ex10-1.htm


    
      
         


      

      
         


        
          

        

      

      
         


        Exhibit
10.1

      

    


    CSX
Long Term Incentive Plan

    2009-2011
Cycle

    


    


    Purpose and
Objective

    


    The CSX
Long Term Incentive Plan (“LTIP” or “the “Plan”) is the vehicle pursuant to
which CSX Corporation (“CSX”) awards Performance Grants, as described in Section
8 of the CSX Omnibus Incentive Plan. The purpose of LTIP is to reward eligible
employees for their contribution to the attainment of improved operating results
which is intended to result in CSX share price appreciation. Grant amounts,
approved by the Compensation Committee of CSX’s Board of Directors (the
“Committee”), are based on an employee’s job position, accountability, and the
potential to impact CSX’s financial results.

    


    The Plan
seeks to motivate and reward employees through the issuance of Performance
Grants, represented in the form of units. Grants are payable upon achievement of
certain levels of Operating Ratio (as defined herein) during a given performance
period and are referred to as Performance Awards at the time of
payment.  Performance Awards are payable in the form of CSX common
stock.

    


    Effective Date and
Term

    


    The
2009–2011 LTIP Cycle (the “2009–2011 Cycle” or “Cycle”) is the three-year period
during which performance is measured.  The Cycle commences May 5, 2009
(“the Effective Date”) and ends December 30, 2011.

    


    Eligibility and
Participation

    


    Active
employees of CSX or a participating affiliate (the Company or collectively, the
“Companies”) in salary Band 06 and above as of the Effective Date shall
participate in the 2009–2011 LTIP Cycle (“Participants”) and shall receive
Performance Grants in accordance with the dollar value schedule approved by the
Committee. The CSX Compensation and Benefits Department calculates the
Performance Grants for each salary band level. The Performance Grant schedule is
maintained in the office of the Plan Administrator.

    


    Employees
hired or promoted into Band 06 and above after the Effective Date and before the
end of the 2009–2011 Cycle will receive a pro rata allocation of Performance
Grants based on their participation (and status as full time or
part-time).  Participants who are moved to a higher or lower Band
during the Cycle will receive a pro rata reallocation of Performance Grants
pertaining to each applicable Band based upon the number of months of
participation in each Band relative to the number of months in the
Cycle.  The same pro rata method will be used for employees who
transfer between union and non-union employment. For purposes of the pro rata
calculation, participation begins on the first day of the month following the
date the Participant was hired, promoted, demoted, or
transferred.  Notwithstanding the preceding sentence, any Participant
who is hired at or promoted to a salary level making such Participant a “covered
employee” under Internal Revenue Code Section 162(m) must have had a period of
service of at least 3 months to qualify for a Performance Grant at that level.
In such cases, the pro rata calculation shall be made as of the date of hire or
promotion.

    


    Plan
Design

    


    Performance
Grant Value

    


    Under the
long-term incentive compensation program design, the Committee approves the
annual competitive dollar value of long-term incentive compensation for each
Band. For the 2009-2011 Cycle, performance units comprise 75% of the value
approved by the Committee and restricted stock units comprise the other 25%
which is provided in a separate grant.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Performance
Units are calculated by dividing the annual grant value for each Band by the
average closing price of CSX common stock during the most recent three months
preceding the Effective Date.  For the 2009-2011 Cycle, the average
stock price equaled $27.31, representing the months of February, March and April
2009.  This price is used solely to determine the number of
Performance Units granted to each Participant at the commencement of the
Cycle.

    


    Performance
Measure

    


    Operating
Ratio is the single performance measure used in the 2009-2011 Cycle and is
defined as consolidated CSX Corporation operating expenses divided by operating
revenue.  It is calculated excluding nonrecurring items disclosed in
the financial statements.  Performance achievement for the Cycle is
based on Operating Ratio as measured in the third and final year of the Cycle
(2011).

    


    Using
this measure to determine payout levels reinforces the correlation between an
improving Operating Ratio and an increasing stock price.  Efforts to
improve the Operating Ratio align CSX’s business objectives in a way that allows
individuals to equate personal actions to desired performance
outcomes.  Each Plan Participant should be motivated to grow revenue,
reduce expense, improve service, increase productivity, improve safety, and
increase asset utilization and rationalization.

