UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
[X] Definitive Proxy Statement RULE 14A-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
NORFOLK SOUTHERN RAILWAY COMPANY
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
Notice and Proxy Statement
Annual Meeting of Stockholders
NORFOLK SOUTHERN RAILWAY COMPANY
Three Commercial Place, Norfolk, Virginia 23510-2191
Notice of Annual Meeting
of Stockholders to be Held
on Tuesday, May 22, 2001
The Annual Meeting of Stockholders of Norfolk Southern Railway Company will
be held on the 19th Floor of the Norfolk Southern Tower, Three Commercial
Place, Norfolk, Virginia, on Tuesday, May 22, 2001, at 11 o'clock A.M.,
Eastern Daylight Time, for the following purposes:
1.Election of two directors to the class whose term will expire in 2004.
2.Ratification of the appointment of KPMG LLP, independent public
accountants, as auditors.
3.Transaction of such other business as properly may come before the
meeting.
Stockholders of record at the close of business on March 22, 2001, will be
entitled to vote at such meeting.
By order of the Board of Directors,
REGINALD J. CHANEY,
Corporate Secretary.
Dated: April 16, 2001
If you do not expect to attend the meeting, you are urged to mark, date and
sign the enclosed proxy card and return it in the accompanying envelope.
NORFOLK SOUTHERN RAILWAY COMPANY
THREE COMMERCIAL PLACE
NORFOLK, VIRGINIA 23510-2191
April 16, 2001
PROXY STATEMENT
On March 9, we began mailing to you and other stockholders the Company's
Annual Report for 2000, which contains important financial and narrative
information. On April 16, 2001, we expect to begin mailing to you and other
stockholders this Proxy Statement and the accompanying proxy card, both of
which relate to the Board of Directors' solicitation of your proxy for use at
the Annual Meeting of Stockholders to be held May 22, 2001 ("2001 Annual
Meeting"). Only stockholders of record on March 22, 2001, are entitled to vote
at the 2001 Annual Meeting. As of February 28, 2001, the Company had issued
and outstanding 1,197,027 shares of $2.60 Cumulative Preferred Stock, Series A
("Preferred Stock"), and 16,668,997 shares of Common Stock. Of these shares,
1,096,907 shares of Preferred Stock (this total excludes 100,120 shares held
by Company subsidiaries and/or in a fiduciary capacity), and all shares of
Common Stock are entitled to one vote per share. All the Common Stock is owned
directly by Norfolk Southern Corporation ("NS").
If you properly sign the enclosed proxy card and timely return it to The
Bank of New York, the shares represented by that proxy card will be voted
in accordance with its terms.
Any stockholder may revoke a signed and returned proxy card at any time
before the proxy is voted by: (a) giving prior notice of revocation in any
manner to the Company; (b) executing and delivering a subsequent proxy; or
(c) attending the 2001 Annual Meeting and voting in person.
The cost of soliciting these proxies will be paid by the Company, including
the reimbursement, upon request, of brokerage firms, banks and other
institutions, nominees and trustees for the reasonable expenses they incur to
forward proxy materials to beneficial owners. Officers and other regular
employees of the Company may solicit proxies by telephone, telegram or
personal interview; they receive no additional compensation for doing so.
CONFIDENTIALITY
We have put policies in place to safeguard the confidentiality of proxies
and ballots. The Bank of New York, New York, N.Y., which has been retained at
an estimated cost of $2,200 to assist in soliciting proxies, directly or
through others, and to tabulate all proxies and ballots cast at the 2001
Annual Meeting, is bound contractually to maintain the confidentiality of the
voting process. In addition, each Inspector of Election will have taken the
oath required by Virginia law to execute duties faithfully and impartially.
Members of the Board of Directors and employees of the Company do not have
access to proxies or ballots and therefore do not know how individual
stockholders vote on any matter. However, when a stockholder writes a question
or comment on the proxy card or ballot, or when there is need to determine the
validity of a proxy or ballot, Management and/or its representatives may be
involved in providing the answer to the question or in determining such
validity.
BUSINESS TO BE CONDUCTED AT THE ANNUAL MEETING
FOR WHICH YOUR PROXY IS SOUGHT
1. ELECTION OF DIRECTORS
At the 2001 Annual Meeting, the terms of two directors will expire: those of
David R. Goode and Stephen C. Tobias.
Unless you instruct otherwise when you give us your proxy, it will be voted
in favor of the reelection of Messrs. Goode and Tobias as directors for
three-year terms that expire in 2004.
If either nominee becomes unable to serve--something we have no reason to
believe will occur--your proxy will be voted for a substitute nominee to be
designated by the Board of Directors, or the Board of Directors will reduce
the number of directors.
So that you have information concerning the independence of the process by
which nominees and directors whose terms will continue after the 2001 Annual
Meeting were selected, we confirm, as required by the Securities and Exchange
Commission ("SEC"), that (1) there are no family relationships among any of
the nominees or directors or among any of the nominees or directors and any
officer and (2) that there is no arrangement or understanding between any
nominee or director and any other person pursuant to which the nominee or
director was selected.
Vote Required to Elect a Director: Under Virginia law and under the
Company's Restated Articles of Incorporation and Bylaws, directors are elected
at a meeting, so long as a quorum exists, if the votes cast favoring the
election of that director exceed the number of votes cast opposing the
election. Abstentions or shares that are not voted, such as those held by a
broker or other nominee who does not vote in person or return a proxy card,
are not "cast" for this purpose.
The following information relates to the nominees and the directors whose
terms of office will continue after the 2001 Annual Meeting.
Nominees (for the class whose term expires in 2004)
DAVID R. GOODE, 60, Norfolk, Va.; Chairman, President and Chief Executive
Officer of Norfolk Southern Corporation and President and Chief Executive
Officer of Norfolk Southern Railway Company since September 1, 1992. Director
of Norfolk Southern Corporation, Conrail Inc., Consolidated Rail Corporation
and several Norfolk Southern Railway Company subsidiaries. Also a director of
Caterpillar, Inc., Delta Air Lines, Inc., Georgia-Pacific Corporation and
Texas Instruments Incorporated. Mr. Goode has been a director since 1992.
