Union Pacific Annual Report 2023

Plain-text annual report

Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 FORM 10-K(Mark One)☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2023OR☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from __________ to ____________ Commission File Number 1-6075 UNION PACIFIC CORPORATION(Exact name of registrant as specified in its charter)Utah 13-2626465(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 1400 Douglas Street, Omaha, Nebraska68179(Address of principal executive offices)(Zip Code) Registrant’s telephone number, including area code: (402) 544-5000 Securities registered pursuant to Section 12(b) of the Act:Title of each ClassTrading SymbolName of each exchange on which registeredCommon Stock (Par Value $2.50 per share)UNP New York Stock Exchange Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.☑Yes ☐ NoIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.☐Yes ☑ NoIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was requiredto file such reports), and (2) has been subject to such filing requirements for the past 90 days.☑Yes ☐ NoIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to besubmitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for suchshorter period that the registrant was required to submit such files).☑Yes ☐ NoIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, asmaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “acceleratedfiler,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large Accelerated Filer ☑ Accelerated Filer ☐Non-Accelerated Filer ☐ Smaller Reporting Company ☐ Emerging Growth Company☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition periodfor complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of theeffectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements ofthe registrant included in the filing reflect the correction of an error to previously issued financial statements.☐Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to§240.10D-1(b).☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).☐Yes ☑ NoAs of June 30, 2023, the aggregate market value of the registrant’s Common Stock held by non-affiliates (using the New YorkStock Exchange closing price) was $123.0 billion. The number of shares outstanding of the registrant’s Common Stock as of February 2, 2024, was 609,777,914.Table of Contents Documents Incorporated by Reference – Portions of the registrant’s definitive Proxy Statement for the Annual Meeting ofShareholders to be held on May 9, 2024, are incorporated by reference into Part III of this report. The registrant’s ProxyStatement will be filed with the Securities and Exchange Commission (SEC) within 120 days after the end of the fiscal yearthat this report relates pursuant to Regulation 14A. UNION PACIFIC CORPORATIONTABLE OF CONTENTS CEO’s Letter3 Directors and Senior Management4 PART I Item 1.Business5Item 1A.Risk Factors10Item 1B.Unresolved Staff Comments16Item 1C.Cybersecurity16Item 2.Properties18Item 3.Legal Proceedings20Item 4.Mine Safety Disclosures21 Executive Officers of the Registrant and Principal Executive Officers of Subsidiaries22 PART II Item 5.Market for the Registrant’s Common Equity, Related Stockholder Matters, and IssuerPurchases of Equity Securities23Item 6.[Reserved]24Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations24 Critical Accounting Estimates24 Cautionary Information38Item 7A.Quantitative and Qualitative Disclosures About Market Risk39Item 8.Financial Statements and Supplementary Data40 Report of Independent Registered Public Accounting Firm41Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure72Item 9A.Controls and Procedures72 Management’s Annual Report on Internal Control Over Financial Reporting72 Report of Independent Registered Public Accounting Firm73Item 9B.Other Information74Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections74 PART III Item 10.Directors, Executive Officers, and Corporate Governance74Item 11.Executive Compensation74Item 12.Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters75Item 13.Certain Relationships and Related Transactions, and Director Independence75Item 14.Principal Accountant Fees and Services75 PART IV Item 15.Exhibit and Financial Statement Schedules75Item 16.Form 10-K Summary79 Signatures80 Certifications81 2Table of Contents February 9, 2024 Fellow Shareholders: As Union Pacific shareholders, we own a piece of history. Over the course of 161 years, our Company is built to handleinevitable changes and challenges of business cycles while seeking ways to innovate and grow. 2023 was no different. This year, I assumed the role of Chief Executive Officer, and Lance Fritz retired after a distinguished career. At that time, wealso split the roles of Chairman and CEO and Mike McCarthy, was named Chairman of the Board of Directors. Thetransition was seamless, a credit to the Board, Lance, and the management team. Since becoming CEO, I have focused the team on a multi-year strategy of “Safety + Service & Operational Excellence =Growth.” Safety must always be our first area of focus, returning everyone home safely each day. Service is all aboutdelivering what we sold our customers, committing to what we can do and doing it with excellence. Operational Excellenceis about operating efficiently and productively while maintaining a buffer to handle ups and downs of railroading. In the second half of 2023, we achieved great momentum as the team united to deliver a shared strategy. Our fourth quarteroperating metrics were the best of the year. We exited the year with a stronger service product and fluid network. OurFourth Quarter financial results also demonstrated momentum as we achieved sequential quarterly margin improvement.For 2023, we reported earnings per diluted share of $10.45, a 7% decrease versus 2022, reflecting 1% lower volumes andan operating ratio increase of 220 basis points. To support our service product and growth, we invested $3.7 billion back intoour network. Soft consumer markets, continued inflationary pressures, and new labor agreements all impacted financialresults. As we turn the page to 2024, we are looking at the opportunities ahead. The entire Union Pacific team is focused on beingthe industry’s best in safety, service, and operational excellence. That strategy leads to long-term growth and provides youwith industry-leading returns on your investment. It’s how we win. We understand that we hold the keys to an iconic company that helped Build America. We are propelled by that historyand recognize we have an important responsibility to deliver for our stakeholders. We are grateful for this opportunity andthank you for your ownership of Union Pacific Chief Executive Officer 3Table of Contents DIRECTORS AND SENIOR MANAGEMENT BOARD OF DIRECTORS William J. DeLaneyFormer Chief Executive Officer -Sysco CorporationBoard Committees: Compensationand Benefits (Chair); Safety andService Quality David B. DillonFormer Chairman and CEO - TheKroger CompanyBoard Committees: Audit (Chair);Corporate Governance, Nominating,and Sustainability Sheri H. EdisonFormer Executive Vice President andGeneral Counsel - Amcor plcBoard Committees: Compensationand Benefits; Corporate Governance,Nominating, and Sustainability(Chair) Teresa M. FinleyFormer Chief Marketing andBusiness Services Officer - UnitedParcel Service, Inc.Board Committees: Audit; Finance Deborah C. HopkinsFormer Chief Executive Officer - CitiVentures and Former Chief InnovationOfficer - CitiBoard Committees: Compensationand Benefits; Finance (Chair) Jane H. LuteStrategic Advisor - SICPA, NorthAmericaBoard Committees: Audit; Safety andService Quality (Chair) Michael R. McCarthyChairman - Union Pacific Corporationand Union Pacific RailroadCompany; Chairman - McCarthyGroup, LLC; and Co-Chairman -Bridges Trust CompanyBoard Committees: CorporateGovernance, Nominating, andSustainability; Finance Doyle R. SimonsFormer President and CEO -Weyerhaeuser CompanyBoard Committees: Compensationand Benefits; Safety and ServiceQuality John K. Tien, Jr.Former Deputy Secretary - U.S.Department of Homeland SecurityBoard Committees: PendingAssignment V. James VenaChief Executive Officer - UnionPacific Corporation and Union PacificRailroad Company John P. WiehoffFormer Chairman, President, andCEO - C.H. Robinson Worldwide,Inc.Board Committees: Audit; Safety andService Quality Christopher J. WilliamsChairman - Siebert Williams Shank &Co.Board Committees: Audit; Finance SENIOR MANAGEMENT V. James VenaChief Executive Officer Prentiss W. Bolin, Jr.Vice President - External Relations Bryan L. ClarkVice President - Tax Eric J. Gehringer*Executive Vice President -Operations Rebecca B. Gregory*Vice President and Chief of Staff Jennifer L. HamannExecutive Vice President and ChiefFinancial Officer Rahul JalaliExecutive Vice President and ChiefInformation Officer Michael V. MillerVice President and Treasurer Craig V. RichardsonExecutive Vice President, Chief LegalOfficer, and Corporate Secretary Kenny G. Rocker*Executive Vice President - Marketingand Sales Todd M. RynaskiSenior Vice President and ChiefAccounting, Risk, and ComplianceOfficer Elizabeth F. WhitedPresident *For Union Pacific Railroad Company only. 4Table of Contents PART I Item 1. Business GENERAL Union Pacific Railroad Company is the principal operating company of Union Pacific Corporation. One of America's mostrecognized companies, Union Pacific Railroad Company connects 23 states in the western two-thirds of the country by rail,providing a critical link in the global supply chain. The Railroad’s diversified business mix includes Bulk, Industrial, andPremium. Union Pacific serves many of the fastest-growing U.S. population centers, operates from all major West Coast andGulf Coast ports to Eastern gateways, connects with Canada's rail systems, and is the only railroad serving all six majorMexico gateways. Union Pacific provides value to its roughly 10,000 customers by delivering products in a safe, reliable, fuel-efficient, and environmentally responsible manner. Union Pacific Corporation was incorporated in Utah in 1969 and maintains its principal executive offices at 1400 DouglasStreet, Omaha, NE 68179. The telephone number at that address is (402) 544-5000. The common stock of Union PacificCorporation is listed on the New York Stock Exchange (NYSE) under the symbol “UNP”. For purposes of this report, unless the context otherwise requires, all references herein to "Union Pacific", “UPC”,“Corporation”, “Company”, “we”, “us”, and “our” shall mean Union Pacific Corporation and its subsidiaries, including UnionPacific Railroad Company, which we separately refer to as “UPRR” or the “Railroad”. STRATEGY Safety, Service, and Operational Excellence supports the Company's long term initiative to Grow its freight volumes (Safety +Service & Operational Excellence = Growth). Together as a team, the Company will focus on achieving the best safety recordin the industry, being known for superior service, grounded in operational excellence which, in turn, drives growth. Safety is paramount and, as our first area of focus, sets the foundation for achieving the Company's objectives. The mindsetand culture are built around a personal commitment by all employees to prioritize safety so everyone goes home safely. Service is all about delivering what we sold our customers. We work with our customers to understand the service they needto win in their markets and then drive how we win together. We commit to these service levels and do it with excellence. Operational Excellence is about operating efficiently and productively. We will drive value with our available resources, butalso maintain a buffer so our service is resilient, managing the inevitable ups and downs that come with weather, fluctuatingvolumes, and securing growth. Execution of our strategy to be the industry leader in both safety and service leads to revenue growth with improved marginsand greater cash generation, creating long term enterprise value. The result will be strong financial performancedriving significant shareholder returns. As we work to transform our railroad, our core values continue to guide us. Our passion for performance will help us win; ourhigh ethical standards ensure we win in a way that supports all of our stakeholders; and our teamwork ensures we wintogether. OPERATIONS The Railroad, along with its subsidiaries and rail affiliates, is our one reportable operating segment. Although we provide andanalyze revenues by commodity group, we treat the financial results of the Railroad as one segment due to the integratednature of our rail network. Additional information regarding our business and operations, including revenues, financialinformation and data, and other information regarding environmental matters, is presented in Risk Factors, Item 1A; LegalProceedings, Item 3; Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 7; andthe Financial Statements and Supplementary Data, Item 8. 5Table of Contents Operations – UPRR is a Class I railroad operating in theU.S. We have 32,693 route miles, connecting PacificCoast and Gulf Coast ports with the Midwest and EasternU.S. gateways and providing several corridors to keyMexican and Canadian gateways. We serve the westerntwo-thirds of the country and maintain coordinatedschedules with other rail carriers to move freight to andfrom the Atlantic Coast, the Pacific Coast, the Southeast,the Southwest, Canada, and Mexico. Export and importtraffic moves through Gulf Coast, Pacific Coast, and EastCoast ports and across the Mexican and Canadianborders. In 2023, we generated freight revenues totaling$22.6 billion from the following three commodity groups:2023 Freight Revenues Bulk – The Company's Bulk shipments consist of grain and grain products, fertilizer, food and refrigerated, and coal andrenewables. In 2023, this group generated 33% of our freight revenues. We access most major grain markets, connecting theMidwest and Western U.S. producing areas to export terminals in the Pacific Northwest and Gulf Coast ports as well asMexico. We also serve significant domestic markets, including grain processors, animal feeders, ethanol, and renewablebiofuel producers in the Midwest and West. Fertilizer movements originate in the Gulf Coast region, Midwest, Western U.S.,and Canada (through interline access) for delivery to major agricultural users in those areas as well as abroad. The Railroad’snetwork supports the transportation of coal shipments to independent and regulated power companies and industrial facilitiesthroughout the U.S. Through interchange gateways and ports, UPRR’s reach extends to Eastern U.S. utilities as well as toMexico and other international destinations. Coal traffic originating in the Powder River Basin (PRB) area of Wyoming is thelargest portion of the Railroad’s coal business. Renewable shipments for customers committed to sustainability consistprimarily of biomass exports and wind turbine components. Industrial – Our extensive network facilitates the movement of numerous commodities between thousands of origin anddestination points throughout North America. The Industrial group consists of several categories, including construction,industrial chemicals, plastics, forest products, specialized products (primarily waste, salt, and roofing), metals and ores,petroleum, liquid petroleum gases (LPG), soda ash, and sand. Transportation of these products accounted for 36% of ourfreight revenues in 2023. Commercial, residential, and governmental infrastructure investments drive shipments of steel,aggregates, cement, and wood products. Industrial and light manufacturing plants receive steel, nonferrous materials,minerals, and other raw materials. The industrial chemicals market consists of a vast number of chemical compounds that support the manufacturing of morecomplex chemicals. Plastics shipments support automotive, housing, and the durable and disposable consumer goodsmarkets. Forest product shipments include lumber and paper commodities. Lumber shipments originate primarily in thePacific Northwest or Western Canada and move throughout the U.S. for use in new home construction and repairs andremodeling. Paper shipments primarily support packaging needs. Oil and gas drilling generates demand for raw steel, finishedpipe, stone, and drilling fluid commodities. The Company’s petroleum and LPG shipments are primarily impacted by refineryutilization rates, regional crude pricing differentials, pipeline capacity, and the use of asphalt for road programs. Soda ashoriginates in southwestern Wyoming and California, destined for chemical and glass producing markets in North America andabroad. Premium – In 2023, Premium shipments generated 31% of Union Pacific’s total freight revenues. Premium includes finishedautomobiles, automotive parts, and merchandise in intermodal containers, both domestic and international. Internationalbusiness consists of import and export traffic moving in 20 or 40-foot shipping containers, that mainly pass through WestCoast ports, destined for one of the Company's many inland intermodal terminals. Domestic business includes container andtrailer traffic picked up and delivered within North America for intermodal marketing companies (primarily shipper agents andlogistics companies) as well as truckload carriers. We are the largest automotive carrier west of the Mississippi River and operate or access 39 vehicle distribution centers. TheRailroad’s extensive franchise accesses six vehicle assembly plants and connects to West Coast ports, all six major Mexicogateways, and the Port of Houston to accommodate both import and export shipments. In addition to transporting finishedvehicles, the Company provides expedited handling of automotive parts in both boxcars and intermodal containers destinedfor Mexico, the U.S., and Canada. 