    


    As the
price of fuel has a significant impact on this particular performance measure,
the Operating Ratio targets vary based on the average cost of oil per barrel
outside of a pre-determined range (‘fuel collar”) established at the beginning
of the Cycle based on the average price per barrel of oil according to West
Texas Intermediate (WTI).  The chart in Exhibit A reflects the
Operating Ratio targets and related Performance Awards at various WTI per barrel
oil prices and provides a payout example.

    


    Performance
Awards

    


    As shown
in the Performance Measure Table in Exhibit A, Performance Awards are paid
as a percentage of a Participant’s Performance Unit Grant based upon the
applicable CSX 2011 Operating Ratio discussed above.  All Performance
Awards will be paid in CSX common stock.

    


    Impact
of Change in Employment Status

    


    Performance
Awards will be paid only to Participants who are actively employed by the
Companies at the end of the applicable three-year performance cycle. Except as
provided below, all other Participants whose employment terminates prior to the
end of the Cycle shall forfeit any and all Performance Grants and thus receive
no Performance Award. All Performance Awards will be payable no later than March
15 following the end of the Cycle.

    


    A
Participant whose employment terminates due to death, disability, or retirement,
shall be eligible to receive a pro rata Performance Award under the LTIP if the
Participant would have received a Performance Award had there been no death,
disability, or retirement.  The pro rata Performance Award will be
determined based upon the number of months of participation relative to the
number of months in the Cycle.  Retirement shall mean (i) the
attainment of age 55 and 10 years of Company service, or (ii) the attainment of
age 65. Disability shall mean long-term disability as defined in the CSX
Corporation Salary Continuance and Long-Term Disability Plan.  In the
case of death, such Performance Awards shall be made to the Participant’s
estate, or as otherwise directed by law.

    


    
      
        
        

      

      
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    Participants
whose hours are reduced so that they are no longer full time active employees
during the 2009–2011 LTIP Cycle, as a result of a phased retirement or similar
program at the request of or with the consent of CSX, shall be entitled to a pro
rata Performance Award to the date of such change, and a pro rata reduced
Performance Award for the remaining portion of such 2009–2011 Cycle worked based
on the reduced hours.

    


    A
Participant who commits an act involving moral turpitude that
adversely affects the reputation or business of the Companies or violates the
conditions stated in (i) through (v) of the Claw Back Provision contained
herein, shall forfeit any Performance Grant.  Examples of acts of
moral turpitude include dishonesty or fraud involving the Companies, their
employees, vendors or customers and violations of CSX’s Code of
Ethics.

    


    No
Performance Award is considered earned under the Plan until the Compensation
Committee approves the Operating Ratio level of achievement for the Cycle and
approves the Payment Awards.

    


    Taxation
of Performance Awards

    


    Performance
Awards will be paid in shares of CSX common stock.  The value received
by the Participant is taxable income, therefore CSX is required to withhold
income taxes at the prescribed rates for both supplemental income and employment
taxes at the time the Performance Awards are paid.  CSX will withhold
the minimum number of shares (in whole shares) equal in value to such required
amount.  No additional voluntary withholding amount is
permitted.  An example of the withholding calculation is shown in
Exhibit A.  Participants in the CSX Executive Deferred Compensation
Plan may defer receipt of Performance Awards.

    


    Plan
Administration

    


    The
Senior Vice President - Human Resources and Labor Relations of CSX shall be the
Plan Administrator and shall interpret and construe the provisions of the Plan
subject to the terms of the CSX Omnibus Incentive Plan and the Compensation
Committee’s authority and responsibility under the CSX Omnibus Incentive Plan
and Internal Revenue Code Section 162(m).

    


    Plan
Amendments and Termination

    


    Consistent
with Internal Revenue Code Section 162(m), the Compensation
Committee reserves the right to terminate, adjust, amend, or suspend the Plan at
any time and at its sole discretion.

    


    Claw Back
Provision

    


    The Claw
Back Provision discussed herein applies only to Participants in Band 10 and
above.

