EX-10.1 2 directorsdeferredfee0101091.htm

                                                                             

DIRECTORS' DEFERRED FEE PLAN

OF

NORFOLK SOUTHERN CORPORATION

                    

(Effective June 1, 1982)

Last Amended January 1, 2009

 

PURPOSE

 

            The Directors' Deferred Fee Plan (the "Plan") as adopted and
approved by the Board of Directors (the "Board") of Norfolk Southern Corporation
("NS"), effective June 1, 1982, and as last amended effective January 1, 2009,
makes available to NS directors a deferral election with respect to the
directors' annual compensation and fees to provide for retirement and death
benefits and thereby facilitate individual financial planning.

 

 

SECTION 1.  ADMINISTRATION

            The Plan Administrator shall be the Board.  The Board shall from
time to time adopt rules and regulations determined to be necessary to ensure
the effective implementation of the Plan.  The Board shall have the power to
interpret the Plan, to supervise the maintenance of the deferred memorandum
accounts of participants in the Plan and the method of distribution of those
amounts credited to the deferred memorandum accounts pursuant to Section 4.

 

SECTION 2.  ELIGIBILITY

            Each NS director who is not an employee of NS (a "Non-Employee
Director") shall be eligible to be a participant in the Plan.

 

SECTION 3.  DEFERRED COMPENSATION

            A Non-Employee Director may elect to have all or a specified part of
the annual compensation and fees earned for service on the Board credited to a
deferred memorandum account established pursuant to Section 4.  The Non-Employee
Director making such an election (the "Participant") shall do so by filing with
the Corporate Secretary on or before the date specified by the Plan
Administrator (the "Election Deadline") an election on a form prescribed by the
Corporate Secretary for the purpose of specifying the percentage of compensation
and fees to be deferred and the distribution option under Section 6(b). 

            If the Participant was a Non-Employee Director on December 31
preceding the calendar year for which the compensation and fees to be deferred
are earned, in no event shall the Election Deadline be later than such December
31.      The election shall apply only to compensation and fees earned for
services performed in calendar years commencing after the Election Deadline.

            If the Participant either is elected to fill a vacancy on the Board
or is elected at the annual meeting of shareholders, and the Participant was not
a Non-Employee Director on the last day of the year preceding that Participant's
election, in no event shall the Election Deadline be later than the end of the
30-day period following such Participant's first day of eligibility to
participate in the Plan.  The election shall apply only to compensation and fees
earned for services performed after the election.

            An election so made by a Participant shall continue from year to
year, unless the Participant changes or revokes it by filing a new election with
the Corporate Secretary prior to the Election Deadline.  The Participant's
deferral election and distribution election in effect on the Election Deadline
shall be irrevocable for the calendar year following the Election Deadline (or
for the portion of the calendar year following the election, in the case of an
election made during the initial 30-day period of participation in the Plan). 
Until a Non-Employee Director makes a deferral election, the Non-Employee
Director shall be deemed to have elected to receive the entire compensation and
fees in cash.

 

SECTION 4.  DEFERRED MEMORANDUM ACCOUNT

            The amount of a Participant's annual compensation and fees which,
pursuant to Section 3, the Participant has elected to receive on a deferred
basis shall by appropriate bookkeeping entries be credited to that Participant's
deferred memorandum fixed interest or variable earnings accounts (the
"Accounts") in accordance with the Plan terms and the Participant's investment
election applicable to such deferral. 

            The Board shall have the right to delegate to NS' chief financial
officer the responsibility for supervising the maintenance of the Participants'
respective Accounts and, subject to Section 6, the method of distribution of the
amounts credited to the Accounts.  In addition, the Board shall have the right
to delegate to NS' chief financial officer the responsibility to select
Hypothetical Investment Options, subject to subsection (b) of this Section, made
available to Participants solely for the purpose of valuing deferrals in the
Variable Earnings Accounts.