6Table of Contents Seasonality – Some of the commodities we carry have peak shipping seasons, reflecting either or both the nature of thecommodity (such as certain agricultural and food products that have specific growing and harvesting seasons) and thedemand cycle for the commodity (such as intermodal traffic that generally peaks during the third quarter to meet back-to-school and holiday-related demand for consumer goods during the fourth quarter). The peak shipping seasons for thesecommodities can vary considerably each year depending upon various factors, including the strength of domestic andinternational economies and currencies; consumer demand; the strength of harvests, which can be adversely affected bysevere weather; market prices for agricultural products; and supply chain disruptions. Proud & Engaged Workforce – Our employees are central to our Safety + Service & Operational Excellence = Growthstrategy, and investing in our workforce is key to our success. Our People: Our award-winning, multigenerational workforce includes talented people from all walks of life, in many stages oflife. Made up of management and craft professionals, we are focused on attracting, retaining, and developing talent across ourentire system. As of December 31, 2023, the Company employed 32,973 employees. Our workforce includes five generations fromTraditionalists (born before 1946) to Generation Z (born after 1998). The average age is 46.6 with average tenure of 15.9 years. Union Pacific works with 13 major rail unions, representing approximately 85% of our workforce. The National CarriersConference Committee of the National Railway Labor Conference, consisting of the top labor officers in most Class I railroads,is the bargaining committee for the industry. Railroads are governed by the Railway Labor Act (RLA), a federal statuteenacted in 1926 to bring the railroads and unions to agreement without disruptions to rail transportation. The RLA includesnumerous safeguards to help overcome bargaining stalemates. The next round of negotiations begins on January 1, 2025,related to years 2025-2029. Our Culture: We incorporate our commitment to safety, diversity and inclusion, high ethical standards, passion forperformance, and teamwork into our day-to-day operations as we serve our customers. Safety is central to everything we do at Union Pacific. Together, we are committed to cultivating a safety-focused culture, soour employees return home safely every day. To achieve this, our employees identify risks, initiate action to mitigate thoserisks, and have the courage to care to keep each other safe. Our success is measured by our personal injury rate (the number of reportable injuries for every 200,000 employee-hoursworked) and our derailment incident rate (the number of reportable derailment incidents per million train miles). Reportablepersonal injuries are defined as on duty incidents or occupational illnesses that result in employees losing time away fromwork, modifying or restricting their normal duties, or receiving any medical treatment above and beyond first aid. Reportablederailment incidents are defined as any occurrence where a wheel of a locomotive or rail car falls off the track and causesdamage to track, equipment, or structures above the Federal Railroad Administration (FRA) reporting threshold, regardless ofownership ($11,500 for 2023 and $12,000 for 2024) per million train miles. Personal injuries and derailment incidents thatmeet reportable criteria are reported to the FRA. Our 2023 personal injury rate of 1.17 deteriorated 4%, while our derailment incident rate of 2.72 improved 6% versus 2022.(See further discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 7,of this report.) Diversity, Equity, and Inclusion: Union Pacific’s commitment to diversity and inclusion is based on our desire to create anenvironment where people can be their best, personally and professionally. We believe that a diverse and supportive cultureincreases employee engagement, improves morale, and allows qualified employees to succeed and contribute to UnionPacific's success. All of this supports our safety strategy and improves the quality of decision-making, problem-solving, andstrategic thinking. Union Pacific’s commitment, today and for the future, is to further improve and strengthen performance through an inclusiveworkforce that reflects the diverse markets and communities we serve, where everyone is treated fairly, differences are valued,and talent is recognized and rewarded. To that end, Union Pacific intends to maintain its standards of hiring and promotingbased on merit, while aspiring to reach 40% people of color and double our female representation to 11% in our workforce by2030. As of December 31, 2023, workforce representation of people of color and females was approximately 33.8% and5.5%, respectively. 7Table of Contents The Employee Journey: From recruitment to retirement and milestones in between, we are relentlessly focused onsupporting and engaging employees throughout their Union Pacific journey. We view it as imperative to invest in ouremployees with meaningful benefit offerings, developmental experiences, and career opportunities. The process begins with recruitment, where we strive to attract the most talented and diverse employees to join ourteam. Then, we focus on training and development, which includes courses and programs designed to help our employeesgrow into new roles and/or learn a new skill in their current role so that we can retain our workforce over time. Providing competitive compensation and meaningful benefits is key to attracting and retaining talented employees. UnionPacific is committed to continuously reviewing its compensation programs and comprehensive benefits programs to promoteprograms that are fair and competitive. Both are key to enhancing the value of working for Union Pacific and demonstratingthe Company’s commitment to the health and wealth of employees during their career. Benefits vary based on the applicablecollective bargaining agreement or an employee’s management status. The final stage of the employee journey is a fulfillingretirement, which is enabled during their UP career through our compensation and benefit programs, particularly contributionsto 401(k) plans and the employee stock purchase plan (ESPP). Our Board of Directors evaluates our non-union compensation plans and reviews recommendations from the Compensationand Benefits Committee, while collective bargaining agreements govern compensation for our union employees. The medianannual compensation for all employees employed as of December 31, 2023, was $108,244 (excluding the CEO). Talent is critical - our ability to recruit and retain employees is directly tied to our railroad’s fluidity. Without team members todispatch, operate trains, and maintain our infrastructure, our network struggles to provide customers efficient, reliable service.We are focused on effectively managing workforce levels to the demands of the business and improving quality of life for ouremployees. Therefore, we continue to hire to backfill attrition and handle growth as needed. Railroad Security – Our security efforts consist of a wide variety of measures, including employee training, engagement withour customers, training of emergency responders, and partnerships with numerous federal, state, and local governmentagencies. While federal law requires us to protect the confidentiality of our security plans designed to safeguard againstterrorism and other security incidents, the following provides a general overview of our security initiatives. UPRR Security Measures – We maintain a comprehensive security plan designed to both deter and respond to any potentialor actual threats as they arise. The plan includes four levels of alert status, each with its own set of countermeasures. Weemploy our own police force, consisting of commissioned and highly-trained officers. The police are certified state lawenforcement officers with investigative and arrest powers. The Union Pacific Police Department has achieved accreditationunder the Commission on Accreditation for Law Enforcement Agencies, Inc. (CALEA) for complying with the highest lawenforcement standards. Our employees undergo recurrent security and preparedness training as well as federally mandatedhazardous materials and security training. We regularly review the sufficiency of our employee training programs. Wemaintain the capability to move critical operations to back-up facilities in different locations. We operate an emergency response management center 24 hours a day. The center receives reports of emergencies,dangerous or potentially dangerous conditions, and other safety and security issues from our employees, the public, lawenforcement, and other government officials. In cooperation with government officials, we monitor both threats and publicevents, and, as necessary, we may alter rail traffic flow at times of concern to minimize risk to communities and ouroperations. We comply with the hazardous materials routing rules and other requirements imposed by federal law. We designour operating plan to expedite the movement of hazardous material shipments to minimize the time rail cars remain idle atyards and terminals located in or near major population centers. Additionally, in compliance with Transportation SecurityAdministration (TSA) regulations, we deployed information systems and instructed employees in tracking and documentingthe handoff of Rail Security Sensitive Materials with customers and interchange partners. We established a number of our own innovative safety and security-oriented initiatives ranging from various investments intechnology to The Officer on Train program, which provides local law enforcement officers with the opportunity to ride with traincrews to enhance their understanding of railroad operations and risks. Our staff of information security professionalscontinually assess cybersecurity risks and implement mitigation programs that evolve with the changing technology threatenvironment. To date, we have not experienced any material disruption of our operations due to a cyber threat or incidentdirected at us. 8Table of Contents Cooperation with Federal, State, and Local Government Agencies – We work closely on physical and cybersecurity initiativeswith government agencies, including the U.S. Department of Transportation (DOT); the Federal Bureau of Investigation (FBI);the Department of Homeland Security (DHS), along with its Cybersecurity and Infrastructure Security Agency (CISA) and theTSA; as well as local police departments, fire departments, and other first responders. Based on guidance from the TSA, starting from January 1, 2022, we were obligated to report cyber incidents to CISA.Additionally, we appointed cybersecurity coordinators, conducted a self-assessment of our cyber vulnerabilities, and put inplace a plan to respond to cyber incidents. We are currently awaiting approval of our security plan before progressing with theestablishment of a cybersecurity assessment plan, which will describe how the Company proactively and regularly evaluatesthe effectiveness of our cybersecurity measures as well as identify and address any weaknesses in our devices, networks,and systems. In conjunction with the Association of American Railroads (AAR), we sponsor Ask Rail, a mobile application that provides firstresponders with secure links to electronic information, including commodity and emergency response information required byemergency personnel to respond to accidents and other situations. We also participate in the National Joint Terrorism TaskForce, a multi-agency effort established by the U.S. Department of Justice and the Federal Bureau of Investigation to combatand prevent terrorism. We work with the Coast Guard, U.S. Customs and Border Protection (CBP), and the Military Transport ManagementCommand, which monitor shipments entering the UPRR rail network at U.S. border crossings and ports. We were the firstrailroad in the U.S. to be named a partner in CBP’s Customs-Trade Partnership Against Terrorism, a partnership designed todevelop, enhance, and maintain effective security processes throughout the global supply chain. Cooperation with Customers and Trade Associations – Through TransCAER (Transportation Community Awareness andEmergency Response), we work with the AAR, the American Chemistry Council, the American Petroleum Institute, and otherchemical trade groups to provide communities with preparedness tools, including the training of emergency responders. Incooperation with the FRA and other interested groups, we are also working to develop additional improvements to tank cardesign that will further limit the risk of releases of hazardous materials. Sustainable Future – Union Pacific believes it is important that we act as environmental stewards, reducing greenhouse gas(GHG) emissions and supporting the transition to a more sustainable future. While we work to further reduce ourenvironmental footprint, it is important to note that railroads already are one of the most fuel-efficient means of transportation.Freight rail leads other forms of surface transportation when it comes to minimizing GHG emissions, and we expect rail willcontinue to play a critical role in mitigating and abating the impacts of climate change. According to the AAR, moving freightby rail instead of truck reduces GHG emissions by up to 75%. Therefore, converting freight transportation from truck to railtypically results in an immediate reduction in our customers' scope 3 GHG emissions. Competition – see “We Face Competition from Other Railroads and Other Transportation Providers” in the Risk Factors inItem 1A of this report. Key Suppliers – see “We Are Dependent on Certain Key Suppliers of Locomotives and Rail” in the Risk Factors in Item 1Aof this report. Available Information – Our Internet website is www.up.com. We make available free of charge on our website (under the“Investors” caption link) our Annual Reports on Form 10-K; our Quarterly Reports on Form 10-Q; our current reports on Form8-K; our proxy statements; Forms 3, 4, and 5, filed on behalf of our directors and certain executive officers; and amendmentsto such reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the Exchange Act). Weprovide these reports and statements as soon as reasonably practicable after such material is electronically filed with, orfurnished to, the SEC. We also make available on our website previously filed SEC reports and exhibits via a link to EDGARon the SEC’s Internet site at www.sec.gov. Additionally, our corporate governance materials, including By-Laws, BoardCommittee charters, governance guidelines and policies, and codes of conduct and ethics for directors, officers, andemployees are available on our website. From time to time, the corporate governance materials on our website may beupdated as necessary to comply with rules issued by the SEC and the NYSE or as desirable to promote the effective andefficient governance of our Company. Any security holder wishing to receive, without charge, a copy of any of our SEC filingsor corporate governance materials should send a written request to: Secretary, Union Pacific Corporation, 1400 DouglasStreet, Omaha, NE 68179. 