
Vote by Internet. If you are a shareholder of record, you can also vote via the Internet by following the instructions in the Notice. The website address for Internet voting is indicated in the Notice. Internet voting is also available 24 hours a day. If you are a beneficial owner, or you hold your shares in “street name,” please check your voting instruction card or contact your bank, broker or nominee to determine whether you will be able to vote via the Internet.
Vote by Mail. If you requested printed proxy materials and choose to vote by mail, complete, sign, date and return your proxy card in the postage-paid envelope provided if you are a registered holder or your voting instruction card if you are a beneficial owner of shares in “street name.” Please promptly mail your proxy card or voting instruction card to ensure that it is received prior to the Annual Meeting.
If you want to vote in person at the Annual Meeting, and you hold your CSX stock in “street name,” you must obtain a proxy from your bank, broker or other nominee and bring that proxy to the Annual Meeting.
Can I change my vote?
Yes. If you are a shareholder of record, you may change your vote or revoke your proxy any time before it is voted by written notice delivered to CSX Corporation, Office of the Corporate Secretary, 500 Water Street, C160, Jacksonville, FL 32202, by timely receipt of a later-dated signed proxy card or written revocation, by a later vote via the Internet or by telephone, or by voting in person at the Annual Meeting. If you hold your shares in “street name,” you should follow the instructions provided by your bank, broker or other nominee if you wish to change your vote.
Will my shares be voted if I do not provide voting instructions to my broker?
If you are the beneficial owner of shares held in “street name” by a bank, broker or other nominee, the bank, broker or other nominee as the record holder of the shares, is required to vote those shares in accordance with your instructions. If you do not give instructions to the broker, the broker will be entitled to vote the shares with respect to “discretionary” items but will not be permitted to vote the shares with respect to “non-discretionary” items (those shares are treated as “broker non-votes”).
The proposal to ratify the appointment of Ernst & Young LLP as CSX’s Independent Auditors for 2016 is considered a discretionary item for which a broker will have discretionary voting power if you do not give instructions with respect to this proposal. The proposals to: (i) elect directors; and (ii) vote on an advisory (non-binding) resolution on executive compensation are non-routine matters for which a broker will not have discretionary voting power and for which specific instructions from beneficial owners are required in order for a broker to vote your shares.
What happens if I return my proxy card but do not give voting instructions?
If you are a shareholder of record and sign and return your proxy card but do not give voting instructions, the shares represented by that proxy will be voted as recommended by the Board.
The Board of Directors unanimously recommends a vote:
Female | Male | Non-Binary | ||||
Directors | 3 | 8 | – | |||
Part II. Demographic Background | ||||||
African American or Black | – | – | – | |||
Alaskan Native or Native American | – | – | – | |||
Asian | – | – | – | |||
Hispanic or Latin | 1 | – | – | |||
Native Hawaiian or Pacific Islander | – | – | – | |||
White | 2 | 7 | – | |||
Two or More Races or Ethnicities | – | 1 | – | |||
LGBTQ+ | – | – | – | |||
Did Not Disclose Demographic Background | – | – | – |
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What happens if other matters are properly presented at the Annual Meeting?
If any other matters are properly presented for consideration at the Annual Meeting, the persons named as proxies on the enclosed proxy card will have discretion to vote on those matters for you. On the date we filed this Proxy Statement with the SEC, the Board did not knowTable of any other matters to be brought before the Annual Meeting.
How are votes counted?
Votes are counted by an independent inspector of elections appointed by the Company.
What happens if the Annual Meeting is postponed or adjourned?
Unless a new record date has been fixed, your proxy will still be in effect and may be voted at the reconvened meeting. You will still be able to change your vote or revoke your proxy with respect to any item until the polls have closed for voting on such item.
How do I obtain admission to the Annual Meeting?
You will be issued an admission ticket at the Shareholder Registration Desk at the Annual Meeting. If you hold shares in your name, please be prepared to provide proper identification, such as a driver’s license or other government-issued identification. If you hold your shares through a broker, bank or other nominee, you will need proof of ownership, such as a recent account statement or letter from your broker, bank or other nominee along with proper identification. If you are a duly appointed proxy for a shareholder, you must provide proof of your proxy power and proof of share ownership for the shareholder for whom you are a proxy. In addition, if you are authorized to represent a corporate or institutional shareholder, you must also present proof that you are the authorized representative of such shareholder.
For security reasons, attendees will not be permitted to bring any packages, briefcases, large pocketbooks or bags into the meeting. Also, audio tape recorders, video and still cameras, laptops and other portable electronic devices will not be permitted into the meeting. We thank you in advance for your patience and cooperation with these rules.
What is the deadline for consideration of shareholder proposals for the 2017 Annual Meeting of Shareholders?
A shareholder who wants to submit a proposal to be included in the proxy statement for the 2017 Annual Meeting of Shareholders (the “2017 Meeting”) must send the proposal to CSX Corporation, Office of the Corporate Secretary, 500 Water Street, C160, Jacksonville, FL, 32202, so that it is received on or before November 28, 2016, unless the date of the 2017 Meeting is changed by more than 30 days from May 11, 2017, in which case the proposal must be received a reasonable time before the Company begins to print and mail its proxy materials for the 2017 Meeting.
A shareholder who wants to nominate a director or submit a proposal that will not be in the proxy statement but will be considered at the 2017 Meeting, pursuant to the CSX bylaws, must send it to the principal office of CSX so that it is received not earlier than the close of business on January 11, 2017, nor later than the close of business on February 10, 2017 unless the date of the 2017 Meeting is more than 30 days before or more than 70 days after May 11, 2017, in which case the nomination or proposal must be received not earlier than the 120th day prior to the date of the 2017 Meeting and not later than the close of business on the later of the 90th day prior to the date of the 2017 Meeting or the 10th day following the day on which the Company first publicly announces the date of the 2017 Meeting.
Does the Board consider director nominees recommended by shareholders?
Yes. The Governance Committee of the Board will review recommendations as to possible nominees received from shareholders and other qualified sources. Shareholder recommendations should be submitted in writing addressed to the Chair of the Governance Committee, CSX Corporation, 500 Water Street, C160, Jacksonville, FL 32202, and should include a statement about the qualifications and experience of the proposed nominee, as discussed further below in the Board Leadership and Committee Structure section. Shareholders who wish to nominate a director nominee should do so in accordance with the nomination provisions of the Company’s bylaws. In general, a shareholder nomination for the 2017 Annual Meeting must be delivered to the Company within the time periods described above and set forth in the Company’s bylaws.
Can shareholders include their director nominees in the Company’s proxy statement?
Yes. The Company recently amended its bylaws to allow “proxy access.” Under the bylaws, a shareholder, or a group of up to 20 shareholders, owning 3% or more of the Company’s outstanding common stock continuously for at least three years may submit director nominees (up to the greater of two or 20% of the Board) for inclusion in the Company’s proxy statement, provided: (i) there are no other shareholder nominations pursuant to the advance notice provision of the bylaws; and (ii) the shareholder(s) and the nominee(s) satisfy the other requirements set forth in the bylaws.
Determining Ownership.Shareholder(s) must have full voting and economic interest of the shares to satisfy the 3% ownership threshold. Loaned shares are considered “owned” if such shares can be recalled on not more than three business days’ notice. Additionally, the shareholder(s) must own the requisite number of shares through the meeting date.
When and Where to Send These Proposals.To include a director nominee in the Company’s 2017 proxy statement, the proposing shareholder(s) must send notice and the required information to CSX Corporation, Office of the Corporate Secretary, 500 Water Street, C160, Jacksonville, FL, 32202, so that it is received by November 28, 2016.
Certain Disclosures.Among other things, director nominees must disclose to the Company any agreement, arrangement or understanding regarding how they would vote if elected as a director, or any direct or indirect compensation they would receive in connection with their service or action as a director.
Prior Nominees.A director nominee pursuant to proxy access who receives less than 25% of the votes cast may not be nominated for election at the next two annual meetings of shareholders.
A shareholder or group of shareholders wishing to nominate a candidate for director through proxy access should review carefully the procedures and requirements described in the Company’s bylaws. These procedures and requirements must be followed precisely by both the proposing shareholder(s) and the director nominee(s) in order to use proxy access.
▸ITEM 1: ELECTION OF DIRECTORS
Key Skills and Experience
In determining the qualifications of a director nominee, the Board and the Governance and Sustainability Committee consider the following to be key skills and areas of experience:
Business Operations Business operations experience gives directors a practical understanding of developing, implementing and assessing the Company’s operating plan and business strategy. | Corporate Governance Corporate governance experience supports Board and management accountability, transparency and protection of shareholder interests. | Finance / Capital Allocation Financial and capital allocation experience is important in evaluating capital markets and the Company’s design and implementation of financing and capital allocation strategies. | ||||
Board’s Skills and Experience | Board’s Skills and Experience | Board’s Skills and Experience as a Group | ||||
![]() Accounting / Financial Experience as an accountant, auditor, chief financial officer or senior leader responsible for financial reporting is important because it assists directors | Government / Public Policy Government and public policy experience is important in understanding the legislative process and regulatory environment in which the Company operates. | Risk / Crisis Management Risk / crisis management experience is critical in helping the Board fulfill its responsibilities with respect to its risk oversight and mitigation, as well providing Board leadership in navigating through corporate crises. | ||||
Board’s Skills and Experience | Board’s Skills and Experience | Board’s Skills and Experience | ||||
Human Capital Human capital management experience is valuable in understanding the dynamics of attracting, motivating and retaining high performing employees, including succession planning efforts. | Sustainability Sustainability experience supports the Company’s
| Transportation Industry / Transportation industry experience is important to understanding rail operations, the | ||||
Board’s Skills and
| Board’s Skills and
| Board’s Skills and | ||||
Board Nominees
As of the date of this Proxy Statement, the Board has no reason to believe that any of the nominees named below will be unable or unwilling to serve. If any of the nominees named below is not available to serve as a director at the time of the Annual Meeting (an event which the Board does not now anticipate), the proxies will be voted for the election of such other person or persons as the Board may designate, unless the Board, in its discretion, reduces the size of the Board. There are no family relationships among any of these nominees or among any of the nominees and any executive officer of the Company.
