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4,200 workers furloughed, but UP CEO's compensation was $11.2 million in 2009 |
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 OMAHA, Neb. — Union
Pacific Corp. Chairman and CEO Jim Young’s compensation fell less than 5
percent last year because the railroad’s board felt he kept the company
on track in a difficult economy that led to a 19 percent decline in
earnings.
An Associated Press analysis of a filing with the
Securities and Exchange Commission Wednesday shows Young received 2009
compensation worth $11.2 million, down from $11.8 million the year
before mainly due to a smaller bonus.
UP’s board gave Young a
$2.5 million bonus, saying the railroad improved efficiency and
generated $1.9 billion in net income. His 2008 bonus was $3 million.
Besides
the bonus, the rest of Young’s compensation remained largely unchanged
in 2009, including stock options and restricted stock worth $7.5
million.
“Economic conditions made 2009 a very challenging year,”
the railroad’s board wrote. “Despite these obstacles, we achieved
all-time bests in many of our business objectives by operating a safer
railroad, improving customer service and operations, and implementing
productivity initiatives to improve efficiency and reduce costs.”
The
Omaha-based railroad’s profit last year was down from the $2.4 billion
net income it generated in 2008. But UP’s board said it was still proud
of the 2009 results, given the economy.
Union Pacific had 4,200
employees furloughed at the end of 2009, and 44,000 railcars and 1,600
locomotives stored. Those measures helped the railroad reduce its costs
when freight demand diminished with the weak economy.
The
Associated Press formula is designed to isolate the value the company’s
board placed on the executive’s total compensation package during the
last fiscal year. It includes salary, bonus, performance-related
bonuses, perks, above-market returns on deferred compensation and the
estimated value of stock options and awards granted during the year.
The
calculations don’t include changes in the present value of pension
benefits, making the AP total different in most cases than the total
reported by companies to the Securities and Exchange Commission.
Union
Pacific said it will hold its annual shareholder meeting May 6 in Salt
Lake City, where the railroad was incorporated, even though company
headquarters are in Omaha.
In addition to routine items like the
re-election of directors, Union Pacific investors will vote on two
shareholder proposals the railroad’s board opposes.
One proposal
would ask UP’s board to consider adopting a policy to require that the
company’s chairman be an independent director, not the current or former
CEO.
Investment firm Pax World Management Corp. submitted the
independent chairman proposal, arguing it will help ensure the board can
independently set long-term goals for the railroad and evaluate current
management.
The board said it prefers having the flexibility to
appoint a single person both chairman and CEO, and that it believes the
current setup provides effective independent oversight of the company.
The
other proposal submitted by an individual shareholder in California
would ask the board to change the railroad’s charter so most issues
could be decided by a simple majority vote.
Currently Union
Pacific bylaws require some things to be supported by at least 67
percent of shareholders.
The board asked shareholders to oppose
the majority voting measure because it believes the super-majority
requirement is appropriate for the few issues where UP requires it, such
as for the removal of board members.
Union Pacific operates
32,400 miles of track in 23 states from the Midwest to the West and Gulf
coasts.
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