9Table of Contents References to our website address, in this report, including references in Management’s Discussion and Analysis of FinancialCondition and Results of Operations, Item 7, are provided as a convenience and do not constitute, and should not bedeemed, an incorporation by reference of the information contained on, or available through, the website. Therefore, suchinformation should not be considered part of this report. GOVERNMENTAL AND ENVIRONMENTAL REGULATION Governmental Regulation – Our operations are subject to a variety of federal, state, and local regulations, generallyapplicable to all businesses. (See also the discussion of certain regulatory proceedings in Legal Proceedings, Item 3.) The operations of the Railroad are subject to the regulations of the FRA and other federal and state agencies as well as theregulatory jurisdiction of the Surface Transportation Board (STB). The STB has jurisdiction over rates charged on certainregulated rail traffic; common carrier service of regulated traffic; freight car compensation; transfer, extension, or abandonmentof rail lines; and acquisition of control of rail common carriers. The STB continues its efforts to explore expanding railregulation and is reviewing proposed rulemaking in various areas, including reciprocal switching and commodity exemptions,and has finalized rules creating new procedures for smaller rate complaints that are being reviewed in appellate courts. TheSTB also continues to explore changes to the methodology for determining railroad revenue adequacy, the possible uses ofrevenue adequacy in regulating railroad rates, and ways to regulate service, including by use of emergency service orders.The STB posts quarterly reports on rate reasonableness cases, maintains a database on service complaints, and has theauthority to initiate investigations, among other things. DOT, the Occupational Safety and Health Administration, the Pipeline and Hazardous Materials Safety Administration, andDHS, along with other federal agencies, have jurisdiction over certain aspects of safety, movement of hazardous materials andhazardous waste, emissions requirements, and equipment standards. Additionally, various state and local agencies havejurisdiction over disposal of hazardous waste and seek to regulate movement of hazardous materials in ways not preemptedby federal law. Environmental Regulation – We are subject to extensive federal and state environmental statutes and regulationspertaining to public health and the environment. The statutes and regulations are administered and monitored by theEnvironmental Protection Agency (EPA) and by various state environmental agencies, such as the California Air ResourcesBoard (CARB) and the Texas Commission on Environmental Quality (TCEQ), among others. The primary laws affecting ouroperations are the Resource Conservation and Recovery Act, regulating the management and disposal of solid and hazardouswastes; the Comprehensive Environmental Response, Compensation, and Liability Act, regulating the cleanup ofcontaminated properties; the Clean Air Act, regulating air emissions; and the Clean Water Act, regulating wastewaterdischarges. Information concerning environmental claims and contingencies and estimated remediation costs is set forth inManagement’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates- Environmental, Item 7, and Note 17 to the Financial Statements and Supplementary Data, Item 8. Item 1A. Risk Factors The following discussion addresses significant factors, events, and uncertainties that make an investment in our securitiesrisky and provides important information for the understanding of our “forward-looking statements,” which are discussedimmediately preceding Item 7A of this Form 10-K and elsewhere. The risk factors set forth in this Item 1A should be read inconjunction with the rest of the information included in this report, including Management’s Discussion and Analysis ofFinancial Condition and Results of Operations, Item 7, and Financial Statements and Supplementary Data, Item 8. We urge you to consider carefully the factors described below and the risks that they present for our operations as well asthe risks addressed in other reports and materials that we file with the SEC and the other information included or incorporatedby reference in this Form 10-K. When the factors, events, and contingencies described below or elsewhere in this Form 10-Kmaterialize, our business, reputation, financial condition, results of operations, cash flows, or prospects can be materiallyadversely affected. In such case, the trading price of our common stock could decline and you could lose part or all of yourinvestment. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may alsomaterially adversely affect our business, reputation, financial condition, results of operations, cash flows, and prospects. 10Table of Contents Strategic and Operational Risks We Must Manage Fluctuating Demand for Our Services and Network Capacity – Significant reductions in demand for railservices with respect to one or more commodities or changes in consumer preferences that affect the businesses of ourcustomers can lead to increased costs associated with resizing our operations, including higher unit operating costs andcosts for the storage of locomotives, rail cars, and other equipment; workforce adjustments; and other related activities, whichcould have a material adverse effect on our results of operations, financial condition, and liquidity. If there is significantdemand for our services that exceeds the designed capacity of our network or shifts in traffic flow that are contrary to thedesigned capacity of our network, we may experience network difficulties, including congestion and reduced velocity, thatcould compromise the level of service we provide to our customers. This level of demand also may compound the impact ofweather and weather-related events on our operations and velocity. Although we continue to work to improve ourtransportation plan, add capacity, improve operations at our yards and other facilities, and improve our ability to addresssurges in demand for any reason by carrying a resource buffer, we cannot be sure that these measures will fully oradequately address any service shortcomings resulting from demand exceeding our planned capacity. We may experienceother operational or service difficulties related to network capacity, dramatic and unplanned fluctuations in our customers’demand for rail service with respect to one or more commodities or operating regions, or other events that could negativelyimpact our operational efficiency, which could all have a material adverse effect on our results of operations, financialcondition, and liquidity. We Transport Hazardous Materials – We transport certain hazardous materials and other materials, including crude oil,ethanol, and toxic inhalation hazard (TIH) materials, such as chlorine, that pose certain risks in the event of a release orcombustion. Additionally, U.S. laws impose common carrier obligations on railroads that require us to transport certainhazardous materials regardless of risk or potential exposure to loss. A rail accident or other incident or accident on ournetwork, at our facilities, or at the facilities of our customers involving the release or combustion of hazardous materials couldinvolve significant costs and claims for personal injury, property damage, and environmental penalties and remediation inexcess of our insurance coverage for these risks, which could have a material adverse effect on our results of operations,financial condition, and liquidity. We Rely on Technology and Technology Improvements in Our Business Operations – We rely on information technology in allaspects of our business, including technology systems operated by us or under control of third-parties. If we do not havesufficient capital or do not deploy sufficient capital in a timely manner to acquire, develop, or implement new technology ormaintain or upgrade current systems, such as Positive Train Control (PTC) or the latest version of our transportation controlsystems, we may suffer a rail service outage or competitive disadvantage within the rail industry and with companies providingother modes of transportation service, which could have a material adverse effect on our results of operations, financialcondition, and liquidity. We Are Subject to Cybersecurity Risks – We rely on information technology in all aspects of our business, includingtechnology systems operated by us (whether created by us or purchased), under control of third-parties, and open-sourcesoftware. Although we devote significant resources to protect our technology systems and proprietary data, we haveexperienced and will likely continue to experience varying degrees of cyber incidents in the normal course of business. Therecan be no assurance that the systems we have designed to identify, prevent, or limit the effects of cyber incidents will besufficient to prevent or detect such incidents, or to avoid a material adverse impact on our systems after such incidents dooccur. Furthermore, due to the rising numbers and increasing sophistication of cyber-attacks, an increasingly complexinformation technology supply chain, and the nature of zero-day exploits, we may be unable to anticipate or implementadequate measures to prevent a security breach, including by ransomware or as a result of human error or other cyber-attackmethods, from materially affecting our systems or the systems of third-parties upon which we rely. A cyber incident thatresults in significant service interruption; safety failure; other operational difficulties; unauthorized access to (or the loss ofaccess to) competitively sensitive, confidential, or other critical data or systems; loss of customers; financial losses;regulatory fines; reputational harm; or misuse or corruption of critical data and proprietary information, could have a materialadverse impact on our results of operations, financial condition, and liquidity. We may experience security breaches thatcould remain undetected for an extended period and, therefore, have a greater impact on us. Additionally, we may be exposedto increased cybersecurity risk because we are a component of the critical U.S. infrastructure. 11Table of Contents Severe Weather Could Result in Significant Business Interruptions and Expenditures – As a railroad with a vast network, weare exposed to severe weather conditions and other natural phenomena, including earthquakes, hurricanes, fires, floods,mudslides or landslides, extreme temperatures, avalanches, and significant precipitation, and climate change may cause orcontribute to the severity or frequency of such weather conditions. Line outages and other interruptions caused by theseconditions has in the past and can in the future adversely affect parts or all of our entire rail network, potentially negativelyaffecting revenues, costs, and liabilities, despite efforts we undertake to plan for these events. Our revenues can also beadversely affected by severe weather that causes damage and disruptions to our customers. These impacts caused bysevere weather could have a material adverse effect on our results of operations, financial condition, and liquidity. A Significant Portion of Our Revenues Involves Transportation of Commodities to and from International Markets – Althoughrevenues from our operations are attributable to transportation services provided in the U.S., a significant portion of ourrevenues involves the transportation of commodities to and from international markets, including Mexico, Canada, andSoutheast Asia, by various carriers and, at times, various modes of transportation. Significant and sustained interruptions oftrade with Mexico, Canada, or countries in Southeast Asia, including China, could adversely affect customers and otherentities that, directly or indirectly, purchase or rely on rail transportation services in the U.S. as part of their operations, andany such interruptions, including international armed conflicts such as the Russia-Ukraine and Israel-Hamas wars, could havea material adverse effect on our results of operations, financial condition, and liquidity. Any one or more of the following couldcause a significant and sustained interruption of trade with Mexico, Canada, or countries in Southeast Asia: (a) adeterioration of security for international trade and businesses; (b) the adverse impact of new laws, rules, and regulations orthe interpretation of laws, rules, and regulations by government entities, courts, or regulatory bodies, including the UnitedStates-Mexico-Canada Agreement (USMCA) or other international trade agreements; (c) actions of taxing authorities thataffect our customers doing business in foreign countries; (d) any significant adverse economic developments, such asextended periods of high inflation, material disruptions in the banking sector or in the capital markets of these foreigncountries, and significant changes in the valuation of the currencies of these foreign countries that could materially affect thecost or value of imports or exports; (e) shifts in patterns of international trade that adversely affect import and export markets;(f) a material reduction in foreign direct investment in these countries; and (g) public health crises, including the outbreak ofpandemic or contagious disease, such as the coronavirus and its variant strains (COVID). We Are Dependent on Certain Key Suppliers of Locomotives and Rail – Due to the capital-intensive nature and sophisticationof locomotive equipment, parts, and maintenance, potential new suppliers face high barriers to entry. Therefore, if one of thedomestic suppliers of locomotives discontinues manufacturing locomotives, supplying parts, or providing maintenance for anyreason, including bankruptcy or insolvency or the inability to manufacture locomotives that meet efficiency or regulatoryemissions standards, we could experience significant cost increases and reduced availability of the locomotives that arenecessary for our operations. Additionally, we utilize a limited number of steel producers that meet our specifications. Rail iscritical to our operations for rail replacement programs, maintenance, and for adding additional network capacity, new rail andstorage yards, and expansions of existing facilities. This industry similarly has high barriers to entry, and if one of thesesuppliers discontinues operations for any reason, including bankruptcy or insolvency, we could experience both significantcost increases for rail purchases and difficulty obtaining sufficient rail for maintenance and other projects. Changes to tradeagreements or policies that result in increased tariffs on goods imported into the United States could also result in significantcost increases for rail purchases and difficulty obtaining sufficient rail. Workforce Risks Strikes or Work Stoppages Could Adversely Affect Our Operations – The U.S. Class I railroads are party to collectivebargaining agreements with various labor unions. The majority of our employees belong to labor unions and are subject tothese agreements. Disputes over the terms of these agreements or our potential inability to negotiate acceptable contractswith these unions can lead to, among other things, strikes, work stoppages, slowdowns, or lockouts, which could cause asignificant disruption of our operations and have a material adverse effect on our results of operations, financial condition, andliquidity. Additionally, future national labor agreements, or renegotiation of labor agreements or provisions of labor agreements,could compromise our service reliability or significantly increase our costs for health care, wages, and other benefits, whichcould have a material adverse impact on our results of operations, financial condition, and liquidity. Labor disputes, workstoppages, slowdowns, or lockouts at loading/unloading facilities, ports, or other transport access points could compromiseour service reliability and have a material adverse impact on our results of operations, financial condition, and liquidity. Labordisputes, work stoppages, slowdowns, or lockouts by employees of our customers or our suppliers could compromise ourservice reliability and have a material adverse impact on our results of operations, financial condition, and liquidity. 12Table of Contents The Availability of Qualified Personnel Could Adversely Affect Our Operations – Changes in demographics, trainingrequirements, and pandemic illnesses or restrictions could negatively affect the availability of qualified personnel for us, ourcustomers, and throughout the supply chain. Our ability to quickly react to other factors that affect our ability to attract andretain employees may be restricted due to limited flexibility to make unilateral changes to collective bargaining agreements,which cover the majority of our workforce. Unpredictable increases in demand for rail services and a lack of network fluiditymay exacerbate our risks, which could have a negative impact on our operational efficiency and otherwise have a materialadverse effect on our results of operations, financial condition, and liquidity. Legal and Regulatory Risks We Are Subject to Significant Governmental Regulation – We are subject to governmental regulation by a significant numberof federal, state, and local authorities covering a variety of health, safety, labor, environmental, economic (as discussedbelow), tax, and other matters. Many laws and regulations require us to obtain and maintain various licenses, permits, andother authorizations, and we cannot guarantee that we will continue to be able to do so. Our failure to comply with applicablelaws and regulations could have a material adverse effect on us. Governments or regulators may change the legislative orregulatory frameworks that we operate in without providing us any recourse to address any adverse effects on our business,including, without limitation, regulatory determinations or rules regarding dispute resolution, increasing the amount of ourtraffic subject to common carrier regulation, business relationships with other railroads, use of embargoes, calculation of ourcost of capital or other inputs relevant to computing our revenue adequacy, the prices we charge, changes in tax rates,enactment of new tax laws, and revision in tax regulations. Significant legislative activity in Congress or regulatory activity bythe STB could expand regulation of railroad operations and pricing for rail services, which could reduce capital spending onour rail network, facilities, and equipment, and have a material adverse effect on our results of operations, financial condition,and liquidity. We May Be Subject to Various Claims and Lawsuits That Could Result in Significant Expenditures – As a railroad withoperations in densely populated urban areas and a vast rail network, we are exposed to the potential for various claims andlitigation related to labor and employment, personal injury, property damage, environmental liability, and other matters. Anymaterial changes to litigation trends or a catastrophic rail accident or series of accidents involving any or all of propertydamage, personal injury, and environmental liability that exceed our insurance coverage for such risks could have a materialadverse effect on our results of operations, financial condition, and liquidity. In addition, some of these matters could impactthe cost of obtaining, or availability in general, of insurance coverage meant to cover these types of risks. We Are Subject to Significant Environmental Laws and Regulations – Due to the nature of the railroad business, ouroperations are subject to extensive federal, state, and local environmental laws and regulations concerning, among otherthings, emissions to the air; discharges to waters; handling, storage, transportation, and disposal of waste and othermaterials; and hazardous material or petroleum releases. We generate and transport hazardous and non-hazardous waste inour operations. Environmental liability can extend to previously owned or operated properties, leased properties, propertiesowned by third-parties, as well as properties we currently own. Environmental liabilities have arisen and may also arise fromclaims asserted by adjacent landowners or other third-parties in toxic tort litigation. We have been and may be subject toallegations or findings that we have violated, or are strictly liable under, these laws or regulations. We currently have certainobligations at existing sites for investigation, remediation, and monitoring, and we likely will have obligations at other sites inthe future. We maintain adequate reserves for liabilities for these obligations, but fluctuations of potential costs affect ourestimates based on our experience and, as necessary, the advice and assistance of our consultants. However, actual costsmay vary from our estimates due to any or all of several factors, including changes to environmental laws or interpretations ofsuch laws, technological changes affecting investigations and remediation, the participation and financial viability of otherparties responsible for any such liability, and the corrective action or change to corrective actions required to remediate anyexisting or future sites. We could incur significant costs as a result of any of the foregoing, and we may be required to incursignificant expenses to investigate and remediate known, unknown, or future environmental contamination, which could havea material adverse effect on our results of operations, financial condition, and liquidity. 