AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 18/10/2026
Moat56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Extensive owned route infrastructure, exclusive operating rights and restricted-access shared assets demonstrate an established physical franchise. Replication difficulty is a supported inference, but comparative cost superiority is not established.
durability · 2/4 · The existing asset base and sustained freight activity support persistence. Overlapping rail competition, transport substitution and recurring capital additions limit confidence in durable excess economic returns.
customer dependency · 2/4 · Growth with existing automotive customers and sustained network volumes indicate repeat use indirectly. Alternative carriers and sourcing options remain available; customer-specific captivity and switching costs are not demonstrated.
erosion resilience · 2/4 · Freight activity and selective realized price improvements show continuing relevance. Experienced capacity constraints, reduced equipment availability and coal pricing weakness reveal vulnerabilities. Improved alternative transport technology remains a prospective risk.
Pricing power56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Metals and construction recorded favorable pricing in 2024 and 2025, and intermodal pricing contributed positively in 2026. First-half coal pricing declined, while overall 2026 unit-revenue growth was primarily fuel-surcharge driven. Pricing power is selective rather than uniformly strong.
retention · 2/4 · Existing-customer automotive growth and sustained aggregate freight activity provide indirect evidence of repeat demand. They do not establish retention specifically following price increases or quantify customer switching friction.
margin resilience · 2/4 · The 2025 operating ratio improved, but incident recoveries and restructuring effects materially influenced the comparison. First-half 2026 operating income declined despite higher revenue, reflecting absent prior-year recoveries, higher fuel costs, inflation and merger expenses. These results show mixed resilience rather than a clean deterioration attributable to pricing.
contractual freedom · 3/4 · Private contracts and exempt price quotes are the predominant pricing mechanisms and are not regulated, supporting substantial formal pricing discretion. Market forces and transport alternatives constrain its economic exercise; detailed escalation and repricing provisions are absent.
Predictability82
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 50.00
- Revenue growth volatility (pp)
- 7.14
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 5.93
Financial strength20
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 1.12
- netDebtEbitGrade
- 28.57
- interestCoverageGrade
- 40.91
- currentRatioGrade
- 7.77
- Debt / FCF (x)
- 7.92
- Net debt / operating income (x)
- 3.57
- Interest coverage (x)
- 5.50
- Current ratio (x)
- 0.85
Capital allocation79
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 12.82
- 3-year average dilution (%)
- -1.40
- 3-year average SBC / revenue (%)
- 0.39
- cashConversionGrade
- 63.62
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Actual infrastructure spending and positive reported capital returns support an assessable record, with lower borrowing and higher debt repayments in 2026. Capital returns remain below their 2022 level, cash balances declined, and the office building guarantee is a material commitment. Missing complete cash-flow coverage limits a stronger conclusion.
incentive alignment · 3/4 · Approved equity incentives use multiyear capital returns and relative shareholder returns. The completed 2023–2025 PSU cycle earned zero after below-threshold performance, including incident effects, demonstrating an actual downside consequence. Merger-related cash retention awards temper alignment; comprehensive ownership evidence is missing.
execution · 2/4 · Indirect operating evidence shows increased 2025 freight activity and improved employee productivity versus 2024. Incident recoveries influenced expense improvement, while 2026 income weakened and equipment availability constrained some shipments. The record supports mixed execution rather than exceptional demonstrated performance.
governance · 3/4 · Annual elections, proxy access, disclosed independence determinations and completed compensation-governance changes support strong formal accountability. Shareholder engagement and improved 2025 compensation-vote approval provide evidence of responsiveness. These disclosures do not establish exceptional oversight effectiveness or the outcome of the 2026 elections.
