Good morning, ladies and gentlemen. It's great to be here with you in Regina. [Foreign language] , www.cn.ca. My name is Robert Pace, and I am CN's Chairman of the Board. It has been our custom to hold our annual general meetings in cities across CN's North American network. It is certainly a pleasure to be here this morning in Regina. CN's roots in Saskatchewan go back more than a century, where we have built more branch lines here than in any other province, and today, almost 2,000 route miles of our network is here in Saskatchewan. That network allows us to support the economy of Regina and moving what you produce: grains, fertilizers, oil seeds, processed foods, and petroleum products.
Our employees, based here in Regina, join with thousands across the province and western Canada every day to serve major employers in this community. The crews and trains working in Regina are part of our network that spans Canada and Mid-America, from Chicago to New Orleans and Mobile, Alabama, transporting freight traffic 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, bulk commodity shipments, making us a true supply chain enabler. CN's commitment to innovation, long-term investments in its business, and playing its role as a true backbone of the economy will remain hallmarks of the company not only for the next 20 years but for decades to come.
On behalf of CN's Board of Directors, I'm now pleased to call to order the annual meeting of shareholders of Canadian National Railway Company. I would like to welcome a number of distinguished guests we are very pleased to have with you today in attendance, including two CN directors whom we have honored as Directors Emeritus in recognition of their extraordinary contributions to CN's Board of Directors. Chair Emeritus David McLean and Director Emeritus Hugh Bolton, would you please stand to be recognized with your wives, Brenda McLean and Margo Bolton? They keep a very watchful eye on us. Before we begin the business of the meeting, I would ask Sean Finn, our Executive Vice President and Corporate Services and Chief Legal Officer, to give us a safety briefing. Sean?
Good morning. At CN, every work assignment or meeting begins with a safety briefing. Please allow me to take a few moments to review the safety procedures of the Hotel Saskatchewan. We are currently in the Regency Ballroom, which is equipped with an audible alarm system. If an evacuation order is given through the system, Hotel staff and our CN police officers to my right, to your left, will direct you out of the building. We will regroup on Victoria Avenue out front and across the street to our designated muster location, Victoria Park. To exit this room, you may use the doors from which you came in, the main doors to your left. The main doors lead to the hallway.
On your right, as you exit, to the right of the elevators, there are stairs that lead to the emergency exit doors that are situated in the main lobby. In the event of a medical emergency, my colleague Kevin Mantie is a qualified first aid medical responder, Kevin, and Joe Jardine has been designated to call 911. En cas d'urgence dans la salle. In the room. There is the sound. You're going to leave it here through the left, and to the right, you got the stairs, and you go to the lobby, and after that, you can leave the building. In terms of medical emergency, my colleague here, Kevin, is here. He's going to first aid. Joe Jardine, my colleague, he's going to help us. Thank you very much. I wish you a very good meeting.
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. This is Rail Safety Week in Canada. Across the country, CN is participating in this important industry-wide initiative to make people aware of the dangers of walking, driving, or playing around railroad tracks. As part of the Rail Safety Week, CN police officers will be conducting safety blitzes at busy highway and railroad crossings across the country. But this isn't just about law enforcement. This week allows us to refocus our continuing efforts to engage our employees and pensioners by asking them to act as safety ambassadors to their friends and families, by taking a safety pledge and talking about rail safety with their families and friends.
Rail safety is everyone's responsibility, and by looking out for each other, we can help keep our employees and communities safe. You can help us spread the word by taking the rail safety pledge at our rail safety booth set up outside our meeting room today. I invite you to join the thousands of CN employees and retirees who have already signed on. The safety of our 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 railway in North America. This goal is to eliminate work-related accidents altogether. Through technology, employee education, and promoting a safety 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. Please rise and join me in a moment of silence for Mr. Michael Stevenson on November 24, 2016. This tragedy reminds us all that railroading 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 we can honor the memory of our colleague. I would ask for a moment of silence in his memory.
I would now like to introduce the senior officers of CN who are present on the stage. On my far right is Ghislain Houle, the Executive Vice-President and Chief Financial Officer of the company. Next to Ghislain is Luc Jobin, President and Chief Executive Officer of the company, and next to Luc 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 second it, but before the vote on that motion takes place. If you have any questions or motions, please use the floor microphones when addressing this meeting. As you can see, there are two. Also identify yourself and state whether you are a shareholder or a proxy holder. There will also be two short presentations.