            The Accounts shall be utilized solely as a device for the
measurement of amounts to be paid to the Participant under the Plan.  The
Accounts shall not constitute or be treated as an escrow, trust fund, or any
other type of funded account for ERISA or Internal Revenue Code ("Code")
purposes and, moreover, contingent amounts credited thereto shall not be
considered plan assets for ERISA purposes.  The Accounts merely provide a record
of the bookkeeping entries relating to the contingent benefits that NS intends
to provide to the Participant and thus reflect a mere unsecured promise to pay
such amounts in the future.

            (a)    Fixed Interest Account.  Amounts deferred before January 1,
2001, shall be credited to a Participant's Fixed Interest Account as provided in
this subsection.  Unless otherwise stated herein or determined by the Board,
each Participant's Account shall also be credited at the end of each quarter by
appropriate bookkeeping entries with an amount equivalent to interest
("Interest") on the amount credited to the Participant's Fixed Interest Account
at the beginning of the quarter at a rate determined by the Participant's age at
the time the deferral is made.  For purposes of determining the appropriate
rates, a deferral is deemed to occur when the compensation and fees would
otherwise have been paid.  Amounts deferred on or after January 1, 1994, shall
accrue Interest based on the Participant's age at the time of deferral at the
rates set forth below:

                                             Age                               
  Rate

           

                                         Under 45              
                7%

                                              45-54                             
10%

                                             55‑60                             
11%

                                          Over 60                             
12%

            Amounts deferred on or after January 1, 1992, and prior to January
1, 1994, shall accrue Interest based on the Participant's age at the time of
deferral at the rates set forth below:

                                             Age                               
  Rate

           

                                         Under 45                             
13%

                                             45‑54                              
14%

                                             55‑60                              
15%

                                          Over 60                             
 16%

            Amounts deferred on or after January 1, 1987, and prior to January
1, 1992, shall accrue Interest based on the Participant's age at the time of
deferral at the rates set forth below:

                                             Age                               
  Rate

           

                                         Under 45                            
15%

                                             45‑54                             
16%

                                             55‑60                             
17%

                                          Over 60                             
18%

            Amounts deferred under the Plan prior to January 1, 1987, shall
accrue Interest at a rate determined by the Participant's age on January 1,
1987, as if such amounts had been deferred on January 1, 1987.  Interest on each
deferral shall continue to accrue at the rate determined by the Participant's
age at the time the deferral is made until all benefits payable hereunder have
been distributed to, or with respect to, the Participant.

            (b)    Variable Earnings Account.  Amounts deferred on or after
January 1, 2001, shall be credited to a Participant's Variable Earnings Account
as provided in this subsection.  Investment funds or benchmarks shall be
selected from time to time by the Plan Administrator or its designee (as
provided in this Section) and made available to Participants solely for the
purpose of valuing deferrals.  Such funds or benchmarks shall be referred to as
"Hypothetical Investment Options." 

            Unless otherwise stated herein or determined by the Board of
Directors, an amount equivalent to earnings or losses ("Earnings") shall accrue
on or be deducted from all deferrals, beginning when the compensation and fees
would otherwise have been paid, in accordance with the Participant's selection
of Hypothetical Investment Options. Earnings shall be determined based upon the
Hypothetical Investment Option(s) elected by the Participant. If a Participant
does not elect Hypothetical Investment Options for the deferrals, then Earnings
shall be determined based on such Hypothetical Investment Options as may be
designated by the Plan Administrator to apply in the absence of an election. 
Participants will be required to elect a Hypothetical Investment Option(s) at
the time a deferral election is made for amounts deferred on or after January 1,
2001, and such investment election will apply to all subsequent deferrals until
the Participant changes such election.  Participants will be permitted at any
time prior to the complete pay out of their Variable Earnings Account balance to
elect to change their Hypothetical Investment Option(s) with respect to all or
part of their Variable Earnings Account balances effective as soon as
practicable following such election.  The procedure for electing to change a
Hypothetical Investment Option(s) will be established by the Plan
Administrator.  An election to change a Hypothetical Investment Option for part
of a Variable Earnings Account balance must be made in increments of 1% of the
Variable Earnings Account balance or a specified dollar amount.