2
STEPHEN C. TOBIAS, 56, Norfolk, Va.; Vice Chairman and Chief Operating Officer
of Norfolk Southern Corporation since August 1, 1998, and Vice President of
Norfolk Southern Railway Company since May 30, 2000, having served prior
thereto as Executive Vice President-Operations of Norfolk Southern
Corporation and Vice President and Chief Operating Officer of Norfolk
Southern Railway Company. Director of Conrail Inc., Consolidated Rail
Corporation and several Norfolk Southern Railway Company subsidiaries. Mr.
Tobias has been a director since 1994.
Continuing Directors
HENRY C. WOLF, 58, Norfolk, Va.; Vice Chairman and Chief Financial Officer of
Norfolk Southern Corporation since August 1, 1998, and Vice President of
Norfolk Southern Railway Company since May 30, 2000, having served prior
thereto as Executive Vice President-Finance of Norfolk Southern Corporation
and Vice President and Chief Financial Officer of Norfolk Southern Railway
Company. Director of Conrail Inc., Consolidated Rail Corporation and several
Norfolk Southern Railway Company subsidiaries. Mr. Wolf has been a director
since 1994 and his term expires in 2002.
L. I. PRILLAMAN, 57, Norfolk, Va.; Vice Chairman and Chief Marketing Officer
of Norfolk Southern Corporation since August 1, 1998, and Vice President of
Norfolk Southern Railway Company since May 30, 2000, having served prior
thereto as Executive Vice President-Marketing of Norfolk Southern Corporation
and Vice President and Chief Marketing Officer of Norfolk Southern Railway
Company. Director of several Norfolk Southern Railway Company subsidiaries.
Mr. Prillaman has been a director since 1996 and his term expires in 2003.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of KPMG LLP, independent
public accountants ("KPMG"), to audit the books, records and accounts of the
Company for the year 2001. This firm has acted as auditors for the Company
since June 1, 1982, and also provides services to NS. The Board of Directors
recommends that the firm's appointment be ratified by the stockholders.
In 2000, KPMG performed audit services which consisted of the annual audit
of the consolidated financial statements of the Company and its subsidiaries
and of NS and its subsidiaries, including annual reports of the Company to the
stockholders and the SEC, audits of the financial statements of various
subsidiaries, audits of the financial statements of various NS employee
benefit plans, limited reviews of quarterly financial statements and review of
internal controls not directly related to the audit of the financial
statements. The firm also provided consulting and other services during 2000.
All services rendered by KPMG to the Company and NS in 2000 were approved in
advance by, ratified by or reported to the Board of Directors. KPMG has
represented to the Board of Directors that its fees are customary and that no
agreement exists to limit current or future years' audit fees.
For the fiscal year ending December 31, 2000, KPMG billed NS and the Company
for the following services:
Audit Fees
KPMG billed NS and the Company $1,077,920 for services related to the audit
of the annual financial statements and review of the quarterly financial
statements for the most recent fiscal year.
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Financial Information Systems Design and Implementation Fees
KPMG did not bill NS or the Company for services related to Financial
Information Systems, as defined by Section 210.2-01(c)(4)(ii) of Regulation
S-X as promulgated by the SEC.
All Other Fees
KPMG billed NS and the Company $2,620,655 for all other services it
rendered to NS and the Company that are not included under the captions
"Audit Fees" or "Financial Information Systems Design and Implementation
Fees" above.
The Board of Directors has considered whether the provision of the services
included under the captions "Financial Information Systems Design and
Implementation Fees" and "All Other Fees" is compatible with maintaining the
independence of the independent public accountants and has determined that the
firm's independence is not thereby compromised.
Representatives of KPMG are expected to be present at the 2001 Annual
Meeting, with the opportunity to make a statement if they so desire, and
available to respond to appropriate questions.
3. OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
2001 Annual Meeting other than as noted elsewhere in this Proxy Statement. If
any other matters properly come before the meeting, the proxies received
pursuant to this solicitation will be voted thereon in accordance with the
judgment of the holders of such proxies.
SUPPLEMENTAL INFORMATION
Applicable rules of the SEC require that we furnish you the following
information relating to the oversight and management of your Company and of
Norfolk Southern Corporation and to certain matters concerning the Board of
Directors and the officers.
BENEFICIAL OWNERSHIP OF NS AND COMPANY STOCK
As of February 28, 2001, 100,120 shares, or approximately 8.4%, of the
Company's Preferred Stock were held by Company subsidiaries and/or in a
fiduciary capacity, and such Company subsidiaries had sole voting power with
respect to none of such shares. NS held 246,355 shares, or approximately
20.5%, of the Company's Preferred Stock, and had sole voting power with
respect to all of such shares.
To the knowledge of the Company, no other person beneficially owns more than
5% of the Company's Preferred Stock. NS held 16,668,997 shares, or 100%, of
the Company's Common Stock on February 28, 2001.
The following table sets forth as of February 28, 2001, the beneficial
ownership of Norfolk Southern Corporation Common Stock (including "Deferred
Stock Units," each of which is not actually a share of Common Stock, but
ultimately has a cash value equal to the market price of a share of Common
Stock at the time such unit is satisfied) for:
(1) each director and each nominee (including the Chief Executive Officer);
(2) each of the other four most highly compensated Executive Officers (as
defined on Page 6), based on the sum of 2000 salary and incentive pay
for 2000 (three of whom are also directors or nominees); and
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(3) all directors and Executive Officers of the Corporation as a group.
Unless otherwise indicated by footnote to the data in the table, all such
shares are held with sole voting and investment powers, and no director or
Executive Officer beneficially owns any equity securities of NS or its
subsidiaries other than Norfolk Southern Corporation Common Stock. No one
director or Executive Officer, nor all directors and Executive Officers as a
group, owns as much as 1% of the total outstanding shares of Norfolk Southern
Corporation Common Stock. No director or Executive Officer owns any shares of
the Company's Preferred Stock.
