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 · 19/10/2026
Moat56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · The integrated network and distinctive coverage of all six major Mexico gateways demonstrate a substantial existing geographic franchise. Recurring core pricing supports commercial relevance. Efficient-scale economics are inferred; route-level exclusivity and rival cost comparisons are missing.
durability · 2/4 · Gateway coverage persists across 2023 and 2025 disclosures, with core pricing gains across subsequent periods. Infrastructure obligations support persistence but also impose continuing costs. The evidence does not establish exceptional long-term protection from alternative transport.
customer dependency · 2/4 · Repeated shipment demand and distinctive gateway access indicate customer utility indirectly. Motor carriers, barges and alternative products or origins provide disclosed substitutes; customer captivity and switching expenditures remain unproven.
erosion resilience · 2/4 · Pricing, productivity and service improvements demonstrate adaptation. However, second-quarter 2026 fuel inflation worsened the operating ratio, while competing modes retain service advantages. Resilience is demonstrated but incomplete.
Pricing power56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 3/4 · Core pricing gains contributed to reported freight revenue in 2023, 2024, 2025 and second-quarter 2026, including periods of declining volume. This demonstrates recurring realized pricing, although the magnitude is not separately quantified and revenue growth includes fuel and mix.
retention · 2/4 · Aggregate volume increased in 2024, 2025 and second-quarter 2026 alongside core pricing gains, providing indirect evidence of continued demand. Improved service and an internally benchmarked customer-satisfaction result add support, but do not identify repeat customers or separate market demand from retention.
margin resilience · 2/4 · Pricing and productivity offset inflation and other pressures in 2025. In second-quarter 2026, operating income increased 9% but the operating ratio deteriorated 0.7 points primarily because of fuel. Surcharge recovery provides partial protection with a timing lag.
contractual freedom · 2/4 · Actual core pricing gains and fuel surcharge recovery demonstrate some ability to adjust charges. STB jurisdiction over certain regulated rates limits freedom. Contract lengths, unilateral repricing rights and the regulated share of traffic are not supplied.
Predictability93
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 (%)
- 75.00
- Revenue growth volatility (pp)
- 6.50
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 2.67
Financial strength35
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
- 31.64
- netDebtEbitGrade
- 37.95
- interestCoverageGrade
- 59.29
- currentRatioGrade
- 12.68
- Debt / FCF (x)
- 5.79
- Net debt / operating income (x)
- 3.10
- Interest coverage (x)
- 7.52
- Current ratio (x)
- 0.91
Capital allocation90
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 (%)
- 20.42
- 3-year average dilution (%)
- -1.50
- 3-year average SBC / revenue (%)
- 0.50
- cashConversionGrade
- 79.78
Management75
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 3/4 · First-half 2026 operating cash generation of $5.516 billion supported $1.810 billion of capital investment, $1.640 billion of dividends and $1.506 billion of debt repayment without debt issuance. Pausing repurchases demonstrates financing restraint. Acquisition returns remain unproven, and the contingent $2.5 billion termination fee is material.
incentive alignment · 3/4 · Actual grants link performance units to multiyear ROIC and relative operating-income growth; the 2023–2025 units vested at 86% of target, demonstrating payout sensitivity. Ownership and anti-hedging policies support alignment. Options lack performance-based vesting, merger costs were excluded from annual incentive results, and actual ownership compliance is missing.
execution · 3/4 · Measured 2025 injury and derailment improvements, higher velocity and productivity, and further second-quarter 2026 operating improvements demonstrate execution. Assessment relies on issuer-reported operational outcomes rather than independently established market leadership; fuel-driven margin deterioration limits the conclusion.
governance · 3/4 · An independent chairman, independent standing committees, executive sessions and annual evaluations provide concrete oversight structures. Twelve board meetings and disclosed attendance support actual activity. Nominee independence statistics do not establish subsequent election outcomes or exceptional oversight effectiveness.
Evidence
Although we provide and analyze revenues by commodity group, we treat the financial results of the Railroad as one segment due to the integrated nature of our rail network.
Item 1, Operations: integrated rail network · Filed 06/02/2026
We have 32,889 route miles, connecting Pacific Coast and Gulf Coast ports with the Midwest and Eastern U.S.
Item 1, Operations: route miles · Filed 06/02/2026
population centers, operates from all major West Coast and Gulf Coast ports to Eastern gateways, connects with Canada's rail systems, and is the only railroad serving all six major Mexico gateways.