Luc Jobin will give the President's address, and Ghislain Houle will outline the highlights of CN's 2016 financial report and our outstanding Q1 2017 results. After Ghislain's remarks, we'll welcome your general questions. On behalf of the Board and the company, we'd like to thank the shareholders who submitted their proxies in advance of this meeting. Of course, only registered shareholders or their proxy holders are entitled to take an active part in or vote at this meeting. To move this meeting along, a number of shareholders have already agreed to move and second formal motions, and I will call upon 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 this 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 22, 2017, to holders of common shares at the close of business on March 2, 2017, 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 will appoint Mark Thompson and Bruno Di Genova of Computershare Trust Company of Canada, the transfer agent for CN's common shares, to act as scrutineers of 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, 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 at December 31, 2016, 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 were also made available to you this morning in the adjacent room. There is no formal action to be taken towards these documents today with regards to this agenda item. 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 a resolution of the Board, 13 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 information circular.
Mr. Chairman, the following individuals are nominated for election as directors of Canadian National Railway Company: Shauneen Bruder, Donald Carty, Ambassador Gordon Giffin, Julie Godin, Edith Holiday, Luc Jobin, 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.
Mr. Chairman, my name is Sam Forgione. I'm a shareholder of the company, and I'm 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. François Bellanger, will you second the nominations?
Mr. Chairman, my name is François Bellanger. I am a shareholder of the company, and I second the nominations.
Thank you, François. As there are no further nominations, I declare the nominations closed. Pursuant to a resolution adopted by the Board of Directors, 13 directors to be elected and 13 eligible candidates have been nominated. I now direct that a ballot be taken on the motion to elect the directors. The names of the 13 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're entitled to vote as a registered shareholder or proxy holder. The Board of Directors recommends voting for the election of each nominee. 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 through their proxy holders. Registered shareholders who have not sent in their proxies and proxy holders who are present have received a ballot at the registration desk. It is included in the agenda package handed to you. 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. Please hold onto 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 now like to call on Donald J. Carty, Chairman of the Audit Committee of our Board, to present the motion to appoint the auditors of the company.
Mr. Chairman, my name is Donald J. Carty, and I'm a shareholder of the company. I move that KPMG LLP be appointed auditors of the company to hold office for the fiscal year 2017 or until the close of the next annual meeting of shareholders.
Thank you, Don. Paul Butcher, will you please second the motion?
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. All those opposed? That was easy. I declare that KPMG LLP has been appointed as auditors of the company to hold office for the fiscal year 2017 or until the close of the next annual meeting of shareholders. 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 vote 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 the motion.
Good morning, Mr. Chairman. My name is Janet Drysdale, and I'm 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 9 of the management information circular, be approved.
Thank you, Janet. Stacey Alderson, will you second the motion?
Mr. Chairman, my name is Stacey Alderson. I'm a shareholder of the company, and I second the motion.
Thank you, Stacy. 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 are entitled to vote as a registered shareholder 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 that are in the room. I'll just give this a minute. I believe you now have had time to complete your ballots. Are there any more ballot forms to be collected? Just raise your hand if you need help. Seeing none, I therefore declare the poll closed.
With the scrutineers, please finish collecting all the ballots, count the votes, and report back to me. We do not have any business to bring before this meeting further. While the scrutineers are computing the ballots, we now move to the next item, our CEO's presentation. 2016 was a great year for CN on many fronts. Despite significant economic and volume challenges, our 23,000 employees broke many performance records due to the unwavering focus of this great group of railroaders on operational efficiencies and unparalleled customer service. As a result, CN generated record free cash flow, and the Board of Directors announced our 21st annual increase in our dividend. This year will also be remembered as a year of change.
The CN Board has always taken great pride in our focus and attention on succession planning, so we were very gratified with the smooth transition to Luc Jobin as our new President and Chief Executive Officer. We look forward to Luc's inspired leadership and his capacity to drive innovation, which will maintain our position as North America's most efficient, customer-centric, and profitable railroad. Luc and his 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. It is with great pleasure that I now call upon our President and Chief Executive Officer, Luc Jobin, to address shareholders, about our substantial 2016 successes, and to talk about the next steps in CN's remarkable transformational journey.
Merci beaucoup, Monsieur le Président, et bonjour, actionaires of CN.
