I'm Robert Pace, and I am the Chairman of the Board of CN. CN is an iconic company, a proud company, and a great company. Since privatization in 1995, it has become the most efficient railroad in North America and the leader in operational and service excellence. 2017 was a successful year for CN on a number of fronts, but challenging on others, as high volume demand led to capacity constraints and customer service challenges. The Board is seized by these immediate operational challenges and focused on the need to accelerate the execution of our innovation strategy that will restore and retain industry-leading metrics and best-in-class customer service in a competitive marketplace.
It has been our custom to hold our annual general meetings in cities across CN's North American network, and it's certainly a pleasure to be in a city, a region, and a province where we have such a dynamic relationship. I would also like to acknowledge that we are located today on the traditional territory of the Mississaugas of the Credit First Nation, and we also acknowledge the Six Nations of the Grand River. Our history in this area has created many notable achievements, especially Toronto and the GTA, the recognized global landmark the CN Tower. Our network in terminals in Ontario, the Brampton Intermodal Terminal, MacMillan Yard in Vaughan, and our future site in Milton are the backbone of this province's economy, moving the goods that contribute to the everyday lives of millions of people.
We have nearly 4,000 employees in the province, and in 2017, CN invested about $255 million to strengthen our rail network, support safety and efficiencies, and long-term growth in Ontario. We contribute about $2.2 billion in local spending and invested $4.6 million in community organizations ranging from hospitals to food banks to universities. The crews and trains working in the GTA are part of our network that spans Canada and Mid-America, from Chicago to New Orleans and Mobile, Alabama. We transport freight seamlessly over an almost 20,000 route-mile network, reflecting more than $8 billion of rail acquisitions since 1998. Our operational and service excellence agenda has produced a range of innovative services for intermodal, merchandise, and bulk commodity shipments, and we've become a true supply chain enabler. We have great confidence in Jean-Jacques Ruest as our interim President and CEO.
He has been with CN for 22 years and is well known to many of you in the room, as he is to customers and investors. He's well positioned to focus the company and its team of extremely capable railroaders to rapidly address operational challenges during this time of transition. Lastly, next year, on June the 6th, 2019, we will celebrate our 100th anniversary, and later in the meeting, we'll show you a video highlighting our 100 years of operations. On behalf of the CN Board of Directors, I'm now pleased to call to order the annual meeting of shareholders of Canadian National Railway Company. I'd like to welcome all distinguished guests. We are pleased to have today with us two former CN directors who we have honored as Director Emeritus in recognition of their extraordinary contributions to the CN Board over many years.
Those directors, Mr. Jim Gray and the Honourable Edward Lumley, with his wife, Patty Lumley, would you stand to be recognized? Before we begin with the business of the meeting, I would ask Sean Finn, our Executive Vice President, Corporate Services, and Chief Legal Officer to give a safety briefing for this meeting.
Good morning, everyone. Bonjour. At CN, every work assignment or meeting begins with a safety briefing. Please allow me to take a few moments to review the safety procedure of this hotel. We're currently in the Sovereign Ballroom at the Omni King Edward Hotel on King Street. The room is equipped with an audible alarm system. If an evacuation order is given, hotel staff and our CN police officers will direct you out of the building. We will regroup at the primary evacuation point in the parking lot on Leader Lane, directly east of the hotel, to your right of the hotel as you exit. To exit this room, you may use the doors from which you came in back to the room or turn left to exit on Victoria Street. You may also use the doors behind the stage, which will lead you outside the hotel to Colborne Street.
The fire alarm and fire extinguishers can be located in the hallway just outside the room. In the event of a medical emergency, my friend and colleague, Steve Covey, our CN Chief of Police, is a qualified first aid medical responder, and Jay Harris has been designated to call 911. Steve, would you please identify yourself to the people in the room? The big tall guy in the back. One of the big tall guys in the back.
Bonjour, [Foreign language] . I heard. Every meeting starts with safety, so I want to take a few minutes to review the safety procedures in this hotel. We are in the Sovereign Ballroom at the Omni King Edward Hotel, and that has an alarm system and a fire alarm system with a vocal message. If we have to evacuate the site, we will go outside in safety, and our meeting place is on Leader Lane, located to the east of the hotel on your right. To leave this room, please use the door that they direct you to evacuate the hotel and go to Victoria Street. You can also use the streets that are behind the scene here and go to Colborne Street. If there's a medical emergency. Steve is still here, and he is a qualified first responder, and Jay Harris has been designated to dial 911. Thank you and have a nice meeting.
Thank you, Sean. As Sean mentioned, every work assignment at CN begins with a safety briefing, and nothing is more important to us than creating a safe place to work. Safety isn't just a priority at CN. It's a core value. The safety of the men and women who work for CN is of paramount importance to us. We devote significant effort and resources to ensuring a safe environment and culture in pursuit of our goal of being the safest railroad in North America. The goal is to eliminate work-related accidents altogether. Through technology, employee education, and promoting a safe mindset throughout the company, we work diligently to improve our results each year. CN's significant and ongoing investments in its training programs and its training facilities in Winnipeg and Chicago are designed to strengthen CN's safety culture and prepare a new generation of safety-conscious railroaders.