Shares of Norfolk Southern
Corporation Common Stock
Beneficially Owned as of
Name February 28, 2001/1/
---- --------------------------
David R. Goode 2,293,326
L. I. Prillaman 585,182
Stephen C. Tobias 591,372
Henry C. Wolf 615,076
Charles W. Moorman 248,566
14 Executive Officers as a group 5,903,239/2/
(including the persons named above)
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/1/Includes shares credited to individual accounts under the NS Thrift and
Investment Plan and shares held by NS under share retention agreements
pursuant to the NS Long-Term Incentive Plan (for Mr. Goode, this amounts,
respectively, to 11,704 and 230,198 shares; for Mr. Tobias, 14,648 and 59,106
shares; for Mr. Wolf, 11,395 and 68,007 shares; for Mr. Prillaman, 23,061 and
57,466 shares; and for Mr. Moorman, 3,678 and 23,807 shares). The individual
possesses voting power over shares held under share retention agreements but
has no investment power until the shares are distributed. Also includes shares
subject to stock options granted pursuant to the NS Long-Term Incentive Plan
and with respect to which the optionee has the right to acquire beneficial
ownership within 60 days (for Mr. Goode, this amounts to 1,830,000 shares; for
Mr. Tobias, 454,500 shares; for Mr. Wolf, 477,000 shares; for Mr. Prillaman,
432,000 shares; and for Mr. Moorman, 205,000 shares); includes Deferred Stock
Units credited pursuant to the NS Long-Term Incentive Plan (for Mr. Goode,
this amounts to 101,358 units; for Mr. Tobias, 26,764 units; for Mr. Wolf,
26,764 units; for Mr. Prillaman, 26,764 units; and Mr. Moorman, 10,396 units);
and includes 26,520 Restricted Shares awarded to Mr. Goode pursuant to the NS
Long-Term Incentive Plan and over which Mr. Goode possesses voting power but
has no investment power until January 29, 2004.
/2/The NS Common Stock figure includes, as of February 28, 2001: 111,925
shares credited to individual accounts under the NS Thrift and Investment
Plan; 553,641 shares held by NS under share retention agreements pursuant to
the NS Long-Term Incentive Plan over which the individual possesses voting
power but has no investment power until the shares are distributed; 4,710,750
shares subject to stock options granted pursuant to the NS Long-Term Incentive
Plan with respect to which optionees have the right to acquire beneficial
ownership within 60 days; 265,945 Deferred Stock Units, which ultimately will
be satisfied in cash, credited pursuant to the NS Long-Term Incentive Plan;
and 26,520 Restricted Shares awarded to one Executive Officer pursuant to the
NS Long-Term Incentive Plan and over which he possesses voting power but no
investment power until January 29, 2004. Also includes 1,936 shares in which
beneficial ownership is disclaimed.
5
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 requires the Company's
directors and those officers designated as executive officers ("Executive
Officers") by the Company's Board of Directors, and any persons beneficially
owning more than 10 percent of a class of the Company's stock, to file certain
reports of beneficial ownership and changes in beneficial ownership (Forms 3,
4 and 5) with the SEC and the New York Stock Exchange. Based solely on its
review of copies of Forms 3, 4 and 5 available to it, or written
representations that no Forms 5 were required, the Company believes that all
required Forms concerning 2000 beneficial ownership were filed on time.
BOARD OF DIRECTORS AND COMMITTEES
On December 31, 2000, the Board of Directors of the Company consisted of
four members. The Board is divided into three classes; the members of each
class are elected for a term of three years, and each class contains as nearly
as possible one third of the total number of directors. The Board of Directors
has no Audit, Nominating or Compensation committees. In 2000, the Board of
Directors acted by unanimous written consent on twenty-one separate occasions.
The Executive Committee took no action in 2000; its members were David R.
Goode, Chair, and Henry C. Wolf. This committee is empowered to exercise, to
the extent permitted by Virginia law, all the authority of the Board of
Directors when the Board is not in session. All actions taken by the Committee
are to be reported to the Board at its meeting next succeeding such action and
are subject to revision or alteration by the Board.
COMPENSATION OF DIRECTORS
Each director was also an officer of the Company and an officer of NS and,
as such, their compensation was determined in accordance with the Joint
Committee Report Concerning the 2000 Compensation of Certain Executive
Officers on page 12. No such director is paid a retainer, meeting fees or
other compensation for service as a director.
NS COMPENSATION COMMITTEES INTERLOCKS AND INSIDER PARTICIPATION
The members of the NS Compensation and Nominating Committee during 2000 were
Mr. Carter, Chair (elected in November 2000), Mr. Coleman (who was Chair of
the Committee until his death on October 21, 2000), Mr. Hilliard, Mr. Leer and
Mr. Pote. The members of the NS Performance-Based Compensation Committee
during 2000 were Mr. Carter, Chair (elected in November 2000), Mr. Coleman
(who was Chair of the Committee until his death on October 21, 2000), Mr. Leer
and Mr. Pote. Other than Mr. Hilliard's relationship with Brown Brothers
Harriman & Co. and Mr. Leer's relationship with Arch Coal, Inc., which are
reported in the Proxy Statement for the 2001 Annual Meeting of the
Stockholders of Norfolk Southern Corporation, there were no reportable
business relationships between NS and such individuals.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table sets forth the cash compensation paid, as well as
certain other compensation accrued or paid, to the Chief Executive Officer and
to each of the other four most highly compensated executive officers of NS in
2000 (together, the "Named Executive Officers"), for service in all
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capacities to both NS and its subsidiaries, including the Company, by the
Named Executive Officers in the fiscal years ending December 31, 2000, 1999
and 1998.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
------------------------------------- ---------------------
Awards Payouts
---------- ----------
Securities
Other Annual Underlying LTIP All Other
Name and Principal Salary/1/ Bonus/1/ Compensation/2/ Options/3/ Payouts/4/ Compensation/5/
Position at NS Year ($) ($) ($) (#) ($) ($)
------------------ ---- --------- -------- --------------- ---------- ---------- ---------------
David R. Goode 2000 950,000 410,400/6/ 530,535/7/ 525,000 167,130 62,343
Chairman, President and 1999 950,000 0 337,490 365,000 597,047 88,315
Chief Executive Officer 1998 900,000 887,400 739,809 250,000 1,615,566 82,083
L. I. Prillaman 2000 375,000 108,000 86,779 150,000 55,710 21,824
Vice Chairman and Chief 1999 375,000 0 265,636 90,000 191,055 29,722
Marketing Officer 1998 360,417 274,231 280,085 60,000 516,981 25,719
Stephen C. Tobias 2000 500,000 144,000 164,377 150,000 55,710 33,821
Vice Chairman and Chief 1999 500,000 0 247,075 90,000 191,055 44,448
Operating Officer 1998 485,417 382,897 219,885 60,000 516,981 35,877
Henry C. Wolf 2000 500,000 144,000 176,612 150,000 55,710 37,804
Vice Chairman and Chief 1999 500,000 0 109,030 90,000 191,055 50,359
Financial Officer 1998 485,417 382,897 321,915 60,000 516,981 38,425
Charles W. Moorman 2000 257,500 69,525 12,619 60,000 16,713 14,075
President Thoroughbred 1999 250,000 0 14,003 30,000 59,705 20,157
Technology and 1998 240,000 177,480 15,920 25,000 161,557 20,157
Telecommunications,
Inc.
