Good morning, and welcome to the CSX Corporation 2019 Annual Meeting of Shareholders. I would now like to turn the conference over to John Zillmore, Chairman of the Board. Please go ahead, sir.
Good morning, and welcome to the CSX Annual Meeting of Shareholders. I am John Zellmer, Chairman of the CSX Board of Directors, and I hereby call this meeting to order. I will serve as Chairman of today's meeting and Nathan D. Goldman, Executive Vice President, Chief Legal Officer and Corporate Secretary, will act as the meeting secretary. We are excited to be hosting our first ever virtual meeting.
The Board believes that a virtual meeting format will provide the opportunity for participation by all shareholders, from any location around the world while substantially reducing the costs associated with hosting an in person meeting. As is our custom, we will conduct the business portion of our meeting first, then conduct a question and answer session. During the question and answer session, we will answer questions submitted in advance of the meeting and questions that are received during the meeting as time permits. Before we begin the business of the meeting, it's my pleasure to introduce the members of your Board of Directors. Donna M.
Alvarado, Founder and current President of Geely International, a business consulting firm Pamela L. Carter, former President of Cummins Distribution, a division of Cummins Incorporated, a designer, manufacturer and marketer of diesel engines and related components and power systems James M. Foote, President and Chief Executive Officer of CSX Stephen T. Halverson, former Chairman of the Board and Chief Executive Officer of the Haskell Corporation, one of the largest design and construction firms in the country Paul C. Hilal, Founder and Managing Member of Mantle Ridge LP, an Investment Advisory Firm John D.
MacPherson, Former President and Chief Operating Officer of Florida East Coast Railway Linda H. Riefler, Former Chairman of Global Research at Morgan Stanley and Stephen Whisler, Retired Chairman Chief Executive Officer of Phillips Dodge Corporation, a Mining and Manufacturing Company. Unable to join us today is David M. Moffett, former Chief Executive Officer and Director of the Federal Home Loan Mortgage Corporation. I'd also like to introduce key officers who are with us today.
Of course, Jim Foote, who I've already introduced Nathan Goldman, who I've already introduced in addition, Edmund Del Harris, Executive Vice President of Operations Frank Winegro, Executive Vice President and Chief Financial Officer Diana Sorkly, Executive Vice President and Chief Administrative Officer and Mark Wallace, Executive Vice President, Sales and Marketing. The rules of conduct for the meeting have been posted to the virtual meeting website. The cooperation in following these rules will allow us to treat all shareholders fairly ensure that we can conduct an orderly meeting. With that, I now declare the voting polls to be open and ask our secretary to make the appropriate presentations at this time. Nathan?
Today's meeting is being held pursuant to a notice included with the CSX proxy statement and sent to CSX shareholders on or about March 22, 2019. Our tabulator, Broadridge Financial Solutions, has previously advised that a majority of the company's total outstanding shares are represented here today. A report of the Inspector of Elections to that effect will be filed with the minutes of this meeting. As a result, we have a quorum and can proceed with the business of the meeting. A list of holders of the company's common stock at the close of business on March 4, the record date for this meeting, certified by Broadridge Corporate Issuer Solutions as our transfer agent and registrar, will also be filed with the records of the company and is available for inspection by any shareholder.
I would now like to outline the voting procedures. Only CSX shareholders as of the close of business on March 4, which is the record date for this meeting are entitled to vote. If you have already submitted a proxy, you do not need to vote again unless you wish to change your vote. If you have not yet submitted a proxy or if you would like to change your vote and you are participating in the meeting via the virtual meeting web portal, you may do so now by clicking the Vote Here button on your screen. Once all items of business have been addressed and shareholders have been provided an opportunity to submit their votes online, the Chairman will close the polls for voting.
The preliminary vote totals will be outlined, but the final vote totals will not be known until the inspector certifies its tabulation after the meeting. Those final results will be reported by the company and on Form 8 ks to be filed with the Securities and Exchange Commission within 4 business days following the meeting. We will announce the preliminary results, however, at the end of the meeting. There are 4 items listed in the notice for shareholder action at today's meeting: the election of directors ratification of Ernst and Young as the company's independent registered public accounting firm for 2019 the consideration of an advisory resolution to approve compensation for the company's named executive officers and the approval of the CSX 2019 stock and incentive award plan. The first item of business is the election of directors to hold office until the 2020 Annual Meeting of Shareholders or until their successors are duly qualified and elected.
The directors standing for election were introduced earlier and additional information about each nominee is contained in your proxy materials. If you have not done so already, please enter your vote now for the election of directors. We will now move on to item 2, the ratification of the appointment of the independent registered public accountants. Based on the recommendation of the Audit Committee, the Board of Directors has reappointed Ernst and Young as the company's registered public accounting firm for the year 2019 and is requesting shareholder ratification at this meeting. Steve Nichols, coordinating partner of Ernst and Young is with us today and available to respond to any questions you may have during the question and answer session following the business of the meeting.