Evidence
Corridors with heaviest freight volume: •New York City area to Chicago (via Allentown and Pittsburgh) •Chicago to Macon (via Cincinnati, Chattanooga, and Atlanta) •Central Ohio to Norfolk (via Columbus and Roanoke) •Birmingham to Meridian •Cleveland to Kansas City K4 The miles operated, which include an exclusive operating agreement for trackage rights over property owned by North Carolina Railroad Company, were as follows: Mileage Operated at December 31, 2025 Route Miles Second and Other Main Track Passing Track, Crossovers, and Turnouts Way and Yard Switching Total Owned 14,594 2,826 1,975 8,212 27,607 Operated under lease, contract, or trackage rights 4,525 1,735 373 719 7,352 Total 19,119 4,561 2,348 8,931 34,959 We operate freight service over lines with ongoing Amtrak and commuter passenger operations, including trackage owned or leased by Amtrak, New Jersey Transit, Southeastern Pennsylvania Transportation Authority, Metro-North Commuter Railroad Company, Virginia Passenger Rail Authority (VPRA), and the Michigan Department of Transportation.
Business and Properties: corridors, mileage and exclusive operating agreement · Filed 09/02/2026
RAILWAY PROPERTY Our railroad infrastructure makes us capital intensive with net properties of approximately $36 billion on a historical cost basis.
Railway Property: infrastructure capital intensity and historical net property value · Filed 09/02/2026
CRC owns and operates certain properties (the Shared Assets Areas) for the joint and exclusive benefit of NSR and CSX Transportation, Inc.
Investment in Conrail: exclusive beneficiaries of Shared Assets Areas · Filed 09/02/2026
The following table sets forth certain statistics relating to our operations for the past five years: Years ended December 31, 2025 2024 2023 2022 2021 Revenue ton miles (billions) 184 178 176 179 178 Revenue per thousand revenue ton miles $ 66.31 $ 68.09 $ 69.05 $ 71.35 $ 62.56 Revenue ton miles (thousands) per railroad employee 9,486 8,846 8,719 9,513 9,694 Ratio of railway operating expenses to railway operating revenues (railway operating ratio) 64.2% 66.4% 76.5% 62.3% 60.1% RAILWAY OPERATING REVENUES – Total railway operating revenues were $12.2 billion in 2025.
Business: five-year operating statistics · Filed 09/02/2026
Our primary rail competitor is CSX Corporation (CSX); both we and CSX operate throughout much of the same territory.
Competition: primary rail competitor and territorial overlap · Filed 09/02/2026
We also compete with motor carriers, water carriers, and with shippers who have the additional options of handling their own goods in private carriage, sourcing products from different geographic areas, and using substitute products.
Competition: alternative carriers, private carriage and substitution · Filed 09/02/2026
Any future improvements, expenditures, legislation, or regulation changing or materially increasing the efficiency or reducing the cost of one or more alternative modes of transportation in the regions in which we operate (such as granting materially greater latitude for motor carriers with respect to size or weight limitations or adoption and utilization of K16 autonomous commercial vehicles) could have a material adverse effect on our ability to compete with other modes of transportation.
Risk Factors: potential improvement in alternative transport economics · Filed 09/02/2026
Property Additions – Property additions for the past five years were as follows: 2025 2024 2023 2022 2021 ($ in millions) Road and other property $ 1,824 $ 1,711 $ 1,525 $ 1,345 $ 1,041 Acquisition of assets of CSR — 1,643 22 — — Equipment 380 670 802 603 429 Total $ 2,204 $ 4,024 $ 2,349 $ 1,948 $ 1,470 Our capital spending and replacement programs are and have been designed to support our ability to provide safe, efficient, and reliable rail transportation services.
Railway Property: five-year actual property additions · Filed 09/02/2026
We have experienced and may again experience capacity constraints on our rail network related to employee or equipment shortages, increased demand for rail services, severe weather, congestion on other railroads, including passenger activities, or impacts from changes to our network structure or composition.
Risk Factors: experienced network capacity constraints · Filed 09/02/2026
In 2025, the increase was driven by higher average revenue per unit due to favorable price and mix, partially offset by lower fuel surcharge revenue, with volumes down slightly.