In spite of our best efforts, however, it saddens me to report that one of our employees died in service since our last annual meeting, Ms. Melissa Heins, on December 22nd, 2017. This tragedy reminds us all that railroads can be an unforgiving industry and how important safety is. I urge everyone to be highly vigilant about personal safety and protecting our colleagues as we perform our duties. This is the best way that we can honor the memory of our colleagues. Please rise and join me in a moment of silence. I would now like to introduce the senior officers of CN who are present on the stage today. In the center, Jean-Jacques Ruest, Interim President and Chief Executive Officer and Chief Marketing Officer of the company.
On JJ's right is Ghislain Houle, Executive Vice-President and Chief Financial Officer of the company, and to his left is Sean Finn. I will act as Chairman of the meeting, and Sean Finn will act as Secretary of the meeting. During the meeting, I will entertain questions relating to a specific motion after that motion has been moved and seconded, but before the vote on that motion takes place. If you have questions or motions, please use the floor microphones when addressing the meeting. These two microphones are in the room. Also identify yourself and state whether you are a shareholder or a proxy holder. There will also be two short presentations. JJ will give the President's address, and Ghislain Houle will outline highlights of CN's 2017 financial performance and our Q1 2018 results. After Ghislain's remarks, we'll welcome your general questions.
On behalf of the Board and the company, we would like to thank the shareholders who submitted their proxies in advance of the meeting. Of course, only registered shareholders or their proxy holders are entitled to take an active part or vote at this meeting. To move the meeting along, a number of shareholders have already agreed to move and second formal motions, and I will call on them at the appropriate times. We'll conduct a ballot on the election of directors and the non-binding advisory resolution on the company's approach to executive compensation. I'll explain the procedure to be followed at the appropriate time. Regarding the nomination of auditors, we'll proceed on the motion by a show of hands.
The Corporate Secretary of the company has advised me that the notice calling this meeting and the accompanying information circular, form of proxy, and annual report were mailed starting on March 23rd, 2018, to holders of common shares at the close of business on March 1st, 2018, the record date. A copy of the confirmation of mailing of such documents has been filed with me for inclusion with the minutes of this meeting. With your agreement, I would appoint Mark Thompson and Jamie Bassick of Computershare Trust Company of Canada, the transfer agent for CN's common shares, to act as scrutineers at the meeting. I've been advised by the scrutineers that based on the proxies received prior to the meeting and the shareholders and proxy holders attending this meeting, that there is a quorum present.
I therefore declare that the meeting has been regularly called and properly constituted for the transaction of business. The next item of business is the submission of the financial statements of the company. The annual report of the company, which contains the consolidated financial statements of the company and its subsidiaries on December 31st, 2017, together with the reports of the auditors and management's discussion and analysis, has been mailed to the shareholders of the company who have requested it. Copies are also made available this morning in the adjacent room. There's no formal action to be taken with regards to this item on the agenda. However, as I previously mentioned, Ghislain Houle, our Executive Vice President and Chief Financial Officer, will be delivering a report on the financial statements later this morning.
We will now proceed with the election of directors. According to the resolution of the Board, 12 directors are to be elected. Information regarding our nominees is set out in the management information circular sent to shareholders. I would now ask Sean to read the names of those nominated for election as directors in the management information circular.
Individuals are nominated for election as directors of Canadian National Railway: Shauneen Bruder, Donald Carty, Ambassador Gordon Giffin, Julie Godin, Edith Holiday, Maureen Kempston Darkes, the Honorable Denis Losier, the Honorable Kevin Lynch, James O'Connor, Robert Pace, Robert Phillips, and Laura Stein.
Thank you, Sean. I'll ask Sam Forgione to nominate the directors.
Good morning, Mr. Chairman. My name is Sam Forgione. I am a shareholder of the company, and I am pleased to nominate each of the persons named by the Secretary of the meeting to be elected as a director to hold office until the next annual meeting of shareholders or until his or her successor is duly elected or appointed.
Thank you, Sam. Tony Yi, will you second the nominations?
Mr. Chairman, my name is Tony Yi. I'm a shareholder of the company. I second the nomination.
Thank you, Tony. Are there any further nominations? By seeing none, I will declare the nominations closed. Pursuant to a resolution adopted by the Board of Directors, 12 directors are to be elected, and 12 eligible candidates have been nominated. I now direct that a ballot be taken on the motion to elect the directors. The names of the 12 nominees for election as directors are set out on the ballot. You should mark the ballot off to the names of each of the persons for whom you wish to vote and complete the form. Please sign and print your name in the places indicated at the bottom of the ballot and indicate the total number of shares that you are entitled to vote as a registered shareholder and/or proxy holder. The Board of Directors recommends voting for the election of directors. Many shareholders present have already filed their proxies.
These shareholders should not complete the ballot since their shares will be voted in accordance with the instructions contained in the proxies granted to their proxy holders. Registered shareholders who have not sent in their proxies and proxy holders who are present have received the ballot at the registration desk this morning. It is included in the agenda package. If you're entitled to vote today but have not received a ballot, please raise your hand so that the scrutineers may provide you with a ballot form. I'll just give a minute. Is there anybody that wishes to vote? Just raise your hand. They'll find you. Please hold on to the ballot forms. We'll collect them after the ballot on the advisory vote on executive compensation.
We'll now proceed with the appointment of auditors. I would like to call upon Donald Carty, Chairman of the Audit Committee of the Board, to present the motion to appoint the auditors of the company.