If you have not already done so, please enter your vote regarding the ratification of Ernst and Young as the company's registered public accounting firm. The next item, item 3 is an advisory resolution to approve compensation for the company's named executive officers. In accordance with the requirements set forth in the Dodd Frank Act, we are providing shareholders with the opportunity to vote on a non binding advisory resolution to approve the compensation of our named executive officers as described in our proxy statement. The company's executive compensation program is designed to align executive pay with the company's financial performance and the creation of sustainable long term shareholder value. We will now vote on the following resolution.
Resolved that the shareholders of CSX Corporation, the company, approve on an advisory non binding basis the compensation of the company's named executive officers as disclosed in the compensation discussion and analysis, the accompanying compensation tables and the related narrative disclosure in the proxy statement. If you have not done so already, please enter your vote in regards to the compensation of the named executive officers. The final item on the agenda, item 4, is the approval of the CSX 2019 Stock and the company provides equity based incentive awards designed to align employee interests with those of shareholders. In this regard, the Board is seeking shareholder approval of the CSX 2019 Stock and Incentive Award Plan, which gives the company the ability to provide these incentives through issuances of stock, restricted stock, stock options and other stock based awards. The 2019 stock and incentive award plan is intended to replace the company's existing compensation plan, which was previously approved by shareholders and is set to expire in 2020.
More information regarding the 2019 stock and incentive award plan can be found in your proxy materials. If you have not already done so, please enter your vote regarding the approval of the CSX 2019 stock and incentive award plan. That concludes all items on the agenda for shareholder action at the meeting. Any shareholder who has not yet voted or who wishes to change their vote should do so now by clicking on the voting button on the web portal and follow the instructions
provided. Shareholders who
have sent in proxies for voted via the telephone or Internet and do not want to change their vote do not need to take any further action. We will pause for a moment to allow shareholders to submit their votes. I would now like to turn the meeting back over to Mr. Zilmer.
Thank you, Nathan. Now that everyone has had the opportunity to vote, I now declare the polls closed 2019 Annual Meeting of Shareholders. And at this time, I'd like to invite Jim Foote to take a few minutes to discuss our business.
Jim? Thanks, John, and thank everyone for participating in today's annual meeting. Before we begin the question and answer period, I'd like to take a moment to recognize the tremendous progress CSX has made toward our goal of becoming the best run railroad in North America. I can say that your company is operating better than at any time in its history. We are improving our safety performance, delivering a very high quality service to our customers and setting industry records for efficiency.
This formula is producing very strong cash flows, which allows us to reinvest in the railroad, pursue unique growth and productivity opportunities and return cash to you, the owners of CSS. None of this would be possible without the dedication and perseverance of the best railroaders in the business. I am extremely proud of what CSX employees have achieved, and I am very excited about what I know they can deliver in the future. There is still much to be done, and CSX will remain relentless in the pursuit of continuously improving our premium service product. By offering customers superior service, we are able to earn more of their business and deliver sustainable long term growth.
Thank you for sharing this journey with us and having confidence in our Board and management team. We remain committed to rewarding your confidence. Now I'll turn it back over to Nathan, who will moderate the Q and A session.
Thank you, Jim.
For those
of you participating via the web portal, you can submit a question by typing your question in the Ask a Question field on your screen and click Submit. The first will begin with questions submitted in advance of today's meeting, and then we'll respond to any questions that might be asked during this time. Please note, we will answer as many questions as time permits. In accordance with the rules of conduct for the meeting, we ask that you limit your questions to matters relevant to the business of the company. Following the meeting, all appropriate questions submitted in accordance with the rules of conduct will be published on the company's website, including those who are unable to get to during today's meeting.
Now to the first question. With the significant reductions in assets and headcount over the last few years, what are the next steps? And how does the company plan to grow revenues?
Yes. Sorry, Nathan. Our service product has improved. We have been able to intensify our focus on leveraging our superior service to grow our merchandise business and become a much more effective competitor to the highway. As part of our merchandise growth strategy, we made key additions to the leadership team and completed a restructuring of our sales and marketing group.
The realigned sales and marketing organization is part of a continuing effort to build a highly skilled team focused on finding creative ways to address our customers' key transportation needs and drive profitable sustained growth. On the intermodal side of the business, we have long term relationships with various channel partners and are interested in jointly developing transportation solutions that are going to make us both more competitive in the marketplace. We have significant advantages in terms of cost and long haul moves, and we will continue to look to our partners to leverage that. Our growth over the past 12 months in the merchandise business segment is directly related to the fact that we now have a product that customers can and are willing to rely upon. We're gaining a large share of the transportation spend every day and hopefully, that will continue.
We will continue our aggressive transformation with emphasis on top line growth.