            While a Participant's Accounts do not represent the Participant's
ownership of, or any ownership interest in, any particular assets, the
Participant's Variable Earnings Account shall be adjusted in accordance with the
performance of the Hypothetical Investment Options chosen by the Participant. 
Any cash earnings generated under a Hypothetical Investment Option (such as
interest and cash dividends and distributions) shall be deemed to be reinvested
in that Hypothetical Investment Option.  All notional acquisitions and
dispositions of Hypothetical Investment Options which occur within a
Participant's Variable Earnings Account, pursuant to the terms of the Plan,
shall be deemed to occur at such times as the Plan Administrator shall determine
to be administratively feasible in its sole discretion and the Participant's
Variable Earnings Account shall be adjusted accordingly.  In the event of a
Change in Control, the practices and procedures for determining any Earnings
credited to any Participants' Variable Earnings Accounts following a Change in
Control shall be made in a manner no less favorable to Participants than the
practices and procedures employed under the Plan, or otherwise in effect, as of
the date of the Change in Control. 

 

 

SECTION 5.  RESTRICTIONS

            The Participants shall have only those rights in respect of the
amounts credited to their Accounts specifically set forth herein.

            No Participant may, prior to the distribution of funds pursuant to
Section 6, sell, assign, transfer, distribute, pledge as collateral for a loan
or as security for the performance of any obligation, exchange or otherwise
dispose of any interest in the amounts credited to that Participant's Accounts. 

            The amounts credited to the Accounts shall remain assets of NS until
distributed to Participants pursuant to Section 6.

 

 

SECTION 6.  DISTRIBUTION

            (a)    Fixed Interest Account.  Except as otherwise provided in
Section 7, distributions of the amounts credited to a Participant's Fixed
Interest Account shall be made in ten annual cash installments beginning with
the first day of the calendar year immediately following the year when a
Participant ceases to be an NS director by retirement or otherwise. 

(b)    Variable Earnings Account.  No later than the Election Deadline for each
calendar year's deferrals, a Participant may elect one of the two distribution
options described in this Section 6(b) for amounts credited to the Variable
Earnings Account.  If a Participant fails to elect the time and form of
distribution for a particular calendar year's deferrals by the Election
Deadline, the Participant shall be deemed to have made the same distribution
election as he last made for a calendar year's deferrals.  If the Participant
has never elected the time and form of distribution of his deferral, the
Participant's distribution will be made in one lump sum after the Participant
experiences a  "separation from service" within the meaning of section 409A of
the Code and the regulations thereunder for a reason other than the
Participant's death (a "Separation From Service").

            The Participant must elect to have the benefit distributed either
(i) beginning with the first day of the calendar year immediately following the
year when the Participant experiences a Separation From Service, or (ii) upon
the earlier of the Participant's Separation From Service or a specified date at
least five (5) years but not more than fifteen (15) years after the calendar
year in which the deferred amount is earned ("Specified Date").  If the
Participant elects to receive the benefit upon Separation from Service, he may
elect to have the benefit distributed to him in one lump sum or in annual
installment payments that are distributed over a period of five (5), ten (10),
or fifteen (15) years.  The amount of each annual installment payment shall be
determined by dividing the balance credited to the Participant's Variable
Earnings Account on each payment date by the number of installments remaining. 
For purposes of Section 409A of the Code, a series of installment payments will
be considered a single payment.  Any benefit which a Participant elects to
receive on the earlier of Separation from Service or a Specified Date will be
distributed in one lump sum. 

            For each calendar year's deferrals for which the Participant elected
to have the benefit distributed on a Specified Date, the Participant shall be
paid the amount in the Account for that calendar year's deferrals on the first
day on or after the date selected or, if the Participant's Separation From
Service is earlier than the Specified Date, on the first day following the date
of the Separation From Service.  

