SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14a.

[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

[_] 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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(2) Aggregate number 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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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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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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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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Notes:

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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 23, 1995

- --------------------------------------------------------------------------------

The Annual Meeting of Stockholders of Norfolk Southern Railway Company will
be held on the 19th Floor of Norfolk Southern Tower, Three Commercial Place,
Norfolk, Virginia, on Tuesday, May 23, 1995, 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
1998 and one director to the class whose term will expire in 1996.

(2)Transaction of such other business as may properly come before the
meeting.

Stockholders of record at the close of business on March 30, 1995, will be
entitled to vote at such meeting.

By order of the Board of
Directors,
DEZORA M. MARTIN,
Corporate Secretary.

Dated: April 18, 1995

IF YOU DO NOT EXPECT TO ATTEND THE MEETING, YOU ARE URGED TO MARK, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING ENVELOPE.

NORFOLK SOUTHERN RAILWAY COMPANY
THREE COMMERCIAL PLACE
NORFOLK, VIRGINIA 23510-2191

April 18, 1995

PROXY STATEMENT

This statement and the accompanying proxy will be mailed to stockholders of
Norfolk Southern Railway Company on or about April 18, 1995. The Company's
Annual Report for 1994 was mailed under separate cover beginning March 16,
1995. The proxy is solicited by the Board of Directors of the Company for use
at the Annual Meeting of Stockholders to be held May 23, 1995. The cost of
soliciting proxies will be paid by the Company, including the reimbursement,
upon request, of brokerage firms, banks and other institutions, nominees and
trustees for their reasonable expenses in forwarding proxy material to
beneficial owners. In addition to solicitation by mail, officers and regular
employees of the Company may solicit proxies by telephone, telegram or personal
interview at no additional compensation.

Policies are 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 $3,000 to assist in soliciting proxies directly or through
others and to tabulate all proxies and ballots cast at the Annual Meeting, is
contractually bound to maintain the confidentiality of the voting process. 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 the 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.

If the enclosed proxy is properly signed and returned to The Bank of New
York, the shares represented thereby will be voted in accordance with its
terms. Any stockholder who has executed and returned a proxy and for any reason
wishes to revoke it may do so at any time before the proxy is voted by giving
prior notice of revocation in any manner to the Company, or by executing and
delivering a subsequent proxy or by attending the meeting and voting in person.

The record date for stockholders entitled to vote at the Annual Meeting is
March 30, 1995. As of February 28, 1995, 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, 1,096,833
shares of Preferred Stock, excluding 100,194 shares of Preferred Stock 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 of the Company
is owned directly by Norfolk Southern Corporation ("NS").

ELECTION OF DIRECTORS

The terms of David R. Goode, Stephen C. Tobias and Henry C. Wolf expire at
the Annual Meeting on May 23, 1995.

Paul R. Rudder, at the time a member of the class whose term expires in 1995,
and Thomas C. Sheller, at the time a member of the class whose term expires in
1996, resigned from the Company's Board of Directors effective July 1, 1994,
due to their pending retirements as executive officers of NS. Mr. Tobias, who
succeeded Mr. Rudder as Executive Vice President-Operations of NS, was elected
by the Board of Directors to fill the vacancy created by the resignation of Mr.
Rudder. Mr. Wolf, Executive Vice President-Finance of NS, was elected by the
Board of Directors to fill the vacancy created by the resignation of Mr.
Sheller. Under Virginia law, the term of a director elected by a Board of
Directors to fill a vacancy expires at the next stockholders' meeting at which
directors are elected.

Unless otherwise instructed on the enclosed proxy, such proxy will be voted
in favor of the election of Mr. Wolf to serve for a one-year term expiring in
1996 and of Messrs. Goode and Tobias to serve for three-year terms expiring in
1998. If any nominee becomes unable to serve, an event which is not
anticipated, the proxy will be voted for a substitute nominee to be designated
by the Board of Directors, or the number of directors will be reduced.

Under Virginia law and under the Company's Articles of Incorporation and
Bylaws, directors are elected by a plurality of the votes cast by the shares
entitled to vote in the election at a meeting at which a quorum is present.
Votes that are withheld 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, are not
"cast" for this purpose.

The following information relates to the nominees and the directors whose
terms of office will continue after the stockholders' meeting. There are no
family relationships among any of the nominees or directors--or among any of
the nominees or directors and any officer--nor is there any arrangement or
understanding between any nominee or director and any other person, pursuant to
which the nominee or director was selected.