2022 Proxy Statement | 13 |
ITEM 1: ELECTION OF DIRECTORS
Information regarding each of the Board’s nominees adds to the overall diversity of the Board. The director nominees bring a wide range of experience and expertise in management, railroad operations, financial markets, and public policy. In addition, several of the director nominees are able to provide valuable perspective into the political and regulatory environments, as well as certain key markets.
Information regarding each director nominee follows. Each such nominee has consented to being named in this Proxy Statement and to serve if elected.
![]() | The Board unanimously recommends a vote |
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Independent Director Nominee Director since 2006 | ||
CSX Committees Audit/Compensation and Talent Management. | ||
Biographical Donna M. Alvarado is the founder and current President of Aguila International, a business-consulting Ms. Alvarado previously served as Chairwoman of the Ohio Board of Regents. Following executive and legislative staff appointments at the U.S. Department of Defense and in the U.S. Congress, Ms. Alvarado was appointed by President Ronald Reagan to lead the federal agency ACTION, the nation’s premier agency for civic engagement and volunteerism, a position which she held from | ||
1985 to 1989. | ||
Skills and As a result of her experience in the public and private sector, Ms. Alvarado brings to the Board | ||
Other Public Directorships ■ CoreCivic, Inc. ■ Park National Corporation | ||
Thomas P. Independent Director Nominee Director since 2020 CSX Committees Finance/Governance and Sustainability Biographical Information Mr. Thomas P. Bostick is Chairman of Bostick Global Strategies and is a retired U.S. Army Lieutenant General. He also served as Chief of Engineers and Commanding General of the U.S. Army Corps of Engineers, where he was responsible for most of the nation’s civil works infrastructure and military construction, leading the world’s largest public engineering organization. Among his previous commands, Mr. Bostick was the Army’s Director of Human Resources and led the U.S. Army Recruiting Command. He was deployed during Operation Iraqi Freedom as second in command of the 1st Cavalry Division and later commanded the Army Corps of Engineers Gulf Region Division. After retiring from the Army in 2016, Mr. Bostick joined Intrexon, a biological engineering company where he served as Chief Operating Officer. He led a restructuring of the company in 2019, that resulted in Intrexon being renamed Precigen at the start of 2020. Skills and Qualifications Mr. Bostick has extensive leadership and crisis management experience, engineering expertise and knowledge in the fields of environmental sustainability and human resources. Other Public Directorships ■ Perma-Fix Environmental Services, Inc.2016 Proxy Statement14
Bostick, 65
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ITEM 1: ELECTION OF DIRECTORS
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Director
since 2017 | ||
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Executive (Chair) | ||
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Skills and Qualifications Mr. Foote has expertise in
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Other Public Directorships ■ None | ||
![]() | Steven T. Independent Director Nominee Director since 2006 |
CSX Committees Audit/Compensation and Talent Management (Chair)/Executive | |
Biographical Steven T. Halverson | |
Council. From 2008 until its sale to McKesson Corporation in 2013, Mr. Halverson served on the board of directors of PSS World Medical. | |
Skills and Mr. |
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2022 Proxy Statement | 15 |
ITEM 1: ELECTION OF DIRECTORS
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Independent Director Nominee / Director since 2017 | ||
CSX Committees Executive/Finance/Governance and Sustainability | ||
Biographical
Prior to Pershing Square Capital Management where he worked from 2006 to 2016. From 2012 to | ||
the Grameen Foundation – an umbrella organization that helps micro-lending and micro-franchise institutions empower the world’s poorest through financial inclusion and entrepreneurship. | ||
Skills and Qualifications Mr. Hilal draws on his experience as a value investor, as a capital allocator, and as an engaged director driving shareholder value. Additionally, through his railroad industry experience and perspective, Mr. Hilal provides the Board valuable insight regarding the financial aspects of CSX’s business. | ||
Other Public
Aramark
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![]() | David M. Independent Director Nominee Director since 2015 |
CSX Committees Audit (Chair)/Executive/Finance | |
Biographical David M. Moffett served as the Chief Executive Mr. Moffett From 2007 to 2015, Mr. Moffett served on the board of directors of eBay, Inc. | |
From 2010 to 2016, Mr. Moffett served on the board of directors of CIT Group Inc. | |
Skills and
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Other Public Directorships ■ PayPal Holdings, Inc. | |
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ITEM 1: ELECTION OF DIRECTORS
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Independent Director Nominee Director since 2017 | ||
CSX Committees Compensation and Talent Management/Executive/Governance and Sustainability (Chair) | ||
Biographical
Since 2007, Ms. Riefler has served on the board of MSCI, Inc., a global provider of indices and decision report tools and services to global portfolio managers and asset owners across the equity, fixed income, and alternative asset universes. MSCI is also a leader in ESG research. She has also served on the board of North American Partners in Anesthesia, a private equity-owned national health care company since 2016. Ms. Riefler also serves as the chair of an educational nonprofit called Pencils of Promise that is committed to literacy in global rural underserved communities. Ms. Riefler also serves on the executive leadership team of Stanford Women on Boards whose mission is to cultivate and place exceptional women for board service. Previously, Ms. Riefler has served on the boards of Stanford Graduate School of Business and Choate Rosemary Hall. | ||
Skills and Qualifications Ms. Riefler draws on her experience at Morgan Stanley and elsewhere to provide the Board perspective on corporate strategy, talent management, sustainability, governance, debt and equity financings, and capital market allocations. | ||
Other Public Directorships ■ MSCI, Inc. | ||
![]() | Suzanne M. Independent Director Nominee Director since 2019 |
CSX Committees Audit/Governance and Sustainability | |
Biographical Information Ms. Vautrinot retired from the United States Air Force (“USAF”) as a Major General in 2013, following a distinguished 31-year career where she influenced the development and application of critical cybersecurity and space technology. From 2011 to 2013, Ms. Vautrinot served as Commander of the USAF’s Cyber Command where she oversaw a multibillion-dollar cyber enterprise and led a workforce of 14,000 personnel conducting offensive and defensive cyber operations worldwide. She served as the Deputy Commander for Joint Forces Component Command Network Warfare and was instrumental in creating, operating and protecting U.S. Cyber Command and the global network architecture. During her career in the USAF, Ms. Vautrinot also served as Director of Plans and Policy, U.S. Cyber Command and Deputy Commander, Network Warfare, U.S. Strategic Command, as well as Commander - Air Force Recruiting Service. Ms. Vautrinot was formerly a director of Norton Life Lock Inc. (formerly Symantec Corporation) from 2013 to 2019. | |
Skills and Qualifications Ms. Vautrinot provides the | |
Other Public Directorships ■ Ecolab, Inc. ■ Parsons Corporation ■ Wells Fargo & Co. | |
2022 Proxy Statement | 17 |
ITEM 1: ELECTION OF DIRECTORS
![]() | James L. Independent Director Nominee Director since 2020 |
CSX Committees Compensation and Talent Management/Finance | |
Biographical Information James L. Wainscott is the
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leadership positions with National Steel Corporation. Effective as of January 1, 2022, Mr. | |
Chief Executives, a group primarily consisting of retired Fortune 500 Company CEOs. He served as Vice Chair of this organization from 2020 through 2021. | ||
Skills and
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directors. | ||
Other Public
Parker-Hannifin Corp.
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Independent Director Nominee Director since 2011 | ||
CSX Committees Audit/Executive/Finance (Chair) | ||
Biographical J. Steven Whisler is the retired Chairman and Chief Executive Mr. Whisler also served as a director of International Paper Co. from 2007 until 2021, US Airways Group, Inc. from 2005 until 2011, and Burlington Northern Santa Fe from 1995 until its acquisition by Berkshire Hathaway in 2010. | ||
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Skills and Through his prior | ||
Other Public Directorships ■ Brunswick Corporation | ||
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ITEM 1: ELECTION OF DIRECTORS
![]() | John J. Zillmer, 66 Independent Director Nominee / Director since 2017 |
CSX Committees Compensation and Talent Management/Executive/Governance and Sustainability | |
Biographical Information John J. Zillmer is the President and Chief Executive Officer of Aramark, a food service, facilities, and uniform services provider. Prior to joining Aramark, Mr. Zillmer served as the Executive Chairman, President and Chief Executive Officer of Univar Inc., a global chemical distributor and Fortune 500 company, where he also served as a director from 2009 to 2012. Prior to joining Univar, Mr. Zillmer served as Chairman and Chief Executive Officer of Allied Waste Industries, Inc. from 2005 to 2008, leading an operational transformation that has become an industry benchmark. He has also served as a director of Liberty Capital Partners, a private equity and venture capital firm specializing in startups, early stage, growth equity, buyouts and acquisitions. Mr. Zillmer also serves on the North American advisory board of CVC Capital Partners. He previously served on the board of Reynolds American, Inc. from 2007 until its acquisition by British American Tobacco in 2017, Veritiv Corporation from 2014 to 2020, and Performance Food Group Company from 2015 to 2019. | |
Skills and Qualifications Through his extensive experience as a chief executive officer, Mr. Zillmer provides the Board with critical insight on business transformation and optimization, as well as deep experience with respect to strategy, labor relations, industrial hygiene, safety, logistics, corporate governance and talent management. | |
Other Public Directorships ■ Ecolab, Inc. ■ Aramark | |
What areDirector Commitments
John Zillmer is the directors’ qualificationsBest Choice for Chair of the Board of CSX Corporation
Our Board recognizes that certain shareholders have raised questions about the public company commitments of our Board Chair, John Zillmer, who is also the Chief Executive Officer (“CEO”) of Aramark and serves on a total of three public company boards, including CSX.
