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NS STOCK UNIT PLAN
Effective July 24, 2001, as Renamed August 6, 2001
Section 1. PURPOSE
The Phantom Stock Unit Plan was adopted July 24, 2001, and renamed the
NS Stock Unit Plan (the "Plan") on August 6, 2001. The purpose of the
Plan is to promote the success of Norfolk Southern Corporation (the
"Corporation") by providing compensation to officers and other key
employees of the Corporation and its Subsidiary Companies (as
hereinafter defined) which is tied to the performance of the common
stock of the Corporation, thereby providing an additional incentive to
officers and other key employees to devote their maximum efforts and
skills to the success of the Corporation and further aligning their
interests with those of the shareholders. The Plan provides for the
grant of stock units whose value is measured by the fair market value
of the Corporation's common stock and which will be payable in cash upon
satisfaction of the applicable restrictions, in accordance with the terms
and conditions set forth below.
Section 2. DEFINITIONS
The terms used herein shall have the following meanings unless otherwise
specified or unless a different meaning is clearly required by the context:
Award A grant of Stock Units.
Beneficiary The person or persons designated in writing by the Participant
as his Beneficiary in respect of Awards under the Corporation's
Long-Term Incentive Plan or, in the absence of such a
designation or if the designated person or persons predecease
the Participant, the person or persons who shall acquire the
Participant's rights in respect of Awards by bequest or
inheritance in accordance with the applicable laws of descent
and distribution. In order to be effective, a Participant's
designation of a Beneficiary must be on file with the
Corporation before the Participant's death.
Board of The Board of Directors of the Corporation.
Directors
Code The Internal Revenue Code of 1986, as amended from time
to time.
Committee The Compensation and Nominating Committee or any other
committee of the Board of Directors which is authorized to
grant Awards under this Plan.
Common Stock The Common Stock of the Corporation.
Disability A disability that enables the Participant to be eligible for
and receive a disability benefit under the Long-Term
Disability Plan of the Corporation or a long-term disability
plan of a Subsidiary Company (whichever is applicable), as
amended from time to time.
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Fair Market The value of Common Stock on a particular date as measured
Value by the mean of the high and low prices at which it is traded
on such date as reported in the Composite Transactions for
such date by The Wall Street Journal, or, if Common Stock
was not traded on such date, on the next preceding day on
which Common Stock was traded.
Participant Any officer or key employee of the Corporation or a
Subsidiary Company selected by the Committee to participate
in the Plan.
Performance A period of time not less than twelve (12) nor more than
Period sixty (60) months, to be determined within those limits by
the Committee in its sole discretion, commencing on the date
as of which Stock Units are granted, during which the
restrictions imposed by paragraph (b) of Section 5 of the
Plan shall apply. The Committee shall determine the length
of the Performance Period at the time that the Stock Units
are granted.
Retirement Retirement from the Corporation or a Subsidiary Company
pursuant to the provisions of the Retirement Plan of the
Corporation or a retirement plan of a Subsidiary Company
(whichever is applicable), as amended from time to time.
Stock Contingent rights to receive cash payment for the Fair
Units Market Value of shares of Common Stock granted pursuant to
Section 5 of the Plan and subject to the restrictions and
other terms and conditions set forth therein. Each Stock
Unit shall equal the Fair Market Value of one share of
Common Stock.
Subsidiary A corporation of which more than fifty percent (50%) of the
Company total combined voting power of all classes of stock entitled
to vote is owned, directly or indirectly, by the Corporation.
Section 3. ADMINISTRATION
The Plan shall be administered by the Committee, which, subject to the
limitations set forth herein, shall have the full and complete authority
and sole discretion from time to time to construe and interpret the Plan;
to select the officers and other key employees who shall be granted Awards
under the Plan; to determine the type, size, terms, and conditions of the
Award or Awards to be granted to each such Participant; to authorize the
grant of such Awards pursuant to the Plan; to adjust such Awards based on
the performance of the Corporation or on the individual performance of the
Participant; in connection with the merger or consolidation of the
Corporation, to give a Participant an election to surrender an Award in
exchange for the grant of a new Award; to adopt, amend and rescind rules
and regulations relating to the Plan; and to make all other determinations
and take all other action it may deem necessary or advisable for the
implementation and administration of the Plan. The Committee may authorize
the grant of more than one type of Award, and Awards subject to differing
terms and conditions, to any eligible employee. The Committee's decision
to authorize the grant of an Award to an employee at any time shall not
require the Committee to authorize the grant of an Award to that employee
at any other time or to any other employee at any time; nor shall its
determination with respect to the size, type, or terms and conditions of
the Award to be granted to an employee at any time require it to authorize
the grant of an Award of the same type or size or with the same terms and
conditions to that employee at any other time or to any other employee at
any time. The Committee shall not be precluded from authorizing
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the grant of an Award to any eligible employee solely because the employee
previously may have been granted an Award of any kind under the Plan.