Good morning, Mr. Chairman. My name is Donald Carty, and I am a shareholder of the company. I move that KPMG LLP be appointed auditors of the company to hold office for the fiscal year 2018 or until the close of the next annual meeting of shareholders.
Thank you, Donald. Paul Butcher, will you please second that nomination?
Mr. Chairman, my name is Paul Butcher. I am a shareholder of the company, and I second the motion.
Thank you, Paul. All those in favor of the motion, please signify by raising your hand or your ballot. Anybody opposed? KPMG, you're in. I declare that KPMG LLP has been appointed as auditors of the company to hold office for the fiscal year 2018 or until the close of the annual next meeting of shareholders. Next, the next item on the agenda is the consideration of the non-binding advisory resolution on the company's approach to executive compensation. The statement of executive compensation contained in the company's information circular sent to shareholders discloses such approach in detail. The results of the vote will not be binding on the Board, however, the Board will take into account the results of the Board together with other pertinent information or comments from shareholders when considering the company's approach to executive compensation. I'll ask Janet Drysdale to present this motion.
Good morning, Mr. Chairman. My name is Janet Drysdale, and I am a shareholder of the company. I move that the non-binding advisory resolution on the company's approach to executive compensation, as set out on page nine of the management information circular, be approved.
Thank you, Janet. I'll ask Keith Reardon to second the motion.
Good morning, Mr. Chairman. My name is Keith Reardon. I'm a shareholder of the company, and I second the motion.
Thank you, Keith. I direct that a ballot be taken on the motion to adopt the non-binding advisory resolution on the company's approach to executive compensation. You should sign and print your name in the places indicated at the bottom of the ballot. Please indicate the total number of shares that you're entitled to vote as a registered shareholder and/or proxy holder. You are asked to either vote for or against the motion. The Board of Directors recommends voting for the motion. When your ballot form is completed, please hand it together with the other ballots to the nearest attendant. I'll just allow that to happen for a minute here. Any other ballots? Okay. Oh, there's one more. Any other ballots? Okay. I believe we've completed that process. I therefore declare the poll and the ballot collection closed.
With the scrutineers, please finish collecting all the ballots, count the votes, and report back to me. We do not have any other business to bring before the meeting. While the scrutineers are computing the ballots, we now move to the next item, our Interim President and CEO's presentation. 2017 was a notable year for CN on a number of fronts and challenging in others, especially in terms of capacity and volume challenges. The Board is proud of CN's long track record of outstanding performance. Our almost 25,000 employees broke a number of performance records due to the unwavering focus of this great group of railroaders on operational efficiencies and customer services. As a result, CN generated $1 billion of incremental revenues, record free cash flow, and the Board of Directors announced our 22nd annual increase in our dividend.
JJ and CN's senior leadership team are well prepared to bring CN's agenda of supply chain innovation as well as operational and service excellence to the next level. Before JJ comes up to address the shareholders, we'd like to show you a brief video and some of the highlights of the past year.
2017, a year of record volume growth for CN. Moving more carloads than ever before was just one of our many accomplishments last year. The CN team and our investors, partners, and customers have much to be proud of. Our first pride point is safety. More than just a priority, safety is a deeply held core value at CN. Our vision is to become the safest railway in North America. CN's Looking Out for Each Other program continues to ensure the safety of our team members. At CN, we create value for our customers by listening to them, focusing on their needs, and defining service as they see it. We invest in building closer relationships and stronger partnerships, like our new intermodal container terminal with Duluth Cargo Connect and reducing congestion and transit times with Norfolk Southern joint interline service.
2017 was another year of investments in innovation, including our safety technology. Our track inspection box car will allow for additional inspections across CN's network. CN is also proud to play an important role in the food supply chain. We enhanced our digital tracking and monitoring systems to support the transport of temperature-sensitive goods. CN continues to earn recognition for our sustainability and climate action efforts. Together with our port partners, we continue to grow, expand, and meet new challenges head-on. As we grow, our partners grow, like the newly opened Ray-Mont Logistics Grain Transload Facility in Prince Rupert. CN is dedicated to fostering positive relationships with all of the communities our network touches. In 2017, CN gave $15 million back to communities. We celebrated Canada's 150th in 2017 by commemorating our country's history and connecting with our communities.
From our offices to our railyards, our successes in 2017 fuel us to work harder, accomplish more, and go further than ever before in the year ahead. We're beginning with a record investment in 2018 in safety, efficiency, growth, and innovation. Together with our CN family, partners, and customers, we are committed to making 2018 another year of proud accomplishments.
It is now with great pleasure that I call upon our interim President and Chief Executive Officer, Jean-Jacques Ruest, to address shareholders about our substantial 2017 successes and challenges and talk about the next steps in CN's remarkable transformational journey.
Thank you, Robert. And good morning, fellow shareholders. And good morning to all of the employees who join us today here or on webcast. First, let me say with sincere appreciation, I'm very honored to serve as your Interim President and CEO. As Robert mentioned, I joined CN over 20 years ago, this very hardworking group of hardworking people who have always been very result-focused and extremely smart as it comes to the rail industry. I stand on the shoulders of all those who made CN what it is today. It is with pleasure to be here in Toronto, nearby MacMillan Yard, the largest carload yard of CN on the CN network. The Greater Toronto Area is also home of the Brampton Intermodal Terminal. Together, these two facilities handle 2 million carloads and containers annually, quite significant. We nearly have 5,000, 4,000 employees in Ontario.