SHARES OF
NORFOLK SOUTHERN
CORPORATION
COMMON STOCK
NAME, AGE, BUSINESS EXPERIENCE CURRENT BENEFICIALLY OWNED
DURING PAST 5 YEARS, DIRECTORSHIPS TERM EXPIRES/ AS OF FEBRUARY 28,
IN OTHER PUBLIC CORPORATIONS A DIRECTOR SINCE 1995/1/,/2/,/3/
---------------------------------- ---------------- ------------------

NOMINEE (FOR TERM EXPIRING IN 1996)
HENRY C. WOLF, 52, Norfolk, Va., Executive Vice 1995/1994 46,995
President- Finance, Norfolk Southern Corporation, and
Vice President- Finance, Norfolk Southern Railway
Company, since June 1, 1993, and having served prior
thereto as Vice President-Taxation of both Norfolk
Southern Corporation and Norfolk Southern Railway
Company. Director of several Norfolk Southern Railway
Company subsidiaries, including Norfolk and Western
Railway Company.

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Notes begin on page 4.

NOMINEES (FOR TERM EXPIRING IN 1998)
DAVID R. GOODE, 54, Norfolk, Va., Chairman, President and 1995/1992 151,281
Chief Executive Officer, Norfolk Southern Corporation,
and President and Chief Executive Officer, Norfolk
Southern Railway Company, since September 1, 1992,
having previously become President, Norfolk Southern
Corporation, on October 1, 1991, and Executive Vice
President-Administration on January 1, 1991; Vice
President, Norfolk Southern Railway Company, on February
1, 1992, and Vice President-Administration on January 1,
1991; and having served prior thereto as Vice President-
Taxation of both Norfolk Southern Corporation and
Norfolk Southern Railway Company. Director of Norfolk
Southern Corporation and of several Norfolk Southern
Railway Company subsidiaries, including Norfolk and
Western Railway Company. Director of Caterpillar, Inc.,
Georgia-Pacific Corporation and TRINOVA Corporation.
STEPHEN C. TOBIAS, 50, Norfolk, Va., Executive Vice 1995/1994 43,293
President- Operations, Norfolk Southern Corporation, and
Vice President- Operations, Norfolk Southern Railway
Company, since July 1, 1994, having previously become
Senior Vice President-Operations, Norfolk Southern
Corporation, and Vice President, Norfolk Southern
Railway Company, on October 1, 1993, and having served
prior thereto as Vice President-Strategic Planning of
both Norfolk Southern Corporation and Norfolk Southern
Railway Company. Director of several Norfolk Southern
Railway Company subsidiaries, including Norfolk and
Western Railway Company.
OTHER DIRECTORS
D. HENRY WATTS, 63, Norfolk, Va., Executive Vice 1996/1986 103,838/4/
President- Marketing, Norfolk Southern Corporation, and
Vice President and Chief Traffic Officer, Norfolk
Southern Railway Company, since July 1, 1986. Director
of several Norfolk Southern Railway Company
subsidiaries, including Norfolk and Western Railway
Company.

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Notes begin on page 4.

SHARES OF
NORFOLK SOUTHERN
CORPORATION
COMMON STOCK
NAME, AGE, BUSINESS EXPERIENCE CURRENT BENEFICIALLY OWNED
DURING PAST 5 YEARS, DIRECTORSHIPS TERM EXPIRES/ AS OF FEBRUARY 28,
IN OTHER PUBLIC CORPORATIONS A DIRECTOR SINCE 1994/1/,/2/,/3/
---------------------------------- ---------------- ------------------

OTHER DIRECTORS
JOHN S. SHANNON, 64, Norfolk, Va., Executive Vice 1997/1982 123,624
President- Law, Norfolk Southern Corporation, since June
1, 1982, and Vice President-Law, Norfolk Southern
Railway Company, since May 24, 1984. Director of several
Norfolk Southern Railway Company subsidiaries, including
Norfolk and Western Railway Company.
JOHN R. TURBYFILL, 63, Norfolk, Va., Vice Chairman, 1997/1982 176,099/5/
Norfolk Southern Corporation, and Vice President,
Norfolk Southern Railway Company, since June 1, 1993,
having served prior thereto as Executive Vice President-
Finance, Norfolk Southern Corporation and Vice
President-Finance, Norfolk Southern Railway Company,
respectively. Director of several Norfolk Southern
Railway Company subsidiaries, including Norfolk and
Western Railway Company.