13Table of Contents Macroeconomic and Industry Risks We Face Competition from Other Railroads and Other Transportation Providers – We face competition from other railroads,motor carriers, ships, barges, and pipelines. Our main railroad competitor is Burlington Northern Santa Fe LLC. Its primarysubsidiary, BNSF Railway Company (BNSF), operates parallel routes in many of our main traffic corridors. In addition, weoperate in corridors served by other railroads and motor carriers. Motor carrier competition exists in all three of ourcommodity groups. Because of the proximity of our routes to major inland and Gulf Coast waterways, barges can beparticularly competitive, especially for grain and bulk commodities in certain areas where we operate. In addition to pricecompetition, we face competition with respect to transit times, quality, and reliability of service from motor carriers and otherrailroads. Motor carriers in particular can have an advantage over railroads with respect to transit times and timeliness ofservice. However, railroads are much more fuel-efficient than trucks, which reduces the impact of transporting goods on theenvironment and public infrastructure, and we have been making efforts to convert truck traffic to rail. Additionally, we mustbuild or acquire and maintain our rail system, while trucks, barges, and maritime operators are able to use public rights-of-way maintained by public entities. Any of the following could also affect the competitiveness of our transportation services forsome or all of our commodities, which could have a material adverse effect on our results of operations, financial condition,and liquidity: (a) improvements or expenditures materially increasing the quality or reducing the costs of these alternativemodes of transportation, such as autonomous or more fuel efficient trucks, (b) legislation that eliminates or significantlyincreases the size or weight limitations applied to motor carriers, or (c) legislation or regulatory changes that imposeoperating restrictions on railroads or that adversely affect the profitability of some or all railroad traffic. Many movements faceproduct or geographic competition where our customers can use different products (e.g., natural gas instead of coal, sorghuminstead of corn) or commodities from different locations (e.g., grain from states or countries that we do not serve, crude oilfrom different regions). Sourcing different commodities or different locations allows shippers to substitute different carriers andsuch competition may reduce our volume or constrain prices. Additionally, any future consolidation of the rail industry couldmaterially affect our competitive environment. We May Be Affected by Climate Change and Market or Regulatory Responses to Climate Change – Climate change,including the impact of global warming and transition risks involving policy, legal risks, and market risks, could have amaterial adverse effect on our results of operations, financial condition, and liquidity over both a long-term and near-termbasis. Restrictions, caps, taxes, or other controls on emissions of GHGs, including diesel exhaust, could significantlyincrease our operating costs. Restrictions on emissions could also affect our customers that (a) use commodities that wecarry to produce energy, (b) use significant amounts of energy in producing or delivering the commodities we carry, or (c)manufacture or produce goods that consume significant amounts of energy or burn fossil fuels, including chemical producers,farmers and food producers, and automakers and other manufacturers. Significant cost increases, government regulation, orchanges of consumer preferences for goods or services relating to alternative sources of energy, emissions reductions, andGHG emissions could materially affect the markets for the commodities we carry and demand for our services, which in turncould have a material adverse effect on our results of operations, financial condition, and liquidity. Government incentivesencouraging the use of alternative sources of energy also could affect certain of our customers and the markets for certain ofthe commodities we carry in an unpredictable manner that could alter our traffic patterns, including, for example, increasingroyalties charged to producers of PRB coal by the U.S. Department of Interior and the impacts of ethanol incentives onfarming and ethanol producers. We could face increased costs related to defending and resolving legal claims and otherlitigation or complying with laws or regulations related to climate change and the alleged impact of our operations on climatechange. Violent weather caused by climate change, including hurricanes, fires, floods, extreme temperatures, avalanches,and significant precipitation has in the past and could in the future cause line outages and other interruptions to ourinfrastructure. Any of these factors, individually or in operation with one or more of the other factors, or other unpredictableimpacts of climate change could reduce the amount of traffic we handle and have a material adverse effect on our results ofoperations, financial condition, and liquidity. Our efforts to achieve emission reduction targets could significantly increase ouroperational costs and capital expenditures. In addition, stakeholder expectations regarding some of these matters may beevolving and there may be differing views among stakeholders, which could harm our reputation or increase our costs. 14Table of Contents Our Business, Financial Condition, and Results of Operations have been Adversely Affected, and in the Future, Could beMaterially Adversely Affected by Pandemics or Other Public Health Crises – Pandemics, epidemics, and other outbreaks ofdisease can have significant and widespread impacts. As we saw during the peaks of the COVID pandemic, outbreaks ofdisease can cause a global slowdown of economic activity (including the decrease in demand for a broad variety of goods),disruptions in global supply chains, and significant volatility and disruption of financial markets, resulting further in adverseeffects on workforces, customers, and regional and local economies. The impact of pandemics or public health crises on ourresults of operations and financial condition may depend on numerous evolving factors, including, but not limited to:governmental, business, and individuals’ actions that have been and continue to be taken in response to a global pandemic orother public health crises (including restrictions on travel and transport, workforce pressures, social distancing, and shelter-in-place orders); the effect of a pandemic or other public health crises on economic activity and actions taken in response; theeffect on our customers and their demand for our services; the effect of a pandemic or other public health crises on the credit-worthiness of our customers; national or global supply chain challenges or disruption; facility closures; commodity costvolatility; general macroeconomic uncertainty in key global markets and financial market volatility; global economic conditionsand levels of economic growth; and the pace of recovery as the pandemic subsides as well as response to a potentialreoccurrence. Further, a pandemic or other public health crises, and the volatile regional and global economic conditionsstemming from such an event, could also precipitate and aggravate the other risk factors that we identify, which couldmaterially adversely affect our business, financial condition, results of operations (including revenues and profitability), and/orstock price. Additionally, a pandemic or other public health crises also may affect our operating and financial results in amanner that is not presently known to us or that we currently do not consider to present significant risks to our operations. Financial Risks We Are Affected By Fluctuating Fuel Prices – Fuel costs constitute a significant portion of our transportation expenses.Diesel fuel prices can be subject to dramatic fluctuations, and significant price increases could have a material adverse effecton our operating results. Although we currently are able to recover a significant amount of our fuel expenses from ourcustomers through revenues from fuel surcharges, we cannot be certain that we will always be able to mitigate rising orelevated fuel costs through our fuel surcharges. Additionally, future market conditions or legislative or regulatory activitiescould adversely affect our ability to apply fuel surcharges or adequately recover increased fuel costs through fuel surcharges.As fuel prices fluctuate, our fuel surcharge programs trail such fluctuations in fuel prices by approximately two months, andmay be a significant source of quarter-over-quarter and year-over-year volatility, particularly in periods of rapidly changingprices. International, political, and economic factors, events and conditions, including international armed conflicts such asthe Russia-Ukraine and Israel-Hamas wars, affect the volatility of fuel prices and supplies. Weather can also affect fuelsupplies and limit domestic refining capacity. A severe shortage of, or disruption to, domestic fuel supplies could have amaterial adverse effect on our results of operations, financial condition, and liquidity. Alternatively, lower fuel prices could havea positive impact on the economy by increasing consumer discretionary spending that potentially could increase demand forvarious consumer products we transport. However, lower fuel prices could have a negative impact on other commodities wetransport, such as coal and domestic drilling-related shipments, which could have a material adverse effect on our results ofoperations, financial condition, and liquidity. We Rely on Capital Markets – Due to the significant capital expenditures required to operate and maintain a safe and efficientrailroad, we rely on the capital markets to provide some of our capital requirements. We utilize long-term debt instruments,bank financing, and commercial paper, and we pledge certain amount of our receivables as collateral for credit. Significantinstability or disruptions of the capital markets, including, among other things, elevated interest rates in the credit marketsand/or changes in interest rates, or deterioration of our financial condition due to internal or external factors could restrict orprohibit our access to, and significantly increase the cost of, commercial paper and other financing sources, including bankcredit facilities and the issuance of long-term debt, including corporate bonds. A significant deterioration of our financialcondition could result in a reduction of our credit rating to below investment grade, which could restrict us from utilizing ourcurrent receivables securitization facility (Receivables Facility). This may also limit our access to external sources of capitaland significantly increase the costs of short and long-term debt financing. General Risk Factors We Are Affected by General Economic Conditions – Prolonged, severe adverse domestic and global macroeconomicconditions or disruptions of financial and credit markets, including, for example, the recessionary fears, inflationary pressures,and elevated interest rates we are seeing in the current economic environment, may affect the producers and consumers ofthe commodities we carry and may have a material adverse effect on our access to liquidity, results of operations, andfinancial condition. 15Table of Contents We May Be Affected by Acts of Terrorism, War, or Risk of War – Our rail lines, facilities, and equipment, including rail carscarrying hazardous materials, could be direct targets or indirect casualties of terrorist attacks. Terrorist attacks, or othersimilar events, any government response thereto, and war or risk of war may adversely affect our results of operations,financial condition, and liquidity. In addition, insurance premiums for some or all of our current coverages could increasedramatically, or certain coverages may not be available to us in the future. Item 1B. Unresolved Staff Comments None. Item 1C. Cybersecurity Risk Management and Strategy The Company is subject to cybersecurity threats that could have a material adverse impact on our results of operations,financial condition, and liquidity. See also our discussion in the Risk Factors in Item 1A of this report. As a component of ourCompany-wide enterprise risk management framework, we implemented a cybersecurity program whose objective is toassess, identify, and manage risks from cybersecurity threats that may result in adverse effects on the confidentiality,integrity, and availability of the electronic information systems that we own. We regularly perform internal securityassessments, engage third-party consultants to conduct external security assessments, and participate in, conduct, and/oradminister exercises, drills, and recovery tests as part of this program. We also maintain training programs and policies andprocedures designed to safeguard employee handling and use of data, internet usage, controlled access measures, andphysical protections. We consult with industry groups, monitor threat intelligence reports, and communicate with variousgovernment agencies in an effort to stay up-to-date on changes in the cybersecurity threat landscape. This program, inaddition to addressing our own information systems, is also designed to oversee, identify, and reduce the potential impact ofa security incident at a third-party service provider or that otherwise impacts third-party technology and systems we use. Internal Cybersecurity Team The Company’s internal information security organization (Internal Cybersecurity Team), led by our Executive VicePresident and Chief Information Officer (CIO) as well as the Assistant Vice President and Chief Information Security Officer(CISO), is responsible for coordinating all aspects of the Company’s electronic information security systems, includingprevention, detection, mitigation, and remediation of cybersecurity incidents, as well as implementing, monitoring, andmaintaining our enterprise-wide security strategy, standards, architecture, policies, and processes. Our CIO reports directlyto our Chief Executive Officer, our CISO reports to our CIO, and reporting to our CISO are our Deputy Chief InformationSecurity Officer (Deputy CISO) and other experienced information security personnel responsible for various parts of ourbusiness. In addition to our internal cybersecurity capabilities, we also periodically engage assessors, consultants, auditors,and other third parties to assist with assessing, identifying, and managing cybersecurity risks. When the Company learns ofa cybersecurity incident at a third-party service provider, the Company’s respective department contacts maintaincommunication with the third-party service provider and communicate any cybersecurity incidents to the CISO. Security Policy and Requirements As part of the Company’s Crisis Management Plan, the Company's cybersecurity Incident Response Plan (the IRP) providesa framework for responding to cybersecurity incidents. The IRP sets out a coordinated approach to discovering, investigating,containing, tracking, mitigating, and remediating cybersecurity incidents, including a framework for elevating and reportingfindings and keeping senior management and other key stakeholders informed and involved, based on assessments regardingthe scope or significance of incidents. The IRP applies to the Company’s extended computing environment,including electronic information resources that are owned or used by the Company and are routinely relied on to support ouroperations. The Internal Cybersecurity Team has robust processes and redundancies in place designed with the objective of deterring,detecting, mitigating, and responding to potential cybersecurity threats, which includes a vulnerability assessment,prioritization, and remediation program. The Internal Cybersecurity Team also performs regular system penetration testing tovalidate our security controls and assess our infrastructure and applications. All management employees take mandatoryperiodic security awareness training on the Company’s data security policies and procedures, which is supplemented byCompany-wide testing initiatives, including periodic phishing tests. Additionally, in 2023, our Board of Directors and certainmanagement employees participated in a tabletop exercise to simulate a response to a cybersecurity incident, and ourInternal Cybersecurity Team incorporated the findings from this exercise into our processes. 