I am delighted to be addressing you this morning from the beautiful city of Regina, Saskatchewan, the capital city of a remarkable province. A province with the second-best job creation rate in Canada over the last decade. A province with more population growth in the last 10 years than in the previous 75 years combined. In 2014, the province received a triple-A credit rating from Moody's for the first time in its history. So you can understand why CN is bullish on this province, its people, and its diverse and resilient economy. CN has a long and proud history in Saskatchewan. CN played a critical role in settling new Canadians from Central and Eastern Europe as farmers in this province back in the 1920s. But rail history here even predates CN's founding back on June 6, 1919.
In fact, it goes back to the founding of the province itself in 1905 with the Grand Trunk Pacific, a predecessor railway of CN. Several towns across the province are named after Grand Trunk Pacific executives, including Biggar, Melville, and Watrous. The Grand Trunk Pacific was the result of Sir Wilfrid Laurier's vision for a northerly transcontinental route in order to open up new areas of the prairies that were becoming economically viable. This route with a terminal in Prince Rupert would actually be closer to Asia than Vancouver and would follow one of the two paths surveyed by Sir Sandford Fleming, an advantage that CN enjoys to this day. Today, CN operates nearly 2,000 route miles of track in Saskatchewan and employs over 900 hardworking men and women in the province. We help this province abundant natural resources and products to markets in North America and around the globe.
Grain and potash make up a substantial portion of our business here in Saskatchewan, but the diversification of the province's economy has led to CN making investments in Regina, in Saskatoon, in Bienfait, and North Battleford. We serve customers large and small, and we handle everything from consumer goods to specialty crops and from automobiles to forest products, all that in order to meet the needs of a growing Saskatchewan. By the way, we fulfill a similar role in seven other Canadian provinces and 16 states across the U.S. We move goods to market, and in all modesty, we do it better than any other railway, bar none. By working together, CN, producers, supply chain partners, governments, communities, just to name a few, we can achieve even greater success together. When our customers are successful, CN also stands to be successful.
So you can count on us 24 hours a day, 7 days a week, and 365 days a year. Well, all right, technically, we do take a few hours off on December 25th. But in the same manner, investors can count on us, whether you're a large institutional shareholder or you're investing in CN to secure your own retirement. CN's focus is on delivering sustainable value creation and to do so year in, year out. While 2016 provided a challenging environment, the team at CN performed exceptionally well, and we are proud to have once more risen to the challenge. CN delivered solid service and operational results in 2016, and Ghislain will walk you through the numbers in a few minutes.
But today, I'd like to look ahead and discuss how we plan to build on our own momentum of continuous improvement, a CN hallmark since its initial public offering back in 1995. At CN, we're accelerating the pace of innovation. We're transforming the storied organization into a leading North American transportation and logistics company. And our customers, our shareholders, and the communities in which we operate are all benefiting from this increased supply chain focus. Let me expand on three broad areas where we are innovating and shaping the future at CN. First, service excellence. I'll give you an example that shows how we are always looking at innovating to better serve our customers. Second, operational efficiency. You'll see how we continuously find ways to balance great service with increased efficiency across various supply chains. Third, and most importantly, safety.
Let's start with service, and let's see how CN supports moving grain to market. Now, there's probably more expertise in grain in this province than anywhere else on earth. My apology to those in the room who already are well aware of some of the facts that I'm going to talk about today. The results for the current crop year of Western Canadian grain are quite spectacular. We at CN are helping farmers and grain companies move that crop. In Canada, we have shipped over 16 million metric tons of grain so far this crop year. That is over 12% more than the average of the last three years. Now, how do we explain these records? Well, part of it is driven by increased cooperation and communication between all stakeholders in the grain supply chain, between farmers, grain companies, port terminals, and railways.
Part of it is due to substantial investments that we made in the past few years. At CN, we continuously invest in our network, in our equipment, and in our people. For example, we've acquired 240 new AC locomotives in the last 3 years, investing over $800 million to enable us to move more volume more efficiently, including grain trains that are actually some 20% longer. Our partners are also investing. This starts at the farm, where farmers are investing to improve yields and get the grain off the fields more efficiently. Elevator companies are upgrading their facilities to enhance throughput and constructing new elevators with efficient loop track designs. There have been major investments at the port as well to unload unit trains faster and improve vessel loading capabilities.