After thorough consideration and evaluation of Mr. Zillmer’s performance in leading the Board, including engaging a third-party facilitator, the Board unanimously recommends the re-election of Mr. Zillmer at the 2022 Annual Meeting and his continuation in the role of Board Chair. Mr. Zillmer has been highly engaged since joining the Board in March 2017, and has attended every board and committee meeting since becoming Chair in January 2019. Mr. Zillmer is a fully active participant in the board’s meetings and deliberations, is available for consultation with the other independent directors and serves an important role in the strong, independent oversight of management.
As background, beginning in 2017, the Board was significantly reconstructed, stimulated by an engaged shareholder who helped introduce a change agent CEO and several new directors. The refreshed Board was focusing first on making step change improvements in efficiency and customer service, and then on executing upon strategic growth initiatives and cultural transformation.
In December 2017, CSX appointed a new CEO, who was thrust into the leadership role due to servethe tragic passing of the change agent CEO. Then, the long-tenured and highly effective Board chair retired in January 2019. Given these circumstances, the Board concluded it needed a chair who: (i) had deep industrial experience; (ii) had been CEO of a comparably sized public company; (iii) had experience leading large-scale business transformation; and (iv) possessed the personality and temperament to coalesce a diverse and relatively new board around transformative business and cultural initiatives. The unanimous view was that Mr. Zillmer perfectly fits these criteria.
When Mr. Zillmer was appointed CEO of Aramark in October 2019, where he had previously spent 23 years in leadership roles, the CSX board unanimously concluded he was still the right person to lead the Board. As part of its thought process, the Board recognized Mr. Zillmer’s Board leadership with respect to the ongoing business transformation; his performance, which remained at an exceptionally high level; his other commitments and capacity to serve; and CSX’s need for stability of Board leadership as the Company continued its transformation.
2022 Proxy Statement | 19 |
ITEM 1: ELECTION OF DIRECTORS
The Board believes that Mr. Zillmer’s significant contributions to CSX based on his invaluable, experience-driven insights on business optimization and improvement, labor relations, safety, logistics, corporate governance, and talent management remain critical to the continued progress of the Company. Mr. Zillmer has been a force of stability in leading the Board as it navigates a range of highly complicated issues, including our business transformation and the COVID-19 pandemic. He has engaged extensively with and strongly supported the CEO, who in turn has excelled in driving the business transformation. During this time, the Board and management team have consistently drawn on Mr. Zillmer’s wise counsel to ensure oversight of management’s execution of CSX’s initiatives.
Each member of the CSX Board of Directors?
The table below highlightsDirectors believes that losing Mr. Zillmer as Board Chair for the qualifications and experience of each nomineesole reason that resulted inhe serves on three total boards as a sitting CEO would be to the Board’s determination that each nominee is uniquely qualified to serve on the Board.
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What if a nominee is unable to serve as director?
If anydetriment of the nominees named above is not available to serveBoard, CSX and its shareholders. Accordingly, the CSX Board of Directors unanimously recommends shareholders vote in favor of Mr. Zillmer’s re-election as a director at this year’s Annual Meeting. The Board intends to actively evaluate Mr. Zillmer’s performance, and should Mr. Zillmer be unwilling or unable to continue to maintain the timelevel of the Annual Meeting (an event whichengagement necessary to fulfill his responsibilities to CSX, the Board does not now anticipate), the proxies will be voted for the election of such other person or persons as the Board may designate, unless the Board, inreconsider its discretion, reduces the number of directors.decision.
The Board annually evaluates the independence of each of its directors and, acting through its Governance and Sustainability Committee, the performance of each of its directors. In evaluating the independence of each of its directors, the Board considers the NasdaqNASDAQ Global Select Market (“Nasdaq”NASDAQ”) listing standards and reviews transactions or relationships, if any, between each director, director nominee or his or her immediate family and the Company or its subsidiaries. The purpose of this review is to determine whether any such relationships or transactions are material,would interfere with the exercise of independent judgment by the director or director nominee in carrying out his or her responsibilities as a director, and thus, be inconsistent with a determination that the director or director nominee is independent. The Board also considers the independence of its committee members under applicable securities laws.
In February 2016,2021, after considering NasdaqNASDAQ listing standards, the Board, upon recommendation from the Governance and Sustainability Committee, determined that the following directorsdirector nominees are independent under the NasdaqNASDAQ listing standards: Donna M. Alvarado, John B. Breaux, Pamela L. Carter,Thomas P. Bostick, Steven T. Halverson, Edward J. Kelly, III, John D. McPherson,Paul C. Hilal, David M. Moffett, Timothy T. O’Toole, DavidLinda H. Riefler, Suzanne M. Ratcliffe, Donald J. Shepard andVautrinot, James L. Wainscott, J. Steven Whisler.Whisler and John J. Zillmer.
Principles of Corporate Governance
The Board is committed to corporate governance principles and practices that facilitate the fulfillment of its fiduciary duties to shareholders and to the Company. The Board has adopted Corporate Governance Guidelines that reflect the high standards that employees, investors, customers, suppliers and others can and should expect. Key corporate governance principles observed by the Board and the Company include:
certain future severance agreements with senior executives that provide benefits in an amount exceeding a threshold set forth in the policy; and
Ethics are available on the Company’s website at http://investors.csx.com under the heading “Corporate Governance.” Shareholders may also request a free copy of any of these documents by writing to CSX Corporation, Office of the Corporate Secretary, 500 Water Street, C160, Jacksonville, FL 32202. Any waivers of or changes to the Code of Ethics that apply to our directors or executive officers will be disclosed on CSX’s website at http://www.csx.com. There were no waivers to the Code of Ethics in 2015.
Shareholders who wish to communicate with the Board, or with a particular director, may forward appropriate correspondence to CSX Corporation, Office of the Corporate Secretary, 500 Water Street, C160, Jacksonville, FL 32202. Pursuant to procedures established by the non-management directors of the Board, the Office of the Corporate Secretary will forward appropriate correspondence to the Board or a particular director. Appropriate correspondence generally includes any legitimate, non-harassing inquiries or statements. Interested parties who wish to communicate with the Presiding Director or non-management directors may forward correspondence to CSX Corporation, the Presiding Director, CSX Board of Directors, 500 Water Street, C160, Jacksonville, FL 32202.
Board of Directors’ Role in Risk Oversight
Pursuant to its charter, the Audit Committee of the Board has primary responsibility for overseeing the Company’s business risk management (“BRM”) processes. In addition to regular risk presentations to the Audit Committee, management periodically reports to the Board of Directors and other Board committees on current risks and the Company’s approach to avoiding and mitigating risk exposure.
The BRM process at CSX includes activities related to the identification, assessment, mitigation and monitoring of risks. The CSX risk universe is divided into the following broad risk categories:
Compliance — Risks directly impacting CSX’s ability to meet or comply with state, federal or local rules and regulations (e.g., environmental law and regulation);
Strategic — Risks (and opportunities) directly impacting CSX’s ability to achieve or exceed its stated longer term strategic objectives (e.g., market demand shifts); and
External — Risks arising from events outside CSX and beyond the Company’s direct influence or control (e.g., economic downturn).
The objective of the BRM process is to facilitate timely identification and review of new and existing risks along with ensuring mitigation plans are developed and executed by providing oversight. A well-established risk management structure is leveraged to govern the program.
Risks are prioritized based on their inherent and residual impacts on the Company. On an ongoing basis, risks are evaluated to track the status of key mitigation activities along with the trends of key indicators. Ultimately, the BRM process provides an opportunity for business and functional leadership to collaborate on the key Company risks and identify needed mitigation steps to help advance the Company’s objectives.
Board of Directors’ Role in Succession Planning
The Board of Directors is responsible for succession planning for the Board, as well as senior management. In addition to routine succession planning efforts by the Board and the Governance Committee throughout the year, the full Board engages in a comprehensive management succession planning exercise at its annual strategy conference where it analyzes potential succession candidates across all senior management positions. Although the Board focuses on the senior executive team and CEO succession, directors also discuss the pipeline for other key roles in the Company. As part of this exercise, the Board reviews skills, competencies and readiness levels of succession candidates and recommends development plans to ensure that management succession candidates are adequately prepared for planned transitions.
As part of its succession planning efforts for potential director nominees, the Board considers, among other factors, diversity of backgrounds and experience, the tenure and skill sets of existing directors, and expertise in areas of strategic focus. In May 2015, the Board nominated, and shareholders elected, David M. Moffett as a new member of the CSX Board of Directors. Mr. Moffett brings to the Board a unique perspective on financial markets and public policy matters.
The Board believes that the twelve director nominees standing for re-election at this year's Annual Meeting possess a diverse breadth of experience that will bolster management's positioning of CSX to respond to volatile macroeconomic conditions and challenges facing CSX and the rail industry.
Transactions with Related Persons and Other Matters
CSX operates under a Code of Ethics that requires all employees, officersofficers and directors, without exception, to avoid engaging in activities or relationships that conflict,conflict, or would be perceived to conflict,conflict, with the Company’s interests or adversely affect its reputation. It is understood, however, that certain relationships or transactions may arise that would be deemed acceptable and appropriate upon full disclosure of the transaction, following review to ensure there is a legitimate business reason for the transaction and that the terms of the transaction are no less favorable to CSX than could be obtained from an unrelated person. The Audit Committee is responsible for oversight, review and oversightapproval or ratification of all transactions with related persons. CSX has not adopted written procedures for reviewing, approving or ratifying Related Person Transactions, but generally follows the procedures described below.below in accordance with Item 404 of Regulation S-K.
A “Related Person Transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which: (i) CSX (including any of its subsidiaries) was, is or will be a participant; (ii) the amount involved exceeds $120,000 in any fiscalfiscal year; and (iii) any Related Person had, has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficialbeneficial owner of another entity).