16Table of Contents Our information security program is designed to align our defenses and resources to identify, assess, and address morelikely and more damaging cyber events, to provide support for our organizational mission and operational objectives, and toposition us to deter, detect, mitigate, and respond to a wide variety of potential attacks in a timely fashion. Our informationsecurity program employs quantitative and qualitative approaches to evaluate the effectiveness of controls and assess theresiliency of critical computing resources. This data is combined with knowledge of common attack techniques to assess thelikelihood of components being compromised and assess potential financial implications under different scenarios. Theresults are used to help identify potentially material risks and provide insights which are taken into account when prioritizingour security initiatives. Material Cybersecurity Risks, Threats, and Incidents Due to the evolving nature of cybersecurity threats, it has and will continue to be difficult to prevent, detect, mitigate, andremediate cybersecurity incidents. While we are not aware of having experienced any material effects or reasonably likelymaterial effects on our Company, its business strategy, results of operations, or financial condition resulting fromcybersecurity threats or incidents to date, as a critical infrastructure provider, we may be a target of well-funded andsophisticated adverse actors. There can be no guarantee that we will not be the subject of future risks or incidents that havesuch an effect, or that we are not currently the subject of an undetected risk or incident that may have such an effect. We also rely on information technology and third-party vendors to support our operations, including our secure processing ofpersonal, confidential, sensitive, proprietary, and other types of information. Despite ongoing efforts to continue improvementof our and our vendors’ ability to protect against cyber incidents, we may not be able to protect all of the information systemswe use. Incidents may lead to reputational harm, revenue and client loss, legal actions, or statutory penalties, among otherconsequences. For a more detailed discussion of these risks, see our discussion in the Risk Factors in Item 1A of thisreport. Governance The Board of Directors has delegated primary oversight of the Company’s cybersecurity risk to the Audit Committee, whichreceives updates on cybersecurity risks and incidents at each regularly scheduled Audit Committee meeting from the CIO,CISO, and other members of management, as needed. When making decisions regarding director appointments andcommittee assignments, the Board of Directors takes into consideration the cybersecurity experience of directors anddirector candidates and strives to maintain cybersecurity expertise on the Board of Directors and Audit Committee. We haveprotocols by which certain cybersecurity incidents are reported to the Audit Committee and Board of Directors. At the management level, our CIO, CISO, and Deputy CISO, each of whom has extensive cybersecurity knowledge and skillsgained from over 27 years, 28 years, and 19 years of relevant work experience, respectively, head the Internal CybersecurityTeam that is responsible for implementing and maintaining cybersecurity and data protection practices across our business,with our CIO reporting directly to our Chief Executive Officer. In 2023, our CIO was appointed to serve as a member of theU.S. Cybersecurity Advisory Committee (CSAC) of the Cybersecurity and Infrastructure Security Agency (CISA), whichprovides recommendations to CISA on a range of cybersecurity issues, including corporate cyber responsibility, technologyproduct safety, and efforts to raise the baseline of cybersecurity practices for a variety of entities to enhance the UnitedStates’ cyber defense. Our CISO and Deputy CISO receive reports on cybersecurity threats from a number of experiencedinformation security professionals for various parts of our business on an ongoing basis and, in conjunction with othermanagement personnel, regularly consult on risk management measures implemented by the Company to identify andmitigate data protection and cybersecurity risks. In addition, our Risk and Compliance Committee (RCC) is responsible for oversight and support of the Company’s EnterpriseRisk Management and Compliance and Ethics programs and is comprised of the Executive Leadership Team and the SeniorVice President and Chief Accounting, Risk, and Compliance Officer (Compliance Officer). The RCC also created asubcommittee, the Enterprise Risk Management Committee (ERMC), who is charged with continually monitoring, evaluating,and managing enterprise risks. The ERMC includes the Compliance Officer, General Auditor, Vice President Law - Financeand Compliance, Vice President and Chief Safety Officer, CISO, and Assistant Vice President - Corporate Strategy. The RCCand ERMC both meet throughout the year and receive periodic updates on cybersecurity from the CISO and Deputy CISO. 17Table of Contents Item 2. Properties We employ a variety of assets in the management and operation of our rail business. Our rail network covers 23 states in thewestern two-thirds of the U.S. TRACK Our rail network includes 32,693 route miles. We own 26,110 miles and operate on the remainder pursuant to trackage rightsor leases. The following table describes track miles: As of December 31, 2023 2022 Route 32,693 32,534 Other main line 7,117 7,113 Passing lines and turnouts 3,466 3,454 Switching and classification yard lines 8,852 8,853 Total miles 52,128 51,954 HEADQUARTERS BUILDING We own our headquarters building in Omaha, Nebraska. The facility has 1.2 million square feet of space that canaccommodate approximately 4,000 employees. 18Table of Contents HARRIMAN DISPATCHING CENTER The Harriman Dispatching Center (HDC), located in Omaha, Nebraska, is our primary dispatching facility. It is linked toregional dispatching and locomotive management facilities at various locations along our network. HDC employees coordinatemoves of locomotives and trains, manage traffic and train crews on our network, and coordinate interchanges with otherrailroads. Generally, around 500 employees work on-site in the facility. In the event of a disruption of operations at HDC due toa cyber-attack, flooding or severe weather, pandemic outbreak, or other event, we maintain the capability to conduct criticaloperations at back-up facilities in different locations. RAIL FACILITIES In addition to our track structure, we operate numerous facilities, including terminals for intermodal and other freight; rail yardsfor building trains (classification yards), switching, storage-in-transit (the temporary storage of customer goods in rail carsprior to shipment), and other activities; offices to administer and manage our operations; dispatching centers to direct trafficon our rail network; crew on duty locations for train crews along our network; and shops and other facilities for fueling,maintenance, and repair of locomotives and repair and maintenance of rail cars and other equipment. The following tableincludes the major yards and terminals on our system: Major Classification YardsMajor Intermodal TerminalsNorth Platte, NebraskaJoliet (Global 4), IllinoisEnglewood (Houston), TexasGlobal II (Chicago), IllinoisNorth Little Rock, ArkansasEast Los Angeles, CaliforniaLivonia, LouisianaICTF (Long Beach), CaliforniaFort Worth, TexasMesquite, TexasRoseville, CaliforniaLathrop, CaliforniaHouston, TexasCity of Industry, CaliforniaWest Colton, CaliforniaSalt Lake City, Utah RAIL EQUIPMENT Our equipment includes owned and leased locomotives and rail cars; heavy maintenance equipment and machinery; otherequipment and tools in our shops, offices, and facilities; and vehicles for maintenance, transportation of crews, and otheractivities. As of December 31, 2023, we owned or leased the following units of equipment: Average Locomotives Owned Leased Total Age (yrs.) Multiple purpose 5,971 1,037 7,008 24.3 Switching 132 - 132 43.5 Other 14 - 14 51.2 Total locomotives 6,117 1,037 7,154 N/A Average Freight cars Owned Leased Total Age (yrs.) Covered hoppers 13,761 9,474 23,235 21.3 Open hoppers 4,846 775 5,621 36.4 Gondolas 6,396 4,492 10,888 23.1 Boxcars 3,389 7,572 10,961 32.7 Refrigerated cars 2,444 1,199 3,643 21.8 Flat cars 2,216 2,254 4,470 32.6 Other - 371 371 35.2 Total freight cars 33,052 26,137 59,189 N/A Average Highway revenue equipment Owned Leased Total Age (yrs.) Containers 47,439 545 47,984 12.2 Chassis 30,635 17,705 48,340 13.2 Total highway revenue equipment 78,074 18,250 96,324 N/A 19Table of Contents We continuously assess our need for equipment to run an efficient and reliable network. Many factors cause us to adjust thesize of our active fleets, including changes in carload volume, weather events, seasonality, customer preferences, andoperational efficiency initiatives. As some of these factors are difficult to assess or can change rapidly, we maintain a buffer toremain agile. Without the surge fleet, our ability to react quickly is hindered as equipment suppliers are limited and leadtimes to acquire equipment are long and may be in excess of a year. We believe our locomotive and freight car fleets areappropriately sized to meet our current and future business requirements. These fleets serve as the most reliable and efficientequipment to facilitate growth without additional acquisitions. Locomotive and freight car in service utilization percentages forthe year ended December 31, 2023, were 69% and 74%, respectively. CAPITAL EXPENDITURES Our rail network requires significant annual capital investments for replacement, improvement, and expansion. Theseinvestments enhance safety, support the transportation needs of our customers, improve our operational efficiency, andsupport emission reduction initiatives. Additionally, we add new equipment to our fleet to replace older equipment and tosupport growth and customer demand. 2023 Capital Program – During 2023, our capital program totaled approximately $3.7 billion. (See the cash capitalinvestments table in Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity andCapital Resources, Item 7, of this report.) 2024 Capital Plan – In 2024, we expect our capital plan to be approximately $3.4 billion, down 8% from 2023. (See furtherdiscussion of our 2024 capital plan in Management’s Discussion and Analysis of Financial Condition and Results ofOperations - Liquidity and Capital Resources, Item 7, of this report.) OTHER Equipment Encumbrances – See Note 14 and 16 to the Financial Statements and Supplementary Data, Item 8. Environmental Matters – Certain of our properties are subject to federal, state, and local laws and regulations governing theprotection of the environment. (See discussion within this report of environmental issues in Business - Governmental andEnvironmental Regulation, Item 1; Management’s Discussion and Analysis of Financial Condition and Results of Operations- Critical Accounting Estimates - Environmental, Item 7; and Note 17 to the Financial Statements and Supplementary Data,Item 8.) Item 3. Legal Proceedings From time to time, we are involved in legal proceedings, claims, and litigation that occur in connection with our business. Weroutinely assess our liabilities and contingencies in connection with these matters based upon the latest availableinformation and, when necessary, we seek input from our third-party advisors when making these assessments. Consistentwith SEC rules and requirements, we describe below material pending legal proceedings (other than ordinary routine litigationincidental to our business), material proceedings known to be contemplated by governmental authorities, other proceedingsarising under federal, state, or local environmental laws and regulations (including governmental proceedings involvingpotential fines, penalties, or other monetary sanctions in excess of $1,000,000), and such other pending matters that we maydetermine to be appropriate. ENVIRONMENTAL MATTERS We receive notices from the EPA and state environmental agencies alleging that we are or may be liable under federal orstate environmental laws for remediation costs at various sites throughout the U.S., including sites on the Superfund NationalPriorities List or state superfund lists. We cannot predict the ultimate impact of these proceedings and suits because of thenumber of potentially responsible parties involved, the degree of contamination by various wastes, the scarcity and quality ofvolumetric data related to many of the sites, and the speculative nature of remediation costs. Information concerning environmental claims and contingencies and estimated remediation costs is set forth in this report inManagement’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates- Environmental, Item 7, and Note 17 to the Financial Statements and Supplementary Data, Item 8. 20Table of Contents OTHER MATTERS Antitrust Litigation – As we reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, 20 railshippers (many of whom were represented by the same law firms) filed virtually identical antitrust lawsuits in various federaldistrict courts against us and four other Class I railroads in the U.S. Currently, UPRR and three other Class I railroads are thenamed defendants in the lawsuits. The original plaintiff filed the first of these claims in the U.S. District Court in New Jerseyon May 14, 2007. These suits alleged that the named railroads engaged in price-fixing by establishing common fuelsurcharges for certain rail traffic. On August 16, 2019, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) affirmed the decision of U.S.District Court for the District of Columbia (U.S. District Court) denying class certification (the Certification Denial). Only fiveplaintiffs remain in this multidistrict litigation (MDL) originally filed in 2007, which remains pending. They are proceeding on aconsolidated basis in the U.S. District Court before the Honorable Paul L. Friedman (MDL I). Since the Certification Denial,approximately 106 lawsuits are pending in federal court based on claims identical to those alleged in the class certificationcase. The Judicial Panel on Multidistrict Litigation consolidated these suits for pretrial proceedings in the U.S. District Courtbefore the Honorable Beryl A. Howell (MDL II). As we reported in our Current Report on Form 8-K, filed on June 10, 2011, the Railroad received a complaint filed in the U.S.District Court for the District of Columbia on June 7, 2011, by Oxbow Carbon & Minerals LLC and related entities (Oxbow). In2019, Oxbow dismissed certain claims and the claims that remain are the same as the Plaintiffs’ claims in MDL I. We continue to deny the allegations that our fuel surcharge programs violate the antitrust laws or any other laws. We believethat these lawsuits are without merit, and we will vigorously defend our actions. Therefore, we currently believe that thesematters will not have a material adverse effect on any of our results of operations, financial condition, and liquidity. Item 4. Mine Safety Disclosures Not applicable. 21Table of Contents Information About Our Executive Officers and Principal Executive Officers of Our Subsidiaries The Board of Directors typically elects and designates our executive officers on an annual basis at the board meeting held inconjunction with the Annual Meeting of Shareholders, and they hold office until their successors are elected. Executiveofficers also may be elected and designated throughout the year, as the Board of Directors considers appropriate. There areno family relationships among the officers, nor is there any arrangement or understanding between any officer and any otherperson pursuant to officer selection. The following table sets forth certain information current as of February 9, 2024, relatingto the executive officers. Business Experience DuringNamePositionAgePast Five YearsV. James VenaChief Executive Officer of UPC and the Railroad65[1]Elizabeth F. WhitedPresident of UPC and the Railroad58[2]Jennifer L. HamannExecutive Vice President and Chief Financial Officer of UPC and theRailroad56[3]Eric J. GehringerExecutive Vice President - Operations of the Railroad44[4]Rahul JalaliExecutive Vice President and Chief Information Officer of UPC and theRailroad50[5]Craig V. RichardsonExecutive Vice President, Chief Legal Officer, and Corporate Secretary ofUPC and the Railroad62[6]Kenny G. RockerExecutive Vice President - Marketing and Sales of the Railroad52Current PositionTodd M. RynaskiSenior Vice President and Chief Accounting, Risk, and ComplianceOfficer of UPC and the Railroad53[7] [1]Mr. Vena was elected Chief Executive Officer of UPC and the Railroad effective August 14, 2023. He previously served as aSenior Advisor to the Chairman of UPC (January 2021 - June 2021) and Chief Operating Officer (January 2019- December 2020).[2]Ms. Whited was elected President of UPC and the Railroad effective August 14, 2023. Ms. Whited most recently served asExecutive Vice President - Sustainability and Strategy of UPC and the Railroad (February 2022 - August 2023). She previouslyserved as Executive Vice President and Chief Human Resources Officer (August 2018 - February 2022).