To me, the single most important driver for success has been how we are working with our customers to put in place new innovative commercial agreements. These agreements add flexibility to the supply chain. They help advance planning. They mitigate risk on both sides. They incorporate volume commitments from the shippers in exchange for guaranteed car supply from the railway. And they include reciprocal penalties. In 2016 and 2017, approximately 70% of our Canadian grain volume will move under these commercial contracts that provide better accountability and visibility. And by the way, they were all achieved without any regulatory intervention. The second area we're always looking to improve is balancing service excellence with operational efficiency. And that is the case for any and all products we move. A good example is potash. Saskatchewan is the potash capital of the world.
Last year, when a potash mine located in Eastern Canada unfortunately had to shut down, the CN team got together with our customer to find ways, if we could, to come up with a new way to serve the export markets. Our solution? A new and very innovative and unique train service. Unit trains handling up to 30,000 tons each, moving between Saskatchewan and Saint John's, New Brunswick. For the non-railroaders in the room, let me paint a picture of what that looks like. Each of these trains are almost 10,000 feet long. Well, that's 3 kilometers long. About 200 rail cars powered by 5 AC locomotives using distributed power. That is a very efficient way to move freight across North America. It means successfully moving our customers' product economically and, more importantly, competitively to foreign markets.
Innovation at CN is all about finding better ways to move our customers' goods efficiently and safely. For these long trains, the distributed power configuration uses multiple locomotives, and that improves train handling and significantly improves the train braking system response. That leads me to the third area in which we're constantly innovating, and that is safety. La sécurité est au centre de tout ce que nous faisons au CN. Et notre but est très clair: faire le plus sécuritaire en Amérique du Nord. Safety is at the center. Our goal is nothing less than being the safest railroad in North America. To get there, we're innovating and pushing forward on many fronts. Let me touch on three of them: technology, process, and training for our people. We're constantly investing in the latest track testing technologies to help ensure our infrastructure is the safest it can be.
The technologies provide additional opportunities to find potential issues that may be difficult to locate through normal visual inspection processes. Here are a few examples. Our new test car allows for dynamic measurement of track conditions and produces objective data for identifying where to perform maintenance and capital work. New joint bar and light geometry inspection systems automatically locate rail joint bars and bolt issues. New vehicle tracking interaction identifies locations that are exposed to higher impact and/or alignment issues. We're also innovating in the way we use existing data from our wayside systems, our detectors, and other inspection technologies. By the way, as you can see on the picture, we have the network with the most wayside detectors per mile in the whole rail industry. We are adding predictive data analytics to better identify and plan track inspection and repair, as well as equipment maintenance.
Safety innovation means always looking at how we operate. On the Canadian side, that takes collaboration between CN and Transport Canada, as well as the Transportation Safety Board. Along with the Federal Railroad Administration in the United States, we together make rail transportation safer. Internally, we also continuously review our processes and standards. In many cases, we go above and beyond regulations in place by imposing higher standards on ourselves to keep improving our safety record. Training plays a very big part in reducing the frequency and severity of incidents. With the major renewal of CN's workforce in the past few years, we are making major investments in safety training for the next generation of railroaders. On the engineering side, we're improving employees' track knowledge and proficiency.
Through CN's track maintainer program, key safety practices are embedded in new hires, such as job briefings, field-level risk assessments, and critical task checklists. These employees also receive significant hands-on training. Management training has also been improved. An advanced track inspection course has been created to increase knowledge of analytical tools to help our personnel get to root causes and to help enhance preventive maintenance practices. We have invested in new state-of-the-art training facilities in Winnipeg, Manitoba, and Homewood, Illinois. These facilities were the brainchild and a lasting legacy of my predecessor, Claude Mongeau. Claude left an important mark on CN, and his leadership on the training front was second to none. So on behalf of all 23,000 employees, our 44,000 pensioners, and you, our shareholders, let me pay tribute to Claude by announcing that we are naming our Winnipeg training center after him.
It will be known as the CN Claude Mongeau National Training Center. At CN, safety is not just a priority. It is a core value. We will not stop until we are the safest railroad in North America. A final note on safety: this week actually happens to be Rail Safety Week in Canada. Rail safety is a shared responsibility, and that is why CN, Transport Canada, and others are proud supporters of Operation Lifesaver. Operation Lifesaver is an organization dedicated to educating Canadians about the real dangers surrounding rail property and trains. So please spread the word and encourage your family and friends to look, listen, and live. Virtually every incident is preventable, and together we can save lives. In conclusion, we are not resting on our laurels. We're accelerating the pace of innovation at CN.