Item 1, General: ports and unique Mexico gateway coverage · Filed 06/02/2026
population centers, operates from all major West Coast and Gulf Coast ports to Eastern gateways, connects with Canada's rail systems, and is the only railroad serving all six major Mexico gateways.
Item 1, General: 2023 gateway coverage · Filed 09/02/2024
Freight revenues decreased 3% year-over-year to $22.6 billion driven by lower fuel surcharge revenues, negative mix of traffic (decreased lumber shipments and increased short haul rock shipments), and a 1% decrease in volume, partially offset by core pricing gains.
MD&A: 2023 freight revenue, volume and core pricing · Filed 09/02/2024
Freight revenues increased 1% year-over-year to $22.8 billion driven by a 3% increase in volumes and core pricing gains, partially offset by lower fuel surcharge revenues and negative mix of traffic (for example, a relative increase in international intermodal shipments, which have a lower ARC).
MD&A: 2024 freight revenue, volume and core pricing · Filed 07/02/2025
Freight revenues of $23.2 billion increased 2% from 2024 driven by core pricing gains and a 1% increase in volumes, partially offset by traffic mix (for example, a relative increase in coal and rock shipments, which have a lower ARC, combined with a decline in lumber shipments, which have a higher ARC) and lower fuel surcharge revenues.
MD&A: 2025 freight revenue, volume and core pricing · Filed 06/02/2026
Freight revenues increased 12% in the second quarter of 2026 compared to the same period in 2025 driven by higher fuel surcharge revenues, 2% carload growth, and core pricing gains, which offset a slightly unfavorable business mix (from an increase in shipments with lower ARC, such as domestic intermodal).
MD&A: second-quarter 2026 freight revenue, volume and core pricing · Filed 23/07/2026
Motor carrier competition exists in all three of our commodity groups.
Competition: motor carriers across all commodity groups · Filed 06/02/2026
Because of the proximity of our routes to major inland and Gulf Coast waterways, barges can be particularly competitive, especially for grain and bulk commodities in certain areas where we operate.
Competition: barge alternatives · Filed 06/02/2026
Motor carriers in particular generally have an advantage over railroads with respect to transit times and timeliness of service.
Competition: motor carrier transit-time advantages · Filed 06/02/2026
Additionally, we must build or acquire and maintain our rail system, while trucks, barges, and maritime operators are able to use public rights-of-way maintained by public entities.
Competition: private rail infrastructure versus public rights-of-way · Filed 06/02/2026
Many movements face product or geographic competition where our customers can use different products (e.g., natural gas instead of coal, sorghum instead of corn) or commodities from different locations (e.g., grain from states or countries that we do not serve, crude oil from different regions).
Competition: product and geographic substitution · Filed 06/02/2026
Operating income increased 9% to $2.8 billion reflecting top-line growth, while the operating ratio of 59.7% deteriorated 0.7 points primarily resulting from the impact of higher fuel prices compared to the second quarter of 2025.
MD&A: operating income growth and fuel-driven operating-ratio deterioration · Filed 23/07/2026
Although we currently are able to recover a significant amount of our fuel expenses from our customers through revenues from fuel surcharges, we cannot be certain that we will always be able to mitigate rising or elevated fuel costs through our fuel surcharges.
Financial risks: current fuel surcharge recovery and its limits · Filed 06/02/2026
As fuel prices fluctuate, our fuel surcharge programs trail such fluctuations in fuel prices by approximately two months and are from time-to-time a significant source of quarter-over-quarter and year-over-year volatility, particularly in periods of rapidly changing prices.
Financial risks: fuel surcharge timing lag · Filed 06/02/2026
The STB has jurisdiction over rates charged on certain regulated rail traffic; common carrier service of regulated traffic; freight car compensation; transfer, extension, or abandonment of rail lines; and acquisition of control of rail common carriers.
Regulation: STB jurisdiction over certain rates and rail services · Filed 09/02/2024
•Financial results – Core pricing gains, strong productivity, and 1% volume growth positively impacted our financial results and offset the impact of inflation, negative business mix, and acquisition-related costs.
2025 Business Highlights: pricing and productivity offsetting inflation and other costs · Filed 25/03/2026
Compared to 2024, our personal injury rate (the number of reportable injuries for every 200,000 employee-hours worked) of 0.68 improved 24% and our derailment incident rate (the number of reportable derailment incidents per million train miles) of 1.75 improved 19%.