[3]Ms. Hamann was elected Executive Vice President and Chief Financial Officer of UPC and the Railroad effective January 1, 2020.She previously served as Senior Vice President - Finance (April 2019 - December 2019) and Vice President - Planning &Analysis (October 2017 - March 2019).[4]Mr. Gehringer was elected Executive Vice President - Operations of the Railroad effective January 1, 2021. Mr. Gehringerpreviously served as Senior Vice President - Transportation (July 2020 - December 2020), Vice President - Mechanical andEngineering (January 2020 - July 2020), and Vice President - Engineering (March 2018 - January 2020).[5]Mr. Jalali was elected Executive Vice President and Chief Information Officer of UPC and the Railroad effective June 1, 2023. Mr.Jalali most recently served as Senior Vice President and Chief Information Officer (November 2020 - May 2023).[6]Mr. Richardson was elected Executive Vice President, Chief Legal Officer, and Corporate Secretary of UPC and the Railroadeffective December 8, 2020. He most recently served as Interim Executive Vice President, Chief Legal Officer, and CorporateSecretary of UPC and the Railroad (September 2020 - November 2020) and Vice President - Commercial and Regulatory Law(July 2018 - August 2020).[7]Mr. Rynaski was elected Senior Vice President and Chief Accounting, Risk, and Compliance Officer of UPC and the Railroadeffective July 1, 2022. Mr. Rynaski previously served as Vice President and Controller (September 2015 - June 2022). 22Table of Contents PART II Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of EquitySecurities Our common stock is traded on the NYSE under the symbol “UNP”. At February 2, 2024, there were 609,777,914 shares of common stock outstanding and 27,949 common shareholders ofrecord. On that date, the closing price of the common stock on the NYSE was $248.33. We paid dividends to our commonshareholders during each of the past 124 years. Comparison Over One- and Three-Year Periods – The following table presents the cumulative total shareholder returns,assuming reinvestment of dividends, over one- and three-year periods for the Corporation (UNP), a peer group index(comprised of CSX Corporation and Norfolk Southern Corporation), the Dow Jones Transportation Index (DJ Trans), and theStandard & Poor’s 500 Stock Index (S&P 500). Period UNP Peer Group DJ Trans S&P 500 1 Year (2023) 21.5% 6.9% 20.4% 26.3%3 Year (2021 - 2023) 26.0% 12.9% 32.1% 33.0% Five-Year Performance Comparison – The following graph provides an indicator of cumulative total shareholder returns forthe Corporation as compared to the peer group index (described above), the DJ Trans, and the S&P 500. The graph assumesthat $100 was invested in the common stock of Union Pacific Corporation and each index on December 31, 2018, and that alldividends were reinvested. The information below is historical in nature and is not necessarily indicative of future performance. 23Table of Contents Purchases of Equity Securities – During 2023, we repurchased 3,657,484 shares of our common stock at an average priceof $202.67. The following table presents common stock repurchases during each month for the fourth quarter of 2023: Period Total Number ofShares Purchased [a] Average PricePaid Per Share Total Number of SharesPurchased as Part of aPublicly Announced Planor Program Maximum Number ofShares RemainingUnder the Plan orProgram [b] Oct. 1 through Oct. 31 166 $222.76 - 80,392,027 Nov. 1 through Nov. 30 3,069 219.57 - 80,392,027 Dec. 1 through Dec. 31 3,573 235.05 - 80,392,027 Total 6,808 $227.77 - N/A [a]Total number of shares purchased during the quarter includes approximately 6,808 shares delivered or attested to UPC byemployees to pay stock option exercise prices, satisfy excess tax withholding obligations for stock option exercises or vesting ofretention units, and pay withholding obligations for vesting of retention shares.[b]Effective April 1, 2022, our Board of Directors authorized the repurchase of up to 100 million shares of our common stock byMarch 31, 2025, replacing our previous repurchase program. These repurchases may be made on the open market or throughother transactions. Our management has sole discretion with respect to determining the timing and amount of these transactions. Item 6. [Reserved] Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the Consolidated Financial Statements and applicable notes tothe Financial Statements and Supplementary Data, Item 8, and other information in this report, including Risk Factors setforth in Item 1A and Critical Accounting Estimates and Cautionary Information at the end of this Item 7. The following sectiongenerally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. Discussions of 2021 itemsand year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7, of theCompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The Railroad, along with its subsidiaries and rail affiliates, is our one reportable operating segment. Although we provide andanalyze revenues by commodity group, we treat the financial results of the Railroad as one segment due to the integratednature of our rail network. EXECUTIVE SUMMARY 2023 Results ●Safety – We initiated changes to our safety program that focused on training, culture, and refreshing how teamscommunicate and look out for each other. An analysis of historical injury data identified a large portion of our reportableinjuries involve a failure to comply with a small number of critical operating rules. These critical rules are the foundation ofour new program that is being implemented. While our reportable personal injury incidents rate per 200,000 employee-hours deteriorated 4% from 2022, we improved in the latter part of the year. We continued to refine our proprietary software called Precision Train Builder to evaluate train and route characteristics toenable proactive intervention by our Operating Practices Command Center to prevent derailments. In addition, thesoftware allows the team to simulate in-train forces to avoid train handling that would generate forces greater thantolerance limits. These efforts helped to drive our reportable derailment incident rate per million train miles down 6% year-over-year. Further supporting our efforts, in March, the AAR announced a set of key safety actions. These include the installation ofadditional hot wheel bearing wayside detectors and enhanced standards for how we proactively use and share criticaldata. In addition, the industry is expanding efforts in first responder training and deploying technology to provide real-timerailcar condition monitoring. ●Service – Car trip plan compliance for both intermodal and manifest/automotive products improved compared to 2022.Throughout the year we improved network fluidity as reflected in faster freight car velocity and lower terminal dwell. Wegraduated over 1,900 train, engine, and yard employees to backfill attrition, cover absences resulting from recentlynegotiated sick leave benefits, and added employees in areas of critical need to address operational challenges andsupport our service product. 24Table of Contents ●Operational Excellence – The year began with weather disruptions across the network that impacted our operations.We deployed additional locomotives and aggressively hired train, engine, and yard employees to alleviate theseoperational challenges. Despite the challenges, we continued to focus on using our resources effectively and productively,which resulted in sequential improvement in many of our operating metrics. ●Financial Results – Soft consumer markets, inflationary pressures, new labor agreements, fluctuating fuel prices,operational issues, and first quarter weather disruptions negatively impacted our financial results. Operating income of$9.1 billion declined 8% from 2022, and operating ratio was 62.3%, deteriorating 2.2 points from 2022. Net income of $6.4billion translated into earnings of $10.45 per diluted share, down 7% from 2022. Despite the challenging year, we generated $8.4 billion of cash provided by operating activities, yielded free cash flow of$1.5 billion after reductions of $3.7 billion for cash used in investing activities and $3.2 billion in dividends. Both cashprovided by operating activities and free cash flow were lowered by $454 million of payments related to the 2022 one-timecharge for agreements reached with our labor unions and the ratification charge for a crew staffing agreement reached inthe second quarter of 2023. Free cash flow is defined as cash provided by operating activities less cash used in investing activities and dividends paid.Free cash flow is not considered a financial measure under GAAP by SEC Regulation G and Item 10 of SEC Regulation S-Kand may not be defined and calculated by other companies in the same manner. We believe free cash flow is important tomanagement and investors in evaluating our financial performance and measures our ability to generate cash withoutadditional external financing. Free cash flow should be considered in addition to, rather than as a substitute for, cash providedby operating activities. The following table reconciles cash provided by operating activities (GAAP measure) to free cash flow(non-GAAP measure): Millions 2023 2022 2021 Cash provided by operating activities $8,379 $9,362 $9,032 Cash used in investing activities (3,667) (3,471) (2,709)Dividends paid (3,173) (3,159) (2,800)Free cash flow $1,539 $2,732 $3,523 2024 Outlook ●Safety – Our goal is to be an industry leader in safety. We plan to improve the safety culture through our Courage toCare program. Courage to Care is reflected in actions such as giving and receiving feedback on unsafe behavior, findingand eliminating risk, and improving the safety of the work environment, so that everyone returns home safely.An enhanced safety management program focused on the critical rules that most impact safety will be rolled out to allemployees in 2024. In addition, train, engine, and yard employees will be expected to attend a full day safety trainingclass to reinforce these critical rules. We will continue using a comprehensive safety management approach utilizingtechnology, hazard identification and risk assessments, employee engagement, training, quality control, and targetedcapital investments. In addition, our Operating Practices Command Center will help position us to implement predictivetechnology to reduce variability by seeking to identify causes of mainline service interruptions and develop solutions inaddition to assisting employees with understanding best practices for handling trains. We plan to utilize data to identifyand mitigate exposure to risk, detect rail defects, improve or close crossings, and educate the public and lawenforcement agencies about crossing safety through a combination of our own programs (including risk assessmentstrategies), industry programs, and local community activities across the network. Operating a safe railroad benefits allour stakeholders: employees, customers, shareholders, and the communities we serve, while protecting the environmentfor future generations. ●Service – We are committed to delivering the service we sold to our customers. As we meet with customers to agree ontheir specific needs and outcomes, we will measure ourselves against the best service we provided them over the pastthree years and use that as a guide for meeting their expectations. We will engage with customers to understand how wewin together. ●Operational Excellence – To provide our customers with the service we sold, we must run a fluid network. Networkfluidity enables us to effectively utilize all our resources and provides the capacity to respond in an ever-changingenvironment. We will continue to transform our railroad to further improve our service product, improve resource utilization,and lower our overall cost structure. 25Table of Contents ●Business Volumes – Macroeconomic uncertainties remain in 2024 that could have a material impact on our 2024financial and operating results. Current forecasts for 2024 industrial production are flat versus 2023. In addition, otherfactors, such as changes in domestic and foreign monetary policy (including rising interest rates), may affect economicactivity and demand for rail transportation; natural gas prices, weather conditions, and demand for other energy sourcesmay impact the coal market; crude oil prices and spreads may drive demand for petroleum products and drillingmaterials; available truck capacity could impact our intermodal business; and international trade agreements couldpromote or hinder trade. Lower coal demand and some lost international intermodal business are expected to negativelyimpact volume. Fuel prices may continue to fluctuate in the current economic environment. As prices fluctuate, there willbe a timing impact on earnings, as our fuel surcharge programs trail increases or decreases in fuel prices byapproximately two months. Regardless of external factors, we will focus on operating a safe railroad and delivering theservice we sold to our customers as well as effective asset utilization, cost control, and seeking new businessopportunities. RESULTS OF OPERATIONS Operating Revenues % Change % Change Millions 2023 2022 2021 2023 v 2022 2022 v 2021 Freight revenues $22,571 $23,159 $20,244 (3)% 14%Other subsidiary revenues 872 884 741 (1) 19 Accessorial revenues 584 779 752 (25) 4 Other 92 53 67 74 (21)Total $24,119 $24,875 $21,804 (3)% 14% We generate freight revenues by transporting products from our three commodity groups. Freight revenues vary with volume(carloads) and average revenue per car (ARC). Changes in price, traffic mix, and fuel surcharges drive ARC. Customerincentives, which are primarily provided for shipping to/from specific locations or based on cumulative volumes, are recordedas a reduction to operating revenues. Customer incentives that include variable consideration based on cumulative volumesare estimated using the expected value method, which is based on available historical, current, and forecasted volumes, andrecognized as the related performance obligation is satisfied. We recognize freight revenues over time as shipments movefrom origin to destination. The allocation of revenues between reporting periods is based on the relative transit time in eachreporting period with expenses recognized as incurred. Other subsidiary revenues (primarily logistics and commuter rail operations) are generally recognized over time as shipmentsmove from origin to destination. The allocation of revenues between reporting periods is based on the relative transit time ineach reporting period with expenses recognized as incurred. Accessorial revenues are recognized at a point in time asperformance obligations are satisfied. Freight revenues decreased 3% year-over-year to $22.6 billion driven by lower fuel surcharge revenues, negative mix of traffic(decreased lumber shipments and increased short haul rock shipments), and a 1% decrease in volume, partially offset bycore pricing gains. Volume decreases were primarily driven by weaker demand for intermodal and coal shipments. Thesedeclines were partially offset by a domestic intermodal contract win, increased production and inventory replenishment in theautomotive industry, growth in petroleum and LPG shipments, and strength in rock shipments. Our fuel surcharge programs generated freight revenues of $3.0 billion and $3.7 billion in 2023 and 2022, respectively. Fuelsurcharge revenues in 2023 decreased $0.7 billion due to a 15% decrease in fuel prices and lower volume, partially offset bythe impact of fluctuating fuel prices (it can generally take up to two months for changing fuel prices to affect fuel surchargerecoveries). In 2023, other subsidiary revenues decreased compared to 2022 primarily driven by weaker demand for intermodal shipmentsat our Loup subsidiary. Accessorial revenues decreased in 2023 compared to 2022 driven by decreased intermodalaccessorial and container revenues due to lower volume and improvements in the global supply chain as reflected in betterequipment cycle times. Other revenues increased year-over-year. 26Table of Contents The following tables summarize the year-over-year changes in freight revenues, revenue carloads, and ARC by commoditytype: Freight Revenues % Change % Change Millions 2023 2022 2021 2023 v 2022 2022 v 2021 Grain & grain products $3,644 $3,598 $3,181 1% 13%Fertilizer 757 712 697 6 2 Food & refrigerated 1,041 1,093 998 (5) 10 Coal & renewables 1,916 2,134 1,780 (10) 20 Bulk 7,358 7,537 6,656 (2) 13 Industrial chemicals & plastics 2,176 2,158 1,943 1 11 Metals & minerals 2,194 2,196 1,811 - 21 Forest products 1,347 1,465 1,357 (8) 8 Energy & specialized markets 2,521 2,386 2,212 6 8 Industrial 8,238 8,205 7,323 - 12 Automotive 2,421 2,257 1,761 7 28 Intermodal 4,554 5,160 4,504 (12) 15 Premium 6,975 7,417 6,265 (6) 18 Total $22,571 $23,159 $20,244 (3)% 14% Revenue Carloads % Change % Change Thousands 2023 2022 2021 2023 v 2022 2022 v 2021 Grain & grain products 798 798 805 -% (1)%Fertilizer 191 190 201 1 (5)Food & refrigerated 175 187 189 (6) (1)Coal & renewables 867 885 819 (2) 8 Bulk 2,031 2,060 2,014 (1) 2 Industrial chemicals & plastics 645 637 606 1 5 Metals & minerals 793 785 697 1 13 Forest products 213 241 250 (12) (4)Energy & specialized markets 582 552 559 5 (1)Industrial 2,233 2,215 2,112 1 5 Automotive 820 778 701 5 11 Intermodal [a] 3,028 3,116 3,211 (3) (3)Premium 3,848 3,894 3,912 (1) - Total 8,112 8,169 8,038 (1)% 2% % Change % Change Average Revenue per Car 2023 2022 2021 2023 v 2022 2022 v 2021 Grain & grain products $4,567 $4,509 $3,953 1% 14%Fertilizer 3,962 3,749 3,470 6 8 Food & refrigerated 5,929 5,844 5,279 1 11 Coal & renewables 2,211 2,410 2,173 (8) 11 Bulk 3,623 3,658 3,305 (1) 11 Industrial chemicals & plastics 3,374 3,388 3,207 - 6 Metals & minerals 2,765 2,797 2,598 (1) 8 Forest products 6,310 6,092 5,424 4 12 Energy & specialized markets 4,335 4,320 3,956 - 9 Industrial 3,689 3,704 3,467 - 7 Automotive 2,955 2,902 2,511 2 16 Intermodal [a] 1,504 1,656 1,403 (9) 18 Premium 1,813 1,905 1,601 (5) 19 Average $2,782 $2,835 $2,519 (2)% 13% [a]For intermodal shipments, each container or trailer equals one carload. 