(The following article by Christopher Dinsmore was posted on the Virginian-Pilot website on March 17.)
NORFOLK, Va. — Despite a decent year at Norfolk Southern Corp., the total compensation of the railroad’s top executive slipped about 8 percent in 2003, according to the company’s proxy statement filed with the Securities and Exchange Commission.
Besides outlining executive compensation, the annual proxy statement invites shareholders to the company’s annual meeting and presents directors up for election to the railroad’s board. This year’s annual meeting will be at 10 a.m. May 13 in St. Louis .
David R. Goode, Norfolk Southern’s chairman, president and chief executive, received a compensation package valued at nearly $10.7 million in 2003, down from $11.6 million in 2002. The package included salary, bonus, stock options, restricted stock awards, long-term incentive plan payments and a variety of other income.
Goode’s compensation slipped because he was awarded fewer stock options. That drop was somewhat made up for by awards of restricted stock, which Goode must hold at least three years.
While Goode’s compensation slipped, the compensation of top executives at two of the nation’s other three top railroads rose.
Richard Davidson, the chairman, president and chief executive of Union Pacific Corp., the nation’s largest railroad, saw his compensation rise 15 percent to $18.7 million last year. Matthew Rose, the chairman, president and chief executive of No. 2 Burlington Northern Sante Fe Corp., saw his compensation increase 6.8 percent to nearly $5.4 million. CSX Corp. has not yet released its annual proxy statement.
Norfolk Southern had a decent 2003 with earnings up 16 percent to $535 million on revenue of nearly $6.5 billion.
Goode’s salary and bonus actually increased 44 percent to $2.67 million in 2003 from $1.85 million in 2002. His other compensation – including payments to his 401(k) plan, life insurance and approved personal use of corporate aircraft – totaled $653,012, down from $979,352.
He received restricted stock awards worth $3.14 million last year, under a new plan adopted in January 2003.
Under Norfolk Southern’s long-term incentive plan, which awards executives for the firm’s performance over the three prior years, Goode received $1,458,605 worth of performance shares last year, up from $1,069,170 in 2002.
Goode also received 310,000 stock options with an estimated value to him of $2.7 million. In 2002, he received 650,000 stock options with an estimated value of $7.7 million. The actual value of stock options can be determined only after they are exercised.
Such stock-based awards reflect the company’s efficient use of assets, its profitability and the total return to stockholders, according to the compensation plan outlined in the proxy statement.
Norfolk Southern’s stock rose 18.3 percent in 2003 to end the year at $23.65 a share.
It has since slipped back some, closing down 16 cents Tuesday at $20.82 a share.
Goode now owns or controls 3.63 million shares of Norfolk Southern stock, or about 1 percent of its outstanding stock.
Goode’s stake was worth $75.6 million at Tuesday’s closing price.
The railroad’s largest shareholder is AXA Financial Inc. and its affiliates, which owns 56.9 million shares or 14.6 percent of the stock.
Norfolk Southern’s other four highest-paid executives also saw their compensation packages decline because of a drop in the number and estimated value of stock options awarded last year.
L.I. “Ike” Prillaman, vice chairman and chief marketing officer, $3.25 million in 2003, down from $3.72 million.
Stephen C. Tobias, vice chairman and chief operating officer, $3.49 million, down from $3.92 million.
Henry C. Wolf, vice chairman and chief financial officer, $3.54 million, down from $3.96 million.
James A. Hixon, senior vice president of legal and government affairs, $1.54 million, down from $1.93 million in 2002.
Four directors are up for election to three-year terms, including Alston D. Correll, the chairman, president and chief executive of Atlanta-based Georgia-Pacific Corp.; Landon Hilliard, a partner in the New York investment bank Brown Brothers Harriman & Co.; Burton M. Joyce, chairman of Canadian steel producer IPSCO; and Jane Margaret O’Brien, president of St. Mary’s College of Maryland.