MD&A: 2025 metals and construction price, mix and volume · Filed 09/02/2026
In 2024, the increase was driven by higher average revenue per unit due to favorable price, partially offset by lower fuel surcharge revenue, and higher volume.
MD&A: 2024 metals and construction price and volume · Filed 09/02/2026
28 Intermodal Intermodal revenues were higher in both periods due to increased average revenue per unit, driven by increased fuel surcharge revenue and pricing, and higher volume.
MD&A: 2026 intermodal pricing, fuel surcharges and volume · Filed 23/07/2026
The increase for the first six months was partially offset by reduced pricing.
MD&A: first-half 2026 coal pricing reduction · Filed 23/07/2026
FREIGHT RATES – Our predominant pricing mechanisms, private contracts and exempt price quotes, are not subject to regulation.
Freight Rates: predominant pricing mechanisms and regulatory status · Filed 09/02/2026
In general, market forces are the primary determinant of rail service prices.
Freight Rates: market determination of prices · Filed 09/02/2026
Automotive volume was flat in the second quarter but increased in the first six months driven by growth with existing customers, with offsetting impacts driven by production downtime and model discontinuations for certain manufacturers.
MD&A: automotive growth with existing customers · Filed 23/07/2026
We had no material remaining performance obligations at June 30, 2026 and December 31, 2025.
Revenue recognition: remaining performance obligations · Filed 23/07/2026
SUMMARIZED RESULTS OF OPERATIONS Second Quarter First Six Months 2026 2025 % change 2026 2025 % change ($ in millions, except per share amounts) Railway operating revenues $ 3,465 $ 3,110 11% $ 6,463 $ 6,103 6% Railway operating expenses $ 2,341 $ 1,935 21% $ 4,462 $ 3,782 18% Income from railway operations $ 1,124 $ 1,175 (4%) $ 2,001 $ 2,321 (14%) Net income $ 734 $ 768 (4%) $ 1,281 $ 1,518 (16%) Diluted earnings per share $ 3.26 $ 3.41 (4%) $ 5.69 $ 6.72 (15%) Railway operating ratio (percent) 67.6 62.2 9% 69.0 62.0 11% Income from railway operations, net income, and diluted earnings per share decreased in both periods, the result of higher railway operating expenses, primarily related to the absence of insurance recoveries related to the Eastern Ohio incident recognized in the prior year.
MD&A: comparative results and effect of prior-year insurance recoveries · Filed 23/07/2026
Our financial results were further impacted by higher fuel prices, merger-related expenses, and inflation.
MD&A: fuel, merger expenses and inflation effects · Filed 23/07/2026
These effects were partially offset by higher railway operating revenues, driven by increased average revenue per unit, primarily driven by higher fuel surcharge revenue, and increased volume.
MD&A: revenue growth driven primarily by fuel surcharges and higher volume · Filed 23/07/2026
Domestic metallurgical tonnage decreased in both periods due to idled customer facilities and reduced equipment availability.
MD&A: domestic metallurgical tonnage and equipment availability · Filed 23/07/2026
2024 vs. 2023 ($ in millions) (% change) Compensation and benefits $ 2,922 $ 2,823 $ 2,819 4 % — % Purchased services 1,675 1,655 1,683 1 % (2 %) Equipment rents 420 393 387 7 % 2 % Fuel 932 987 1,170 (6 %) (16 %) Depreciation 1,393 1,353 1,298 3 % 4 % Materials 411 369 364 11 % 1 % Claims 281 237 242 19 % (2 %) Other (58) (273) 226 (79 %) (221 %) Merger-related expenses 80 — — n/m n/m Restructuring and other charges 22 183 — (88 %) n/m Eastern Ohio incident (254) 325 1,116 (178 %) (71 %) Total $ 7,824 $ 8,052 $ 9,305 (3 %) (13 %) n/m - not meaningful In 2025, the decline in railway operating expenses reflects net recoveries related to the Incident (Note 19) and lower restructuring charges (Note 4), which were partially offset by lower gains from the sales of railway lines and properties (Note 9) and the incurrence of merger-related expenses (Note 2).