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/1/For each named individual, the shares owned are less than 1% of the total
shares outstanding. No director or nominee owns shares of the Company's
Preferred Stock.
/2/Unless otherwise indicated by footnote, all shares are held by the named
individuals with sole voting and investment powers.
/3/Includes shares credited to individual accounts under NS' Thrift and
Investment Plan and shares held by NS under share retention agreements
pursuant to NS' Long-Term Incentive Plan (for Mr. Wolf, this amounts to 2,803
and 3,081 shares, respectively; for Mr. Goode, 2,853 and 7,624 shares; for
Mr. Tobias, 3,358 and 3,622 shares; for Mr. Watts, 3,599 and 13,950 shares;
for Mr. Shannon, 2,245 and 14,213 shares; and for Mr. Turbyfill, 8,594 and
15,973 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
NS' Long- Term Incentive Plan and with respect to which the optionee has the
right to acquire beneficial ownership within 60 days (for Mr. Wolf, this
amounts to 37,184 shares; for Mr. Goode, 125,821 shares; for Mr. Tobias,
30,837 shares; for Mr. Watts, 72,942 shares; for Mr. Shannon, 73,320 shares;
and for Mr. Turbyfill, 126,709 shares).
/4/Includes 13,347 shares held by Mr. Watts' wife, in which beneficial
ownership is disclaimed.
/5/Includes 1,893 shares held by Mr. Turbyfill's wife, in which beneficial
ownership is disclaimed.

Section 16 of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, 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 Securities and Exchange Commission and the New York Stock Exchange.
For 1994, 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 were filed on time.

BENEFICIAL OWNERSHIP OF NS AND COMPANY STOCK

As of February 28, 1995, 100,194 shares, or approximately 8.4%, of the
Company's Preferred Stock were held by Company subsidiaries and/or in a
fiduciary capacity. NS held 94,022 shares, or approximately 8%, of the
Company's Preferred Stock. To the knowledge of the Company, no other person
beneficially owns more than 5% of the Company's Preferred Stock. NS held 100%
(16,668,997 shares) of the Company's Common Stock on February 28, 1995.

As of February 28, 1995, all officers and directors of the Company as a group
beneficially owned 1,184,721 shares of NS Common Stock and 70 shares (in which
beneficial ownership is disclaimed) of the Company's Preferred Stock, or less
than 1% of the total shares of each class of stock outstanding. Included in the
NS Common Stock figure are 68,293 shares credited to individual accounts under
NS' Thrift and Investment Plan. Also included are 93,903 shares held by NS
under share retention agreements pursuant to NS' Long-Term Incentive Plan over
which the individual possesses voting power but no investment power until the
shares are distributed, and 850,939 shares subject to stock options granted
pursuant to NS' Long-Term Incentive Plan with respect to which optionees have
the right to acquire beneficial ownership within 60 days. Also included are
15,349 shares in which beneficial ownership is disclaimed. The shares held
individually by directors whose terms of office will continue after the Annual
Meeting and nominees are included in the information under "Election of
Directors."

BOARD OF DIRECTORS AND COMMITTEES

The Board of Directors of the Company consists of six members and is divided
into three classes elected for a term of three years, with each class
containing as nearly as possible one third of the total number of directors.
The Board of Directors has no audit, nominating or compensation committees. In
1994, the Board of Directors acted by unanimous written consent on twenty-four
separate occasions.

Each year the Board of Directors appoints an Executive Committee, which is
empowered to exercise all the authority of the Board of Directors to the extent
permitted by law when the Board is not in session. All such actions taken by
the Committee are to be reported to the Board at its meeting next succeeding
the action and are subject to revision or alteration by the Board. Executive
Committee members are David R. Goode, John S. Shannon and John R. Turbyfill.
The Committee took no action in 1994.

COMPENSATION OF DIRECTORS

Each incumbent director is also an officer of the Company and an officer of
NS and is not paid a director's fee.

NS COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The following identifies any reportable business relationships between NS and
Messrs. Leisenring, Coleman, Hahn or McNair, the members of the Compensation
and Nominating Committee of the NS Board of Directors.

In 1994, NS paid approximately $335,000 to McNair & Sanford, P.A., of which
Mr. McNair is Chairman, for legal and consulting services.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Kathryn B. McQuade is Vice President-Internal Audit of the Company. Ms.
McQuade's spouse is one of approximately 6,100 partners worldwide in KPMG Peat
Marwick LLP ("KPMG"), a firm of independent public accountants that has acted
as auditors for NS. Ms. McQuade's spouse does not participate in, or have
access to, KPMG's work for NS or its subsidiaries, including the Company. NS
paid KPMG approximately $1.7 million for all services rendered during 1994.

EXECUTIVE COMPENSATION

The Chief Executive Officer and each of the named executive officers of the
Company are also officers of NS and receive no compensation for their services
solely as Company officers. Their compensation is set by the NS Board of
Directors, based on the recommendation of its Compensation and Nominating
Committee, for service in all capacities to NS and its subsidiaries. The
directors of the Company do not participate in decisions regarding
compensation. Consequently, the information which follows concerning executive
compensation reflects the compensation paid to Company officers for service in
all capacities to NS and its subsidiaries, including the Company.