We're transforming the core organization into a leading North American transportation and logistics company. We're keeping our relentless focus on supply chain service, efficiency, and above all else, safety. Our customers, our employees, our shareholders, and the communities in which we operate will greatly benefit from this. At this annual meeting of shareholders, let me address you, our shareholders specifically and directly. We will keep delivering the goods for our customers, and we're going to keep delivering for you. That's what Innovation in Motion is all about. On that note, thank you very, very much for your investment and your confidence in CN. Thank you.
Thank you, Luc. We'll now turn to the CFO presentation. 2016 was challenging from a revenue and volume standpoint, and we completed the year with revenues slightly above CAD 12 billion.
Despite the challenges we faced, which were mainly attributable to weak commodity markets, we delivered a record-breaking annual operating ratio of 55.9%. In addition, many of our key operating metrics broke records. We accomplished this by continuing to balance operational and service excellence without undermining our ability to grow as the market improves. I now call upon Ghislain Houle , CN's Executive Vice President and Chief Financial Officer, to discuss CN's 2016 financial performance and our outstanding Q1 2017 results.
Thank you, Mr. Chairman. I would also like to thank shareholders joining us this morning here in Regina and via webcast. Je voudrais remercier nos actionnaires qui sont avec nous ce matin ici à Regina, ainsi que ceux et celles sur la diffusion web. C'est un plaisir d'être ici aujourd'hui pour vous présenter mon rapport. It is my pleasure to be here today and to present my report.
Let me get right to it. Luke has just reviewed with you the key pillars of our strategic agenda and how we remain focused on delivering superior service while continuing to drive operational efficiency with our supply chain focus. This is a formula that allows us to deliver solid results year after year, providing value to our customers and ultimately to our shareholders. It is this foundation that, coupled with our culture of innovation, will enable CN to become a leading North American transportation and logistics company. In 2016, we demonstrated our ability to perform in a challenging volume environment, proving we can deliver in both good and bad times. This is reflected in the EPS growth we were able to achieve. On a reported basis, earnings per share grew 6% to $4.67 in 2016.
Excluding items that affect the comparability of financial results, adjusted earnings per share grew 3% in spite of a challenging economic environment. To put this into context, our adjusted earnings per share grew 3%, while the average of our Class 1 peers decreased 1%. CN has grown adjusted earnings per share at an impressive compounded annual rate of 13% over the last five years. I will briefly comment on the key drivers that underpin this performance. In 2016, the company moved over 214 billion revenue ton miles, or RTMs, 5% less than in 2015. The volume decrease was driven by weaker growth both globally and in North America, resulting in lower volumes in certain markets, including energy-related commodities.
Revenues decreased by 5% to just over $12 billion, partly offsetting the lower volumes the company benefited from pricing gains ahead of inflation and the positive impact of a weaker Canadian dollar, while experiencing lower fuel surcharge rates. Again, to put this into context, both RTMs and revenues decreased 5%, while the average of our peers decreased even further by 8%. At the same time, CN continued its disciplined approach to managing expenses. 2016 operating expenses decreased by 8%. This reduction was mainly the result of efficiency gains, including cost management initiatives and decreased volumes, as well as lower pension and fuel expenses, partly offset by the impact of a weaker Canadian dollar. This resulted in a company record and industry-leading operating ratio of 55.9%. This represents an improvement of 230 basis points over last year.
This also compares favorably against our peers, who on average achieve an operating ratio of 65.6%. That's nearly a full 10 percentage points difference. Our continued focus on operational and service excellence is second to none. Despite a weaker volume environment in 2016, we demonstrated the agility and resiliency of our operating model. As prospects in key commodity markets turned, we moved quickly to right-size our resources, significantly reducing our rolling stock fleet, as well as headcounts, which on average were about 2,000 employees less than the prior year. We increased our train productivity by 7%, consolidating volumes onto fewer, longer, and heavier trains and delivering productivity in our yards. This balancing of operational and service excellence is something we focus on intensely. From a service perspective, we delivered improvements in car order fulfillment and local service performance.