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/1/Includes portion of any salary or bonus award elected to be received on a
deferred basis.
/2/Includes amounts reimbursed for the payment of taxes on personal
benefits. Also includes the amount by which the interest accrued on salary and
bonuses deferred under the NS Officers' Deferred Compensation Plan exceeds
120% of the applicable Federal long-term rate provided under Section 1274(d)
of the Code; for 2000, these amounts were: for Mr. Goode, $125,694; Mr.
Prillaman, $18,429; Mr. Tobias, $85,517; Mr. Wolf, $99,961; and Mr. Moorman,
$3,686. Includes tax absorption payments in 1998 for gains realized upon
exercise of certain stock options (in 1998, for Messrs. Goode, Prillaman,
Tobias and Wolf; in 1999 for Messrs. Prillaman and Tobias and in 2000 for
Messrs. Goode, Prillaman, Tobias and Wolf).
/3/Options were granted without tandem SARs.
/4/Represents the value of the "earn out" pursuant to the performance share
feature of the NS Long-Term Incentive Plan for periods ended December 31,
2000, 1999 and 1998 (for 2000, performance shares were earned for achievements
in the three-year period 1998-2000; for 1999, for achievements in the three-
year period 1997-1999; and for 1998, for achievements in the three-year period
1996-1998).
/5/Includes for 2000 (i) contributions of $5,100 to NS' 401(k) plan on
behalf of each of the Named Executive Officers; and (ii) total premium
payments (out-of-pocket cash cost) on "split dollar" life insurance policies
for Mr. Goode, $57,243; Mr. Prillaman, $16,724; Mr. Tobias, $28,721; Mr. Wolf,
$32,704; and Mr. Moorman, $8,975.
/6/Represents the value of 26,520 Restricted Shares awarded to Mr. Goode
effective January 29, 2001, pursuant to the terms of the NS Long-Term
Incentive Plan, in lieu of the cash bonus Mr. Goode earned in 2000 pursuant to
the NS Executive Management Incentive Plan. These Restricted Shares
7
vest immediately, however Mr. Goode will not have investment power over the
shares during a 36 month Restriction Period. Dividends will be paid on the
Restricted Shares during the Restriction Period. Other than this grant, there
were no restricted stock holdings outstanding at the end of the last fiscal
year.
/7/Includes personal use in 2000, as directed by resolution of the NS Board
of Directors, of NS aircraft valued at $173,789--calculated on the basis of
the aggregate incremental cost of such use to NS.
Long-Term Incentive Plan
The NS Long-Term Incentive Plan, as last approved by stockholders in 1995,
provides for the award of Incentive Stock Options, Non-qualified Stock
Options, Stock Appreciation Rights, Restricted Shares and Performance Share
Units to officers and other key employees of both NS and certain of its
subsidiaries (including the Company). The Performance-Based Compensation
Committee of the NS Board of Directors ("Committee") administers the Plan and
has the sole discretion, subject to certain limitations, to interpret the
Plan; to select Plan participants; to determine the type, size, terms and
conditions of awards under the Plan; to authorize the grant of such awards;
and to adopt, amend and rescind rules relating to the Plan.
Stock Options
The following table sets forth certain information concerning the grant in
2000 of stock options under the NS Long-Term Incentive Plan to each Named
Executive Officer:
Option/SAR* Grants in Last Fiscal Year
Grant Date
Individual Grants Value
- ----------------------------------------------------------------- ----------
Number of
Securities % of Total Grant
Underlying Options Date
Options Granted to Exercise or Present
Granted/1/ Employees in Base Price/2/ Expiration Value/3/
Name (#) Fiscal Year ($ Per Share) Date ($)
- ---- ---------- ------------ ------------- ---------- ----------
D. R. Goode 525,000 6.81% 16.9375 01/30/2010 3,055,500
L. I. Prillaman 150,000 1.95% 16.9375 01/30/2010 873,000
S. C. Tobias 150,000 1.95% 16.9375 01/30/2010 873,000
H. C. Wolf 150,000 1.95% 16.9375 01/30/2010 873,000
C. W. Moorman 60,000 0.78% 16.9375 01/30/2010 349,200
*No SARs were granted in 2000.
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/1/These options (of which the first 5,904 granted to each Named Executive
Officer are Incentive Stock Options and the remainder are Non-qualified Stock
Options) were granted as of January 31, 2000, and are exercisable one year
after the date of grant. They earn dividend equivalents in an amount equal to,
and commensurate with, dividends as paid on NS Common Stock; the dividend
equivalents are converted into Deferred Stock Units, the aggregate fair market
value of which is payable in cash to the optionee on the earliest of (a) the
five-year anniversary of the date of option grant; (b) the exercise of the
option (exercises of less than the full option grant result in a prorated cash
payment); and (c) the optionee's death, disability or retirement.
/2/The exercise price (Fair Market Value on the date of grant) may be paid
in cash or in shares of NS Common Stock (previously owned by the optionee for
at least one year next preceding the date of exercise) valued at Fair Market
Value on the date of exercise.
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/3/In accordance with regulations of the SEC, the present value of the
option grant on the date of grant was determined using the Black-Scholes
statistical model. The actual amount, if any, a Named Executive Officer may
realize upon exercise depends on the stock price on the exercise date;
consequently, there is no assurance the amount realized by a Named Executive
Officer will be at or near the monetary value determined by using this
statistical model.
In the case of NS Common Stock, the Black-Scholes model used the following
measures and assumptions:
(a) a stock volatility factor of 0.2073: volatility was determined by an
independent compensation consultant using monthly data averaged over the
60-month period January 1, 1995, through December 31, 1999;
(b) a dividend yield of 2.7%: yield was determined monthly and averaged
over the 60-month period January 1, 1995, through December 31, 1999;
(c) a 1999 risk-free rate of return of 6.0%: this represents the monthly
average 10-year Treasury strip rate during 1999, the year prior to the
issuance of these options; and
(d) that the option will be exercised during its ten-year term.