All determinations of the Committee shall be by a majority of its members
and shall be final, conclusive and binding. Each member of the Committee,
while serving as such, shall be considered to be acting in his capacity as
a director of the Corporation, and no member of the Committee shall be
liable for any action taken or decision made in good faith with respect to
the implementation or administration of the Plan.
Section 4. ELIGIBILITY
To be eligible for selection by the Committee to participate in the Plan,
an individual must be a full-time salaried officer or key employee of the
Corporation, or of a Subsidiary Company, and must reside in the United
States or Canada, on the date on which the Committee authorizes the grant
to such individual of an Award.
Section 5. STOCK UNITS
(a) Type of Award - The Committee, in its sole discretion, may from
time to time authorize the grant of Stock Units to a Participant.
The grant of Stock Units shall be evidenced by a written Stock Unit
Agreement between the Corporation and the Participant setting forth
the number of such Stock Units, Performance Period , and the terms,
conditions, and restrictions applicable thereto. Such Stock Units
will be recorded in individual memorandum accounts maintained by the
Committee or its agent. The Participant shall have no beneficial
ownership interest in the Common Stock represented by the Stock
Units and no right to receive a certificate representing such shares
of Common Stock. Further, the Participant shall have no right to
vote the Common Stock represented by the Stock Units or to receive
dividends (except for any equivalent payments which may be awarded
by the Committee in connection with such Stock Units) on the Common
Stock represented by the Stock Units.
(b) Restrictions - Until the expiration of the Performance Period or
the lapse of restrictions in the manner provided in paragraphs (d)
or (e) of this Section 5, Stock Units shall be subject to the
following restrictions and any additional restrictions that the
Committee, in its sole discretion, may from time to time deem
desirable in furtherance of the objectives of the Plan:
(i) the Participant shall not be entitled to receive cash
payment for the Stock Units which the Participant may
have a contingent right to receive in the future;
(ii) the Stock Units may not be sold, transferred, assigned,
pledged, conveyed, hypothecated, or otherwise disposed of;
and
(iii) the Stock Units may be forfeited immediately as provided in
paragraph (d) of this Section 5.
(c) Distribution of Stock Units - If a Participant to whom Stock
Units have been granted remains in the continuous employment of
the Corporation or a Subsidiary Company during the entire
Performance Period, upon the expiration of the Performance Period
all restrictions applicable to the Stock Units shall lapse, and
the Stock Units shall be settled in cash, not in shares of Common
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Stock, based on Fair Market Value on the date all applicable
restrictions lapse. The Committee, in its sole discretion, may
review and adjust the Award at any time prior to expiration of the
Performance Period to increase or decrease the number of Stock
Units between 0% and 125% based on the performance of the
Corporation and/or on the individual performance of the
Participant.
(d) Termination of Employment - If the employment of a Participant is
terminated for any reason other than the Disability or death of
the Participant in service before the expiration of the Performance
Period, the Stock Units shall be forfeited immediately and all
rights of the Participant to such units shall terminate immediately
without further obligation on the part of the Corporation or any
Subsidiary Company. If the employment of a Participant is
terminated for Retirement before the expiration of the Performance
Period, the Stock Units shall be forfeited immediately and all
rights of the Participant to such units shall terminate immediately
without further obligation on the part of the Corporation or any
Subsidiary Company. If the Participant's employment is terminated
by reason of the Disability or death of the Participant in service
before the expiration of the Performance Period, the number of
Stock Units held by the Corporation for the Participant's account
shall be reduced by the proportion of the Performance Period
remaining after the Participant's termination of employment; the
restrictions on the balance of such Stock Units shall lapse on
the date the Participant's employment terminated; and the cash
settlement representing the Stock Units upon which the
restrictions have lapsed shall be delivered to the Participant
(or, in the event of the Participant's death, to his Beneficiary).
(e) Waiver of Restrictions - The Committee, in its sole discretion,
may waive any or all restrictions with respect to Stock Units.