CSX considers aA “Related Person” to be:includes: (i) any person who is, or at any time since the beginning of the last fiscalfiscal year was, a director or executive officerofficer or a nominee to become a director; (ii) any person who is known to be the beneficialbeneficial owner of more than 5% of any class of CSX’s voting securities; (iii) any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of the director, executive officer,officer, nominee or more than 5% beneficialbeneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer,officer, nominee or more than 5% beneficialbeneficial owner; and (iv) any firm,firm, corporation or other entity in which any
of the foregoing persons is employed or is a partner or principal or in a similar position or in which such person has a 5%direct or greater beneficial ownershipindirect material interest.
On an annual basis, in response to the Directors and OfficersOfficers Questionnaire (“Questionnaire”) and a Related Person Transaction survey (“Survey”), each director, director nominee and executive officerofficer submits to the Corporate Secretary a description of any current or proposed Related Person Transactions. Directors and executive officersofficers are expected to notify the Corporate Secretary of any updates to the list of Related Person Transactions during the year. If Related Person Transactions are identified,identified, those transactions are reviewed by the Audit Committee.
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ITEM 1: ELECTION OF DIRECTORS
The Audit Committee will evaluate Related Person Transactions based on:
■ | information provided to the Board during the required annual affirmation of independence; |
■ | applicable responses to the Questionnaires submitted to the Company; and |
■ | any other applicable information provided by any director or executive officer of the Company, or obtained through internal database queries. |
In connection with the review, approval or ratification of any Related Person Transaction, the Audit Committee will consider whether the transaction will be a conflictconflict of interest or give the appearance of a conflictconflict of interest. In the case of any Related Person Transaction involving an outside director or nominee for director, the Audit Committee will also consider whether the transaction will compromise the director’s status as an independent director as prescribed in the NasdaqNASDAQ listing standards. There
During 2021, there were no Related Person Transactions in 2015.Transactions.
No member of the Compensation and Talent Management Committee is, or in 2021 was, an executive officerofficer or former officerofficer or employee of the Company. In addition, no executive officerofficer of the Company served on the board of directors of any entity whose executive officersofficers included a director of the Company.
CSX combines the roles of Chairman and CEO, which is balanced through the appointment of an independent Presiding Director. The Board believes an annual review of its performance, as a whole and as individual directors, is essential for ensuring overall effectiveness, including fulfillment of its oversight responsibilities, strategic planning and communications. The Governance and Sustainability Committee is responsible for developing and recommending the annual evaluation process to the Board. For 2021, the Board and director evaluation process was conducted as follows:
EVALUATION FORMAT | |||
In October of 2021, the Governance and Sustainability Committee recommended the use of third-party interviews every third year, supplemented by a peer assessment questionnaire. For 2021, the evaluation process consisted of third-party interviews and peer assessment questionnaires. | |||
1 | |||
■ | |||
CONDUCT EVALUATION | |||
■ One-on-one interviews were conducted by a third-party facilitator in December 2021. The interview questions were designed to elicit feedback on the Board’s performance in the areas of strategy and business, issues and challenges, Board and committee dynamics, Board and committee leadership, and structure of meetings. The supplemental peer assessment questionnaire was distributed to the board in early 2022, and sought feedback on individual director performance. | 2 | ||
REVIEW FEEDBACK | |||
3 | ■ The feedback received from the third-party interviews and the peer assessment questionnaires was compiled on an anonymous basis and provided to the Chair of the Board and the Chair of the Governance and Sustainability Committee, with any committee level feedback provided to the respective committee chairs. This feedback was then discussed by the Board in executive session at its February 2022 meeting. | ||
OUTCOME | |||
Following the review of evaluation results, the Board considers in what ways the processes of the Board, and its committees, can be improved. The Board then implements changes and enhancements to its processes where necessary to ensure the ongoing effectiveness of the Board and each of its committees. ■ ▼ | 4 | ||
2022 Proxy Statement | 21 |
ITEM 1: ELECTION OF DIRECTORS
Board of Directors’ Role in Succession Planning
One of the Board’s primary responsibilities is succession planning, not only for the Board but also for senior management, including the CEO. The Board believes it is critical to have a robust succession planning process and engages in succession planning efforts throughout the year, including a comprehensive management succession planning exercise in conjunction with its annual strategic planning session.
■ | The process begins with management developing a detailed summary of the key skills and competencies required for all senior management roles. Management then analyzes and summarizes the skills, competencies and readiness of potential succession candidates across all senior management positions, as well as the pipeline of candidates for other key roles. |
■ | A detailed review of this analysis is provided to the Board at its annual succession planning session. The Board then engages in robust discussions regarding the skills, competencies and readiness levels of succession candidates and recommends development plans to ensure succession candidates are adequately prepared for planned and unexpected transitions. |
■ | Status updates on succession candidates and development plans are provided to and discussed by the Board at meetings throughout the year. |
Board of Directors’ Role in Risk Oversight
Pursuant to its charter, the Audit Committee of the Board has primary responsibility for risk oversight. In addition to regular risk presentations to the Audit Committee, management periodically reports to the Board and its other committees on current risks and the Company’s approach to avoiding and mitigating risk exposure.
The Company’s Enterprise Risk Management (“ERM”) program includes activities related to the identification, assessment, mitigation and monitoring of enterprise-level risks. CSX revised its ERM framework in 2021 to focus on the Company’s core enterprise risks and related mitigation activities and controls. The CSX risk universe is currently divided into the following broad risk categories: Operations, Finance, Technology, and Compliance. Each risk category includes “core” ERM risks, as reflected in the chart below.
The ERM program is designed to ensure that combiningsenior management, the positionsAudit Committee and the CSX Board understand how enterprise-level risks are monitored, measured, reported and managed to promote risk-aware decision-making and to keep risks within tolerable bounds. A well-established risk management structure is leveraged to support the program. Each core risk is aligned with a Risk Leader, who has ongoing responsibility for monitoring and managing that risk. Each Risk Leader reports to a member of Chairmanthe Executive Risk Committee (comprised of the Executive Vice President (“EVP”) of Operations; EVP and CEO provides clarityChief Administrative Officer; EVP and Chief Legal Officer; and EVP and CFO), with a separate annual ERM report-out to the CEO.
In addition to risks related to financial reporting, internal controls and compliance, the Audit Committee also has oversight responsibilities with respect to information security risk, mitigation strategies and overall resiliency of leadershipthe Company’s technology infrastructure. Such risks are considered as part of the Company’s overall risk management and business continuity processes. In addition, the Audit Committee periodically reviews assessments of information security controls and procedures, any incidents that could have a material impact on the Company’s network, as well as potential cyber security risk disclosures. In late 2019, Maj. Gen. (ret.) Suzanne Vautrinot joined the Board and the Audit Committee. She is a recognized expert in cyber security matters as she previously served as Commander of the United States Air Force’s Cyber Command where she oversaw a multi-billion cyber enterprise, and led a workforce of 14,000 personnel conducting offensive and defensive cyber operations worldwide.
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ITEM 1: ELECTION OF DIRECTORS
Board of Director’s Role in Oversight of ESG
The Governance and Sustainability Committee oversees the development and execution of CSX’s ESG strategy and reporting, and has responsibility for risk oversight and evaluation of climate-related issues. Additionally, the Compensation and Talent Management Committee has oversight responsibilities with respect to the Company’s workforce and human capital management processes, including plans and processes for promoting diversity, equity and inclusion. On a day-to-day basis, ESG is collaboratively managed by the respective operational departments. Operational leaders are responsible for measuring and monitoring progress against key performance indicators and for reviewing and applying stakeholder feedback and insights.
Shareholder Outreach and Engagement
We believe that on-going shareholder engagement is a key component of effective corporate governance that allows the Company to better understand evolving trends and enable strategic decision-making to deliver shareholder value. We conduct shareholder outreach throughout the year to ensure that management and the Board understand and consider our shareholders’ views on important issues.
Senior leaders and subject matter experts from the Company meet routinely with representatives from many of our institutional shareholders and periodically with proxy advisory firms to discuss CSX’s financial and operating performance, business strategy, corporate governance, executive compensation, and ESG matters. Members of the Board participate in these meetings from time to time. In addition, the Company continues to successfully engage with shareholders to advance issues that are in the best interests of our broad and diverse shareholder base.
In addition to this shareholder outreach, CSX also engages with shareholders and other interested parties through its participation in industry and investment community conferences, investor road shows, and analyst meetings. In 2021, CSX maintained an active shareholder outreach program, including investor conferences, small group meetings, and non-deal roadshows. The Company leveraged the continued use of virtual meetings to expand international outreach, meeting with investors in Europe, Asia and Australia. In 2021, CSX hosted meetings with 110 unique firms, representing $12.2 trillion of equity assets under management.
Interested parties who wish to communicate with management, the Board, or with a particular director, may forward appropriate correspondence to CSX Corporation, Office of the Corporate Secretary, 500 Water Street, C160, Jacksonville, Florida 32202. Pursuant to procedures established by the non-management directors of the Board, the Office of the Corporate Secretary will forward appropriate correspondence to the Board or a particular director. Appropriate correspondence generally includes any legitimate, non-harassing inquiries or statements.