27Table of Contents Bulk – Bulk includes shipments of grain and grain products, fertilizer,food and refrigerated, and coal and renewables. Freight revenues frombulk shipments decreased in 2023 compared to 2022 due to lower fuelsurcharge revenues, lower volume, and negative mix from fewer foodand refrigerated shipments, partially offset by core pricing gains.Volume declined 1% compared to 2022 driven by reduced use of coalin electricity generation because of low natural gas prices and mildwinter weather in the second half of the year. Volume for coal andrenewables and food and refrigerated shipments were negativelyimpacted by outages and service challenges due to repeated snowevents in Wyoming and flooding in California in the first quarter of 2023. 2023 Bulk CarloadsIndustrial – Industrial includes shipments of industrial chemicals andplastics, metals and minerals, forest products, and energy andspecialized markets. Freight revenues from industrial shipmentsincreased slightly in 2023 versus 2022 due to core pricing gains andvolume increases, offset by negative mix of traffic, driven by increasedshort haul rock shipments and decreased lumber shipments, and lowerfuel surcharge revenues. Volume increased 1% compared to 2022. Thegrowth was driven by petroleum and LPG shipments and metals andminerals due to strong demand for rock. Partially offsetting that growthwere decreases in forest products due to the softening housing marketand fewer shipments of brown paper as demand for non-durable goodsdeclined. 2023 Industrial CarloadsPremium – Premium includes shipments of finished automobiles,automotive parts, and merchandise in intermodal containers, bothdomestic and international. Freight revenues from premium shipmentsdecreased driven by lower fuel surcharges and volume declines,partially offset by core pricing gains. Intermodal shipments declined3% compared to 2022 as high inventories and inflationary pressuresimpacted consumer demand, partially offset by a domestic contractwin. Despite the negative effects of the United Auto Workers strike,automotive shipments increased 5% compared to 2022 driven byincreased production as dealers replenished inventories.2023 Premium Carloads Mexico Business – Each of our commodity groups includes revenues from shipments to and from Mexico. Revenues fromMexico shipments were $2.8 billion in 2023, up 2% compared to 2022, driven by a 4% volume increase, partially offset by a2% decrease in average revenue per car due to lower fuel surcharge revenues. The volume increase was driven by higherintermodal and automotive shipments, partially offset by fewer beer shipments. The closure of the Eagle Pass and El Pasoborder crossings in the fourth quarter had a slightly negative impact on the overall results. 28Table of Contents Operating Expenses % Change % Change Millions 2023 2022 2021 2023 v 2022 2022 v 2021 Compensation and benefits $4,818 $4,645 $4,158 4% 12%Fuel 2,891 3,439 2,049 (16) 68 Purchased services and materials 2,616 2,442 2,016 7 21 Depreciation 2,318 2,246 2,208 3 2 Equipment and other rents 947 898 859 5 5 Other 1,447 1,288 1,176 12 10 Total $15,037 $14,958 $12,466 1% 20% Operating expenses increased $79 million, or 1%, in 2023 comparedto 2022 driven by inflation; operational challenges in the first half of theyear, including additional costs related to weather; increased workforcelevels, including the impact of increased sick leave benefits provided toour craft professionals; higher casualty costs; and the ratificationcharge for a crew staffing agreement reached in the second quarter of2023, partially offset by lower fuel prices, a one-time charge in 2022 foragreements reached with our labor unions, and volume related costs. 2023 Operating Expenses Compensation and Benefits – Compensation and benefits include wages, payroll taxes, health and welfare costs, pensioncosts, and incentive costs. In 2023, expenses increased 4% compared to 2022. The employee level increase of 3% includesa 4% increase in train, engine, and yard employees to backfill attrition, cover absences resulting from recent negotiated sickleave benefits, and add employees in areas of critical need to address operational challenges and support our serviceproduct. The wage growth, costs for training, and the ratification charge for a crew staffing agreement reached in the secondquarter of 2023, partially offset by the 2022 one-time charge for agreements reached with our labor unions, lower incentivecompensation, and lower volume drove the increase in compensation and benefits for 2023 compared to 2022. Fuel – Fuel includes locomotive fuel and gasoline for highway and non-highway vehicles and heavy equipment. Fuel expensedecreased compared to 2022 due to a decrease in locomotive diesel fuel prices, which averaged $3.09 per gallon (includingtaxes and transportation costs) in 2023 compared to $3.65 per gallon in 2022, resulting in a $0.5 billion decrease in expense(excluding any impact from decreased volume year-over-year), and a 1% decrease in gross ton-miles, partially offset by a 1%deterioration to the fuel consumption rate in 2023 (computed as gallons of fuel consumed divided by gross ton-miles). Purchased Services and Materials – Expense for purchased services and materials includes the costs of services purchasedfrom outside contractors and other service providers (including equipment maintenance and contract expenses incurred byour subsidiaries for external transportation services); materials used to maintain the Railroad’s lines, structures, andequipment; costs of operating facilities jointly used by UPRR and other railroads; transportation and lodging for train crewemployees; trucking and contracting costs for intermodal containers; leased automobile maintenance expenses; and toolsand supplies. Purchased services and materials increased 7% in 2023 compared to 2022 driven by higher locomotivemaintenance expenses due to inflation, increased locomotive overhauls, and a larger active fleet in the first half of 2023 toassist in recovering the network, partially offset by decreased volume-related drayage costs incurred at one of oursubsidiaries. Depreciation – The majority of depreciation relates to road property, including rail, ties, ballast, and other track material.Depreciation expense was up 3% in 2023 compared to 2022 due to a higher depreciable asset base. 29Table of Contents Equipment and Other Rents – Equipment and other rents expense primarily includes rental expense that the Railroad paysfor freight cars owned by other railroads or private companies; freight car, intermodal, and locomotive leases; and office andother rent expenses, offset by equity income from certain equity method investments. Equipment and other rents expenseincreased 5% compared to 2022 due to lower equity income and inflation, partially offset by greater network fluidity and lowervolume. Other – Other expenses include state and local taxes; freight, equipment, and property damage; utilities; insurance; personalinjury; environmental; employee travel; telephone and cellular; computer software; bad debt; and other general expenses.Other expenses increased 12% in 2023 compared to 2022 driven by casualty expenses, including higher personal injuryexpense, environmental remediation, and damaged freight, and one-time write-offs. Non-Operating Items % Change % Change Millions 2023 2022 2021 2023 v 2022 2022 v 2021 Other income, net $491 $426 $297 15% 43%Interest expense (1,340) (1,271) (1,157) 5 10 Income tax expense $(1,854) $(2,074) $(1,955) (11)% 6% Other Income, net – Other income increased in 2023 compared to 2022 driven by a one-time $107 million real estatetransaction, partially offset by lower gains from real estate sales. Real estate sales in 2022 included a $79 million gain from aland sale to the Illinois State Toll Highway Authority and a $35 million gain from a land sale to the Colorado Department ofTransportation. See Note 6 to the Financial Statements and Supplementary Data, Item 8, for additional detail. Interest Expense – Interest expense increased in 2023 compared to 2022 due to an increased weighted-average debt level of$33.2 billion in 2023 from $32.1 billion in 2022. The effective interest rate was 4.0% in both periods. Income Tax Expense – Income tax expense decreased in 2023 compared to 2022 due to lower pre-tax income and deferredtax expense reductions. In 2023, the states of Nebraska, Iowa, Kansas, and Arkansas enacted legislation to reduce theircorporate income tax rates for future years resulting in a $114 million reduction of our deferred tax expense. 2022 income taxexpense included reductions of $95 million in deferred tax expense from Nebraska, Iowa, Arkansas, and Idaho reducing theircorporate income tax rates. Our effective tax rates for 2023 and 2022 were 22.5% and 22.9%, respectively. OTHER OPERATING/PERFORMANCE AND FINANCIAL STATISTICS We report a number of key performance measures weekly to the STB. We provide this data on our website atwww.up.com/investor/aar-stb_reports/index.htm. Operating/Performance Statistics Management continuously monitors these key operating metrics to evaluate our operational efficiency and help us deliver theservice product we sold to our customers. 30Table of Contents Railroad performance measures are included in the table below: % Change % Change 2023 2022 20212023 v 2022 2022 v 2021 Gross ton-miles (GTMs) (billions) 837.5 843.4 817.9 (1) 3% Revenue ton-miles (billions) 413.3 420.8 411.3 (2) 2 Freight car velocity (daily miles per car) [a] 204 191 203 7 (6) Average train speed (miles per hour) [a] 24.2 23.8 24.6 2 (3) Average terminal dwell time (hours) [a] 23.4 24.4 23.7 (4) 3 Locomotive productivity (GTMs per horsepower day)129 125 133 3 (6) Train length (feet) 9,356 9,329 9,334 - - Intermodal car trip plan compliance (%) [b] 78 67 73 11 pts (6)ptsManifest/Automotive car trip plan compliance (%) [b]65 59 63 6 pts (4)ptsWorkforce productivity (car miles per employee)1,000 1,036 1,038 (3) - Total employees (average) 31,490 30,717 29,905 3 3 Operating ratio (%) 62.3 60.1 57.2 2.2 pts 2.9 pts [a]As reported to the STB.[b]Methodology used to report (described below) is not comparable with the reporting to the STB under docket number EP 770. Gross and Revenue Ton-Miles – Gross ton-miles are calculated by multiplying the weight of loaded and empty freight cars bythe number of miles hauled. Revenue ton-miles are calculated by multiplying the weight of freight by the number of tariff miles.In 2023, gross ton-miles and revenue ton-miles decreased 1% and 2%, respectively, compared to 2022, driven by a 1%decrease in carloadings. Changes in commodity mix drove the variance in year-over-year decreases between gross ton-miles,revenue ton-miles, and carloads. Freight Car Velocity – Freight car velocity measures the average daily miles per car on our network. The two key drivers ofthis metric are the speed of the train between terminals (average train speed) and the time a rail car spends at the terminals(average terminal dwell time). Freight car velocity, average train speed, and average terminal dwell improved compared to2022 as last year we experienced congestion across our system. These metrics were negatively impacted by operationalchallenges caused by weather in the first quarter of 2023 and train crew shortages in some locations in the first half of theyear, but as network fluidity improved throughout 2023, freight car velocity increased sequentially. Locomotive Productivity – Locomotive productivity is gross ton-miles per average daily locomotive horsepower. Locomotiveproductivity improved 3% in 2023 compared to 2022 driven by improved network fluidity in the second half of 2023. As a resultof the improved fluidity, we stored locomotives in the second half of the year, reducing our active fleet size 11% since the endof the second quarter of 2023. These improvements more than offset increased average active fleet size in the first half of2023 as resources were deployed to alleviate operational challenges and weather disruptions. Train Length – Train length is the average maximum train length on a route measured in feet. Our train length increasedslightly compared to 2022 as initiative to drive train length improvements in the second half of the year more than offset thedeclines in intermodal shipments, which generally move on longer trains. Car Trip Plan Compliance – Car trip plan compliance is the percentage of cars delivered on time in accordance with ouroriginal trip plan. Our network trip plan compliance is broken into the intermodal and manifest/automotive products. Intermodalcar trip plan compliance and manifest/automotive car trip plan compliance improved in 2023 compared to 2022 driven byimproved network fluidity, as evidenced by faster freight car velocity. Workforce Productivity – Workforce productivity is average daily car miles per employee. Workforce productivity declined 3%in 2023 as average daily car miles decreased slightly and employees increased compared to 2022. The 3% increase inemployee levels was driven by an increase in craft professionals as we aggressively hired train, engine, and yard employeesto backfill attrition, cover absences resulting from recently negotiated sick leave benefits, and add employees in areas ofcritical need to address operational challenges and support our service product. Operating Ratio – Operating ratio is our operating expenses reflected as a percentage of operating revenues. Our operatingratio of 62.3% deteriorated 2.2 points compared to 2022 driven by inflation, excess network costs, the ratification charge for acrew staffing agreement reached in the second quarter of 2023, increased casualty costs, and other cost increases, partiallyoffset by core pricing gains, the 2022 one-time charge for the labor agreements reached with our labor unions, and the year-over-year lag impact from lower fuel prices. 31Table of Contents Return on Average Common Shareholders’ Equity Millions, Except Percentages 2023 2022 2021 Net income $6,379 $6,998 $6,523 Average equity $13,476 $13,162 $15,560 Return on average common shareholders' equity 47.3% 53.2% 41.9% Return on Invested Capital as Adjusted (ROIC) Millions, Except Percentages 2023 2022 2021 Net income $6,379 $6,998 $6,523 Interest expense 1,340 1,271 1,157 Interest on average operating lease liabilities 58 56 54 Taxes on interest (315) (304) (280)Net operating profit after taxes as adjusted $7,462 $8,021 $7,454 Average equity $13,476 $13,162 $15,560 Average debt 32,953 31,528 28,229 Average operating lease liabilities 1,616 1,695 1,682 Average invested capital as adjusted $48,045 $46,385 $45,471 Return on invested capital as adjusted 15.5% 17.3% 16.4% ROIC is considered a non-GAAP financial measure by SEC Regulation G and Item 10 of SEC Regulation S-K and may notbe defined and calculated by other companies in the same manner. We believe this measure is important to managementand investors in evaluating the efficiency and effectiveness of our long-term capital investments. In addition, we currently useROIC as a performance criterion in determining certain elements of equity compensation for our executives. ROIC should beconsidered in addition to, rather than as a substitute for, other information provided in accordance with GAAP. The mostcomparable GAAP measure is return on average common shareholders’ equity. The tables above provide a reconciliation fromreturn on average common shareholders’ equity to ROIC. At December 31, 2023, 2022, and 2021, the incremental borrowingrate on operating leases was 3.6%, 3.3%, and 3.2%, respectively. Debt / Net Income Millions, Except Ratios 2023 2022 2021 Debt $32,579 $33,326 $29,729 Net income $6,379 $6,998 $6,523 Debt / net income 5.1 4.8 4.6 Adjusted Debt / Adjusted EBITDA Millions, Except Ratios202320222021 Net income $6,379 $6,998 $6,523 Add: Income tax expense 1,854 2,074 1,955 Depreciation 2,318 2,246 2,208 Interest expense 1,340 1,271 1,157 EBITDA $11,891 $12,589 $11,843 Adjustments: Other income, net (491) (426) (297)Interest on operating lease liabilities 58 54 56 Adjusted EBITDA $11,458 $12,217 $11,602 Debt $32,579 $33,326 $29,729 Operating lease liabilities 1,600 1,631 1,759 Adjusted debt $34,179 $34,957 $31,488 Adjusted debt / adjusted EBITDA 3.0 2.9 2.7 32Table of Contents Adjusted debt (total debt plus operating lease liabilities plus after-tax unfunded pension and OPEB (other post retirementbenefit) obligations) to adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and adjustments forother income and interest on present value of operating leases) is considered a non-GAAP financial measure by SECRegulation G and Item 10 of SEC Regulation S-K and may not be defined and calculated by other companies in the samemanner. We believe this measure is important to management and investors in evaluating the Company’s ability to sustaingiven debt levels (including leases) with the cash generated from operations. In addition, a comparable measure is used byrating agencies when reviewing the Company’s credit rating. Adjusted debt to adjusted EBITDA should be considered inaddition to, rather