The foregoing produces a Black-Scholes factor of 0.2910 and a resulting
present value of $5.82 for each share of NS Common Stock subject to the 2000
option grant; the factor and resulting present value have not been adjusted to
reflect (i) that options cannot be exercised during the first year of their
10-year term, (ii) the payment of dividend equivalents on unexercised options
or (iii) the deferral of receipt of such dividend equivalents until the
related Deferred Stock Units actually are paid out.
The following table sets forth certain information concerning the exercise
of options by each Named Executive Officer during 2000 and the number of
unexercised options held by each as of December 31, 2000:
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
Number of Securities Underlying Value of Unexercised
Unexercised Options/SARs at FY- In-the-Money Options/SARs at
Shares End FY-End/1/
Acquired on Value (#) ($)
Exercise Realized ----------------------------------- -------------------------------
Name (#) ($) Exercisable* Unexercisable Exercisable/7/ Unexercisable/7/
- ---- ----------- ---------- ---------------- ---------------- -------------- ----------------
D. R. Goode 37,500/2/ 188,673/2/ 1,305,000 525,000 0 0
L. I. Prillaman 15,000/3/ 66,094/3/ 282,000 150,000 0 0
S. C. Tobias 15,000/4/ 75,937/4/ 304,500 150,000 0 0
H. C. Wolf 15,000/5/ 75,469/5/ 304,500 150,000 0 0
C. W. Moorman 6,000/6/ 30,375/6/ 145,000 60,000 0 0
*Reports, for each Named Executive Officer, the total number of unexercised
options that have passed the first anniversary of their grant date.
- --------
/1/Equal to the mean ($13.595) of the high and low trading prices on the New
York Stock Exchange-Composite Transactions of NS Common Stock on December 31,
2000, less the exercise prices of in-the-money options, multiplied by the
number of such options.
9
/2/Mr. Goode surrendered 27,715 shares of stock already owned in full
satisfaction of the exercise price of options on 37,500 shares.
/3/Mr. Prillaman surrendered 11,458 shares of stock already owned in full
satisfaction of the exercise price of options on 15,000 shares.
/4/Mr. Tobias surrendered 11,068 shares of stock already owned in full
satisfaction of the exercise price of options on 15,000 shares.
/5/Mr. Wolf surrendered 11,086 shares of stock already owned in full
satisfaction of the exercise price of options on 15,000 shares.
/6/Mr. Moorman surrendered 4,428 shares of stock already owned in full
satisfaction of the exercise price of options on 6,000 shares.
/7/Because the market price of NS Common Stock on December 31, 2000,
($13.595) was below the exercise price of options granted in 2000 ($16.9375
per share) and for all earlier years, they are "out-of-the money" and have no
reportable value.
Performance Share Units ("PSUs")
The following table sets forth certain information concerning the grant in
2000 of PSUs under the NS Long-Term Incentive Plan to each Named Executive
Officer. These PSU grants entitle a recipient to "earn out" or receive
performance compensation at the end of a three-year performance cycle (2000-
2002) based on NS' performance during that three-year period. Under the 2000
award, corporate performance will be measured using three predetermined and
equally weighted standards; that is, each of the following performance areas
will serve as the basis for "earning out" up to one third of the total number
of PSUs granted: (1) three-year average return on average invested capital
("ROAIC"), (2) three-year average NS operating ratio and (3) three-year total
return to NS stockholders. A more detailed discussion of these performance
criteria can be found in the Joint Committee Report Concerning the 2000
Compensation of Certain Executive Officers under the caption, "Long-Term
Incentive Plan," beginning on page 14.
Long-Term Incentive Plan--Awards in Last Fiscal Year
(Performance Share Units)
Performance Estimated Future Payouts
Number of or Other under Non-Stock Price-Based
Shares, Units Period Plans
or Until ---------------------------
Other rights/1/ Maturation Threshold Target/2/ Maximum
Name (#) or Payout (#) (#) (#)
- ---- --------------- ----------- --------- --------- -------
D. R. Goode 120,000 01/01/00- 0 56,400 120,000
12/31/02
L. I. Prillaman 30,000 01/01/00- 0 14,100 30,000
12/31/02
S. C. Tobias 30,000 01/01/00- 0 14,100 30,000
12/31/02
H. C. Wolf 30,000 01/01/00- 0 14,100 30,000
12/31/02
C. W. Moorman 15,000 01/01/00- 0 7,050 15,000
12/31/02
10
- --------
/1/"Earn outs" may be satisfied in cash or in shares of NS Common Stock (or
in some combination of the two), with the stock portion being held by NS for
up to 60 months pursuant to a share retention agreement, unless such
requirement is waived by the Committee in its sole discretion.
/2/The Long-Term Incentive Plan does not provide a performance target for an
"earn out" under this feature of the Plan; consequently, this column
represents 47% of the maximum potential "earn out," which, in accordance with
applicable rules of the SEC, is the percentage actually "earned out" under the
Plan at the end of the most recently completed performance cycle.
Pension Plans
The following table sets forth the estimated annual retirement benefits
payable on a qualified joint-and-survivor-annuity basis in specified
remuneration and years of creditable service classifications under NS'
qualified defined benefit pension plans, as well as nonqualified supplemental
pension plans that provide benefits otherwise denied participants because of
certain Internal Revenue Code limitations on qualified plan benefits. It is
assumed, for purposes of the table, that an individual retired in 2000 at age
65 (normal retirement age) with the maximum allowable Railroad Retirement Act
annuity. The benefits shown are in addition to amounts payable under the
Railroad Retirement Act.
PENSION PLAN TABLE
Estimated Annual Retirement Benefits
For Years of Service Indicated
Years of Creditable Service
-----------------------------------------
Remuneration 25 30 35 40
- ------------ -------- ---------- ---------- ----------
$ 300,000 $ 93,388 $ 114,633 $ 135,877 $ 157,122
400,000 130,888 159,633 188,377 217,122
500,000 168,388 204,633 240,877 277,122
600,000 205,888 249,633 293,377 337,122
700,000 243,388 294,633 345,877 397,122
800,000 280,888 339,633 398,377 457,122
900,000 318,388 384,633 450,877 517,122
1,000,000 355,888 429,633 503,377 577,122
1,100,000 393,388 474,633 555,877 637,122
1,200,000 430,888 519,633 608,377 697,122
1,300,000 468,388 564,633 660,877 757,122
1,400,000 505,888 609,633 735,000 817,122
1,500,000 543,388 654,633 765,877 877,122
1,600,000 580,888 699,633 818,377 937,122
1,700,000 618,388 744,633 870,877 997,122
1,800,000 655,888 789,633 923,377 1,057,122
1,900,000 693,388 834,633 975,877 1,117,122
2,000,000 730,888 879,633 1,028,377 1,177,122
2,100,000 768,388 924,633 1,080,877 1,237,122
2,200,000 805,888 969,633 1,133,377 1,297,122
2,300,000 843,388 1,014,633 1,207,500 1,357,122
Under the pension plans, covered compensation includes salary and bonus;
each officer can expect to receive an annual retirement benefit equal to his
average annual compensation for the five
11
most highly compensated consecutive years out of the last ten years of
creditable service multiplied by the number that is equal to 1.5% times total
years of creditable service, but not in excess of 60% of such average
compensation, less an offset for the annual Railroad Retirement Act annuity.
