SALT LAKE CITY — As a mixture of snow and rain fell outside their meeting room Friday, Union Pacific Corp. shareholders heard that the company did well in 2001, considering the recession, and is headed for better results this year, the Omaha World-Herald reports.
But shareholders also wondered when their dividend might increase.
“I’ve been happy,” said Charles Perry, an engineer from Elko, Nev., who has worked for the railroad for 52 years. “Where the other railroads lost business, our business is up. Word is, the economy is getting better, and I feel quite comfortable that we made it through.”
Perry was among 100 stockholders and employees who attended Omaha-based Union Pacific’s annual shareholders’ meeting Friday at the Little America Hotel. The nation’s largest railroad holds the meeting in Salt Lake City because it was first incorporated in Utah.
During the hourlong meeting, one shareholder asked a question apparently on the minds of many others: When will the company raise the 20-cents-a-share dividend it pays to stockholders every three months?
Union Pacific cut the dividend from 43 cents to 20 cents in 1998 because serious service problems caused a $633 million loss that year. Those problems have been resolved, the company says.
Dick Davidson, Union Pacific’s chairman and chief executive, answered that Union Pacific is focused on restoring its credit rating and paying down its debt. Once that happens, he said, the company will consider other uses for its cash, such as increasing capital spending or raising the dividend.
On their way into the hotel, shareholders walked past members of the Brotherhood of Locomotive Engineers, who stood in an informational picket line.
About 25 union members stood outside the hotel, holding signs and passing out leaflets at the entrance, and others stood in an inside hallway near the meeting room.
The union, based in Cleveland, wants the use of remote-control locomotives, which are being tested in some U.P. rail yards, to be operated by licensed engineers, not conductors and brakemen who are operating them now.
The remote-control device, which resembles a belt pack, has buttons and controls that let a person run a train from the ground rather than climbing into the locomotive cab. The union has held similar demonstrations at other railroad shareholders’ meetings, including the Burlington Northern and Santa Fe Railway.
The engineers were joined and supported by about a dozen conspicuously quiet Teamsters, who in the past few years have held enthusiastic protests during U.P. shareholders’ meetings. The Teamsters, who are in the talking stages of merging with the Brotherhood of Locomotive Engineers, have been on strike since October 1999 against Overnite Transportation Co., Union Pacific’s trucking division.
On his way into the meeting, Ivor “Ike” Evans, U.P.’s president and chief operating officer, stopped to talk with union members, who offered him a union hat, a T-shirt and a packet of information and lent him an umbrella to keep off the moisture while they talked.
Evans, smiling and shaking hands, told union members that technology such as the remote-control trains will improve the company’s efficiency and provide more job security for all employees.
In an interview before the meeting, Davidson said Union Pacific did well in 2001 and expects “low double-digit earnings growth in 2002” even though revenue so far this year has been flat from a year ago.
That’s an optimistic outlook for the Omaha-based company, which overcame a sluggish economy in 2001 to post revenue of $12 billion and net income of $966 million, higher than in any of the previous four years.
Davidson said that from December 2000 through Wednesday, Union Pacific’s stock price is up 14 percent while the Standard & Poor’s 500 index, a broad measure of the stock market, declined by 15 percent.
Union Pacific’s stock price closed Friday at $57.36, up 74 cents for the day on the New York Stock Exchange. That’s up one-third from its price in September but short of its 52-week high, $65.15 on March 4, and well below its all-time high of $75.44 in July 1997.
Davidson said this year’s good financial achievement came from increased efficiencies and cost-control measures while facing high fuel prices and weak shipping demand.
He said today’s U.P. employment of about 48,000 people is down 4 percent from one year ago. By the end of 2002, he expects that the work force will be reduced an additional 2 percent through attrition.
Davidson said it’s hard to predict when the economy might turn around, although “there is some room for optimism.”
Shipments of automobiles and auto parts, lumber and highway construction materials are strong, he said, although chemicals and agricultural commodities are down.
“So hope springs eternal,” he said. “We hope that we’ll see more pronounced recovery as the year progresses, but we don’t have it clearly in our vision when that’s going to happen.”
Salt Lake City resident Mary Cromar, a shareholder for 30 years, has the same hope of better railroad business in 2002, including capturing some shipping business from the trucking industry.
“I think it will get better, and we’ll win over more freight – that’s my wish, anyway,” she said. “It sounded like they did good. … I’d like to see them get more of the big trucks off the highway.”
During the meeting, shareholders defeated a shareholder proposal calling for U.P.’s chairman to be an independent director who has not served as CEO.
The shareholders re-elected 11 board members and reappointed Deloitte & Touche as independent auditors. Two other directors retired. They are E. Virgil Conway, former chairman of the Metropolitan Transportation Authority in New York City, and Richard D. Simmons, retired president of the International Herald Tribune.