We play a unique multimodal infrastructure role in helping the province export to the world, including $200 million of goods to the United States last year in 2017. One in five Canadians live in the Greater Toronto and Hamilton Area. We at CN bring Ontarians the cars that you drive, the consumer goods that fill the local stores, the seasonal food from faraway countries, and the raw material that maintains these manufacturing sectors vibrant. Our commitment and impact to Ontario runs very deep. CN is a North American rail leader. Our scheduled railroading approach has become the industry standard. But we live in a very competitive world, a marketplace where customers' expectations are high, as they should be, so we must respond decisively with speed and more innovation.
This morning, I'm speaking to shareholders, but also speaking to our customers, our employees, the people, the trade partners that depend on us, the regulators, and the communities that we serve across the network. First and foremost, CN is a service company, a supply chain service company with rail operation at the center of what we do. We enable trade with the rest of the world from the prairies farm for the manufacturing plant, for the resource-rich mining sector, and for the forest product industry. I spent the first part of my career in a chemical manufacturing business and then the last 22 years in sales and marketing at CN. I know the customer side because I walked in those shoes myself for a number of years.
I am acutely aware that everything we do at CN is an integral part of the customer's total experience, an integral part of the import-export story of Canada, an integral part of our reputation abroad on the export side. We can and we will continue to get better. We experienced industry-leading volume last year in 2017, but since last fall, as many of you know, our service has not been up to our customers' expectations and also not up to our own high standard of expectation. That was compounded by an early and harsh winter. You have the Board commitment, my own personal commitment, and the commitment of the entire CN team that we are tackling the capacity issue with great focus and with a great sense of urgency. Before I outline the steps that we are taking, I would like to reflect on CN's unique strength.
We are the only three-coast railroad in North America, giving us unparalleled geographic reach. Our 20,000-mile network spans some very vast and rich white space, as well as very vast manufacturing intensive zone and very densely populated consumers' area. Our balance sheet is very strong. It gives us the great flexibility. It also gives us great strategic optionality. Our team of railroaders is also highly skilled, very well trained, but even more important, very focused. We have the best bench strength of the industry. Now, let me turn to the service plan. We are hiring train crews, acquiring locomotives, building more track infrastructure, and investing in operating technology. Our plant is already in progress and is progressing well.
Since March, we are producing sequential improvement in our operating matrix, including network train speed, reducing wait time at the West Coast port, and increasing movement of export grain above 5,000 hoppers per week. Our service plan starts with people. We have new conductor class graduating every week. In the first three months of this year, we have qualified 400 new train crew members to run our train, complementing the 265 that we did in the fourth quarter of last year. The hiring does continue, will continue, and we expect to qualify another 400 conductors in the current quarter. Safety is at the core of all this. Safety is a core value. Safety is something that we instill as part of the training and qualification of all of these new railroaders.
Our strong balance sheet gives us the flexibility to increase our capital investment in the business, to address immediate but also future infrastructure, to support growth opportunity for CN and growth opportunity for Canadian and the U.S. economy. CN has the largest capital expenditure program of its history, which is well underway. We are investing in safety, efficiency, network capacity, technology infrastructure with approximately CAD 3.4 billion, an increase of CAD 700 million over last year, a very solid contribution to the North American infrastructure by CN. We also have an ongoing share buyback of CAD 2 billion, and we are aiming for adjusted dividend payout ratio of 35%. We are buying locomotives to power the need to move the economy. We are acquiring up to 260 new GE locomotives over the next three years. It's CN's largest locomotive purchase since 2012.
The delivery will start this summer, probably late June. In order to boost our capacity immediately without delay, we went out and leased 130 locomotives, which have progressively come into our active service in the last three months of this year. Last week, we also announced acquiring 250 boxcars to meet the growing demand of the pulp industry, the paper producer, the aluminum producer, and other shippers of different types of metals. Our capital plan also includes infrastructure capacity of over CAD 400 million this year to build new tracks in Western Canada, to allow us to run more train, to move more goods, and to build back up the resiliency that we so desperately lacked last winter. Construction has already started, and it will be completed by mid-fourth quarter of this year, ready for next winter.
Major investment includes a segment of double track, more long sidings on the main line between the West Coast and Chicago, between Vancouver, Prince Rupert, and Chicago. A new rail yard would also be built in Greater Edmonton to address the need of the booming petrochemical area in this zone. These targeted investments will help us to get country grain to the world market, serve the West Coast terminal to move out the containers on average three days from ship discharge, to get truck drivers in and out of our domestic intermodal terminal in 45 minutes from gate in to gate out, and to meet the demand of the strong North American economy and the growing business at CN. We are a growth company. Let me briefly highlight some of the business opportunities that we see real term in the near and long-term potential for CN.