            For a Participant who did not elect distribution on a Specified
Date, the Participant shall be paid on the first day of the calendar year
following the date the Participant experiences a Separation From Service, the
amount in the Variable Earnings Account which is attributable to deferrals for
which the Participant elected a lump sum distribution. 

            For distributions other than lump sum distributions, payments shall
commence on the first day of the calendar year following the date the
Participant experiences a Separation From Service and shall be made in
installments on the first day of each year thereafter for each applicable
deferral based on the distribution elections made by the Participant.  The
annual installment payment for each applicable deferral shall be an amount equal
to the remaining balance in the Participant's Account for that deferral, valued
at the end of the calendar year preceding the installment payment, divided by
the remaining number of annual payments not yet distributed for that deferral.

(c)    Death of the Participant.  The Participant may designate a beneficiary or
beneficiaries who shall receive a distribution of funds pursuant to this Section
6 in the event of the Participant's death.  In the absence of such designation,
or if the beneficiary predeceases the Participant, the beneficiary shall be the
Participant's surviving spouse or, if the Participant does not have a surviving
spouse, the Participant's estate.  In order to be effective, a Participant's
designation of a beneficiary must be on file with NS before the Participant's
death.  Any such designation may be revoked and a new designation submitted by
the Participant at any time before his death without the consent of the
previously designated beneficiary.

            Upon the death of a Participant prior to the expiration of the
period during which the deferred amounts are payable, the balance of the
deferred fees and Earnings credited to the Fixed Interest Account and Variable
Earnings Account shall be payable to the beneficiary or beneficiaries in full on
the first day of the calendar year following the year in which the Participant
dies.

             (d)    Administrative Adjustments in Payment Date.  A payment under
Section 6(b) or 6(c) is treated as being made on the date when it is due under
the Plan if the payment is made on the due date specified by the Plan, or on a
later date that is either (i) in the same calendar year (for a payment whose
specified due date is on or before September 30), or (ii) by the 15th day of the
third calendar month following the date specified by the Plan (for a payment
whose specified due date is on or after October 1).  A payment also is treated
as being made on the date when it is due under the Plan if the payment is made
not more than 30 days before the due date specified by the Plan.  A Participant
or beneficiary may not, directly or indirectly, designate the taxable year of a
payment made in reliance on the administrative rules in this paragraph.

 

 

SECTION 7.  CHANGE IN CONTROL

            If, on the date of a Change in Control (as defined herein) or a 409A
Change in Control (as defined herein), a Participant who was serving as a
Non-Employee Director of NS on the day immediately preceding the date of the
Change in Control or 409A Change in Control experiences a Separation From
Service, then, notwithstanding the provisions of Section 6, such Participant
shall receive the following:

            (a)    For the Fixed Interest Account, a lump-sum cash payment equal
to the present value on the Participant's last day of service as a Non-Employee
Director, using a discount rate of 4.5 percent, of any stream of installment
payments that the Participant would have received had the Participant served as
a Non-Employee Director until the latest date permitted under the Retirement
Policy for Non-Employee Directors as in effect on the day before the Change in
Control; and

(b)    For the Variable Earnings Account, in the event of a 409A Change in
Control, a lump-sum cash payment equal to the present value on the Participant's
last day of services as a Non-Employee Director, using a discount rate of 4.5
percent.  The present value will be calculated assuming that the Participant
would have served as a Non-Employee Director until the latest date permitted
under the Retirement Policy for Non-Employee Directors as in effect on the day
before the Change in Control, and the projected Earnings used to determine such
present value will be calculated in accordance with the Interest rate specified
in Section 4(a) based on the Participant's age immediately preceding the date of
a Change in Control and applied to the Participant's Variable Earnings Account
balance on such date.  In the event of a Change in Control that is not a 409A
Change in Control, the benefit shall be calculated as described above except
that any portion of the Participant's deferred compensation benefit that is not
a Grandfathered Benefit under Section 15, exclusive of any projected Earnings as
described in this section, shall be paid at the time and in the form the benefit
would have been paid absent a Change in Control.      

