(The following article by Gregory Richards was posted on the Virginian Pilot website on March 24.)
NORFOLK, Va. — David R. Goode, the recently retired chairman of Norfolk Southern Corp., took home $14.5 million in compensation during 2005, an increase of 26 percent from the previous year, according to the company’s proxy statement filed Thursday with the Securities and Exchange Commission.
Wick Moorman, Goode’s successor as chairman, chief executive officer and president of the Norfolk-based railroad, also received a substantial increase in pay during a year in which the company posted record earnings. Moorman received $6.02 million in 2005 compensation, up from $1.58 million in 2004, the filing said.
Moorman, who began 2005 as the railroad’s president, assumed the CEO title in November and the chairman title last month.
For Goode and Moorman, the increases came largely from stock-related compensation.
Most of Goode’s increase came from $5.77 million in payments from the railroad’s long-term incentive plan, which reflects financial performance from the past three years. Those payments more than doubled from 2004.
Goode’s annual salary of $1 million and his bonus of $2 million were unchanged from 2004.
He also collected restricted stock awards last year worth $3.75 million, topping the $3.57 million in awards he received in 2004.
Additionally, he was awarded 110,000 stock options with an estimated value of $1.36 million. As of January 2006, Goode owned or controlled nearly 3.2 million shares of the railroad’s stock worth $168.3 million at Thursday’s closing price of $52.89.
Other benefits – including payments made to his 401(k), life insurance and the use of corporate aircraft – totalled $623,778, down from $739,026 the prior year.
Goode’s payout came during what Norfolk Southern refers to as its most successful year ever, with all-time highs in revenue and earnings. The company generated $8.5 billion in revenue, up 17 percent from 2004. Its earnings climbed almost 39 percent to $1.3 billion, or $3.11 a share.
The railroad’s stock climbed 23.9 percent over the course of the year, closing 2005 at $44.83 a share. In contrast, the financial benchmark Standard & Poor’s 500 Index gained only 3 percent last year.
When compared with his peers at two of the country’s other big railroads, Goode’s compensation ranks second, behind the $22.69 million earned in 2005 by Michael J. Ward, chairman, CEO and president of CSX Corp. in Jacksonville, Fla.
Goode made more than the $8.62 million received by Matthew K. Rose, chairman, CEO and president of Burlington Northern Santa Fe Corp. of Fort Worth, Texas.
For Moorman, most of the jump in his compensation came from additional restricted stock awards, according to the SEC filing. He received awards worth $3.07 million in 2005, up from $334,500 in 2004.
In addition, his salary grew from $368,750 in 2004 to $650,000 last year, and it rose again to $750,000 in January, according to the proxy. His bonus increased to $975,000 in 2005, more than quadrupling from the prior year.
Moorman received payments of $721,605 last year from Norfolk Southern’s long-term incentive plan, up from $328,895, the proxy said. And he was awarded 45,000 stock options worth $555,300.
Three other top Norfolk Southern executives also took home increased compensation:
nL.I. “Ike” Prillaman, vice chairman and chief marketing officer, $6.11 million in 2005, up from $3.89 million.
nStephen C. Tobias, vice chairman and chief operating officer, $6.2 million, up from $4 million.
nHenry C. Wolf, vice chairman and chief financial officer, $6.15 million, up from $4.07 million.
The railroad also disclosed Thursday that its annual meeting will be May 11 at the Roper Performing Arts Center on Granby Street in Norfolk.
Both Goode and Harold W. Pote are leaving the company’s Board of Directors when their terms expire at this year’s annual meeting. Pote, a vice chairman with JPMorgan Chase & Co., isn’t seeking re-election “due to professional and personal commit ments that he felt would preclude his full participation to the board,” Norfolk Southern spokesman Robin Chapman said. No replacement directors will be named because the board previously decided to shrink from 12 members to 10 members.
Goode has agreed to serve as a consultant to the railroad for five years beginning this month, the proxy said.
He will help Moorman with his transition into his new jobs and consult on such topics as business strategy and acquisition, as well as make appearances on Norfolk Southern’s behalf.
Up for re-election to the board are Daniel A. Carp, the former chairman and CEO of Eastman Kodak Co.; Steven F. Leer, the president and CEO of Arch Coal Inc., one of the nation’s biggest coal producers; and Moorman. Moorman’s present term doesn’t expire until 2008, but he is resigning to run for a term expiring in 2009 to comply with Virginia law, according to Norfolk Southern.
Also on Thursday, Norfolk Southern announced that its annual report has been completed and will be mailed to shareholders. The report is also posted on the company’s Web site, www.nscorp.com.
In his final letter to shareholders in the report, Goode praised the company’s strength for overcoming obstacles last year, including two hurricanes and the January 2005 wreck in Graniteville, S.C., that killed nine people.