Starting on the west, DP World expansion at Prince Rupert, the container terminal, will increase trade container trade and drive two-way traffic between Asia and the heartland population of North America. The port of Prince Rupert will also be the port of choice for Alberta and BC propane exports via to Asia. Petrochemicals are another area of growth, especially in Louisiana and Greater Edmonton, where propane, refined products, and other manufactured products from the oil and gas industry are also a growing sector. There's great export opportunity for Canadian prairie grain, the crop acreage is growing every year, for Saskatchewan potash, for Western Canada coal, for Illinois coal, and for forest products from both the north and the south of our franchise. Frac sand and other staples of energy drilling also have a bright future for oil and gas exploration.
Of course, the export of Canadian heavy crude to the US Gulf. As I said earlier, the world of logistics and transportation is highly competitive and fast evolving, as it should be. We are highly motivated to drive innovation in the company, innovation coming from our people, innovation coming from our processes, and innovation from advanced analytics and technology. Innovation that is aimed to modernize the customer's experience, innovation that aims to create a safer environment for our people and the communities where our train runs through, innovation that's also aimed to drive financial results and create better long-term shareholders' returns, innovation that will transform CN progressively but surely, innovation that will drive more data-driven supply chain, a supply chain since we are a supply chain service company with rail operation at the center.
Innovation is also about partnership and collaborating with others who have similar goals and similar expertise. So to that point, I am very pleased to announce this morning that CN is donating $2.5 million to the Vector Institute based here in Toronto to drive excellence in our knowledge, creation, and use of artificial intelligence. My fellow shareholders, my teammate, Ghislain, Sean, Robert, Mike was in this room. We have very proud railroaders at CN, very committed to our task. And on the eve of the 100th anniversary of CN, I want to be sure that you rest assured that we are very committed to, A, move the economy and also deliver to our shareholders. Thank you very much, Mr. Chairman.
Thank you, JJ. I'll now call on Ghislain Houle, Executive Vice President and Chief Financial Officer, to discuss CN's 2017 financial performance and our Q1 2018 results.
Thank you, Mr. I would like to thank shareholders joining us this morning here in Toronto via webcast. [Foreign language] . It is my pleasure to be here today and to present my report. So let me get right to it. JJ has just reviewed with you our plan to move through this transition period and the plans we have put in place to ensure that we meet our customers' requirements going forward. Our financial results to the full year of 2017 were strong. However, we felt the impact of low network resiliency and harsh early winter weather across the network in the fourth quarter.
We began taking steps in 2017 to alleviate the impacts of these factors, including adding train crews and locomotives. In 2018, we are accelerating our actions to reestablish our operating performance to the standard that we and our customers expect. On a reported basis, earnings per share grew 55% to $7.24 in 2017. Excluding items that affect the comparability of financial results, including the effect of changes to U.S. tax legislation in 2017, adjusted earnings per share grew 9% as we brought on significant volume, with revenues up more than $1 billion to a record $13 billion. The average adjusted earnings per share of our Class I peers increased 15%. CN has grown its adjusted earnings per share at an impressive compound annual rate of 13% over the last five years. I will briefly comment on the key drivers that underpinned this performance.
In 2017, the company moved over 237 billion revenue ton-miles, or RTMs, 11% more than in 2016. This reflected the very strong volume growth environment that CN faced in 2017. Volume growth was broad-based across almost all of our commodity groups, particularly strong in intermodal, frac sand, coal, petroleum coke exports, and Canadian grain. This volume environment led to CN achieving strong revenue growth, with revenues increasing by 8% to just over $13 billion. In addition to volume growth, the company benefited from freight rate increases and higher volume surcharge rates, partly offset by the negative impact of stronger Canadian dollar. Again, to put this into context, CN's RTM and revenue growth led the industry, with RTM growth more than double that of our Class I peers. The scale of volume growth negatively impacted our operating efficiency. 2017 operating expenses increased by 11%.
This increase was mainly the result of higher costs from increased volumes and higher fuel prices, partly offset by the impact of a stronger Canadian dollar. The operating ratio stood at 59.8%, a 160 basis point increase versus last year, due in part to higher fuel prices that contributed 90 basis points of this increase, plus challenging operating conditions in the fourth quarter, including harsh early winter weather. Our operating ratio nonetheless continues to be the best of all Class I railroads, who on average achieved an operating ratio of 64.6%. In the fourth quarter of 2017, we faced operating and customer service challenges that impacted our performance. In some locations where workload volume was up by as much as 20% compared to 2016, the quick and concentrated growth, combined with network disruptions, tested the resiliency of our operations.
This was then reflected in some of our key operating and service metrics. Although our train productivity improved by 1%, yard productivity was flat. Local service commitment performance and weekly merchandise core order fulfillment both deteriorated in 2017. High demand, insufficient network resiliency, and severe early winter weather conditions all contributed to these challenges and caused our performance to be below the standards that our customers expect of us. However, as announced earlier this year, we have directed additional people and equipment to clear backlogs across our network with the aim of regaining the confidence of North American businesses. As JJ mentioned, we will step up our resource in 2018 to both restore our network resiliency and to position CN for the future growth.
We remain focused and committed to executing the plan that JJ spoke about to restore our performance levels to standards that we all are accustomed from CN. In 2017, free cash flow reached a record of nearly $2.8 billion. Excluding the benefit of non-strategic asset sales, this is a 14% improvement over 2016. Strong free cash flow generation is critical for CN, as it allows us to repay that obligation, pay dividends, repurchase shares, and position ourselves for the long haul. The rail industry is one of the most capital-intensive industries in North America, with railways spending billions of private dollars every year into the infrastructure we own, operate, maintain, and expand. CN annually reinvests about 20% of its revenue and about half of the company's operating income back into the railway. We will continue to make significant investments in our business in 2018, which I will outline shortly.