Principles of Corporate Governance
The Board is committed to corporate governance principles and practices that facilitate the fulfillment of its fiduciary duties to the Company and shareholdersits shareholders. The Board has adopted Corporate Governance Guidelines that reflect the high standards that employees, investors, customers, suppliers and others should expect. Key corporate governance principles observed by the Board and the Company include:
■ | separation of the roles of Board Chair and Chief Executive Officer; |
■ | nomination of a slate of directors for election to the Board, a substantial majority of which are independent, as that term is defined in the NASDAQ listing standards; |
■ | establishment of qualification guidelines for director candidates and review of each director’s performance and continuing qualifications for Board membership; |
■ | the requirement that the Audit Committee, Compensation and Talent Management Committee, and Governance and Sustainability Committee be comprised solely of independent directors; |
■ | authority for the Audit, Compensation and Talent Management, and Governance and Sustainability Committees to retain outside, independent advisors and consultants when appropriate; |
■ | adoption of a Code of Ethics, which meets applicable rules and regulations and covers all directors, officers and employees of CSX; |
■ | adoption of a Policy Regarding Shareholder Rights Plans, establishing parameters around the adoption of any future shareholder rights plan, including the expiration of any such plan within one year of adoption if the plan does not receive shareholder approval or ratification; |
■ | adoption of a Policy Regarding Shareholder Approval of Severance Agreements requiring shareholder approval of certain future severance agreements with senior executives that provide benefits in an amount exceeding a threshold set forth in the policy; |
■ | a majority voting standard with a director resignation policy in an uncontested election; and |
■ | adoption of a proxy access bylaw with market terms. |
CSX’s Corporate Governance Guidelines and Code of Ethics are available on the Company’s website at this time. http://investors.csx.com under the heading “Environmental, Social and Governance.” Shareholders may also request a free copy of any of these documents by writing to CSX Corporation, Office of the Corporate Secretary, 500 Water Street, C160, Jacksonville, Florida 32202. Any waivers of or changes to the Code of Ethics that apply to our directors or executive officers will be disclosed on CSX’s website at http://www.csx.com. There were no waivers to the Code of Ethics in 2021.
2022 Proxy Statement | 23 |
ITEM 1: ELECTION OF DIRECTORS
Board Leadership and Committee Structure
The Board believes that at this time, and based on the useCompany’s current circumstances, the positions of a Presiding DirectorBoard Chair and CEO should be separate, with carefully delineated duties provides appropriate independent oversight of management. The non-management directors regularly meet alone in executive session atthe Board meetings.
The Presiding Director isChair role being filled by an independent director selected annually by the Governance Committee. Mr. Kelly currently serves as the Presiding Director.director. The duties of the Presiding DirectorBoard Chair include: (i) calling special meetings of the Board; (ii) presiding at all meetings of the Board at whichand shareholders; (iii) determining the Chairman is not present; (ii) serving as liaison between the Chairman and the independent directors; (iii) approving information, meeting agendasagenda, schedule and meeting schedules sent tomaterials for meetings of the Board in consultation with the Vice Chair of the Board; (iv) callingguiding Board discussions and facilitating discussions between the Board and the Company’s management; (v) interacting with the Company’s analysts, investors, employees and other key constituencies; and (vi) keeping the Vice Chair informed, and consulting with the Vice Chair as to material developments regarding CSX.
The Chair of the Board is assisted by a Vice Chair. The duties of the Vice Chair include: (i) providing input on the agenda, schedules and meeting materials for meetings of independent directors when appropriate; (v) pre-clearing all transactionsthe Board; (ii) assisting in CSX securities by a director,guiding Board discussions and facilitating communication between the CEOBoard and the ExecutiveCompany’s management; (iii) interacting with the Company’s analysts, investors, employees and other key constituencies; (iv) performing the duties of Board Chair in the absence or at the request of the Board Chair; and (v) keeping the Board Chair informed, and consulting with the Board Chair, as to material internal and external discussions the Vice President—Law & Public Affairs, General CounselChair has, and Corporate Secretary;material developments the Vice Chair learns about the Company and (vi) being available for direct communication with major shareholders, as appropriate.the Board.
The CSX Board has sixfive standing committees: the Audit Committee, the Compensation and Talent Management Committee, the Executive Committee, the Finance Committee, and the Governance Committee, and the Public AffairsSustainability Committee. Each of these committees has a written charter approved by the Board, a copy of which can be found on the Company’s website at http://investors.csx.com under the heading “Corporate Governance”. As“Environmental, Social and Governance.”
Audit Committee | Meetings in 2021:9 | Independent Members:5/5 | ||||
Committee Members | David M. Moffett (Chair) Donna M. Alvarado Steven T. Halverson | Suzanne M. Vautrinot J. Steven Whisler | ![]() | |||
The primary functions of the Record Date,Audit Committee include oversight of: (i) the compositionintegrity of the committeesCompany’s financial statements and accounting methodology; (ii) the Company’s compliance with legal and regulatory requirements; (iii) the Independent Registered Public Accounting Firm’s qualifications, independence and performance; (iv) the Company’s risk management processes; and (v) the Company’s internal audit function.
The Audit Committee recommends the appointment of the Independent Registered Public Accounting Firm and the Board wasapproves the selection. This appointment is then submitted to shareholders for ratification. The Audit Committee also approves compensation of the Company’s Independent Registered Public Accounting Firm, reviews the scope and methodology of the proposed audits, reviews the Company’s financial statements and monitors the Company’s internal control over financial reporting. The Audit Committee is responsible for the approval of all services performed by the Independent Registered Public Accounting Firm. The Audit Committee maintains procedures for the receipt and treatment of complaints regarding the Company’s accounting, internal accounting controls or auditing matters. As part of its risk management responsibilities, the Audit Committee oversees cybersecurity risks.
The Audit Committee has five members, each of whom the Board, upon recommendation of the Governance and Sustainability Committee, has determined to be independent pursuant to the independence standards promulgated by NASDAQ and the SEC.
The Board has determined that all members of the Audit Committee are financially literate and Messrs. Moffett and Whisler have been designated as follows:
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ITEM 1: ELECTION OF DIRECTORS
The primary functions of the Compensation and Talent Management Committee are to: (i) establish the Company’s philosophy with respect to executive compensation and benefits; (ii) review the Company’s compensation practices and policies, benefit plans and perquisites applicable to all employees and executives to ensure consistency with the Company’s compensation philosophy; (iii) monitor the Company’s benefit plans, practices, programs and policies maintained for employees and directors for compliance with all applicable laws; (iv) in consultation with the Board, review and approve corporate goals and objectives relevant to compensation and benefits for the CEO, evaluate the CEO’s performance in light of those goals and objectives, and as directed by the Board, set the level of compensation of the CEO based on such evaluation; and (v) review the Compensation Discussion and Analysis (“CD&A”) section of this Proxy Statement and, as appropriate, recommend to the Board for approval the inclusion of the CD&A section in the Company’s Annual Report on Form 10-K and Proxy Statement. The Compensation and Talent Management Committee also is responsible for the oversight of human capital management including review of the Company’s leadership development, performance management and talent acquisition programs. In addition, the Compensation and Talent Management Committee has oversight responsibilities with respect to the Company’s plans and processes for promoting diversity, pay equity and inclusion. The Compensation and Talent Management Committee has also retained the services of an independent compensation consultant to advise on executive compensation matters. The role of the compensation consultant is described in the CD&A section of this Proxy Statement. The Compensation and Talent Management Committee has five members each of whom qualifies as: (i) a “non-employee director” within the meaning of Rule 16b-3 of Securities and Exchange Act of 1934; and (ii) independent pursuant to the independence standards promulgated by NASDAQ.
The primary functions of the Finance Committee include: (i) providing general oversight with respect to the Company’s capital structure, cash flows and key financial ratios; (ii) reviewing and monitoring corporate debt, cash flow; (iii) recommending policies and practices related to dividends and share repurchase programs, and (iv) authorizing the issuance of debt or other securities, or other forms of financing; and (v) reviewing the assets and liabilities maintained by the Company and its affiliates in conjunction with employee benefit plans, including monitoring the funding and investment policies and performances of the assets. The Finance Committee has five members each of whom the Board has determined to be independent under the applicable NASDAQ rules. The Finance Committee may, under its charter, delegate all or a portion of its duties and responsibilities to a subcommittee of the Committee as appropriate and consistent with applicable regulations, laws and listing standards.
ITEM 1: ELECTION OF DIRECTORS
The Governance and Sustainability Committee’s primary responsibilities include: (i) identifying individuals qualified to become Board members, consistent with criteria approved by the Board, and recommending candidates for election to the Board and its committees, (ii) evaluating the performance and effectiveness of the Board, (iii) recommending changes in Board size, composition and committee structure; and (iv) overseeing the CEO and senior management succession planning process. The Governance and Sustainability Committee is also responsible for reviewing the Company’s sustainability policies, strategies and programs, and sustainability performance and reporting, including an annual review of the Company’s Environmental, Social and Governance Report. In addition, the Governance and Sustainability Committee is also responsible for oversight of the Corporation’s political giving policy and community affairs activities, including the corporate philanthropy policy. The Governance and Sustainability Committee has five members each of whom the Board has determined to be independent under the applicable NASDAQ rules.
The Executive Committee meets for the purpose of acting on behalf of the full Board between regularly scheduled meetings of the Board when time is of the essence. The Executive Committee has and may exercise all the authority of the Board, except as may be prohibited by Section 13.1-689 of the Virginia Stock Corporation Act, as it may from time to time be amended. Pursuant to the Executive Committee charter, a notice of a meeting of the Executive Committee is required to be provided to all Board members. The Executive Committee has seven members, consisting of the CEO, Chair of the Board, Vice Chair of the Board and the chairs of each of the four other standing committees.
ITEM 1: ELECTION OF DIRECTORS During The Board periodically
The following charts show director cash
Each non-employee director was eligible to defer all or a portion of his or her director’s fees in
Matching Gift Program and Other
ITEM 1: ELECTION OF DIRECTORS 2021 Directors’ Compensation Table The following table summarizes the compensation of each of the non-employee directors
The Board has adopted Stock Ownership Guidelines to better align the interests of non-employee directors with the interests of shareholders.