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 five most highly compensated executive officers of NS for
service in all capacities to NS and its subsidiaries (including the Company)
for the fiscal years ending December 31, 1994, 1993 and 1992.

SUMMARY COMPENSATION TABLE

LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------- ---------------------
AWARDS PAYOUTS
---------- ----------
OTHER
ANNUAL SECURITIES
NAME AND COMPEN- UNDERLYING LTIP ALL OTHER
PRINCIPAL SALARY/1/ BONUS/1/ SATION/2/ OPTIONS/3/ PAYOUTS/4/ COMPENSATION/5/
POSITION YEAR ($) ($) ($) (#) ($) ($)
--------- ---- --------- -------- --------- ---------- ---------- ---------------

David R. Goode 1994 585,000 497,250 154,472/6/ 40,000 /7/ 4,500
Chairman, President 1993 535,000 376,480 300,309 40,000 217,011 50,480
and Chief Executive 1992 418,333 297,634 133,057 20,000 81,567 31,778
Officer
John R. Turbyfill 1994 425,000 340,000 187,957 20,000 /7/ 4,500
Vice Chairman 1993 414,583 273,086 331,359 12,500 217,011 36,924
1992 390,000 270,738 317,988 12,500 208,435 28,895
John S. Shannon 1994 370,000 277,500 68,570 12,500 /7/ 4,500
Executive Vice 1993 360,000 237,132 233,296 12,500 217,011 30,681
President-Law 1992 340,000 236,028 204,483 12,500 180,250 25,973
Stephen C. Tobias 1994 267,500 200,625 43,654 5,000 /7/ 4,500
Executive Vice 1993 223,750 147,384 99,425 5,000 86,818 22,910
President-Operations 1992 201,250 139,714 83,308 5,000 72,278 20,235
D. Henry Watts 1994 370,000 277,500 220,252 12,500 /7/ 4,500
Executive Vice 1993 360,000 237,132 377,009 12,500 217,011 33,444
President-Marketing 1992 350,000 242,970 317,355 12,500 180,250 30,384
Henry C. Wolf 1994 267,500 200,625 46,537 12,500 /7/ 4,500
Executive Vice 1993 204,167 134,485 101,053 5,000 86,818 27,269
President-Finance 1992 160,000 111,072 56,893 5,000 33,912 19,390

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/1/Includes portion of any salary or bonus award elected to be received on a
deferred basis.
/2/Includes cash payment of dividend equivalents in an amount equal to, and
commensurate with, dividends paid on NS Common Stock on performance share
units awarded through 1992 pursuant to the NS Long-Term Incentive Plan
(dividend equivalents are not paid on performance share units awarded after
1992). Includes amounts reimbursed for the payment of taxes on personal
benefits.

Does not include a tax absorption payment, which was not determinable in time
to be reported, under the Long-Term Incentive Plan for the 1994 award of
performance shares. 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 Internal Revenue Code; for 1994, these amounts were: for Mr.
Goode, $30,525; Mr. Turbyfill, $161,921; Mr. Shannon, $46,304; Mr. Tobias,
$23,009; Mr. Watts, $195,798; and Mr. Wolf, $26,321.
/3/Options were granted without tandem SARs.
/4/Represents market value, as of the date of award, of NS Common Stock
earned pursuant to the performance share feature of the NS Long-Term Incentive
Plan for periods ended December 31, 1993 and 1992 (for 1992, performance
shares were awarded for achievements in the three-year period 1990-1992 and
for 1993, performance shares were awarded for achievements in the three-year
period 1991-1993). For 1994, the award of performance shares for achievements
in the three-year period 1992-1994 had not been approved in time to be
reported.
/5/Includes for 1994 contributions of $4,500 to the NS 401(k) plan on behalf
of each named executive officer.
/6/Includes personal use, as directed by resolution of the NS Board of
Directors, of NS' aircraft valued at $55,328, calculated on the basis of the
aggregate incremental cost of such use to NS.
/7/For 1994, the award of performance shares for achievements in the three-
year period 1992-1994 had not been approved in time to be reported.