    


    If such
Participant receives a Performance Award, the following terms and conditions
shall apply for the subsequent two-year period from the payout (whether or not
such Participant continues to be employed by the Company).

    


    
      
        
        

      

      
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    Such
Participants, shall

    


    
      	
              (i)  

            	
              not,
      without written Company consent, work for a Class I railroad in a capacity
      similar to the function performed over the 5 years prior to termination;
      or for a customer or supplier for whom the Participant has had direct work
      responsibility in the prior 12 months in a capacity similar to the
      functions performed over the  5 years prior to
      termination;

            


    

    
      	
              (ii)  

            	
              not,
      without written Company consent, solicit employees to work for a
      competitor in a capacity similar to such solicited employee’s
      capacity;

            


    

    
      	
              (iii)  

            	
              not,
      without written Company consent, solicit the Companies’ customers on
      behalf of a competitor;

            


    

    
      	
              (iv)  

            	
              not,
      without written Company consent, act in a manner adversarial or in any way
      contrary to the best interests of the Company; (for example, testifying as
      an expert witness or becoming associated with a union or law firm that
      takes positions adverse to the
Companies);

            


    

    
      	
              (v)  

            	
              provide
      the Company with information or documentation showing compliance with
      conditions (i), (ii), (iii), and (iv) stated above, if requested by the
      Plan Administrator.

            


    

    


    If a
Participant breaches any of the conditions set forth above in this Claw Back
Provision, the Participant shall repay to the Company an amount equal to the
value of the Performance Award.  The value of the Performance Award is
measured by the amount reported on Form W-2 for tax purposes.  Any
amount due hereunder shall be paid by the Participant within thirty (30) days of
notice by the Company to the Participant that the Participant has breached a
condition stated above.

    


    In the
event of Company accounting irregularities discovered within 2 years after
receipt of Performance Awards, which requires the Company to materially restate
its financial statements, the Participant shall repay all amounts in excess of
the proper Award as determined under the restated financial
statements.

    


    By
accepting a Performance Award, the Participant authorizes the Company to
withhold, to the extent permitted by law, the amount it may otherwise owe to the
Participant in any other capacity whatsoever. In cases where all or part of the
Performance Award is deferred under the CSX Executive Deferred Compensation
Plan, breach of these conditions shall result in an immediate forfeiture of the
portion deferred—including any earnings thereon from the date of
deferral.

    


    The Claw
Back provision shall not survive any change in control event as defined in the
CSX Omnibus Incentive Plan ocurring during the Cycle.

    


    Consideration for Noncompete
Agreement

    


    In
consideration for eligibility under this 2009–2011 LTIP Cycle, Employees in Band
10 and above  must enter into a noncompete agreement, if not already
in effect, as prescribed and agreed to by CSX.  Eligibility in the
2009–2011 LTIP Cycle for Employees in Band 10 and above is conditioned upon the
existence of such noncompete agreement.

    


    Miscellaneous

    


    The
adoption of the 2009–2011 Cycle of the LTIP does not imply any commitment to
continue the Plan or any other long term incentive compensation plan or program
for any succeeding year or period. Neither the Plan, nor any Performance Grant
or Performance Award made under the Plan shall create any employment contract or
relationship between the Companies and any Participant.

    


    Committee  Discretion

    


    The
Compensation Committee, in its sole discretion, may also reduce any payout
otherwise earned by Executive Team Participants by up to 30% based upon
accomplishment of certain company initiatives set forth in Exhibit
B.

    


    
      
        
        

      

      
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    Exhibit
A

    


    


    Exhibit A
contains specific quantitative or qualitative performance-related factors
considered by the Compensation Committee of the Board of Directors, or other
factors or criteria involving confidential trade secrets or confidential
commercial or financial information, the disclosure of which would result in
competitive harm for CSX.

    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    



    
      
         


      

      
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    Exhibit
B

    


    


    Exhibit B
contains specific quantitative or qualitative performance-related factors
considered by the Compensation Committee of the Board of Directors, or other
factors or criteria involving confidential trade secrets or confidential
commercial or financial information, the disclosure of which would result in
competitive harm for CSX.

    



    
      
         


      

      
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