The Audit Committee is directly responsible for the appointment, retention, compensation and oversight of the Independent The Audit Committee has selected and appointed Ernst & Young LLP (“EY”) as the Company’s Independent Action by shareholders is not required by law in the appointment of
The Board unanimously recommends that the shareholders vote FOR this proposal. 2022 Proxy Statement 29 ITEM 2: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee is responsible for the approval of all services performed by
The Audit Committee of the CSX Board of Directors (the “Audit Committee”) oversees the Company’s Management has the primary responsibility for the
The meetings of the Audit Committee are designed to facilitate and encourage communication among the Audit Committee, the Company, the Company’s internal audit function and the Company’s Each year, the Audit Committee evaluates the EY, the Company’s In this context, the Audit Committee has:
2022 Proxy Statement 31 REPORT OF THE AUDIT COMMITTEE
Based on its review and on the discussions described above, the Audit Committee has recommended to the Board, and the Board has approved, that the audited Members of the Audit
Donna M. Alvarado Steven T. Halverson Suzanne M. J. Steven Whisler Jacksonville, Florida
The Company’s ongoing business transformation, which began in 2017, initially focused on improving operating performance, driving efficiencies and delivering industry leading customer service. While the Company remains focused on efficiency, safety and service, it is now executing on its strategies to drive profitable growth and deliver significant value for customers. In 2021, these efforts included the Company’s acquisition of Quality Carriers, Inc., the largest provider of bulk liquid chemicals truck transportation in North America. In addition, the Company continued to work through the regulatory process for approval of the acquisition of Pan Am Systems, Inc., which was announced in late 2020. These acquisitions are expected to open new markets and provide complementary service offerings to customers. More details about these acquisitions are included in the Compensation Discussion and Analysis (“CD&A”) The Committee believes the Company is well-positioned for growth and Environmental Advantages of Rail Railroads offer a unique opportunity within the freight transportation sector to reduce carbon emissions, as trains are the most efficient, environmentally friendly mode of transportation by land. On average, freight railroads are three to four times more fuel efficient than trucks and produce 75% fewer greenhouse gas (“GHG”) emissions. As such, CSX expects sustainability to be even more important to the Company’s long-term business strategy going forward, offering substantial benefits for all stakeholders and a significant competitive advantage over trucks. In addition to reducing CSX’s carbon footprint, these environmental advantages provide the Company with a strategic opportunity to convert truck traffic to rail and help customers significantly reduce their GHG emissions. We are extremely proud of the leadership the Company has shown and continues to demonstrate in this area. In 2020, CSX became the first railroad in the United States to align with the Science Based Targets initiative, setting a goal to reduce GHG emissions intensity by 37.3% by 2030, using 2014 as a baseline. The Company’s efforts have been recognized by multiple environmental groups and business publications. Among these recognitions, for the 11th straight year, CSX was included in the Dow Jones Sustainability Index, as the sole U.S. railroad to receive this recognition. Furthermore, CDP, a global environmental non-profit organization, named CSX to its “A List” for climate leadership in 2021, and Forbes included CSX as the only transportation company of any kind on its “Green Growth 50” list. Human Capital Management The Committee continues to focus on initiatives to drive a cultural transformation at CSX that inspires employee engagement and excellence. The Company has adopted the term “One-CSX” to describe a culture that emphasizes cooperative innovation and the value of each individual’s contributions to achieving shared objectives. Expanded learning and development opportunities, growth of employee-led business resource groups and implementation of a social justice action plan all have strengthened the Company’s commitment to valuing and developing employees. While the Company has made great strides to date, the Committee remains focused on supporting initiatives to build an even more diverse, engaged and motivated workforce that will continue to deliver sustainable returns for shareholders. While One-CSX applies to the entire corporate culture, safety improvement represents a significant early success of the initiative. The “put people first” emphasis has included fundamental shifts in CSX’s approach to its CSX safety culture, resulting in reforms to Operational Testing policies, with the involvement of labor organizations that have contributed to a more cooperative environment. Sharing a common understanding of safety rules and expectations, frontline leaders and union-covered employees can work together to identify risks and strategies for avoiding workplace hazards, injuries and accidents. The cultural transformation is evident in the Company’s safety performance. CSX had no employee fatalities in 2021, achieved the lowest Federal Railroad Administration (“FRA”) reportable injury rate among Class 1 peers in two of the past three years, and recorded new lows for accident costs over the past three years. 2022 Proxy Statement 33 LETTER FROM THE COMPENSATION AND TALENT MANAGEMENT COMMITTEE Hiring for Growth CSX continues to transform its business and advance critical strategic objectives, despite significant challenges created by the novel coronavirus pandemic, including supply chain disruption and a tight labor market. Given these challenges, the Committee recognizes the critical importance of winning the competition for the small number of successful railroaders with scheduled railroading expertise. CSX has responded aggressively to fill the Company’s hiring pipeline for frontline railroaders. Recruiting for a wide range of positions, including train crews and mechanical and engineering department employees, the Company has expanded training capacity, offered referral bonuses to current employees and increased pay for new conductors in training. These efforts resulted in the Company hiring and retaining nearly three times as many conductors in 2021 as in the previous two years combined. In addition, ensuring that we have a competitive, performance-based compensation structure is the key to retaining what we believe is a best-in-class management and operating team. This will be especially important as the Company advances its One-CSX culture and continues to grow, whether that be through strategic acquisitions or innovative new service products. Focus on Sustainable Growth The Committee is focused on designing and implementing compensation programs that advance the Company’s strategy to drive long-term sustainable growth. From year-to-year, the Committee’s ability to set appropriate and challenging performance goals is impacted by market and economic volatility, including impacts from the pandemic, global trade and supply chain dynamics, the geopolitical environment and overall visibility for short and long-term forecasts. Each year, the Committee reviews short and long-term incentive plan design to ensure alignment with the Company’s business strategy, key financial objectives, shareholder interests and environmental stewardship. For both 2021 and 2022, the Committee designed the annual incentive program, which applies to all management employees, to align with the Company’s business strategies. In addition to operating income, operating ratio and initiative-based revenue growth, we included sustainability goals related to safety and fuel efficiency. With respect to the long-term incentive plans (“LTIP”), in 2021, the Committee began to shift its focus from efficiency measures to growth-oriented measures. More specifically, for the 2021 – 2023 LTIP, the Committee utilized average annual operating income growth rate percentage and free cash flow on an equally weighted basis, as the performance measures for the performance units. The average annual operating income growth rate percentage measure aligns with the Company’s objective of profitable growth. For the 2022 – 2024 LTIP, the Committee approved the use of CSX cash earnings (“CCE”) and average annual operating income growth rate on an equally weighted basis, as the performance measures for the performance units. The transition to CCE is designed to measure whether returns on new investments exceed an expected rate of return and to encourage investments in growth projects. Based on back-testing of historical data, CCE has shown a high correlation to stock price appreciation. We look forward to this year’s Annual Meeting and continued engagement with shareholders. You may provide feedback to the Committee by sending correspondence to CSX Corporation, Office of the Corporate Secretary, 500 Water Street, C160, Jacksonville, Florida 32202.
The Compensation and Talent Management Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on its review of the disclosures, the Compensation and Talent Management Committee recommended to the full Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
2022 Proxy Statement 35 Key Business Highlights for 2021 In 2021, despite ongoing disruption caused by COVID-19 and its variants, the Company was able to generate earnings of $1.68 per share, a 40% increase from 2020, and a Company-record operating ratio of 55.3%. While supply chain impediments and crew availability continued to present operating challenges, the Company remained focused throughout the year on adding the resources necessary to provide a high level of customer service, creating value for shareholders and setting the course for future growth. In 2021, the Company hired more than 1,000 conductors, which will improve network fluidity and allow us to drive additional customer service improvements.
Despite the supply chain challenges and their impacts on freight volumes in 2021, improved network planning and operational execution contributed to increased fuel efficiency, greater network fluidity and fewer crew starts. These efficiencies enabled the Company to generate $3.833 billion of free cash flow to support dividend payments to shareholders, stock repurchases and investment in the CSX rail infrastructure. The Company’s capital expenditures of approximately $1.8 billion for the year demonstrated a commitment to maintaining a safe, world-class rail network that is positioned for growth. This investment in infrastructure along with increased operating efficiencies and improved asset utilization have provided the Company with a substantial capacity reserve to accommodate higher volumes as economic conditions improve and highway-to-rail conversions increase. Note: Results prior to 2018 restated for pension accounting change. 2017 reflects non-GAAP reported results, which excluded the impact of tax reform and restructuring charges. Growth Initiatives In 2021, CSX continued to execute on its growth strategy, including the advancement of regulatory procedures necessary to finalize the proposed acquisition of Pan Am Systems, Inc. (“Pan Am”), which was announced in late 2020. Pan Am owns and operates a highly integrated, nearly 1,200-mile rail network and has a joint interest in the more than 600-mile Pan Am Southern system. This acquisition, if approved, will expand CSX’s reach in Connecticut, New York and Massachusetts while adding Vermont, New Hampshire and Maine to the Company’s existing network. On February 25, 2021, the Company began the process of seeking approval from the Surface Transportation Board (“STB”), which can take up to a year or more. While this transaction requires regulatory approval, the Company has garnered significant support among key stakeholders.
COMPENSATION DISCUSSION AND ANALYSIS In May 2021, CSX announced the acquisition of Quality Carriers, Inc. (“Quality Carriers”), the largest provider of bulk liquid chemicals truck transportation in North America. Through a network of over 100 company-owned, and affiliate terminals and facilities in key locations throughout the United States, Canada and Mexico, Quality Carriers provides transportation services to many of the leading chemical producers and shippers in North America. This transaction, which closed on July 1, 2021, enables CSX to extend the reach of its network and gain access to new products, markets, and regions through a unique and competitive multimodal solution that leverages the reach of truck transportation with the cost and environmental advantage of rail-based services. As such, CSX is now able to provide more comprehensive transportation services to customers throughout various supply chains. Environmental Advantages of Rail At CSX, we recognize rail plays an integral role in keeping our customers’ businesses and the broader economy moving across North America. As the most fuel-efficient mode of land-based freight transportation, railroads like CSX also have a tremendous responsibility to lead by example in how we address climate change – both in terms of our own operations and our broader engagement. On average, freight railroads are three to four times more fuel efficient than trucks and produce 75% fewer GHG emissions. As such, sustainability at CSX continues to be an important component of the Company’s long-term business strategy going forward.