How we manage resources and execute the strategy ultimately translates into solid cash generation. In 2016, CN generated over $2.5 billion of free cash flow. Excluding the benefit of non-strategic asset sales, this is a 3% improvement over 2015. Even more importantly, cash flow generation at CN is achieved while we continue to reinvest in our business and in our infrastructure. Capital investment in our franchise is both essential to sustain the safety and integrity of our network and to support our strategic agenda. CN deployed $2.75 billion on capital programs in 2016. That represents over 50% of our operating income. We are investing in a consistent and disciplined manner that supports long-term value creation. Over the last five years, the company made capital investments amounting to over $11 billion.
Over $6 billion of that amount was allocated into the maintenance of our core network infrastructure, including the replacement of rails and ties, as well as the maintenance of bridges in line with our commitment to safety. With regards to safety and efficiency, we have invested around $1.6 billion since 2012 to increase our network capacity, improve resiliency, and fluidity. This includes sizable investments ranging from intermodal facilities and logistics terminals to double tracks and long sidings, yard enhancements, and completing connections on the EJ&E line around Chicago. In this time frame, we have also devoted close to $2 billion to rolling stock, including adding nearly 400 additional new locomotives, along with more rail cars and intermodal equipment to accommodate growth. We have a steady, consistent approach to capital investments to support safe, reliable, and efficient service.
We are thinking and investing for tomorrow as we look to many technology initiatives, leveraging our culture of innovation to secure CN as a leading North American transportation and logistics company, continuing to provide solid value to our customers, our supply chain partners, and our shareholders. Our strong cash flow performance and our disciplined approach to capital contribute to maintaining a solid balance sheet. Our investment-grade credit rating allows us to have continuous access to low-cost sources of funds to reinvest back in the business and return cash to shareholders. Rewarding shareholders for their investment in CN is a priority. Our dividend has grown every year since the company was privatized. That's 21 years of uninterrupted dividend growth. During this time, CN has grown dividends at an average rate of 17% per year. Earlier in 2017, CN's board of directors approved a 10% increase in our annual dividend.
This is consistent with our stated objective of moving towards a 35% dividend payout ratio. Meanwhile, we've had significant share buyback programs in place throughout the last five years, amounting to over $8 billion in shareholder value. In 2016, the company bought back $2 billion worth of stock. Our current program, which runs until October 2017, provides for the potential repurchase of up to 33 million shares, and we have allocated some $2 billion to support this. When you combine dividends and share buybacks, the value returned to shareholders is well over $12 billion 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, our Canadian stock price increased 125%, and when you add in the reinvestment of dividends, the cumulative total return is over 145%.
By comparison, over the same period, the TSX increased by 49% and the S&P 500 increased by 98%. Yesterday, we reported our first quarter 2017 earnings. The company achieved a diluted EPS of $1.16, an increase of 16% over the same period last year. Adjusted EPS was up 15% to $1.15 from a year-over-year EPS of $1, excluding the impact on deferred income tax expense from the enactment of a lower provincial income tax rate this quarter. We achieved record volumes in the first quarter, reflecting strong performance in most segments. We are building on this momentum and will continue to leverage our superior service, which has provided us with the ability to gain market share in key customer service-sensitive markets. This is also reflected in our revised outlook for 2017.
We now expect volume growth of approximately 10% in terms of RTMs, compared to 3%-4% previously for the full year versus 2016, with overall pricing remaining above inflation. Accordingly, we are revising our original guidance and now expect to deliver adjusted EPS in the range of $4.95-$5.10 versus 2016 adjusted diluted EPS of $4.59. Previously, we were calling for EPS growth in the mid-single-digit range. In addition, we are increasing our capital investments to approximately $2.6 billion for 2017, or $100 million more than our initial envelope of $2.5 billion. This is mainly driven by the acquisition of 22 new locomotives and other projects to support growth. As we look ahead to the balance of 2017, we remain committed to our agenda and continue to manage the business to deliver sustainable value for our customers and shareholders 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 and the ballots cast, each director nominee received at least 97.14% of the shares voted in favor of his or her election. I therefore declare that the 13 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 97.98% of the holders of shares represented in person or by proxy at the meeting. I would now like to present the members of our 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 our 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. Shauneen Bruder, Donald J. Carty, Ambassador Gordon D. Giffin, Julie Godin, Edith E. Holiday, Maureen Kempston Darkes, the Honorable Denis Losier, the Honorable Kevin Lynch, James O'Connor, Robert Phillips, Laura Stein, Luc Jobin, and I am Robert Pace, and I'm the chair of the CN board of directors. Ladies and gentlemen, these are your elected directors. As we have completed all of the business to come before this meeting, I will entertain a motion to conclude the formal part of this meeting.
