(The following article by Gregory Richards was posted on the Virginian-Pilot website on March 23.)
NORFOLK, Va. — David R. Goode, who retired as Norfolk Southern Corp.’s chairman in January 2006, received total compensation of $24.4 million from the railroad last year, the company reported in its annual proxy filing with the Securities and Exchange Commission.
Goode made an additional $22.4 million by exercising stock options that had been awarded to him by the Norfolk-based company he ran since 1992.
His successor, Chairman and Chief Executive Wick Moorman, received $12.1 million in 2006 plus an additional $1.7 million from stock options, according to the filing.
For Goode, his package consisted of a $166,666 salary, incentive plan compensation of $333,334, a $3.2 million increase in pension value and $304,239 in perks, including $111,500 of club dues.
Norfolk Southern reported that Goode also received stock awards of $19 million and stock options valued at $1.5 million. Those figures, however, reflect awards for both 2006 and prior years for which the cost is still being incurred by the company. For 2006 alone, Goode was granted $12.4 million in stock and options.
Moorman’s $12.1 million in compensation is less than the $13.4 million Burlington Northern Santa Fe Corp. paid Matthew K. Rose, its chairman and chief executive, last year. Burlington Northern is the nation’s second- largest railroad, while Norfolk Southern is fourth. Neither CSX Corp. nor Union Pacific Corp. – the other two of the nation’s big four railroads – has released last year’s executive pay.
Norfolk Southern’s net income last year jumped 15.6 percent to $1.5 billion. Its stock price increased 12 percent.
Moorman’s pay package includes a salary of $750,000, stock awards of $7.6 million, stock options valued at $926,932, incentive plan compensation of $1.3 million, a $1.4 million increase in his pension’s value and $92,188 in perks such as personal use of company aircraft and vehicles and club memberships.
This year’s executive compensation is not directly comparable to last year’s because Norfolk Southern changed its disclosure to comply with new SEC guidelines. However, in 2005, Moorman was paid a salary of $650,000 and received $3.1 million in stock awards. He was the company’s president for all of 2005 and became chief executive that November.
To determine the compensation of its executives, Norfolk Southern examines what is paid to those in similar positions at comparable companies. It also factors in the railroad’s profitability and expense control.
The regulatory filing disclosed some details of Goode’s retirement agreement. Goode agreed to serve as a consultant to the railroad and signed a noncompete agreement saying he wouldn’t work for a competitor. In exchange, Norfolk Southern changed the way it calculates his pension benefits. His pension is now based on his three most highly compensated years instead of the five highest, boosting its present value by $2 million. Norfolk Southern said it also accelerated the vesting of stock given to Goode in 2004 and 2005.
Norfolk Southern also disclosed the 2006 compensation packages of one retired and four current executives:
— L.I. Prillaman, retired vice chairman and chief marketing officer, $10 million.
— Stephen C. Tobias, vice chairman and chief operating officer, $8 million.
— Henry C. Wolf, vice chairman and chief financial officer, $8.1 million.
— Mark D. Manion, executive vice president of operations, $3.5 million.
— Donald W. Seale, executive vice president and chief marketing officer, $3.4 million.
Norfolk Southern announced that its annual shareholders meeting will be held at 10 a.m. May 10 at the Williamsburg Lodge in Williamsburg. Stockholders of record as of March 5 are invited to attend.
Two routine matters are up for shareholder votes: the election of directors and the ratification of the accounting firm KPMG LLP as Norfolk Southern’s auditors. The terms of four directors are expiring and all are seeking re-election: Alston D. Correll, the retired chairman and chief executive of Georgia-Pacific Corp.; Landon Hilliard, a partner of Brown Brothers Harriman & Co., a private bank in New York City; Burton M. Joyce, the former chief executive of Terra Industries Inc.; and Jane M. O’Brien, the president of St. Mary’s College of Maryland.