CSX remains dedicated to advancing innovative solutions and progressive action in our operations to reduce our impact on the environment, while working closely with customers and stakeholders in support of the transition to a low-carbon economy. As detailed in the chart below, the Company has continued to improve its fuel efficiency reducing the Company’s carbon footprint while providing a compelling opportunity for customers moving freight via truck to reduce their GHG emissions by transitioning to rail. To continue the focus on improved fuel efficiency and reduced carbon emissions, the Company has incorporated a fuel efficiency measure in its 2021 and 2022 annual incentive compensation plans, as described below under 2021 Short-Term Incentive Compensation. Objectives of CSX’s Executive Compensation Program The primary objectives of the Company’s executive compensation programs
COMPENSATION DISCUSSION AND ANALYSIS
The
purposes (the “Comparator Group”). The Committee
levels:
In Comparator Group for 2021, which was comprised of 20 primarily U.S.-based companies and North American railroads to help guide executive compensation decisions at CSX. The Committee annually assesses and approves the capitalization and revenue.
COMPENSATION DISCUSSION AND ANALYSIS
Role of the Pursuant to its charter, the Committee has sole authority to select, retain and terminate any consultant used to assist the Committee in duties. The Committee has retained
The Committee reviews the performance and independence of the Consultant on an annual basis, at which time In
COMPENSATION DISCUSSION AND ANALYSIS
The Committee believes appropriately structured compensation
The risk assessment, which includes a summary of all executive compensation programs and
Say-on-Pay and
The
Elements of the Company’s 2021 Executive Compensation Programs CSX provides competitive total compensation The Committee makes its decisions concerning the
The
COMPENSATION DISCUSSION AND ANALYSIS
The Company’s executive compensation philosophy requires that a substantial portion of total compensation
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The Committee determines a base salary for each NEO annually based on its assessment of the individual’s In 2021, the Committee reviewed the annual compensation of the Company’s NEOs and approved, or recommended Board approval for the CEO, changes to base salaries that considered market data, individual performance, overall responsibilities, internal equity and functional experience. For Mr. Foote, the Committee recommended, and the Board approved, an increase to his annual base salary to $1,500,000. The Committee approved increases to the base salaries for Mr. Boone, Executive Vice President – Sales and Marketing (EVP - CFO at the time of approval), Mr. Boychuk, Executive Vice President – Operations, Mr. Goldman, Executive Vice President – Chief Legal Officer and Corporate Secretary, Ms. Sorfleet, Executive Vice President and Chief Administrative Officer, and Mr. Pelkey, Executive Vice President and Chief Financial Officer (Vice President and Acting Chief Financial Officer at the time of approval). The new base salaries were as follows: Messrs. Boone and Boychuk – $700,000; and Mr. Goldman and Ms. Sorfleet - $550,000. These adjustments were effective as of January 1, 2021. In June 2021, the Committee approved a base salary for Mr. Pelkey of $516,000 in connection with his promotion to Vice President and Acting Chief Financial Officer.
2021 MICP Performance Measures In January 2021, the Committee approved the performance measures for the
COMPENSATION DISCUSSION AND ANALYSIS To determine the
2021 MICP Targets and Payout Percentages In light of the continuing economic uncertainties and widespread supply chain challenges that existed in January 2021, when the plan was adopted, the Committee approved annual incentive targets with a wider range than recent years. The 2021 MICP
The Committee believes that the measures for the 2021 MICP were directly aligned with the Company’s strategic short-term goals, were directly impacted by executive leadership actions, supported our long-term strategy, helped deliver shareholder value and ensured retention of critical talent. For 2021, the Company achieved above-maximum operating income of $5.594 billion and above-maximum operating ratio of 55.3%. FRA Personal Injuries were slightly below target at 0.92, while FRA Train Accidents fell below threshold at 2.90. For the Operational and ESG goals, the Company achieved: 76.5% trip plan compliance, which was below threshold; fuel efficiency of 0.960, which was just below maximum; and $341 million of initiative-based revenue growth, which was well ahead of maximum. As such, the Company’s performance on each of these goals for 2021, resulted in a payout of
Similar to how management 2022 Proxy Statement 49 COMPENSATION DISCUSSION AND ANALYSIS The 2022 MICP design continues to emphasize safety, operating income and operating ratio, as well as operational and ESG-focused performance measures, including trip plan compliance (a customer service measure), fuel efficiency and initiative-based revenue growth. These measures are designed to enhance focus on items that employees have the Long-Term Incentive Compensation The Company’s long-term incentive compensation
to delivering shareholder value. Long-term incentives The Stock
A significant portion of the NEOs’ target compensation is comprised of the
Since the three-year performance cycles run concurrently, the Company may have up to three active LTIP cycles during a given year. For example, the 2019-2021 performance cycle closed on December 31, 2021, and was paid out in January 2022. The 2020 – 2022, 2021 – 2023 and 2022 – 2024 cycles remain in progress, which help ensure that our employees remain focused on sustainable long-term performance. Performance Units. Performance units are granted at the beginning of the applicable performance cycle, as described below. Awards are paid in the form of CSX common stock at the end of the performance period based on the level of achievement on Company performance goals. Performance units are generally subject to forfeiture if a participant’s employment terminates before the end of the performance cycle for any reason other than death, disability, retirement or other limited circumstances, as approved by the Committee. For the 2019 – 2021 LTIP cycle, upon death, disability or retirement, participants or their estates received a prorated portion of their award based on the number of months completed in the cycle. Beginning in 2020, upon death or disability, participants are eligible to earn the performance units that they would otherwise have earned at the end of the performance period had there been no death or disability. Upon retirement, participants receive a prorated portion of their award based on the number of months completed in the LTIP cycle. Mr. Foote is currently eligible for retirement for purposes of the LTIP and his employment agreement provides that, in connection with his retirement, his outstanding performance units will remain outstanding and eligible to vest based on Company performance through the end of the applicable LTIP cycle. Performance unit payouts for each LTIP cycle, if any, do not occur until approved by the Committee in January of the year following the
COMPENSATION DISCUSSION AND ANALYSIS Non-qualified Stock Options. Non-qualified stock options vest ratably over three years and require stock price appreciation to provide any value to the NEOs. As a result, they reinforce leadership’s focus on the importance of value creation for shareholders. Non-qualified stock options generally provide participants with the right to buy CSX stock at a pre-set price for a period of 10 years. The exercise price of the non-qualified stock options is established as
Restricted Stock Units. Restricted stock units are time-based awards that vest three years from the
Further information regarding the LTIP grants made to our NEOs in 2021 can be found under the “2021 Grants of Plan-Based Awards Table” below. Performance Measures for the 2019 - 2021 LTIP For performance units granted under the 2019 – 2021 LTIP cycle, cumulative operating ratio and cumulative free cash flow were selected to measure the Company’s performance. Operating ratio has a historically high correlation to the Company’s stock price and serves as a key financial performance measure for CSX and the railroad industry. As such, the use of operating ratio has strengthened participants’ understanding of how they can impact Company performance and drive operating efficiency. Long-term improvements in operating ratio have increased operating income and earnings, creating value for shareholders. Free cash flow was chosen as a performance measure as it is a key measure of the financial health of the business, has a high correlation to shareholder returns and aligns with CSX’s financial business plan. Operating ratio and free cash flow were each weighted 50% of the total payout opportunity and were measured independently of the other.