Doug MacDonald, would you kindly introduce a motion to that effect?
Mr. Chairman, my name is Doug MacDonald, and I am a shareholder of the company, and I move that the formal part of this meeting be concluded.
Thanks, Doug. Paul Deegan, could you second that motion?
Mr. Chairman, my name is Paul Deegan. I'm a shareholder of the company, and I second the motion.
Thanks, Paul. All those in favor of the motion, please raise your right hand. I declare the motion carried. Thank you. We now have time for a general question period. We invite any shareholder or proxy holder of the company who has a question to come forward and use the four 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.
In order to allow the maximum number of shareholders who wish to ask questions to participate, we ask that you keep your question short. Anyone who wants to ask for more than one question will be asked to hold his or her second question until anyone else that wants to ask a question has had the opportunity to do so. Prior to asking your question, please state your name and whether you are a shareholder or a proxy holder of the company.
Mr. Chairman, my name is Seth Lazucani. I'm a shareholder of the company. Intermodal is one of the growth sectors at CN. Can you tell us a bit more about the prospect in that area, please?
Thank you for the question, Seth. Yeah, I mean, this is an intermodal sector is one where we have made great headway in the last several years.
We have grown share, and we have grown the business, and we continue to invest by identifying new destinations for overseas intermodal product to find their way in Canada and in the United States. So we're looking forward to growing the business in sectors such as the Gulf Coast, New Orleans, and Mobile, Alabama, as well as we've just recently opened a new terminal in Duluth, Minnesota. So we continue to grow the business. It is a business which has a high service requirement. So that actually bodes well because we have been really increasing the service levels, and that's how we have actually attracted more business to CN, and we continue to see this as a sector of growth. So we're actually growing both on the overseas side of the intermodal business as well as the domestic.
Yesterday, in our investor call, we did share with our investors some of the recent acquisitions we made in terms of customer relationships. On the intermodal overseas side, we have started to do business back in January of this year with Yang Ming. This is one of our new customers. On the domestic front, we have started to serve an increasing level of the Canadian Tire business domestically as well as the Lowe's RONA account. All in all, what we're seeing just for the immediate future is growth in business just from these three accounts somewhere in the range of $100 million on an annual basis. It continues to be a high growth area for us. It is very competitive. We do compete with other railways and also with the trucking industry.
But this is where continued innovation, continued improvement, and efficient service really makes a difference. So we're actually looking forward to a long and successful growth path on the intermodal front. So thank you for your questions, Seth.
Second question.
Good morning, Mr. Chairman. My name is Russell Marcoux. As a shareholder of the company, I have a question for management. Based on your significantly increased volumes, I'm wondering if you can expand and share with us what trends you are seeing in the broader Canadian and North American economy.
Thank you for your question, Russell. Actually, the growth that we have experienced in the first quarter is indicative of some fairly broad-based growth patterns which we're seeing. I mentioned earlier the intermodal franchise, which continues to grow. And that intermodal franchise is mostly driven by consumers.
So this is a lot of consumer goods that we get that are either moved domestically across North America or coming from Asia to serve all of our needs. So we continue to see a good and resilient economy both in Canada and the U.S. Consumers are continuing to invest in housing. So the housing sector, specifically in the U.S., Canada is probably going to slow down a little bit with some of the constraints that some of the local governments have introduced in Vancouver as well as in Toronto. But housing continues to be solid. The energy business is also making a little bit of a comeback as well as the coal business. Global prices have actually gone up, which is encouraging growth in our business, namely in the frac sand area, which helps the horizontal drilling process for shales.
The coal, we have seen two mines reopen on the West Coast in terms of met coal, which is exported to Asia. The grain business, actually, both in Canada and the U.S., continue to do very well. Yields have been increasing over time, and so we think that that's actually going to bode well for us. Potash, very strong demand. The automotive sector is actually starting to level off, but we have gained significant share, and we have a great franchise across North America. Also, we're seeing good demand in natural gas liquids. That's butane and propane, namely. So we're optimistic. We actually see a fairly good and broad-based demand level for most of the commodities. There's no question that there is volatility. And so as the price of oil bounces up and down, that can bring some sudden changes to the demand levels.