            Any payment made pursuant to this Section 7 will be in full
satisfaction of all amounts credited to the Participant's Accounts.       

            A Change in Control shall occur upon any of the following
circumstances or events:

            (i)         NS consummates a merger or other similar control-type
transaction or transactions (however denominated or effectuated) with another
corporation or other entity (Combination), and immediately thereafter less than
eighty percent (80%) of the combined voting power of the then-outstanding
securities of such corporation or entity is held in the aggregate by the holders
of securities entitled, immediately prior to such Combination, to vote generally
in the election of NS directors (Voting Stock); 

            (ii)        NS consummates any stockholder-approved consolidation or
dissolution (however denominated or effectuated) pursuant to a recommendation of
the Board;

            (iii)       At any time, Continuing Directors (as herein defined)
shall not constitute a majority of the members of the Board ("Continuing
Director" means (i) each individual who has been a director of NS for at least
twenty-four (24) consecutive months before such time and (ii) each individual
who was nominated or elected to be a director of NS by at least two-thirds (2/3)
of the Continuing Directors at the time of such nomination or election); or

            (iv)       NS sells all or substantially all of its assets to any
other corporation or other entity, and less than eighty percent (80%) of the
combined voting power of the then-outstanding securities of such corporation or
entity immediately after such transaction is held in the aggregate by the
holders of Voting Stock immediately prior to such sale.

A Change in Control under Section 409A of the Code (a "409A Change in Control")
shall occur upon any of the following circumstances or events:

            (i)         A person, or more than one person acting as a group,
acquires ownership of stock of NS that, together with stock held by such person
or group, constitutes more than fifty percent (50%) of the total fair market
value or total voting power of the stock of NS; 

            (ii)        A person, or more than one person acting as a group,
acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) ownership of stock of NS
possessing thirty percent (30%) or more of the total voting power of NS;

            (iii)       Continuing Directors (as herein defined) no longer
constitute a majority of the members of the Board ("Continuing Director" means
(i) each individual who has been a director of NS for at least twelve (12)
consecutive months before such time and (ii) each individual who was nominated
or elected to be a director of NS by at least a majority of the directors at the
time of such nomination or election); or

            (iv)       A person, or more than one person acting as a group,
acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) assets from NS that have a
total gross fair market value equal to forty percent (40%) or more of the total
gross fair market value of all of the assets of NS immediately before such
acquisition. 

For purposes of a 409A Change in Control, persons will be considered to be
acting as a group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock or similar business transaction
with NS.  The definition of a 409A Change in Control shall be interpreted and
applied in a manner consistent with section 409A of the Code.

 

 

SECTION 8.  RECALCULATION EVENTS  

        

            NS' commitment to accrue and pay Interest and Earnings as provided
in Section 4 is facilitated by the purchase of corporate‑owned life insurance
purchased on the lives of eligible Participants.  If the Board, in its sole
discretion, determines that any change whatsoever in Federal, State or local
law, or in its application or interpretation, has materially affected, or will
materially affect, the ability of NS to recover the cost of providing the
benefits otherwise payable under the Plan, then, if the Board so elects, a
Recalculation Event shall be deemed to have occurred.  If a Recalculation Event
occurs, then Interest and/or Earnings shall be recalculated and restated using a
lower rate of Interest and/or Earnings determined by the Board, but which shall
be not less than one-half (1/2) the rate of Earnings provided for in Section
4(b) or one‑half (1/2) the rate of Interest provided in Section 4(a), as
applicable. 

 

 

SECTION 9.  AMENDMENTS

 

            The Board in its sole discretion may at any time modify or amend any
provisions of the Plan, or suspend or terminate the Plan.  However, except as
otherwise provided in Section 8, no modification, amendment, suspension or
termination of the Plan may, without the Participant's consent, apply to or
affect the rights of a Participant in respect of amounts credited to the
Participant's Account for any month ended prior to the effective date of that
modification, amendment, suspension or termination.  In no event shall a
termination of the Plan accelerate the distribution of amounts deferred under
the Plan in calendar year 2005 and succeeding years, except to the extent
permitted in regulations or other guidance under section 409A of the Code and
expressly provided in the resolution terminating the Plan.