In 2017, CN deployed $2.7 billion on capital programs. This was an increase of $200 million compared to our original plan for 2017, as we adjusted to address significant resource constraints. This represented just under 50% of our 2017 operating income. Over the last five years, the company has made significant capital investments amounting to over $12 billion. Over half of that amount is related to track infrastructure and maintenance, including replacement of rail and ties, as well as the maintenance of bridges in line with our commitment to safety. We are bullish on the North American economy, and we expect to see continued volume growth from a strong pipeline of opportunities that we highlighted at our June Investor Day last year. To support this growth, we plan to invest a record $3.4 billion in our 2018 capital plan.
This is a $200 million increase over the original budget we announced in January. JJ highlighted some of the major components of this capital budget, including the acquisition of locomotives, with deliveries starting around June, and substantial investments to increase capacity and enable growth. Our capital plan also includes our program for basic track and railway infrastructure and investments for the continued implementation of Positive Train Control in the United States. This record capital budget for 2018 is indicative of our commitment to building network resiliency and the service quality that comes with it. Despite some of the operational challenges we faced in 2017, our balance sheet remains strong, owing to our record cash flow generation and a disciplined approach to capital allocation. Our single-A investment-grade credit rating means that we have continuous access to low-cost sources of funds to reinvest back in the business and return cash to shareholders.
For example, in February, we successfully closed a $900 million U.S. dollar two-tranche bond offering that priced with credit spreads among the tightest levels achieved by corporate issuers in the last decade. Our capital allocation priorities have been consistent over the years. First priority is reinvestment in the business, which I spoke about a few minutes ago. Next, we return capital to shareholders in the form of both dividends and share repurchases. On the dividend per share, our dividend per share has grown every year since the company was privatized at an average rate of 16% per year. Our track record continues in 2018 with our board of directors' approval of a 10% increase in the dividend, our 22nd consecutive annual increase. We continue to move towards a 35% adjusted dividend payout ratio.
Our share repurchases have been steady as well, with cumulative purchases of over $8 billion in the last five years. In 2017, the company repurchased $2 billion worth of stock. Our current program, which runs until October 2018, provides for the potential repurchase of up to 31 million shares, and we have allocated some $2 billion to support it. On a combined basis, we have returned over $13 billion to shareholders in the last five years. In addition, shareholder value creation has translated into a significant stock price appreciation. Over the last five years, adjusting for the stock split and adding in the reinvestment of dividends, cumulative total return of CN stock was 149% in Canadian dollar terms or 97% in U.S. dollar terms. By comparison, over the same period, the TSX increased by 51% and the S&P 500 increased by 108%. Yesterday, we reported our first quarter 2018 results.
The company achieved a diluted EPS of $1, a decrease of 14% over the same period last year. Excluding the impact on deferred income tax recovery from the enactment of a lower provincial income tax rate in 2017, our adjusted diluted EPS for the quarter was down 13% versus last year. CN faced a challenging first quarter, but we are restoring network fluidity. Our operating and service metrics are showing sustained sequential improvement, and that momentum will build as we continue to expand track capacity, add crews, and bring on new locomotives. The demand environment remains solid in a number of different sectors, and we continue to be optimistic that the North American economic conditions will be supportive with favorable consumer confidence.
We continue in our plan to hire crews, taking delivery of 60 new locomotives starting in June, and began construction on our aggressive infrastructure capacity investment plan, which is now projected to be completed in the fourth quarter of this year. With this in mind, and in light of lower-than-expected RTMs in the first quarter, we are revising our 2018 financial outlook and now expect to deliver adjusted EPS in the range of $5.10-$5.25 versus 2017 adjusted diluted EPS of $4.99. This compares to our previous financial outlook, which was for EPS to be in the range of $5.25-$5.40. We continue to assume that the Canadian to US dollar exchange rate will be around $0.80.
This environment should translate into volume growth in terms of RTM in the range of 2%-4% for the full year versus 2017, compared to our previous expected volume growth of 3%-5%. Overall pricing is trending up. As I had mentioned earlier, given the strong volume growth we have experienced in 2017 and to continue to support future growth opportunities with superior service, we are further increasing our capital envelope for 2018 by $200 million to approximately $3.4 billion versus our previous outlook of $3.2 billion. This increase continues to step up our capacity investments to accommodate strong demand and restore our network fluidity and resiliency. We remain committed to our agenda of operational and service excellence with our supply chain focus, and we continue to manage the business to deliver sustainable value today and for the long term. Ladies and gentlemen, thank you for your attention.
Thank you, Ghislain . I have now received the report of the scrutineers. According to the proxies received in the ballot cast, each director nominee received at least 94% of the shares voted in his or her election. I therefore declare that the 12 nominees set out in the Management Information Circular have been duly elected as directors of the company to hold office until the next annual meeting of shareholders or until their successors are duly elected or appointed. I also declare that the non-binding advisory say-on-pay resolution on the company's approach to executive compensation has been approved by 96% of the holders of shares represented in person or by proxy at this meeting. The number that I like is that this year, 77% of all votes voted, and that's significantly higher than in previous years, so we had a great turnover of voters.