LONG-TERM INCENTIVE PLAN

The NS Long-Term Incentive Plan, as amended by the NS stockholders in 1989,
provides for the award of incentive stock options, non-qualified stock
options, stock appreciation rights, restricted stock and performance share
units to officers and other key employees of NS and certain of its
subsidiaries (including the Company). The Compensation and Nominating
Committee of the NS Board of Directors ("Committee") is charged with
administration of 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
1994 of stock options under 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
UNDERLYING OPTIONS GRANT 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 40,000 5.68% 72.9375 01/30/2004 787,600
J. R. Turbyfill 20,000 2.84% 72.9375 01/30/2004 393,800
J. S. Shannon 12,500 1.77% 72.9375 01/30/2004 246,125
S. C. Tobias 5,000 .71% 72.9375 01/30/2004 98,450
D. H. Watts 12,500 1.77% 72.9375 01/30/2004 246,125
H. C. Wolf 12,500 1.77% 72.9375 01/30/2004 246,125

* No SARs were granted in 1994
- --------

/1/Options were granted effective January 31, 1994, exercisable one year
after the date of grant. Dividend equivalents are paid in cash on these
options in an amount equal to, and commensurate with, dividends paid on NS
Common Stock.
/2/The exercise price (fair market value on 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.
/3/In accordance with regulations of the Securities and Exchange Commission,
the present value of the option grant at the date of grant was determined
using the Black-Scholes statistical model. The actual amount, if any, an
executive officer may realize depends on the stock price on the date the
option is exercised; consequently, there is no assurance the amount realized
by an executive officer will be at or near the monetary value determined by
using this statistical model.

The model assumes:

(a) a stock volatility factor of 0.2309: volatility was determined by an
independent compensation consultant using monthly data averaged over the
60-month period January 1, 1989, through December 31, 1993;

(b) a dividend yield of 3.43%: yield was determined monthly and averaged
over the 60-month period January 1, 1989, through December 31, 1993; and

(c) a 1993 risk-free rate of return of 6%: this represents the return on
a comparatively "risk-free" investment in 1993, the year prior to the
issuance of these options.

These assumptions produce a Black-Scholes factor of 0.27 and a resulting
present value for the 1994 option grant of $19.69 per share. The factor
computed under the Black-Scholes formula was not adjusted to reflect that the
options cannot be exercised during the first year of their ten-year term, nor
does it reflect that dividend equivalents are paid on unexercised options.

The following table sets forth certain information concerning the exercise
of options and/or SARs by each named executive officer during 1994 and the
unexercised options and SARs held by each as of the end of 1994:

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 IN-THE-MONEY OPTIONS/SARS
SHARES FY-END AT FY-END/1/
ACQUIRED ON VALUE (#) ($)
EXERCISE REALIZED -------------------------------------- ----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE/2/ UNEXERCISABLE/2/
---- ----------- -------- ---------------- ---------------- ----------- -------------

D. R. Goode 4,731 205,008 85,821/3/ 40,000 676,615/3/ 0
J. R. Turbyfill 3,227 179,436 108,909/4/ 20,000 2,661,048/4/ 0
J. S. Shannon 0 0 60,820 12,500 876,958 0
S. C. Tobias 0 0 25,837 5,000 409,788 0
D. H. Watts 0 0 60,442 12,500 866,444 0
H. C. Wolf 1,318 65,708 24,684 12,500 386,910 0

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/1/Equal to the mean ($60.875) of the high and low trading prices on the New
York Stock Exchange-Composite Transactions of NS Common Stock on December 31,
1994, less the exercise prices of the options, multiplied by the number of
options.

/2/Because the market price of NS Common Stock at the end of 1994 was below
the exercise price of options granted in 1993 ($63.25 per share) and in 1994
($72.9375 per share), such options are out-of-the-money and are not includable
in the reported value of in-the-money options at year end, whether or not
exercisable.
/3/Includes 3,300 tandem SARs with a value of $105,874.
/4/Includes 44,386 tandem SARs with a value of $1,689,486.

PERFORMANCE SHARE UNITS ("PSUS")

The following table sets forth certain information concerning the grant in
1994 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 shares (shares of NS Common Stock) at the end of a three-year
performance cycle (1994-1996) based on NS' performance during this three-year
period. Under the 1994 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 earnings
per share ("EPS") growth over the prior three-year base period, (2) three-year
average return on average invested capital ("ROAIC") and (3) three-year
average annual operating ratio measured both absolutely and in relation to
average industry performance for six major rail carriers. A more detailed
discussion of these performance criteria can be found in the Report of the NS
Compensation and Nominating Committee, beginning on page 11.

LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR

NUMBER OF PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
SHARES, OR OTHER NON-STOCK PRICE-BASED PLANS
UNITS OR PERIOD UNTIL -------------------------------------
OTHER RIGHTS/1/ MATURATION THRESHOLD TARGET/2/ MAXIMUM
NAME (#) OR PAYOUT (#) (#) (#)
---- --------------- ------------ ---------- ----------- -----------

D. R. Goode 20,000 01/01/94- 0 10,280 20,000
12/31/96
J. R. Turbyfill 10,000 01/01/94- 0 5,140 10,000
12/31/96
J. S. Shannon 6,250 01/01/94- 0 3,212 6,250
12/31/96
S. C. Tobias 2,500 01/01/94- 0 1,285 2,500
12/31/96
D. H. Watts 6,250 01/01/94- 0 3,212 6,250
12/31/96
H. C. Wolf 6,250 01/01/94- 0 3,212 6,250
12/31/96

- --------
/1/Performance shares, when earned out, will be 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. Since all performance shares
earned under the 1994 award will be subject to a share retention agreement, a
tax absorption payment in cash or as additional withholding taxes, equal to
any Federal and state income taxes imposed, will be made to or on behalf of an
executive officer as the result of this "earn out."

/2/The Long-Term Incentive Plan does not provide for a performance target;
consequently, this column represents 51.4% of the maximum "earn out," which,
in accordance with applicable rules of the Securities and Exchange Commission,
is based on the percentage of the previous fiscal year's actual "earn out"
under the Plan.

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 1994 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

YEARS OF CREDITABLE SERVICE
-----------------------------------------------------------------------
REMUNERATION 25 30 35 40
------------ -------- -------- -------- --------

$ 200,000 $ 60,722 $ 74,279 $ 87,879 $101,831
300,000 98,222 119,279 140,379 161,831
400,000 135,722 164,279 192,879 221,831
500,000 173,222 209,279 245,379 281,831
600,000 210,722 254,279 297,879 341,831
700,000 248,222 299,279 350,379 401,831
800,000 285,722 344,279 402,879 461,831
900,000 323,222 389,279 455,379 521,831
1,000,000 360,722 434,279 507,879 581,831
1,100,000 398,222 479,279 560,379 641,831
1,200,000 435,722 524,279 612,879 701,831

Under the pension plans, covered compensation includes salary and bonus;
each officer can expect to receive an annual retirement benefit equal to
average annual compensation for the five 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, 1995, for each executive officer named in
the Summary Compensation Table were: Mr. Goode, $612,648 and 29 years; Mr.
Turbyfill, $660,595 and 34 years; Mr. Shannon, $573,438 and 38 years; Mr.
Tobias, $322,716 and 25 years; Mr. Watts, $576,937 and 40 years; Mr. Wolf,
$276,895 and 22 years.

THE NORFOLK SOUTHERN CORPORATION COMPENSATION ANDNOMINATING COMMITTEE REPORT
CONCERNING THE 1994COMPENSATION OF CERTAIN EXECUTIVE OFFICERS

This Report describes NS' officer compensation strategy, the components of
its compensation program and the manner in which 1994 compensation
determinations were made for NS' Chairman, President and Chief Executive
Officer, David R. Goode, and the other officers (collectively, including Mr.
Goode, referred to as the "Executive Officers") whose 1994 compensation is
disclosed in the Summary Compensation Table of this Proxy Statement.

Among other things, the Compensation and Nominating Committee of the NS Board
of Directors ("Committee") is responsible for: (1) recommending to the NS Board
the salaries of corporate officers and (2) administering NS' Management
Incentive Plan ("MIP"), as adopted by the NS Board, and its Long-Term Incentive
Plan ("LTIP"), as last amended and approved by NS stockholders in 1989.
Included in the LTIP, and more particularly described below, are awards of
stock options and performance share units. The Committee is composed entirely
of non-employee directors and met six times during 1994.

BASE SALARY: While the Committee believes that a substantial portion of
each Executive Officer's total compensation should be "performance-based,"
the Committee seeks to assure that the base salaries of Executive Officers
are generally competitive with those earned by individuals in comparable
positions.

Specifically, the Committee compares Mr. Goode's base salary with those
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. The base salaries of the other Executive
Officers--as well as all NS officers--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. This information is compiled by NS' Personnel Department and by an
outside consultant. The Committee's general intention is to set the base
salaries of 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 Executive Officers. Based on such subjective
evaluations, comparative salary data and each Executive Officer's length of
service in current position, Mr. Goode makes base salary recommendations
which are submitted for Committee and NS Board approval.

Mr. Goode makes no recommendations concerning, nor does he play any role in
determining, his base salary (or other compensation), which is set by the
NS Board. As noted, the Committee customarily seeks to set the Chairman's
base salary between the 50th and 75th percentiles of the base salaries paid
to chairmen 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. Since Mr.
Goode became Chairman of NS in 1992, his base salary in 1994 was below the
50th percentile; the base salary of other Executive Officers in 1994
approximated the 50th percentile.