MD&A: operating expenses, incident recoveries and restructuring effects · Filed 09/02/2026
Cash and cash equivalents totaled $1.1 billion and $1.5 billion at June 30, 2026 and December 31, 2025, respectively.
Liquidity: comparative cash balances · Filed 23/07/2026
The increase reflects lower proceeds from borrowing and higher debt repayments, partially offset by lower repurchases of Common Stock.
Cash flows: borrowing, debt repayments and repurchases · Filed 23/07/2026
The lease contains a residual value guarantee of approximately $499 million for the total construction cost of the building.
Debt: office building residual value guarantee · Filed 23/07/2026
Norfolk Southern Corporation 2026 Proxy Statement 81 Table of Contents Executive Compensation PAY VERSUS PERFORMANCE TABLE AND RELATED DISCLOSURE Tabular Disclosure of Pay Versus Performance Value of Initial Fixed $100 Investment on December 31, 2020 Based On: Year Summary Compensation Table Total for PEO1(1) ($) Summary Compensation Table Total for PEO2(2) ($) Summary Compensation Table Total for PEO3(3) ($) Compensation Actually Paid to PEO1(1),(5) ($) Compensation Actually Paid to PEO2(2),(5) ($) Compensation Actually Paid to PEO3(3) ($) Average Summary Compensation Table Total for Non-PEO NEOs(4) ($) Average Compensation Actually Paid to Non-PEO NEOs(4),(5) ($) Norfolk Southern Total Shareholder Return Peer Group Total Shareholder Return(6) Net Income ($ in Millions) After-Tax Return on Average Invested Capital(7) 2025 16,245,050 13,376,591 5,442,145 4,386,599 $135 $129 2,873 11.8% 2024 8,985,660 11,924,070 9,134,271 (5,709,671) 5,282,388 4,304,294 $107 $116 2,622 11.5% 2023 13,418,978 4,077,950 3,478,630 1,402,195 $106 $121 1,827 11.4% 2022 9,770,910 9,615,456 10,444,401 1,969,194 4,239,302 4,343,073 $107 $106 3,270 14.1% 2021 14,016,942 25,072,294 4,059,729 5,783,924 $127 $126 3,005 12.7% Notes: (1) Principal executive officer (PEO)1: Mark R.
Pay versus performance: five-year capital returns, earnings and shareholder returns · Filed 27/03/2026
EQUITY VEHICLE PURPOSE WEIGHTING KEY FEATURES AND METRICS PSUs Incentivize outperformance on key metrics of long-term value creation ■ Payout is based 60% on goals for three-year ROAIC and 40% on goals for relative TSR ■ Payouts range between 0% to 250% of target ■ Any earned awards vest following the three-year performance period RSUs Provide a strong retentive value and directly align executives’ rewards with shareholder value ■ RSU grants vest ratably over three years, providing robust retentive value Stock Options Directly incentivize the creation of long-term shareholder value ■ Awards have value only if company stock price increases from the grant date ■ Options vest and become exercisable on the third anniversary of the grant date to support retention ■ Awards expire ten years after the grant date In January 2025, the Committee approved the following equity awards for the NEOs, consistent with the long-term program structure outlined above: 2025 TARGET LONG-TERM INCENTIVE VALUE ($) EXECUTIVE OFFICER PSUs RSUs OPTIONS TOTAL Mark R.