That's one of the reasons why, and Ghislain was explaining earlier, we need to be nimble. So we need to seize the opportunities when we see one particular sector starting to really grow quickly. At the same time, as soon as the prices come down on some of the commodities, people retrench very quickly. So we have to adjust our level of resources accordingly. So all in all, I would say that we're optimistic for the outlook in 2017. We've actually raised our target for volumes to be up around 10% in terms of revenue ton miles, which is our proxy for volume growth. And in fact, we've also raised our guidance in terms of earnings growth, as Ghislain mentioned. So we're optimistic. The visibility longer term is always a little bit challenging to do. There are a few issues on the horizon in terms of the lumber business.
We saw the American government introduce a 20% duty on softwood lumber coming from Canada. So we'll have to see how that particular sector will adapt and adjust. We continue to be optimistic in terms of the NAFTA discussions. There's a lot of saber rattling going on, a lot of posturing. But when you get down to the basic facts, Canada and the U.S. are extremely good and extremely valuable trading partners and what is a very successful relationship. So there may be a number of areas where there's adjustments to be made, but by and large, a lot of the wealth and the success of North America has been built on NAFTA. So we, again, we're optimistic on that front. Thank you for your question.
Okay. Any other questions?
Hello. I'm Cameron Smith, and I'm a shareholder here from Regina. So thanks for coming here.
My question is, there's been some stuff in the media about the closure, the company that's serving the port at Churchill. And I saw on the map there that CN does have a line up there. What's our investment in that line in that port, and do you see a future for that port as a northern port for Canada?
Thank you for your question, Mr. Smith. The Our line actually doesn't reach all the way up to Churchill. That line was operated by a short line railway, which is no longer operating it. So they decided to close the line. Unfortunately, the demand patterns for volume to go up to Churchill are not what they were historically. And in that sense, it's very difficult to see. It's a high cost to maintain these branch lines.
This is a perfect example of why long-term, to be successful, you really have to invest. To invest, you have to have a certain level of volume. That, I think, is the predicament that the short rail operator is finding himself in. There are a number of discussions that are underway. We certainly have the track that leads up to interchange with whoever would own the line up to Churchill. We're working closely with potential investors in order to facilitate bringing the line back in operation. We hope that there'll be some opportunity to resume service there. We, at this point, unfortunately, do not have an interest in investing ourselves, but we do want to facilitate others to pave the way for resumption of the operation of the line. We'll have to see.
The government has not, as indicated, that they didn't intend to invest themselves. So it has to fall under either First Nations, which have expressed some interest, and potentially other private investors.
Thank you for your question.
For the company. In the media lately, there's been talk about rail crew fatigue. I'm a recently retired locomotive engineer. I'm just wondering, going forward, what are your plans as far as time pools and other strategies going forward to reduce the fatigue on the rail crews?
Good question, Doug. And as a locomotive engineer, you certainly understand how demanding that job is. We're actually working very, very closely with the TSB, the Transportation Safety Board.
As a matter of fact, Mike Cory, who's here today, has actually launched a new pilot to actually try to understand sleeping patterns and how employees' metabolism actually performs during the course of not just the work shift, but throughout time, and how we can better look at safety in that context. So this is not an area where there's been a lot of research, certainly from the railway standpoint, but we're tapping in on what's going on in the airline business and other areas where transportation and humans actually participate. So we're looking at that closely. We are trying to make sure in our own practices that if issues do come up, we address them promptly. We haven't adopted an approach which is to push people beyond their limits.
And what we have done is we've actually invested in ensuring that we had the proper level of resources so that if people actually do want to work overtime, that's fine. That's their choice. But we have well-trained and hopefully well-rested individuals that pick up the role every time their shift comes up. So more to come on that. I think what we want to do is we want to use research to help inform whatever changes might be required. And so we've brought in experts from outside working with the TSB. So I think there's encouraging signs that we may be able to come up with some breakthroughs.
Those may actually indicate that it's back to a little bit of the lifestyle and how people do we get the most and the most productive level and awareness and acuity level in our employees as they perform their task. So more to come, but it is top of mind for us and clearly an area that we hope to have some breakthrough in the next year or so. Thank you for your question, Doug.
Any other questions? Okay. Well, I want to thank all of you for attending today and have a safe day and a great day. Thank you.