Section 6. DIVIDEND EQUIVALENT PAYMENTS
The Committee may authorize the payment of dividend equivalents on some
or all of the Stock Units representing shares of Common Stock, in an
amount equal to, and commensurate with, dividends declared by the Board
of Directors and paid on Common Stock. Dividend equivalents payable on
Stock Units under this Section 6 shall be paid immediately in cash or
converted to additional Stock Units based on the Fair Market Value of
Common Stock on the date dividends are paid, as may be determined by the
Committee. If the dividend equivalents are paid immediately in cash, the
cash settlement thereof will be paid in cash. If the dividend equivalents
are converted to additional Stock Units, the additional Stock Units shall
be recorded in the Participant's individual memorandum account and subject
to any remaining Performance Period applicable to the Stock Units on which
the dividend equivalents were paid. Upon cash settlement of the Stock
Units on which the dividend equivalents were paid, the additional Stock
Units representing dividend equivalents will be paid in cash. The
Committee may authorize the payment of dividend equivalents under this
Section 6 with respect to any Stock Unit for all or some portion of its
term by including a specific provision, authorizing such payment, in the
Stock Unit Agreement required under Section 5(a) of the Plan.
Section 7. CAPITAL ADJUSTMENTS
In the event of a recapitalization, stock split, stock dividend, exchange,
combination, or reclassification of shares, merger, consolidation,
reorganization, or other change in or affecting the capital structure or
capital stock of the Corporation, the Board of Directors, upon the
recommendation of the Committee, may make appropriate adjustments in the
number of Stock Units representing shares of Common Stock, as it deems
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equitable, in its absolute discretion, to prevent dilution or enlargement
of the rights of Participants.
Section 8. AMENDMENT OR TERMINATION OF THE PLAN
The Corporation may at any time and from time to time alter or amend, in
whole or in part, any or all of the provisions of the Plan, or may at any
time suspend or terminate the Plan, through written action of its chief
executive officer or resolution of its Board of Directors, provided that
no change in any Awards theretofore granted to any Participant may be made
which would impair or diminish the rights of the Participant without the
Participant's consent.
Section 9. MISCELLANEOUS
(a) Withholding - The Corporation and its Subsidiary Companies shall
have the right, to the extent permitted by law, to deduct from
any payment of any kind otherwise due to a Participant any Federal,
state or local taxes of any kind required by law to be withheld
with respect to Awards under the Plan, and to the extent any such
withholding requirements are not satisfied, each Participant shall
pay to the Corporation any Federal, state or local taxes of any
kind required by law to be withheld with respect to Awards under
the Plan.
(b) Stockholder Rights - No person shall have any rights of a
stockholder by virtue of a Stock Unit.
(c) No Contract of Employment - This Plan shall not be deemed to be an
employment contract between the Corporation or any Subsidiary
Company and any Participant or other employee. Nothing contained
herein, or in any agreement, certificate or other document
evidencing, providing for, or setting forth the terms and
conditions applicable to any Awards shall be deemed to confer upon
any Participant or other employee a right to continue in the
employment of the Corporation or any Subsidiary Company, or to
interfere with the right of the Corporation or any Subsidiary
Company to terminate the employment of such Participant or employee
at any time.
(d) Unfunded Plan - Except as may otherwise be provided in the Plan,
the Plan shall be unfunded. Neither the Corporation nor any
Subsidiary Company shall be required to segregate any assets that
may be represented by Stock Units, and neither the Corporation
nor any Subsidiary Company shall be deemed to be a trustee of any
amounts to be paid under a Stock Unit. Any liability of the
Corporation to pay any Participant or Beneficiary with respect to
a Stock Unit shall be based solely upon any contractual obligations
created pursuant to the provisions of the Plan; no such obligation
shall be deemed to be secured by any pledge or encumbrance on any
property of the Corporation or a Subsidiary Company.
(e) Applicable Law - The Plan, its validity, interpretation, and
administration, and the rights and obligations of all persons
having an interest therein, shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia, except
to the extent that such laws may be preempted by Federal law.
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(f) Gender and Number - Wherever used in the Plan, words in the
masculine form shall be deemed to refer to females as well as
to males, and words in the singular or plural shall be deemed
to refer also to the plural or singular, respectively, as the
context may require.
Dated: Approved as Renamed:
August 6, 2001 /s/ David R. Goode
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David R. Goode
Chairman, President and Chief Executive Officer