For 1994, Mr. Goode's salary was increased by $50,000, or 9.3%. This 1994
increase, not tied to or reflecting application of any specific formula,
reflects both NS' total operating revenues and net income in 1993, despite
an uncertain economy and reduced coal traffic, and the NS Board's
confidence in Mr. Goode's leadership. The Committee recommended and the NS
Board approved average increases of 2.8% for Messrs. Turbyfill, Shannon,
Tobias, Watts and Wolf; these increases were based on Mr. Goode's
recommendations and NS' 1993 performance. Mr. Tobias was elected Executive
Vice President-Operations at midyear (succeeding Mr. P. R. Rudder who
retired), and the Board set his salary using the same criteria and
considerations applicable to the other Executive Officers.

MANAGEMENT INCENTIVE PLAN ("MIP"): NS' MIP is designed and administered to
ensure that a significant portion of each Executive Officer's total annual
cash compensation is based on NS' annual profitability. MIP awards to
Executive Officers and other MIP participants are paid from an annual
incentive fund equal to a percentage (from 0.75% to 1.5%) of NS' adjusted
pretax net income when NS' annual return on average invested capital
("ROAIC") equals or exceeds 10%.

Base salaries of NS' Executive Officers have tended to be lower than at
comparable organizations, and their incentive pay opportunities have tended
to be higher. When NS achieves MIP profitability goals, the Executive
Officers' base salaries and MIP awards are competitive with the total
annual cash compensation paid by comparable organizations. In years in
which those goals are not realized, the Executive Officers will receive
less (or no) incentive pay.

Specifically, incentive pay opportunities for Mr. Goode are determined
annually by the Committee by comparing Mr. Goode's incentive pay 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 other
Executive Officers are determined annually by the Committee based on its
review of the annual cash compensation of comparable positions at a large
number of American companies of comparable revenue size, including but not
limited to those identified in the Stock Performance Graph.

Using those criteria, in November of 1993, the Committee set Mr. Goode's
maximum 1994 incentive opportunity at 85% of 1994 salary, the Vice
Chairman's at 80% of 1994 salary, and the other Executive Officers' at 75%
of 1994 salary. Actual payments, if any, are based on the total amount in
the annual incentive fund. For 1994, 296 key employees, including the
Executive Officers, earned MIP awards. In light of NS' 1994 performance,
the related MIP payments earned by Mr. Goode and the other Executive
Officers were equal to the maximum amount of their respective incentive
opportunities. The 1994 MIP award paid to Mr. Goode fell below the 50th
percentile with respect to 1993 bonuses (the most current data available
when decisions concerning his incentive opportunity were made) earned by
chief executive officers in his peer group. The 1994 MIP awards paid to the
other Executive Officers also fell below the 50th percentile with respect
to 1993 bonuses earned by individuals in similar positions in their
respective peer group.

LONG-TERM INCENTIVE PLAN ("LTIP"): The Committee believes that a
substantial component of the Executive Officers' total compensation should
be based on and reflect NS' longer-term earnings growth, its profitability
and the total returns (stock price appreciation and dividends) to NS'
stockholders. This is achieved by making annual grants of stock options and
performance share units and through share retention agreements entered into
with the Executive Officers. These LTIP arrangements are intended to ensure
that the longer-term financial interests of the Executive Officers are
directly aligned with those of NS' stockholders and to provide the
Executive Officers with the opportunity to acquire a meaningful beneficial
stock ownership position in NS.

In determining current LTIP awards, the size of prior grants is analyzed
within a current total 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 at a number of U.S.
companies. 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. Since the inception of the Plan, this analysis has resulted in a
general practice of granting options to performance share units in a ratio
of 2 to 1.

Specifically, the Committee compares Mr. Goode's total compensation to that
of 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. The total compensation of the other Executive
Officers is evaluated relative to survey data for comparable positions at
American corporations of comparable revenue size, including but not limited
to those identified in the Stock Performance Graph. Based on this review,
the number of stock options and performance share units granted is fixed
(assuming that all performance share units actually are earned--which has
not happened to date) so as to place the total compensation of Mr. Goode
and the other Executive Officers above the 75th percentile of total
compensation for their respective peer groups. These award opportunities
and the resultant total compensation will be attained only if future
corporate performance warrants.

At its January 1994 meeting, the Committee granted stock options to each of
the six Executive Officers and to 300 other key NS 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.

The 1994 grants of performance share units provide the Executive Officers,
and other recipients, with the opportunity to earn shares of NS Common
Stock during the first quarter of 1997. The number of performance share
units, and equivalent common shares, that are earned by recipients is based
on NS' three-year (i.e., 1994-1996) earnings per share growth, three-year
average ROAIC and three-year average operating ratio evaluated relative to
pre-established performance criteria set out in the schedules below. One
third of the performance share units granted in 1994 are available to be
earned based on each of the three performance criteria.