The threshold, target and maximum payouts for each measure are 10%, 50% and 100% of the performance units subject to the award respectively, generating a total target payout of 100% of the performance units and a maximum possible payout of 200% of the performance units for the 2019 – 2021 LTIP. The 2019 – 2021 LTIP measured operating ratio and free cash flow over a 12-quarter period from January 2019 through December 2021. In addition to operating ratio and free cash flow, the performance units for this LTIP cycle for the President and Chief Executive Officer and all Executive Vice Presidents had a formulaic linear upward or downward relative total shareholder return (“Relative TSR”) modifier of up to 25% (subject to the 250% overall cap) based on CSX’s stock price performance compared to the peer group (weighted 80% core peers and 20% additional correlated companies) for the 12-quarter period from January 2019 through December 2021. This modifier did not apply to Mr. Pelkey for this LTIP cycle as he was not promoted to Executive Vice President until January 2022. The Committee recognizes that operating ratio is a measure in the short and long-term plans, but believes inclusion in both plans reflects the criticality of the alignment between operating ratio and the Company’s focus on operating efficiency. The Committee does not believe this overlap will create inappropriate risk-taking since the measurement periods are different (one vs. three years), and operational measures and reviews are in place to monitor risk. The Committee annually reviews the measures used for each long-term incentive cycle, and makes changes as appropriate. This overlap was eliminated starting with the 2020 – 2022 LTIP consistent with CSX’s strategic initiatives focused on growth. 2022 Proxy Statement 51 COMPENSATION DISCUSSION AND ANALYSIS Financial Goals for the 2019 - 2021 LTIP The LTIP targets for the performance units granted under the 2019 – 2021 LTIP were set in February 2019, based on the three-year business plan at the time of its adoption. The targets under the 2019-2021 LTIP were as follows:
At the time the 2019 – 2021 LTIP was approved by the Committee, a provision was made for the adjustment of the operating ratio performance goals by a pre-determined amount if the average cost of highway diesel fuel was outside the range of $2.85 - $3.35 per gallon. This potential adjustment is designed to mitigate the positive and negative impact volatile fuel prices may have on expenses and operating ratio. There was no adjustment to the cumulative operating ratio targets as the average price per gallon of highway diesel fuel of $2.96 was within the range of $2.85 – $3.35 per gallon, which was the collar set at the time of adoption of the plan. Payout for the 2019 - 2021 LTIP Performance Units Based on a cumulative operating ratio of 57.4% and a cumulative free cash flow of $9.96 billion for the cycle, the payout for the performance units, which comprised 60% of the 2019 – 2021 LTIP, was 169% of target. The Company’s Relative TSR performance against the peer group was below median for the cycle, resulting in a downward modifier of 15%, and a total payout of 144% for each of the NEOs other than Mr. Pelkey, who was not an Executive Vice President as of December 31, 2021. Performance Measures for the Outstanding LTIPs In determining the
Table of COMPENSATION DISCUSSION AND ANALYSIS The 2020 – 2022 LTIP is comprised of
Clawback Provision Payouts made under the MICP and LTIP programs are subject to recovery or clawback in certain circumstances. Under the applicable clawback provisions, an employee who has received a payout will be required to promptly return the monies (or any portion of the monies requested by the Company) in each of the following circumstances: (i) if it is determined that the employee engaged in misconduct, including but not limited to, dishonesty, fraud (including reporting inaccurate financial information), theft, or other serious misconduct as determined by the Company; (ii) if the Company is required to file an accounting restatement due to the Company’s material noncompliance with any financial reporting requirements under the federal securities laws; or (iii) if the payout is otherwise required to be recovered by law or court order (i.e. garnishment). Mr. Foote entered into an employment agreement upon his hiring as Executive Vice President and Chief Operating Officer in October 2017, which was
Non-Compete
The President and CEO, executive vice presidents, senior vice presidents, vice presidents, heads of department, as well as certain other key employees, are required to enter into formal non-compete and non-solicitation agreements with the Company as a condition for participation in each LTIP cycle. The non-compete
As of
Notwithstanding the foregoing, if an NEO is COMPENSATION DISCUSSION AND ANALYSIS
The Company
Our NEOs are subject to
The NEOs may contribute to the CSXtra Plan, a defined contribution 401(k) plan. Participants may contribute on a pre-tax or after-tax basis and receive Company matching contributions. The Company’s matching contribution is equal to 100% on the employee’s first 1% of eligible compensation contributed, and 50% on the employee’s additional contributions up to 6% of base salary, for a Company match up to 3.5% of eligible compensation. Participants may invest contributions in various investment funds. Qualified CSX Pension Plan
The hypothetical account earns interest credits on a monthly basis based on the annual 10-year Treasury bond rate and the participant’s account balance as of the prior month. The average annual interest crediting rate used for 2021 was 3.66%. The resulting
COMPENSATION DISCUSSION AND ANALYSIS
Special Retirement Plan of CSX and The Special Retirement Plan is a
new employees. The Special Retirement Plan
The
Under the Special Retirement Plan, participants receive non-qualified pension benefits on base salary and short-term incentive compensation that exceed the $290,000 compensation limit under the Code and the $230,000 benefit cap under Section 415 of the Code. These benefits are calculated using the cash balance formula described above for all of the NEOs, without regard to the 415 Limit or the Compensation Limit. Non-qualified pension benefits can be paid in the same form as under the Pension
Health and Group Benefits CSX provides the same health and group benefits to the NEOs as those available to all non-union employees. The Company also provides basic life insurance and accidental death and dismemberment insurance coverage to all management employees, each of which is equal to two times their respective annual salaries, up to $1 million. The Company also provides NEOs, on
Under the EDCP,
In accordance with a participant’s individual elections, deferred amounts, other than stock awards, are treated as if they were invested among the investment funds available under the
EDCP participants may elect to receive payment of their deferred amounts, including earnings, upon separation from service or upon the attainment of a A participant may apply for accelerated payment of deferred amounts in the event of certain hardships and unforeseeable emergencies.
The
Under the ESPP, employees may purchase shares at the lesser of: (i) 85% of the fair market value of a share of CSX fair market value of a share of CSX common stock on the last day of an offering. There are two offering periods each year. The ESPP limits the number of shares of CSX common stock that an employee may purchase in a calendar year to a number of shares that have a fair value (as of the applicable grant date) equal to $25,000. COMPENSATION DISCUSSION AND ANALYSIS
The perquisites provided to NEOs in 2021 included: (i) financial planning services of up to $12,000; and (ii) an annual health and well-being examination. The aggregate cost to the Company of these perquisites was approximately $15,000 for each NEO. Additionally, pursuant to Company policy, Mr. Foote, as CEO, is required to travel by Company aircraft at all times for security purposes and to ensure efficient use of his time. Other senior-level executives have access to the Company aircraft and may use it on a limited basis for personal reasons. The amounts related to the NEO’s use of the Company aircraft are Stock Ownership Guidelines CSX believes that, in order to align the interests of management with those of its shareholders, it is
Policy Prohibiting Hedging / Pledging of CSX Stock CSX’s insider trading policy prohibits officers and directors from entering into transactions to hedge their ownership positions in CSX securities. In addition, the policy prohibits officers and directors from pledging CSX securities.
COMPENSATION DISCUSSION AND ANALYSIS 2021 Summary Compensation Table The Summary Compensation Table and the accompanying footnotes describe the amount and type of compensation for the NEOs
Table of COMPENSATION DISCUSSION AND ANALYSIS 2021 Grants of Plan-Based Awards Table In 2021, the
COMPENSATION DISCUSSION AND ANALYSIS
COMPENSATION DISCUSSION AND ANALYSIS 2021 Outstanding Equity Awards at Fiscal Year End The
COMPENSATION DISCUSSION AND ANALYSIS
2021 Option Exercises and Stock Vested Table The table below presents the
COMPENSATION DISCUSSION AND ANALYSIS
As described below,
2021 Non-qualified Deferred Compensation Table The following table presents a summary of 2021 contributions made under the Executives’ Deferred Compensation Plan, as well as associated 2021 earnings, distributions and year-end balances. Two types of deferrals are represented below: cash and CSX
COMPENSATION DISCUSSION AND ANALYSIS The following table presents the severance
Benefits Provided Following a Change-of-Control Each Change-of-Control Agreement provides that for a period of three years after a change-of-control (or, if later, 12 months following the final decision by an agency of a regulated business combination) (the “Employment Period”), CSX is required to:
COMPENSATION DISCUSSION AND ANALYSIS Benefits Provided if the Each Change-of-Control Agreement provides that CSX will pay to the NEO the severance benefits described below if, during the Employment Period, CSX terminates the NEO’s employment other than for
Medical and
Outplacement — Outplacement services at a cost to CSX not to exceed $40,000. Other Change-of-Control
In accordance with the terms of the EDCP, distribution of the entire account balance shall be made to participants upon a change-of-control No Tax Gross-Ups for Excess Parachute Payments The Company does not provide gross-up payments for excess parachute excise taxes. Rather, the Change-of-Control Agreements provide that the Company will provide the best-net-benefit, meaning that to the extent an NEO would have a higher net after-tax benefit if his or her payments were reduced so as to avoid excise taxes due to an excess parachute payment, the payments will be automatically adjusted downward to prevent an excess parachute payment. No amounts are reduced in any of the tables to give effect to any such reduction.
COMPENSATION DISCUSSION AND ANALYSIS Post-Employment Compensation - Termination without Cause by the Company or by the Executive for Good Reason (Other than in connection with a Change-of-Control) The following table presents the severance benefits to which each of the NEOs would be entitled as of December 31, 2021, under the applicable severance arrangement assuming the NEO was terminated “without cause” by the Company or by the executive for “good reason.” Mr. Wallace is not included in the table below due to his untimely passing on November 28, 2021.
For 2021, the last completed fiscal year:
The Company identified a new median employee as of year-end 2021. To identify the median employee, as well as to determine the annual total compensation of Mr. Foote, the following analysis occurred:
Table of Contents In accordance with the Dodd-Frank Act and Section 14A of the Securities Exchange Act of 1934, CSX is providing shareholders with the opportunity to vote on a non-binding, advisory resolution to approve the compensation of the “RESOLVED, that the shareholders of CSX Corporation (the The Company currently holds an advisory vote on the compensation of the Company’s NEOs on an annual basis (in accordance with the results of the advisory shareholder vote held at the Company’s 2017 Annual Meeting to determine the frequency of an advisory vote on NEO compensation), and will continue to hold the vote annually until the next frequency vote is held (which is not required until 2023). As described in the CD&A, the Company’s executive compensation program is designed to align executive pay with the Company’s Shareholders are urged to read the CD&A, the accompanying compensation tables and the related narrative disclosure in this Proxy Statement, which more thoroughly discuss the Company’s compensation policies and procedures. The Compensation and Talent Management Committee and the Board believe that these policies and procedures are effective in implementing the Company’s overall pay-for-performance compensation philosophy. While this advisory vote is required by law, it will neither be binding on the Company, the Compensation and Talent Management Committee or the Board, nor will it create or imply any change in the
The following table sets forth information about the Company’s equity compensation plans as of December 31, 2021.
Ownership of
Security Ownership of Management and Certain Beneficial Owners The following table sets forth, as of March
OWNERSHIP OF OUR STOCK The following table sets forth information regarding the
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders As permitted by rules adopted by the SEC, we are making our proxy materials available to our shareholders electronically via the Internet. We have mailed many of our shareholders a Notice containing instructions on how to access this Proxy Statement and Annual Report on Form 10-K
the website maintained by the SEC (www.sec.gov). The information on or accessible through our website is not part of this Proxy Statement. You may submit a request for a printed version of the
March By Order of the Board of Directors
Executive Vice 2022 Proxy Statement 71
2022 Proxy Statement 73 ANNUAL MEETING QUESTIONS & ANSWERS
74 ANNUAL MEETING QUESTIONS & ANSWERS
2022 Proxy Statement75 ANNUAL MEETING QUESTIONS & ANSWERS
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2022 Proxy Statement 77 ANNUAL MEETING QUESTIONS & ANSWERS
78 Awards and Achievements CSX continues to be recognized with several high-profile awards, rankings and selections for its business practices, long-term investment value and commitment to excellence, including the following:
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CSX CORPORATION This Proxy is to be held on May The undersigned hereby appoints The proxy will be voted as directed. If no direction is made, the proxy will be voted: Continued and to be signed on reverse side |