I would now like to present the members of your board of directors and congratulate them on their election to the board. They are a talented group from all over North America who make every effort to bring value to the shareholders of the company. I will ask each of them seated before the stage to rise and face the audience and remain standing until all of them have been introduced. I would ask you to hold your applause until they have all been introduced. Sean Finn, Donald J. Carty, Ambassador Gordon D. Giffin, Julie Godin, Edith E. Holiday, Maureen Kempston Darkes, the Honorable Denis Losier, the Honorable Kevin Lynch, James E. O’Connor, Robert Phillips, Laura Stein. I am Robert Pace, and I am the chairman of the board of directors. Ladies and gentlemen, these are your elected directors. As I mentioned, next year, CN will celebrate its 100th anniversary. As part of the celebrations, I'm now pleased to show you this video highlighting our anniversary.
For the last century, CN has worked tirelessly to bring together people of all ages and backgrounds, to build the foundation that binds this vast and beautiful land, and to supply and share the products that fuel our society. We're proud of what we've done to connect the communities that forged this continent and the network we've built to better serve the markets upon which our future depends. For CN's 100th anniversary, let's create something special, an experience filled with festive moments, one that highlights CN's contributions to the economy and emphasizes its constant innovation, and shows the role CN plays in the North American transportation and logistics industry, and as a facilitator connecting employees, retirees, customers, and partners. CN 100, a Moving Celebration.
This traveling event will bring to life these connections between people, places, and products. Throughout the year, CN's Moving Celebration will stop in towns and cities across Canada and the US, generating magical encounters and unique moments, unloading cutting-edge containers filled with interactive, educational, and entertaining experiences. They'll showcase the people and history of CN and educate and inspire children of all ages. They'll set a communal table filled with food and drink from every coast, and they'll build buzz at every stop with artists and performers that will have us singing and dancing. CN's Moving Celebration will be a place to discover, learn, and exchange ideas, to make new contacts and partnerships. It will be an opportunity to create new conversations and start a dialogue about CN's next 100 years. We can't wait to see you all there.
Exciting. As we have completed all of the business to come before this meeting, I'll entertain a motion to conclude the formal part of this meeting. Michael Farquhar, would you kindly introduce a motion?
Good morning, Mr. Chairman. My name is Michael Farquhar, and I'm a shareholder of the company. I move that the formal part of this meeting be concluded.
Paul Deegan, will you second the motion?
Good morning, Mr. Chairman. My name is Paul Deegan. I'm a shareholder of the company, and I second the motion.
Thank you, Paul. All those in favor of the motion, please rise to the same or put your hand up. Thank you. I declare the motion carried and this meeting closed. We now have time for a general question period. We invite our shareholder or proxy holder of the company who has a question to come forward and use the floor microphones. In the interest of time and fairness to everyone who wishes to ask a question, I ask you to restrict your questions to matters relevant to the business of the company. Prior to asking your question, please state your name and whether you are a shareholder or proxy holder of the company.
Good morning, Mr. Chairman. My name is Ishirat, and I am a stockholder of CNR. I have a question regarding the value of the stock. I've been observing the value from 1998 up to 2008. The difference in the price of CPR and CN was CAD 10. For example, if CP is CAD 60, then CN would be CAD 50. But after the crash and recovery of 2008, there is a big difference. Like now, the CP is 227, and we are around 9,500. So what is the main reason for this change? I don't see any big investment in CPR. So what do you think is the reason for this big, big change?
I'll turn that over to Ghislain.
Yeah, thank you for your question. I think you've got to look at it through time. I think I mentioned how our stock has, in my remarks, how it performed over the years. You have to consider as well that we split our stock a few times, so that has an impact. So listen, I think we're very proud of our performance on our stock price, and we're proud of our performance, and we think we have some very good value coming forward that JJ and I highlighted. We have a slew of real growth opportunities, and we're going to invest to accommodate those opportunities from a growth standpoint at low incremental costs. And stay tuned because the stock price will continue to increase going forward.
Thank you.
Other questions? Any other questions?
Good morning, Mr. Chairman. My name is Doug Stephen, and I'm a CNR shareholder for 10 years. My question is about the grain farmers who can't get the grain to their elevators because they're filled. I've heard you talking about it today. Is that being done right now, so they're being helped one way or another?
It's a good question. I'll pass it on to JJ.
Yes, thank you, Mr. Stephen. It's a very important question, and it's one that we feel that we have a lot of passion about moving more grain into the country. So as I said in my remark, we are making major capital investments on the track infrastructure, mostly from the West Coast, where most of that grain needs to go for export, and Chicago.
So major track work this summer in Saskatchewan, Manitoba, Alberta, all the way to Rupert, where there's one major grain elevator, and also, obviously, all the way to Vancouver, where there's even more grain elevators. The CN board has also approved on condition that we start to renew our grain hopper fleet, and we will start to do that in 2019 and 2020. We're waiting for Bill C-49 to be passed and to be passed as is. So that's another major investment that we will be doing toward protecting the crop for the export market and moving more of it. And of course, to move more grain, we need to have more crew members. And I did mention in my remark how many people we are hiring, training for into a qualified and safety program so we can run more trains to the coast.
