Norfolk Southern Announces New Initiatives to Drive Operational Performance

Norfolk Southern Corporation (NYSE: NSC) has announced new initiatives aimed at driving productivity and accountability, with a specific focus on accelerating operational performance and ensuring performance accountability through changes in the compensation program.

Under the new initiatives, operational reporting changes have been implemented, with intermodal and automotive operations now reporting to the new Chief Operating Officer, John Orr. This change aims to instill additional operational rigor, enhance productivity, and improve coordination across the business. Since Orr's appointment, the company has seen tangible results in just two weeks, including an 8% improvement in terminal dwell, an 8% increase in merchandise train speed, and an 8% decrease in active train count. Additionally, a comprehensive review and optimization of the intermodal network has led to the removal of 53 low-volume lanes, which has supported efforts to improve network fluidity and productivity.

Furthermore, Norfolk Southern has implemented changes in its 2024 annual incentive compensation plan. The company has added the operating ratio (OR) as a performance metric, replacing the margin modifier. This change is aimed at aligning management incentives with the company’s financial and operational goals and strategy, including safety, service, productivity, and growth.

The updated 2024 annual incentive performance measures now include operating income at 25% (reduced from 40%), revenue at 15% (reduced from 30%), merchandise on-time delivery at 10%, intermodal composite at 10%, and safety metrics such as FRA reportable injury rate and FRA reportable train accident rate at 5% each. These changes reflect the company’s commitment to holding management accountable and driving productivity throughout its network.

The initiatives are part of Norfolk Southern’s commitment to becoming a more productive, resilient, and efficient railroad, with a focus on driving long-term value creation. The company aims to achieve its long-term objective of delivering best-in-class value to shareholders.

Today the company's shares have moved 0.5% to a price of $249.66. If you want to know more, read the company's complete 8-K report here.

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