Proxy Summary: realized 2025 injury and derailment improvements · Filed 25/03/2026
Highlights of the Company's full year 2025 financial and operational performance include: Reported net income: $7.1 B or $11.98 per diluted share compared to 2024 net income of $6.7 billion or $11.09 per diluted share Adjusted net income*: $6.9 B or $11.66 per diluted share* compared to 2024 adjusted net income* of $6.8 billion or $11.11 per diluted share* Operating revenue: $24.5 B was up 1% driven by core pricing gains and higher volume, partially offset by business mix, reduced fuel surcharge revenue, and lower other revenue Reported operating income: $9.8 B increased 1% from 2024 Adjusted operating income*: $10.0 B increased 2% from adjusted 2024* Reported operating ratio: 59.8% improved 0.1 points from 2024 Adjusted operating ratio*: 59.3% improved 0.6 points from adjusted 2024* Reportable personal injury rate: 0.68 per 200,000 employee-hours improved 24% from 2024 Reportable derailment incident rate: 1.75 improved 19% from 2024 Freight car velocity improved 8% compared to 2024 Average terminal dwell declined 8% compared to 2024 Locomotive productivity improved 3% compared to 2024 driven by improved network fluidity and asset utilization Workforce productivity improved 7% as average daily car miles increased 3% while employees decreased 3% compared to 2024 Service Performance Index (SPI) IMPROVED compared to 2024.
Proxy Summary: 2025 financial, productivity and service results · Filed 25/03/2026
Freight car velocity increased 5% and terminal dwell improved 7%.
MD&A: second-quarter 2026 velocity and terminal dwell · Filed 23/07/2026
Workforce productivity improved 5% and locomotive productivity improved 1%, demonstrating efficient asset utilization in a strengthening demand environment.
MD&A: second-quarter 2026 workforce and locomotive productivity · Filed 23/07/2026
5 Table of Contents Condensed Consolidated Statements of Cash Flows (Unaudited) Union Pacific Corporation and Subsidiary Companies Millions, for the six months ended June 30, 2026 2025 Operating activities Net income $ 3,694 $ 3,502 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 1,271 1,223 Deferred and other income taxes 93 (123) Other operating activities, net 6 (43) Changes in current assets and liabilities: Accounts receivable, net (270) (21) Materials and supplies (132) (5) Other current assets (26) (49) Accounts payable and other current liabilities 52 (203) Income and other taxes 828 262 Cash provided by operating activities 5,516 4,543 Investing activities Capital investments (1,810) (1,842) Other investing activities, net (254) 3 Cash used in investing activities (2,064) (1,839) Financing activities Dividends paid (1,640) (1,599) Debt repaid (1,506) (409) Share repurchase programs (Note 16) (26) (2,679) Debt issued (Note 14) - 1,995 Other financing activities, net 63 43 Cash used in financing activities (3,109) (2,649) Net change in cash, cash equivalents, and restricted cash 343 55 Cash, cash equivalents, and restricted cash at beginning of year 1,280 1,028 Cash, cash equivalents, and restricted cash at end of period $ 1,623 $ 1,083 Supplemental cash flow information Non-cash investing and financing activities: Capital investments accrued but not yet paid $ 140 $ 157 Cash paid during the period for: Income taxes, net of refunds $ (236) $ (785) Interest, net of amounts capitalized (638) (610) Reconciliation of cash, cash equivalents, and restricted cash to the Condensed Consolidated Statement of Financial Position: Cash and cash equivalents $ 1,614 $ 1,060 Restricted cash equivalents in other current assets 2 18 Restricted cash equivalents in other assets 7 5 Total cash, cash equivalents, and restricted cash equivalents per above $ 1,623 $ 1,083 The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
Condensed Consolidated Statements of Cash Flows: first-half 2026 spending, financing and cash generation · Filed 23/07/2026
[b]As part of the pending acquisition of Norfolk Southern described in Note 18 to the Condensed Consolidated Financial Statements, Item 1, we paused our share repurchases.
