Union Pacific railroad increased the bonus it paid CEO Jim Young to $3.7 million for 2010 because he managed the railroad well as the economy began to improve, but Young's total compensation grew only about 6 percent to nearly $12 million, according to a filing the company made Friday.
The Omaha-based company revealed how much its top executives make in documents filed with the Securities and Exchange Commission.
Young, who is also chairman of Union Pacific, didn't see much growth in his total compensation because he received stock options worth $2.8 million in 2010, compared with $3.8 million in 2009.
The railroad's board commended Young for helping the railroad generate $2.8 billion net income last year as shipping volume increased.
That's a 47 percent increase in profit from 2009, when Union Pacific's net income was $1.9 billion.
The board said it was also pleased with improvements the railroad made in terms of safety, efficiency and customer satisfaction during 2010. So the board said Young's performance warranted increasing his bonus 48 percent to $3.7 million last year from 2009's $2.5 million.
The perks Young received in 2010 grew 31 percent to $101,813 largely because he made more personal use of Union Pacific's corporate aircraft. The railroad said Young used $46,003 worth of flight time in 2010, up from $20,994 the previous year.
Union Pacific is the nation's largest railroad with 32,400 miles of track crossing 23 states from the Midwest to the West and Gulf coasts. It has been gradually hiring back employees as the economy and shipping volumes slowly improve. About 1,500 Union Pacific employees remained furloughed at the end of 2010, down from 4,200 at the end of 2009.
The AP's formula for calculating executive compensation is designed to isolate the value the company's board placed on the executive's total compensation package during the last fiscal year. It includes salary, bonus, performance-related bonuses, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.
The calculations don't include changes in the present value of pension benefits, making the AP total different in many cases from the totals companies report to the Securities and Exchange Commission.
At the railroad's annual meeting in Salt Lake City, Utah, shareholders will have a chance to voice their opinion about the company's executive compensation and vote on several other measures. The meeting will be held on May 5.
One shareholder proposal would recommend that the board split up the chairman and chief executive roles and appoint an independent chairman.
UP's board opposes the measure because it prefers having the flexibility to appoint a single person both chairman and CEO, and that it believes the current setup provides effective independent oversight of the company.
The railroad is recommending that shareholders approve changing the corporation's rules to eliminate requirements for a super-majority vote for certain actions, such as the removal of board members.
Last year, shareholders approved a proposal suggesting the change to a simply majority vote standard.
Online: Union Pacific Corp.: www.up.com