Our next question relates to disposition of assets. In the last few years, CSX has sold off a number of assets. Will the company continue to divest itself of rail lines going forward?
Jeff? Okay, Nathan. We continue to evaluate every aspect of our network and operations to be sure that all assets are maximized for efficiency and add value to the company's long term business strategy. When we identify underutilized lines and assets, we will continue consider options to monetize some of those assets with the right partner. The goal of our line sales program is to obtain the highest value for non core line segments after a thorough evaluation of each line's traffic, customers, potential value and impact on network efficiency.
Ultimately, the line sales program benefits all customers by enabling us to focus on improving service performance on the core network through higher velocity, faster equipment turns and greater consistency.
Thank you, Jim. We have a question now about the company's police force. I understand CSX has its own police force. What types of matters do they handle and how does their work differ from that of local law enforcement? And I'll go ahead and take this question.
The CSS Police Force actually dates back to 18/50 with the original predecessor railroad, the B and O. That police force now in its current form plays really a vital role in protecting the safety of our employees and the communities in which we operate. They protect CSX personnel, critical infrastructure, property and the public against criminal acts and the threat of terrorism and sabotage. Our special agents handle many of the same crimes as local law enforcement, assault from assault and battery to burglary and theft, but they also have a major advantage for investigating railroad related crimes, because crimes against the railroad typically cover many jurisdictions. So our agents have the authority to pursue enforcement across jurisdictional boundaries that would be a barrier for traditional law enforcement.
The CSX Police also serves as a liaison to local, state and federal agencies in many of our communities on safety and service issues, such as trespassing, homelessness and first responder training and education. In addition, the CSX Police participate in public safety activities, including Operation Lifesaver, an education and awareness organization dedicated to ending collisions, fatalities and injuries at highway rail, rail crossings and along railroad rights of way. Moving to our next question. Does the CSX Board strive to increase diversity in the boardroom?
I'll take this one. Certainly, Nathan, diversity and inclusion are vital to the success of our business, and we are proud as the women leaders on our Board. As part of our succession planning efforts, the Board seeks candidates with varied age, gender, cultural and ethnic backgrounds, who add to the overall diversity and viewpoint of the Board. In addition to making our company stronger at the highest level of leadership, the diverse Board sets an example for the entire organization. At all levels of the organization, we embrace and promote diversity of all types through inclusion groups, development programs, recruiting initiatives and a wide range of cultural recognition.
Thanks, John. Next question. How is compensation set for craft employees? The CSX benchmark its compensation against other Class 1 railroads. Diana, would you like to take this?
My pleasure, Nathan. We have a strong sense of shared purpose at CSX and a keen awareness that our talented people drive the company's success. To that end, recognizing our employees with competitive compensation and benefits is an important way we collectively celebrate our results. CSX engages in collective bargaining to address matters such as compensation and benefits for our union employees. We participate with the National Railway Labor Conference, which is an association of all U.
S. Class 1 freight railroads and smaller freight and passenger lines. In addition to national bargaining, the conference represents the railroads in the administration of the point 6,000,000,000 industry wide health and welfare plans for rail employees. We have also negotiated pay for performance provisions locally for employees represented by the Brotherhood of Locomotive Engineers Teamsters. Pay for performance provisions provide bonus opportunities, which supplement general wage increases that are tied to our company's business success.
We believe that giving employees the opportunity to earn more in those years that the railroad is doing well contributes to a shared interest in the company's success.
Thank you, Giana. All right, we've had a question come in online. The question is, what is CSX doing to prevent trespass deaths, including suicide?
Jim? Sure, Nathan. I'll try to answer that question. We're very active in our communities across our network with our own CSF sponsored programs as well as industry initiatives like Operation Lifesaver, which attempts to constantly advise the communities and people who are on or near our tracks of the dangers associated with being there and what the consequences could be as a result of that. So we are constantly trying to keep people away from the network to the best of our abilities as well as again, involve ourselves in any kind of community awareness programs and programs associated with those people who may use the railroad system to harm themselves to avoid those situations where we can.
Thank you, Jim. And Mr. Chairman, that concludes our question and answer session. Any questions that came in online that have not yet been answered will be posted to the Annual Meeting page at css.com.
Thank you, Nate. Do we have an indication of the proxy vote totals previously received?
Yes, sir. Mr. Chairman, based on the votes received and counted, it appears that first, all the nominees for election to the Board have been elected second, the appointment of Ernst and Young as the company's independent registered public accounting firm for 2019 has been ratified. And 3rd item, the resolution on the advisory shareholder vote on the compensation of CSX's named executive officers has been approved. And finally, the CSX 2019 Stock and Incentive Award Plan has been approved.
There being no further business items to address, I'll turn the meeting back over to the Chairman.
Thank you, Nathan, and thank you all for participating today. The CSX 2019 Annual Meeting of Shareholders is now adjourned.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.