Executive Compensation: approved 2025 equity awards and incentive structure · Filed 27/03/2026
62 2026 Proxy Statement Norfolk Southern Corporation Table of Contents Executive Compensation 2023-2025 PERFORMANCE CYCLE PSU EARNOUT CALCULATIONS For the 2023-2025 performance cycle, the performance criterion was based on ROAIC as shown in the table below: THREE-YEAR AVERAGE ROAIC 2023-2025 PSUs EARNED ≥ 14.3% 200% (Maximum) 13.7% 100% Target Performance 12.2% 30% (Threshold) ACTUAL PERFORMANCE: 11.6% 0% (Below Threshold) As discussed above, after receiving specific feedback from our shareholders following our 2024 Annual Meeting, as well as advice from our independent compensation consultant, and following significant further deliberation and discussion, the Committee determined to continue its prior-year practice of including the financial impact of the East Palestine incident when calculating ROAIC performance under the PSUs.
Executive Compensation: actual 2023–2025 PSU performance and zero earnout · Filed 27/03/2026
Huffard, Jr, as Committee Chair, given his extensive experience executing a company-wide executive compensation, talent management and retention program from his prior service as President and Chief Operating Officer of Tenable; and ■ Approved one-time cash retention awards for each of Norfolk Southern's NEOs in connection with the Merger Agreement with Union Pacific, which the Committee determined were necessary and appropriate to promote stability, maintain continuity of leadership, and incentivize our NEOs to remain focused on our business and the successful completion of the proposed merger for the benefit of our stockholders.
Executive Compensation: approved merger-related cash retention awards · Filed 27/03/2026
Norfolk Southern Corporation 2026 Proxy Statement 27 Table of Contents Corporate Governance CORPORATE GOVERNANCE BEST PRACTICES Annual Election of Directors: All of our directors are elected annually with a one-year term.
Corporate Governance: annual director elections · Filed 27/03/2026
Proxy Access: Our Bylaws permit a group of up to 20 shareholders holding at least 3% of our outstanding shares for at least three years, and who otherwise comply with the requirements provided in our Bylaws, to nominate for election to the Board the greater of two directors or 20% of number of directors then in office.
Corporate Governance: proxy access rights · Filed 27/03/2026
These actions were intended to build on the significant responsive actions the Committee took following the 2024 Annual Meeting, including the below, which led to a 95.7% approval percentage at the 2025 Annual Meeting: ■ Electing a new Committee Chair (Richard Anderson) with significant experience administering executive compensation programs in the transportation sector given his prior tenure as the CEO at Delta, Amtrak, and Northwest Airlines; ■ Appointing three (out of four) new members, including one nominated by a shareholder activist, to meaningfully review Norfolk Southern’s executive compensation program from a fresh perspective; ■ Conducting a targeted and thorough shareholder engagement campaign led by the Board, Committee, and Governance and Nominating Committee Chairs, ultimately conducting 38 engagements with shareholders representing over 49% of our outstanding shares to specifically review and discuss, among other items, feedback on Norfolk Southern’s executive compensation program and the drivers of the 2024 Say-on-Pay voting results; ■ Holding eight meetings of the Committee in the second half of 2024 and January 2025 (including four regular and four special meetings) to review and discuss these matters and consider changes in response to shareholder feedback; ■ Conducting a baseline review of all Norfolk Southern executive compensation policies and practices; ■ Conducting a detailed selection process to retain a new independent compensation consultant to advise the refreshed Committee in reviewing the overall compensation program and practices; ■ Conducting a refreshed benchmarking comparison exercise, including with respect to overall program structure, and incentive metrics and weightings used, with particular emphasis placed on PSUs given their importance during the most recent Say-on-Pay voting result; and ■ Reviewing and updating its Charter and annual Committee calendar to align with best governance practices and add regular meeting dates to address Committee demands.
Executive Compensation: completed governance changes, shareholder engagement and 2025 vote outcome · Filed 27/03/2026
George satisfy the categorical standards and qualify as independent directors of Norfolk Southern.
Corporate Governance: director nominee independence determination · Filed 27/03/2026
1. Merger Agreement On July 28, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Union Pacific Corporation, a Utah corporation (“Union Pacific”), pursuant to which Union Pacific will acquire the Company in a stock-and-cash transaction more fully described therein.
Merger Agreement: proposed Union Pacific acquisition · Filed 23/07/2026