The respective last five-year average compensation and approximate years of
creditable service, as of January 1, 2001, for each Named Executive Officer
were: Mr. Goode, $1,503,397 and 35 years; Mr. Prillaman, $529,367 and 31
years; Mr. Tobias, $695,538 and 31 years; Mr. Wolf, $695,538 and 28 years; and
Mr. Moorman, $398,371 and 28 years.
Change-in-Control Arrangements
In May 1996, the NS Compensation and Nominating Committee recommended, and
the NS Board of Directors approved, NS' entering into new change-in-control
compensation agreements ("Agreements") with each of the Named Executive
Officers and with certain other key employees. These Agreements, the terms of
which were reviewed by outside counsel, were filed as an exhibit to NS' Report
on Form 10-Q for the period ended June 30, 1996, and provide certain economic
protections in the event of an involuntary or other specified Termination
(each term with an initial capital letter is defined in the Agreements) of a
covered individual during a period of twenty-four months next following a
Change in Control of NS. As consideration for these Agreements and to help
encourage management continuity, covered individuals agreed not to engage in
Competing Employment for a period of (a) three years, in most cases, from the
date they execute an Agreement and (b) one year from their Termination Date,
if they accept benefits payable or provided under the Agreements.
These Agreements are terminable by either NS or a covered employee on
twenty-four months' notice; however, the term of the prohibition on engaging
in Competing Employment is not affected by an Agreement's being terminated.
Generally, these Agreements provide for (a) severance compensation payments
(not continued employment) equal, in the case of each Named Executive Officer,
to three times the sum of their Base Pay and Incentive Pay (most other covered
employees are entitled to receive a lower multiple of Base Pay and Incentive
Pay); (b) redemption of outstanding Performance Share Units and of
outstanding, exercisable options (subject to restrictions, if any, in the case
of persons, such as each Named Executive Officer, imposed under Section 16 of
the Securities Exchange Act of 1934) and payment of dividend equivalents
foregone as a result of the redemption of such options; (c) payment of an
amount equal to the present value of the projected value of amounts deferred
under the NS Officers' Deferred Compensation Plan; (d) eligibility for certain
Benefits (principally medical, insurance and death benefits) for up to three
years following Termination; and (e) certain additional service credit under
NS' retirement plans. The Agreements also provide for payment of any Federal
excise tax that may be imposed on payments made pursuant to these Agreements.
JOINT COMMITTEE REPORT CONCERNING
THE 2000 COMPENSATION OF CERTAIN EXECUTIVE OFFICERS
This Report describes Norfolk Southern Corporation's officer compensation
strategy, the components of its compensation program and the manner in which
2000 compensation determinations were made for NS's Chairman, President and
Chief Executive Officer, David R. Goode, and for the four other officers
(collectively, including Mr. Goode, referred to in this report as the
12
"Named Executive Officers") whose 2000 compensation is reported in the Summary
Compensation Table of this Proxy Statement.
The NS Board's Compensation and Nominating Committee ("C&N Committee") and
its Performance-Based Compensation Committee ("PBC Committee") are composed
entirely of non-employee directors and met, respectively, six times and one
time during 2000. Among other things, the C&N Committee is responsible for
recommending to the NS Board the salaries of Board-elected officers and has
administered NS's annual cash incentive plans (the Executive Management
Incentive Plan and the Management Incentive Plan); established in January of
2000, the PBC Committee became responsible for administering the Long-Term
Incentive Plan, as amended and approved by stockholders at their May 1995
Annual Meeting, which authorizes, as more particularly described below, awards
of stock options and performance share units.
BASE SALARY: While the Board believes that a substantial portion of each
Named Executive Officer's total compensation should be "performance-based,"
both it and the C&N Committee seek to assure that the base salaries of the
Named Executive Officers are competitive with those earned by individuals
in comparable positions.
Specifically, the C&N Committee compares Mr. Goode's base salary with
salaries paid to chief executive officers of other holding companies of
Class I railroads (the same companies comprising the S&P Railroad Index
included in the Stock Performance Graph) and of other American corporations
of comparable revenue size. The base salaries of the other Named Executive
Officers--as well as all Board-elected officers of the Corporation--are
evaluated, principally by Mr. Goode, relative to survey data of base
salaries for comparable positions at a large number of American
corporations of comparable revenue size, including but not limited to those
identified in the Stock Performance Graph. These data are compiled by the
Corporation's Human Resources Department and by an outside compensation
consultant. The Committee's general intention is to set the base salaries
of the Named Executive Officers between the 50th and 75th percentiles of
their peers in the respective groups with which they are compared.
Mr. Goode discusses with the Committee the specific contributions and
performance of each of the other Named Executive Officers. Based on such
evaluations, comparative salary data and each such Executive Officer's
performance in light of the length of service in his current position, Mr.
Goode makes base salary recommendations which are submitted for Committee
and Board approval.
Mr. Goode makes no recommendation concerning, nor does he play any role in
determining, his base salary (or other compensation), which is set by the
Board. As noted, the C&N Committee customarily seeks to set the NS
Chairman, President and CEO's base salary around the 50th percentile of the
base salaries paid to CEOs of other American corporations of comparable
revenue size and competitively (within the mid-range of compensation
practice) with those of the chairmen of the other holding companies of
Class I railroads. Mr. Goode's base salary in 2000 fell below the 25th
percentile; the average 2000 base salaries of the four other Named
Executive Officers also fell below the 25th percentile.