So definitely, if you look at the last few weeks, in the last six weeks, we've moved a whole lot more grain than we did in February. February was not a good month. March was a much better month. April is a fairly good month. But last two weeks and this week, we are meeting all of the orders, grain orders being placed on us by the grain company. And I'm hoping by the end of the second quarter, early summer, we will have caught up with the Canadian grain crop. And then everything that we do in terms of hiring and investing this year will set us up well for the next crop, especially for next winter.
Thank you very much. My question before I came here was, is something being done right now to help these farmers? Thank you for your answer.
Thank you. Thank you for the question.
Any other questions? Microphone?
Good morning. My name is Bob Dion. I'm a shareholder. I'd like you to comment on the progress being made in finding a replacement for Jean-Jacques, or perhaps he's going to be in the job as a CEO. I was just wondering, the share value goes up 20%. He's got my vote, but I was wondering if you could. He's got mine too. I'm just wondering if you're still looking or whether you're sort of holding it in abeyance, or where are we in that department?
We have established a committee of the board that's chaired by Ambassador Gordon Giffin. We've retained the firm of Russell Reynolds to do a search. That is on its way. We've had one meeting, and we will canvas North America or globally for the best candidate to run this company. But I thank you for your comments.
Thank you very much for your answer. I know there's a lot of raiding between rail companies. I was wondering if you considered Keith Creel just to keep everything going.
I won't answer that. I think the telecommunications company calls that churning when customers go from one to the other.
Anyway, thanks very much.
Thank you very much for the question.
Thank you.
Any other questions? Seeing none, I'll bring a—oh, sure. Sure, certainly.
Good morning. My name is Jerry Schiller. I'm a shareholder in Canadian National Railway. I'm curious as to what the future is for CN with regard to the impact that we're having on the Kinder Morgan pipeline and some of the pipelines going to the States. I know CN was carrying a fair bit of freight down there. Now, I don't know if legislation in the United States and the Kinder Morgan issue is going to affect us adversely or to our good.
Good question. JJ?
Yeah, so the question of pipeline, I would leave to our elected officials to decide how best to find a solution to this challenge. But as far as the railroad's concern of CN, we do move some crude, Western Canada crude, from Alberta to the United States. We had to curtail the movement of the Canadian crude in the fourth quarter and the first quarter of this year to reserve more capacity for grain, namely. But we will re-enter the movement of crude in the second half of this year so we can help to the point that we can move Canadian crude to market.
We will do that because what I just mentioned earlier, to now we're hiring more people, getting more people qualified to do that. The capital investment we're making in Western Canada doesn't only help just the farmer, but also helps other industries and namely crude. But you got to take this into account. Rail is not a substitution for pipeline. We can only complement the pipeline industry. And it's only in that regard you have to take into context what we can do to help the Western Canadian sector narrow the pricing differential. Thank you.
Thank you for your question. Sir, you have a question?
Hello, Andrew King, shareholder. Yes, kind of a little bit of a follow-up with regulatory issues and the long travails that the Milton facility has been going through. I haven't seen anything like that in a long time. Any feeling for how much longer, and are there any other initiatives that might get caught up in that kind of regulatory review in the coming year in the capacity increase?
I'll let Sean Finn respond to that, and maybe he'll share it with JJ.
Yeah. Maybe I can start with why is it that we want to do that, and Sean can provide you some more insight about the timing and the regulatory process. Ontario is a very large province. This is where the biggest population of Canada is. And as the population grows and consumes, and the manufacturing sector in Ontario stays vibrant, there is a need for more and more infrastructure, intermodal infrastructure, transportation infrastructure. And CN will feel very compelled to be part of that solution.
So in order for Ontario to be connected to Asia, connected to NAFTA, connected to where the product you consume comes from, and/or the product that you manufacture needs to go, we need to have more intermodal capacity. In that mindset, we need another container terminal. Milton is a good location because we've owned that land for over a decade. It has rail connection, has access to the highway, and there's very much of a need for more infrastructure of the likes in Ontario. Regarding the regulatory process, Sean.
I'll be short. Thank you, JJ. Effectively, you own 1,000 acres in Milton, as you know, just south of Britannia and Tremaine. We're working on this for several years now. There is a full federal panel review of three eminent Canadians looking at this. We expect to have hearings this fall in 2018 if all goes well. And then within a year, hopefully 18 months having approval. But I think it's important to realize that this is a property you've owned for more than a decade. The fact that we were thinking of building in Milton has been known now for several years. And the fact that we have for a $250 million project, a very detailed environmental review is, I think it shows maybe the importance that some people are aware to this. But we realize also that large infrastructure programs in Canada, such as a terminal in Milton, does require a quicker approval than we have right now because the traffic is not waiting to come.
So we've been working on this now since 2013, so for almost five years. And we're looking at shoveling ground if things go very well, hopefully 2019, 2020. So that's an issue of how long it takes to get projects that are important to Canada's economy and development through these processes. So we are looking forward to seeing hopefully some streamlining of the processes going forward. In our case, we're in the process. We're going to complete our consultations and make sure that everybody in Milton and the greater region of Toronto understands what is important to the economy of the GTHA and look forward to the approval.
Thank you for the question. Okay. There's no further questions that I see, so I'll bring the meeting to a close. And thank you very much, and we're looking forward to the 100th anniversary. Thank you.
Thank you.