Equity repurchases: suspension for pending acquisition · Filed 23/07/2026
Vena and sixty-seven percent (67%) of the target compensation opportunity provided to the other Named Executive Officers (NEOs) was in the form of long-term incentive (LTI) equity awards ▪2025 LTI awards granted in February consisted of sixty percent (60%) performance stock units and forty percent (40%) stock options •Performance stock unit awards granted in 2025 were based: •two-thirds (2/3) on the average annual return on invested capital (ROIC) for a three-year performance period (Performance Period); and •one-third (1/3) on the Company’s operating income growth (OIG) over the Performance Period as compared to the OIG of the companies in the S&P 100 Industrials Index and the Class I Railroads ▪In 2025, our formula-based annual incentive plan was based: •seventy percent (70%) on the attainment of specified Company financial performance goals (equally weighted between operating income and operating ratio); •twenty percent (20%) on the Company’s performance against pre-established strategic business objectives; •five percent (5%) on the attainment of specified reportable personal injury rate goals; and •five percent (5%) on the attainment of specified reportable derailment rate goals ▪Under our formula-based annual incentive plan, performance for 2025 resulted in a payment of 138% of target for each of the NEOs as a result of achieving above target operating income and operating ratio performance, exceptional safety performance as reflected by both our reportable personal injury rate and reportable derailment rate, as well as meeting or exceeding all strategic scorecard objectives ▪Based on our three-year average ROIC of 15.9% and our relative OIG at the 52nd percentile, performance stock units for the three-year performance period (2023-2025) ending in 2025 vested at 86% of target ▪The Compensation and Talent Committee reviewed and approved changes to our Peer Group in May 2025.
Compensation highlights: actual grants, incentive payments and performance-unit vesting · Filed 25/03/2026
2025 Governance Highlights Include: Board Composition ▪Board Nominees are 91% Independent (10 of 11 Board Nominees) ▪Six (6) Diverse Board members/Nominees for Election (55%) Board Refreshment ▪Commitment to Board Refreshment (Seven Director Nominees with tenure of less than 5 years, 64% of Board composition) ▪Board Nominees have average Board Tenure of 5.3 years ▪W Anthony Will was elected to the Board effective January 5, 2026 Board Leadership and Board Committees ▪Independent Board Chairman ▪Four Board Committees - Audit Committee, Compensation and Talent Committee, Corporate Governance, Nominating and Sustainability Committee, and Finance Committee - composed solely of independent directors ▪Transition of Safety and Service Quality Committee responsibilities - safety oversight to the full Board and oversight of service performance to the Finance Committee ▪Executive Sessions of Independent Directors at each Board and Committee Meeting ▪Annual Evaluation of Board and Committee performance Governance Practices and Oversight ▪Annual Election of Directors with Majority Voting Standard ▪“Proxy Access” Right ▪Board Strategic Oversight and Review of Enterprise Risk Management ▪Regular Succession Planning for the CEO and executive management levels ▪Stringent Director (5x cash portion of Annual Retainer within 5 years of joining Board) and Executive Officer (7x Annual Salary for CEO and 4x Salary for other Named Executive Officers) Stock Ownership Guidelines ▪Policy against Pledging and Hedging Company common stock Note: These statistics reflect the tenure and independence of the eleven (11) director nominees.
Governance highlights: independent leadership, committees and ownership policies · Filed 25/03/2026
During 2025, the Board met 12 times.
Board meetings: actual 2025 meeting count · Filed 25/03/2026
None of the directors attended fewer than 75% of the aggregate number of meetings of the Board and the Committees on which he or she served.
Board meetings: actual director attendance · Filed 25/03/2026
Reported operating income of $9,846 and operating ratio of 59.8% are adjusted to exclude $72 million of merger related costs.
Annual Incentive Plan: exclusion of merger-related costs · Filed 25/03/2026
Both Union Pacific and Norfolk Southern may be required to pay the other a termination fee of $2.5 billion if the merger agreement is terminated under certain circumstances described in the merger agreement.
Acquisition note: contingent termination fee · Filed 23/07/2026
Subject to completion of the mergers, the acquisition is expected to be accounted for as a business combination using the acquisition method of accounting and is currently expected to be completed in 2027.
Acquisition note: conditional expected completion in 2027 · Filed 23/07/2026
In determining 2025 target pay opportunities for the NEOs, the Committee considered competitive market information gathered in 2024 from the following Peer Group, which comprised the same 15 companies reviewed in the prior year: Canadian National Canadian Pacific Kansas City CSX Deere & Co.
Compensation discussion: named compensation peers · Filed 25/03/2026
At June 30, 2026, outstanding stock options are not subject to performance or market-based vesting conditions.
Stock-based compensation: options lack performance-based vesting conditions · Filed 23/07/2026
•Net promoter score exceeded the Company’s set goal by 16 points.
Strategic scorecard: net promoter score relative to internal goal · Filed 25/03/2026