For 2000, Mr. Goode did not receive a salary increase. This decision, not
tied to or based on the application of any specific formula, reflects the
Corporation's performance in 1999, including its total operating revenues
and net income. The base salaries of each of the vice chairmen remained at
the same level as in effect at the time of the Committee's meeting in
November 1999;
13
effective January 1, 2000, Mr. Moorman's base salary was increased by
$7,500, or 3%, when he became President of Thoroughbred Technology and
Telecommunications, Inc.
EXECUTIVE MANAGEMENT INCENTIVE PLAN ("EMIP"): The Corporation's EMIP is
designed and administered to ensure that a significant portion of each
Named Executive Officer's total annual cash compensation is based on the
Corporation's annual financial performance. Effective in 2000, awards to
Named Executive Officers, to other Board-elected officers and to
participants in the Corporation's Management Incentive Plan (MIP) are paid,
if at all, based on the Corporation's performance relative to two pre-
determined criteria: operating ratio for the year and pre-tax net income;
the performance standards relative to these two criteria are established by
the C&N Committee prior to the beginning of each incentive year.
It is the C&N Committee's philosophy that, to the extent the Corporation
achieves EMIP goals, the total of each Named Executive Officer's base
salary and EMIP award should become increasingly competitive with the total
annual cash compensation paid by comparable organizations. In years in
which those goals are not realized, the Named Executive Officers will
receive less or no incentive pay.
Specifically, incentive pay opportunities for Mr. Goode are determined
annually by the C&N Committee by comparing Mr. Goode's total annual cash
compensation with that paid to the chief executive officers of all other
holding companies of Class I railroads (the same companies comprising the
S&P Railroad Index included in the Stock Performance Graph) and of other
American corporations of comparable revenue size. Incentive pay
opportunities for the four other Named Executive Officers are determined
annually by the C&N Committee based on its review of the annual cash
compensation of comparable positions at companies of comparable revenue
size, including but not limited to those identified in the Stock
Performance Graph.
Using those criteria, in November of 1999 the C&N Committee set Mr. Goode's
maximum 2000 incentive opportunity at 120% of his 2000 base salary, Mr.
Prillaman's, Mr. Tobias' and Mr. Wolf's at 80% of 2000 base salary and Mr.
Moorman's at 75% of 2000 base salary. Actual payments, if any, are based on
the extent to which performance standards are achieved.
For 2000, Mr. Goode, and all other Executive Officers earned EMIP awards
and each of 461 other officers and key employees earned EMIP or MIP awards,
as applicable, equal in the case of each such individual to 36% of that
individual's incentive opportunity. As a result, total 2000 cash
compensation--2000 base salary and 2000 EMIP award paid in 2001--earned by
Mr. Goode and by the four other Named Executive Officers fell below the
25th percentile. Mr. Goode chose to waive the EMIP award he earned in 2000;
in lieu of that cash award, the PBC Committee awarded Mr. Goode 26,520
restricted shares of stock pursuant to the Corporation's Long-Term
Incentive Plan (as more fully described below).
LONG-TERM INCENTIVE PLAN ("LTIP"): The Board and the PBC Committee believe
that a substantial component of each Named Executive Officer's total direct
compensation should be based on and reflect the Corporation's efficient use
of assets, its profitability and the total returns (stock price
appreciation and dividends) to its stockholders. This is achieved by making
annual grants of stock options and performance share units and through
share retention agreements entered into with the Named Executive Officers.
These LTIP arrangements are intended to ensure that the longer-term
financial interests of the Named Executive Officers are directly aligned
with those of the Corporation's stockholders and
14
to provide the Named Executive Officers with the opportunity to acquire a
meaningful beneficial stock ownership position in the Corporation.
In determining current LTIP awards, the size of prior grants is analyzed
within a current total direct compensation framework predicated on a review
of both the long-term awards and the total compensation (base salary, bonus
and long-term awards) of comparable positions in U.S. companies with
comparable revenues. The mix of options and performance share units may
vary from year to year to reflect an analysis of the relative value of each
type of award and other considerations. The number of stock options and
performance share units granted in any year is determined so as to place
the total compensation of Mr. Goode and the four other Named Executive
Officers, when corporate performance warrants, above the 75th percentile of
total compensation for their respective peer groups.
At its January 2000 meeting, the PBC Committee granted stock options to
each of the Named Executive Officers and to 390 other officers and key
employees at an exercise price equal to the market value of the shares on
the date of grant. These options are exercisable during a ten-year period
following the date of grant, after a one-year period has elapsed.
At the same meeting, the PBC Committee granted performance share units
which provide the Named Executive Officers and other recipients the
opportunity to earn awards (that will be paid either in cash or in shares
of the Corporation's Common Stock, or in some combination thereof) during
the first quarter of 2003. The number of performance share units actually
earned by recipients is based on criteria approved by stockholders at their
May 1995 Annual Meeting -- specifically, the Corporation's three-year (i
e., 2000-2002) average Return on Average Invested Capital, three-year
average Operating Ratio and three-year Total Stockholder Return, evaluated
relative to performance measures established by the PBC Committee and set
out in the schedules below. One third of the performance share units
granted in 2000 are available to be earned based on each of the three
performance criteria.
Total Stockholder Return ("TSR") Return on Average Invested
vs. S&P 500 Capital ("ROAIC")
------------------------------------ ---------------------------------
Percentage of Percentage of
Three-Year Performance Three-Year Performance
Average TSR Share Units Average Share Units
vs. S&P 500 Earned Out ROAIC Earned Out
-------------------- -------------- ------------- ------------------
90th percentile 19% 100%
and above 100% 18% 90%
80th 90% 17% 80%
70th 85% 16% 70%
60th 80% 15% 60%
50th 75% 14% 50%
40th 50% 13% 40%
30th 30% 12% 30%
25th and below 0% 11% 20%
10% 10%
Below 10% 0%
15
Operating Ratio ("OpR")
-----------------------------
Percentage of
Three-Year Performance
NS Average Share Units
OpR Earned Out
-----------------------------
75% or below 100%
80% 75%
85% 50%
90% 25%
Above 90% 0%
All stock options granted in 2000 to the Named Executive Officers were
subject to the following terms: For the first five (5) years following the
date stock options are granted, the Corporation credits dividend
equivalents on unexercised options to a separate memorandum account
maintained for each Named Executive Officer, and--based on the fair market
value of the Corporation's Common Stock on the dividend payment date--the
dollar amount of that dividend equivalent is converted into Deferred Stock
Units (one such unit is equal in value to one share of Common Stock). The
value of such Deferred Stock Units is paid in cash to each Named Executive
Officer based on the then-fair market value of the Corporation's Common
Stock on the earliest to occur of (a) the five-year anniversary of the date
of grant; (b) the exercise of the option (exercises of less than the full
option grant result in a prorated cash payment); and (c) the officer's
death, disability or retirement.