 

 

SECTION 10.  NATURE AND SOURCE OF PAYMENTS

            The obligation to make payments hereunder with respect to each
Participant shall constitute a liability of NS to the Participant and any
beneficiaries in accordance with the terms of the Plan.  NS may establish one or
more grantor trusts within the United States to which NS may transfer such
assets as NS determines in its sole discretion to assist NS to accumulate assets
that can be used to pay benefits under the Plan.  While NS generally reserves
the right to establish or fund any such grantor trust at any time, it shall not
fund such trust in connection with a change in NS' financial health to the
extent that such funding would not comply with the requirements of section 409A
of the Code.  The provisions of the Plan shall govern the rights of NS,
Participants and the creditors of NS to the assets transferred to the trust. 
NS' obligations under the Plan may be satisfied with trust assets distributed
pursuant to the terms of the trust, and any such distribution shall reduce NS'
obligations under this Plan.

            Participants and beneficiaries shall stand in the position of
unsecured creditors of NS, and all rights hereunder and under any trust are
subject to the claims of creditors of NS.

 

 

SECTION 11.  EXPENSES OF ADMINISTERING PLAN

 

            All expenses of administering the Plan shall be borne by NS, and no
part thereof shall be charged against the benefit of any Participant, except the
costs of the Hypothetical Investment Options in the Variable Earnings Account,
which shall be charged against the value of deferrals measured against those
funds.

 

 

SECTION 12.  FACILITY OF PAYMENT

 

            If the Board shall find that any individual to whom any amount is
payable under the Plan is unable to care for his or her affairs because of
illness or accident or is a minor or other person under legal disability, any
payment due such individual (unless a prior claim for such payment shall have
been made by a duly appointed guardian, committee, or other legal
representative) may be paid to the spouse, a child, a parent, or a brother or
sister of such individual, or to any other person deemed by the Board to have
incurred expenses of such individual, in such manner and proportions as the
Board may determine.  Any such payment shall be a complete discharge of the
liabilities of NS with respect thereto under the Plan.

 

 

SECTION 13.  CONTINUED SERVICE

 

            Nothing contained herein or in a deferral agreement shall be
construed as conferring upon any Participant the right nor imposing upon the
Participant the obligation to continue in the service of NS in any capacity.

 

 

SECTION 14.  DISPUTED QUESTIONS

 

            Any disputed question arising under the Plan, including questions of
construction and interpretation, shall be determined conclusively and finally by
the Board.

 

 

SECTION 15.  EFFECTIVE DATE

 

            The Plan became effective on June 1, 1982, and was last amended
effective January 1, 2009.  The Plan, as hereby amended and restated, is
effective with respect to amounts that were not earned and vested (within the
meaning of section 409A of the Code) before January 1, 2005, and any earnings on
such amounts.  Amounts earned and vested (within the meaning of section 409A of
the Code) before January 1, 2005, and earnings on such amounts (collectively,
"Grandfathered Amounts"), remain subject to the terms of the Plan as in effect
on October 3, 2004.  For recordkeeping purposes, the Company will account
separately for Grandfathered Amounts.

 

 

SECTION 16.  INTERNAL REVENUE CODE SECTION 409A

            The Plan is intended, and shall be construed, to comply with the
requirements of section 409A of the Code.  NS does not warrant that the Plan
will comply with section 409A of the Code with respect to any Participant or
with respect to any payment, however.  In no event shall NS, its officers,
directors, employees, parents, subsidiaries, or affiliates be liable for any
additional tax, interest, or penalty incurred by a Participant or beneficiary as
a result of the Plan's failure to satisfy the requirements of section 409A of
the Code, or as a result of the Plan's failure to satisfy any other applicable
requirements for the deferral of tax.