EARNINGS PER SHARE ROAIC
- ------------------------------------- ---------------------------------------
PERCENTAGE OF PERCENTAGE OF
THREE-YEAR PERFORMANCE THREE-YEAR PERFORMANCE
AVERAGE EPS SHARE UNITS AVERAGE SHARE UNITS
GROWTH EARNED ROAIC EARNED
- ------------------------------------- ---------------------------------------

40% 100% 20% 100%
35% 90% 19% 90%
30% 80% 18% 80%
25% 60% 17% 70%
20% 40% 16% 60%
15% 20% 15% 50%
Below 15% 0% 14% 40%
13% 20%
Below 13% 0%

3-YEAR AVERAGE OPERATING RATIO ("OPR")
- --------------------------------------------------------------------------------
AVERAGE OF A AND B = PERCENTAGE OF PERFORMANCE SHARE UNITS
EARNED UNDER OPERATING RATIO CRITERIA
- --------------------------------------------------------------------------------

A B
- --------------------------------------------------------------------------------
PERCENTAGE OF 3-YEAR AVERAGE PERCENTAGE OF
PERFORMANCE NS OPR BELOW PERFORMANCE
NS 3-YEAR SHARE UNITS INDUSTRY OPR SHARE UNITS
OPR AVERAGE EARNED AVERAGE EARNED
- --------------------------------------------------------------------------------

70% 100% 15.0+ 100%
75% 90% 10.0 80%
80% 80% 7.5 70%
85% 60% 5.0 60%
90% 40% 2.5 30%
Greater than 0% 0.0 0%
90%

All stock options and performance share units granted in 1994 to Executive
Officers were subject to the following terms. During the period that the
stock options remain outstanding (i.e., until such time as they are
exercised by the Executive Officer), NS pays cash dividend equivalents on
such options to the Executive Officers. At the time performance share units
are earned, NS makes a cash payment so the Executive Officers can pay taxes
due on the value of such performance shares. In exchange for these cash
payments, the Executive Officers have entered into share retention
agreements with NS whereby they have agreed to have NS hold performance
shares for a period of five years following the date such performance
shares are earned.

In 1994, Mr. Goode was granted options on 40,000 shares of NS Common Stock
and 20,000 performance share units. The other Executive Officers as a group
were awarded options on 62,500 shares of NS Common Stock and 31,250
performance share units.

In sum, the Committee believes that compensation of the Executive Officers
is competitive with that of similar positions at comparable American
corporations. More importantly, the Committee believes Executive Officer
compensation has been appropriately structured and administered so that a
substantial component of total compensation is dependent upon, and directly
related to, NS' annual and longer-term earnings growth, its profitability
and the total returns to NS' stockholders.

Regulations of the Securities and Exchange Commission require the Committee
to report to stockholders on the Committee's policy concerning the Revenue
Reconciliation Act of 1993 which amended Section 162 of the Internal Revenue
Code to eliminate the deductibility of certain compensation over $1 million
paid to executive officers. Because it appeared that this new legislation (in
light of interpretive regulations and transition rules) would not affect the
deductibility of amounts paid to Executive Officers under NS' 1994 compensation
arrangements, the Committee concluded it was not necessary to formulate a
policy with respect to the new tax provision. However, the Committee has
continued to monitor developments affecting the tax deductibility of
compensation of Executive

Officers, including the December 1994 amendments to the proposed regulations,
and has made recommendations to the NS Board to permit NS both to offer
competitive compensation in a suitable package and to take related tax
deductions.

E. B. Leisenring, Jr., Chairman
L. E. Coleman, Member
T. M. Hahn, Jr., Member
R. E. McNair, Member

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.

APPOINTMENT OF INDEPENDENT ACCOUNTANTS

The Board of Directors has appointed the firm of KPMG Peat Marwick LLP,
independent public accountants, to audit the books, records and accounts of the
Company for the year 1995. This firm has acted as auditors for the Company
since June 1, 1982.

Representatives of KPMG Peat Marwick LLP are expected to be present at the
Annual Meeting, with the opportunity to make a statement if they so desire, and
available to respond to appropriate questions.

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 1996 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 23510-2191, no later
than December 19, 1995.

OTHER MATTERS

The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than as set forth above. However, if any other matters
come before the meeting, the proxies received pursuant to this solicitation
will be voted thereon in accordance with the judgment of the person or persons
acting under the proxies.

By order of the Board of
Directors,
DEZORA M. MARTIN,
Corporate Secretary.