All Named Executive Officers have entered into share retention agreements
with the Corporation whereby they have agreed to have the Corporation hold
shares of the Corporation's Common Stock actually earned pursuant to the
performance share feature of the LTIP for a period of five years following
the date such shares are earned.
For 2000, Mr. Goode was granted options (including 5,904 incentive stock
options that may receive capital gains treatment) on 525,000 shares of
common stock and the opportunity to earn up to 120,000 performance shares;
the other four Named Executive Officers as a group were awarded options
(including in the case of each such officer, 5,904 incentive stock options
that may receive capital gains treatment) on a total of 510,000 shares of
common stock and the opportunity to earn up to 105,000 performance shares.
At its January 2001 meeting, the PBC Committee granted 26,520 shares of
stock to Mr. Goode, subject to a three-year restriction period. These
restricted shares were granted pursuant to the terms of the LTIP in lieu of
the EMIP cash bonus award Mr. Goode earned in 2000, which he waived.
Because Mr. Goode had an immediate right to receive his bonus under the
EMIP, the PBC Committee waived the LTIP restrictions that would cause Mr.
Goode to forfeit shares if his employment were terminated during the three-
year restriction period. During the three-year restriction period for these
shares, Mr. Goode may not sell, transfer or otherwise dispose of the
restricted shares, but he will be entitled to vote and receive dividends on
these shares.
16
In summary, the C&N Committee and the PBC Committee believe that the
compensation program for Named Executive Officers is designed to offer
opportunities competitive with those of similar positions at comparable
American corporations. More important, these committees believe each Named
Executive Officer's compensation has been appropriately structured and
administered so that a substantial component of total compensation is
dependent upon, and directly related to, the Corporation's efficient use of
assets, its profitability and the total returns to its stockholders.
Section 162(m) of the Internal Revenue Code limits to $1 million the
corporate federal income tax deduction for certain "non-performance based"
compensation paid in a year to any of the Corporation's Named Executive
Officers. Each Committee has carefully considered the Corporation's executive
compensation program in light of the applicable tax rules. Accordingly, the
Corporation amended the Long-Term Incentive Plan in 1995 with stockholder
approval to permit the grant of stock options that meet the requirements of
Section 162(m). However, each Committee believes that tax-deductibility is but
one factor to be considered in fashioning an appropriate compensation package
for executives. As a result, each Committee reserves and will exercise its
discretion in this area so as to serve the best interests of the Corporation
and its stockholders.
NS Compensation and NS Performance-Based Compensation
Nominating Committee Committee
Gene R. Carter, Chairman* Gene R. Carter, Chairman*
Landon Hilliard, Member Steven F. Leer, Member
Steven F. Leer, Member Harold W. Pote, Member
Harold W. Pote, Member
- --------
* L. E. Coleman, who died in October of 2000, served as Chairman of these
committees when the described decisions were made. Gene R. Carter first was
elected as a member of the committees in November of 2000 and since that
time has served as Chairman of each.
PERFORMANCE GRAPH
The performance graph comparing the yearly percentage change in the
cumulative total stockholder return on the Company's Common Stock with the
cumulative total return of the S&P Composite 500 Stock Index and a published
industry index has been omitted because the Company's Common Stock is owned
entirely by NS and is not publicly traded.
STOCKHOLDER PROPOSALS
Stockholders are entitled to submit proposals on matters appropriate for
stockholder action consistent with regulations of the Securities and Exchange
Commission. In order for a stockholder proposal for the 2002 Annual Meeting of
Stockholders to be eligible for inclusion in the Company's proxy statement and
form of proxy, it must be received by the Corporate Secretary, Norfolk
Southern Railway Company, Three Commercial Place, Norfolk, Virginia 23510-
9219, no later than December 17, 2001.
By order of the Board of Directors,
REGINALD J. CHANEY,
Corporate Secretary.
17
DETACH PROXY HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET
- --------------------------------------------------------------------------------
[ ]
(1) Election of Directors For [X] Withheld [X] Exceptions* [X]
NOMINEES: David R. Goode and Stephen C. Tobias
*(Instructions: To withhold authority to vote for individual nominee(s), mark
the "Exceptions" box and write the name(s) on the following blank line; proxy
will be voted FOR remaining nominees.)
Exceptions
--------------------------------------------------------------
(2) Ratification of the
appointment of KPMG LLP,
independent public
accountants, as auditors. For [X] Against [X] Abstain [X]
(3) Transaction of such other
business as properly may
come before the meeting. For [X] Against [X] Abstain [X]
Address Change and/or
Comments-Mark Here [X]
Sign exactly as the name appears
hereon. Attorneys-in-fact, executors,
trustees, guardians, corporate
officers, etc., should give full title.
Dated: , 2001
-------------------------
-------------------------------------
(Signature)
-------------------------------------
(Signature)
Votes MUST be indicated
(x) in Black or Blue ink. [X]
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY
********************************************************************************
Please Detach Here
YOU MUST DETACH THIS PORTION OF THE PROXY CARD
BEFORE RETURNING IN THE ENCLOSED ENVELOPE
********************************************************************************
Detach Proxy Card Here
- --------------------------------------------------------------------------------
NORFOLK SOUTHERN RAILWAY COMPANY
THREE COMMERCIAL PLACE, NORFOLK, VIRGINIA 23510-2191
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Reginald J. Chaney, L.I. Prillaman or Henry
C. Wolf, and each or any of them, proxy for the undersigned, with full power of
substitution, to vote with the same force and effect as the undersigned at the
Annual Meeting of Stockholders of Norfolk Southern Railway Company to be held at
Three Commercial Place, Norfolk, Virginia, on Tuesday, May 22, 2001, and at any
adjournments, postponements or reschedulings thereof, upon the matters more
fully set forth in the Proxy Statement, dated April 16, 2001, and to transact
such other business, as properly may come before such meeting(s).
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED ON THE
OTHER SIDE BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF DIRECTORS,
(Continued, and to be MARKED, DATED AND SIGNED on the other side)
NORFOLK SOUTHERN RAILWAY COMPANY
P.O. BOX 11139
NEW YORK, N.Y. 10203-0139