than as a substitute for, other information provided in accordance with GAAP. The most comparable GAAPmeasure is debt to net income ratio. The tables above provide reconciliations from net income to adjusted EBITDA, debt toadjusted debt, and debt to net income to adjusted debt to adjusted EBITDA. At December 31, 2023, 2022, and 2021, theincremental borrowing rate on operating leases was 3.6%, 3.3%, and 3.2%, respectively. Pension and OPEB were funded atDecember 31, 2023, 2022, and 2021. LIQUIDITY AND CAPITAL RESOURCES We are continually evaluating our financial condition and liquidity. We analyze a wide range of economic scenarios and theimpact on our ability to generate cash. These analyses inform our liquidity plans and activities outlined below and indicate wehave sufficient borrowing capacity to sustain an extended period of lower volumes. At both December 31, 2023 and 2022, we had a working capital deficit due to upcoming debt maturities. It is not unusual forus to have a working capital deficit, and we believe it is not an indication of a lack of liquidity. We generate strong cash fromoperations and also maintain adequate resources, including our credit facility and, when necessary, access the capitalmarkets to meet foreseeable cash requirements. During 2023, we generated $8.4 billion of cash provided by operating activities, issued $1.0 billion of long-term debt, paid$3.2 billion in dividends, and repurchased shares totaling $0.7 billion. We have been, and we expect to continue to be, incompliance with our debt covenants. Our principal sources of liquidity include cash and cash equivalents, our Receivables Facility, our revolving credit facility, aswell as the availability of commercial paper and other sources of financing through the capital markets. On December 31,2023, we had $1.1 billion of cash and cash equivalents, $2.0 billion of committed credit available under our revolving creditfacility, and up to $800 million undrawn on the Receivables Facility. As of December 31, 2023, none of the revolving creditfacility was drawn, and we did not draw on our revolving credit facility at any time during 2023. Our access to the ReceivablesFacility may be reduced or restricted if our bond ratings fall to certain levels below investment grade. If our bond rating were todeteriorate, it could have an adverse impact on our liquidity. Access to commercial paper as well as other capital marketfinancing is dependent on market conditions. Deterioration of our operating results or financial condition due to internal orexternal factors could negatively impact our ability to access capital markets as a source of liquidity. Access to liquiditythrough the capital markets is also dependent on our financial stability. We expect that we will continue to have access toliquidity through any or all the following sources or activities: (a) increasing the utilization of our Receivables Facility, (b)issuing commercial paper, (c) entering into bank loans, outside of our revolving credit facility, or (iv) issuing bonds or otherdebt securities to public or private investors based on our assessment of the current condition of the credit markets. TheCompany’s $2.0 billion revolving credit facility is intended to support the issuance of commercial paper by UPC and alsoserves as an additional source of liquidity to fund short-term needs. The Company currently does not intend to make anyborrowings under this facility. As described in the notes to the Consolidated Financial Statements and as referenced in the table below, we havecontractual obligations that may affect our financial condition. Based on our assessment of the underlying provisions andcircumstances of our contractual obligations, other than the risks that we and other similarly situated companies face withrespect to the condition of the capital markets (as described in Item 1A of Part II of this report), as of the date of this filing,there is no known trend, demand, commitment, event, or uncertainty that is reasonably likely to occur that would have amaterial adverse effect on our consolidated results of operations, financial condition, or liquidity. In addition, our commercialobligations, financings, and commitments are customary transactions that are like those of other comparable corporations,particularly within the transportation industry. 33Table of Contents The following table identifies material obligations as of December 31, 2023: Payments Due by December 31, Contractual Obligations After Millions Total 2024 2025 2026 2027 2028 2028 Debt [a] $60,516 $2,610 $2,591 $2,617 $2,348 2,294 $48,056 Purchase obligations [b] 2,985 1,150 744 600 222 158 111 Operating leases [c] 1,768 361 375 296 237 199 300 Other post retirement benefits [d] 393 44 40 40 39 39 191 Finance lease obligations [e] 173 55 42 35 30 11 - Total contractual obligations $65,835 $4,220 $3,792 $3,588 $2,876 $2,701 $48,658 [a]Excludes finance lease obligations of $158 million as well as unamortized discount and deferred issuance costs of($1,732) million. Includes an interest component of $26,363 million.[b]Purchase obligations include locomotive maintenance contracts; purchase commitments for ties, ballast, and rail; andagreements to purchase other goods and services.[c]Includes leases for locomotives, freight cars, other equipment, and real estate. Includes an interest component of $168 million. [d]Includes estimated other post retirement, medical, and life insurance payments, and payments made under the unfundedpension plan for the next ten years.[e]Represents total obligations, including interest component of $15 million. Cash Flows Millions 2023 2022 2021 Cash provided by operating activities $8,379 $9,362 $9,032 Cash used in investing activities (3,667) (3,471) (2,709)Cash used in financing activities (4,625) (5,887) (7,158)Net change in cash, cash equivalents, and restricted cash $87 $4 $(835) Operating Activities Cash provided by operating activities decreased in 2023 compared to 2022 due primarily to a decrease in net income and$454 million of payments related to the 2022 one-time charge for agreements reached with our labor unions and theratification charge for a crew staffing agreement reached in the second quarter of 2023. Cash flow conversion is defined as cash provided by operating activities less cash used in capital investments as a ratio ofnet income. Cash flow conversion rate is not considered a financial measure under GAAP by SEC Regulation G and Item 10of SEC Regulation S-K and may not be defined and calculated by other companies in the same manner. We believe cashflow conversion rate is important to management and investors in evaluating our financial performance and measures ourability to generate cash without additional external financing. Cash flow conversion rate should be considered in addition to,rather than as a substitute for, cash provided by operating activities. The following table reconciles cash provided by operatingactivities (GAAP measure) to cash flow conversion rate (non-GAAP measure): Millions, For the Year Ended December 31, 2023 2022 2021 Cash provided by operating activities $8,379 $9,362 $9,032 Cash used in capital investments (3,606) (3,620) (2,936)Total (a) 4,773 5,742 6,096 Net income (b) $6,379 $6,998 $6,523 Cash flow conversion rate (a/b) 75% 82% 93% Investing Activities Cash used in investing activities in 2023 increased compared to 2022 primarily driven by lower proceeds from asset saleswithin other investing activities net. 34Table of Contents The following tables detail cash capital investments and track statistics for the years ended December 31: Millions 2023 2022 2021 Ties $565 $544 $443 Rail and other track material 454 437 507 Ballast 194 216 215 Other [a] 691 693 760 Total road infrastructure replacements 1,904 1,890 1,925 Line expansion and other capacity projects 239 276 284 Commercial facilities 425 308 243 Total capacity and commercial facilities 664 584 527 Locomotives and freight cars [b] 728 800 322 Technology and other 310 346 162 Total cash capital investments [c] $3,606 $3,620 $2,936 [a]Other includes bridges and tunnels, signals, other road assets, and road work equipment.[b]Locomotives and freight cars include early lease buyouts of $57 million, $70 million, and $34 million in 2023, 2022, and 2021,respectively.[c]Weather-related damages for 2023, 2022, and 2021 are immaterial. Capital Plan – In 2024, we expect our capital plan to be approximately $3.4 billion, down 8% from 2023. We plan tocontinue to make investments to support our growth strategy, harden our infrastructure, replace older assets, and improve thesafety and resiliency of the network. In addition, the plan includes investments in growth-related projects to drive morecarloads to the network, certain ramps to efficiently handle volumes from new and existing intermodal customers,continued modernization of our locomotive fleet, and projects intended to improve operational efficiency. The capital plan maybe revised if business conditions warrant or if new laws or regulations affect our ability to generate sufficient returns on theseinvestments. Financing Activities Cash used in financing activities decreased in 2023 compared to 2022 driven by a decrease in share repurchases, partiallyoffset by less debt issued. See Note 14 to the Financial Statements and Supplementary Data, Item 8, for a description of all our outstanding financingarrangements and significant new borrowings, and Note 18 to the Financial Statements and Supplementary Data, Item 8, fora description of our share repurchase programs. 35Table of Contents OTHER MATTERS Inflation – For capital-intensive companies, inflation significantly increases asset replacement costs for long-lived assets. Asa result, assuming that we replace all operating assets at current price levels, depreciation charges (on an inflation-adjustedbasis) would be substantially greater than historically reported amounts. Sensitivity Analyses – The sensitivity analyses that follow illustrate the economic effect that hypothetical changes ininterest and tax rates could have on our results of operations and financial condition. These hypothetical changes do notconsider other factors that could impact actual results. Interest Rates – At December 31, 2023, we did not have variable-rate debt. Market risk for fixed-rate debt is estimated as the potential increase in fair value resulting from a hypothetical one percentagepoint decrease in interest rates as of December 31, 2023, and totals an increase of approximately $3.6 billion to the fair valueof our debt at December 31, 2023. We estimated the fair values of our fixed-rate debt by considering the impact of thehypothetical interest rates on quoted market prices and current borrowing rates. Tax Rates – Our deferred tax assets and liabilities are measured based on current tax law. Future tax legislation, such as achange in the federal corporate tax rate, could have a material impact on our financial condition, results of operations, orliquidity. For example, a future, permanent 1% increase in our federal income tax rate would increase our deferred tax liabilityby approximately $525 million. Similarly, a future, permanent 1% decrease in our federal income tax rate would decrease ourdeferred tax liability by approximately $525 million. Accounting Pronouncements – See Note 3 to the Financial Statements and Supplementary Data, Item 8. Asserted and Unasserted Claims – See Note 17 to the Financial Statements and Supplementary Data, Item 8. Indemnities – See Note 17 to the Financial Statements and Supplementary Data, Item 8. Climate Change – Climate change could have an adverse impact on our operations and financial performance (see RiskFactors under Item 1A of this report). We utilize climate scenario analyses to better understand climate-related risks andopportunities the Company may face in the future under a range of potential scenarios. We continue to refine our approach tounderstand climate-related risks and are taking an iterative approach in our business planning processes as risk factors,solutions, and technology develop. However, we are unable to predict the likelihood, manner, severity, or ultimate financialimpact of actual future incidents as climate scenario analysis considers a range of potential outcomes. We continue to take steps and explore opportunities to reduce our operational impact on the environment, including improvingour operational fluidity to increase fuel efficiency, modernizing locomotives for improved reliability and fuel consumption, usingrenewable fuels, and exploring and testing low- and zero-emissions propulsion technologies. These initiatives are aligned withour Safety + Service & Operational Excellence = Growth strategy. (See further discussion in "Sustainable Future" in theOperations section in Item 1 of this report.) CRITICAL ACCOUNTING ESTIMATES Our Consolidated Financial Statements have been prepared in accordance with GAAP. The preparation of these financialstatements requires estimation and judgment that affect the reported amounts of revenues, expenses, assets, and liabilities.We base our estimates on historical experience and on various other assumptions that we believe are reasonable under thecircumstances. The results form the basis for making judgments about the carrying values of assets and liabilities that arenot readily apparent from other sources. The following critical accounting estimates are a subset of our significant accountingpolicies described in Note 2 to the Financial Statements and Supplementary Data, Item 8. These critical accountingestimates affect significant areas of our financial statements and involve judgment and estimates. If these estimates differsignificantly from actual results, the impact on our Consolidated Financial Statements may be material. 36Table of Contents Personal Injury – See Note 17 to the Financial Statements and Supplementary Data, Item 8, and "We May Be Subject toVarious Claims and Lawsuits That Could Result in Significant Expenditures" in the Risk Factors, Item 1A. Our personal injury liability is subject to uncertainty due to unasserted claims, timing and outcome of claims, and evolvingtrends in litigation. There were no material changes to the assumptions used in the latest actuarial analysis. Our personal injury liability balance and claims activity was as follows: 2023 2022 2021 Ending liability balance at December 31 (millions) $383 $361 $325 Open claims, beginning balance 2,036 2,027 1,897 New claims 3,008 2,747 2,719 Settled or dismissed claims (3,173) (2,738) (2,589)Open claims, ending balance at December 31 1,871 2,036 2,027 Environmental Costs – See Note 17 to the Financial Statements and Supplementary Data, Item 8; "We Are Subject toSignificant Environmental Laws and Regulations" in the Risk Factors, Item 1A; and Environmental Matters in the LegalProceedings, Item 3. Our environmental liability is subject to several factors such as type of remediation, nature and volume of contaminate,number and financial viability of other potentially responsible parties, as well as uncertainty due to unknown allegedcontamination, evolving trends in remediation techniques and final remedies, and changes in laws and regulations. Our environmental liability balance and site activity was as follows: 2023 2022 2021 Ending liability balance at December 31 (millions) $245 $253 $243 Open sites, beginning balance 353 376 373 New sites 74 69 105 Closed sites (94) (92) (102)Open sites, ending balance at December 31 333 353 376 Property and Depreciation – See Note 11 to the Financial Statements and Supplementary Data, Item 8. Assets purchased or constructed throughout the year are capitalized if they meet applicable minimum units of property. Estimated service lives of depreciable railroad property may vary over time due to changes in physical use, technology, assetstrategies, and other factors that will have an impact on the retirement profiles of our assets. We are not aware of anyspecific factors that are reasonably likely to significantly change the estimated service lives of our assets. Actual use andretirement of our assets may vary from our current estimates, which would impact the amount of depreciation expenserecognized in future periods. Changes in estimated useful lives of our assets due to the results of our depreciation studies could significantly impact futureperiods’ depreciation expense and have a material impact on our Consolidated Financial Statements. If the estimated usefullives of all depreciable assets were increased by one year, annual depreciation expense would decrease by approximately$71 million. If the estimated useful lives of all depreciable assets were decreased by one year, annual depreciation expensewould increase by approximately $76 million. We are projecting an increase in our depreciation expense of approximately 3%to 4% in 2024 versus 2023. This is driven by an increase in our projected depreciable asset base. During the last three fiscal years, no gains or losses were recognized due to the retirement of depreciable railroad properties. Pension Plans – See Note 5 to the Financial Statements and Supplementary Data, Item 8. The critical assumptions used to measure pension obligations and expenses are the discount rates and expected rate ofreturn on pension assets. 37Table of Contents We evaluate our critical assumptions at least annually, and selected assumptions are based on the following factors: ●We measure the service cost and interest cost components of our net periodic pension benefit/cost by using individualspot rates matched with separate cash flows for each future year. Discount rates are based on a Mercer yield curve ofhigh-quality corporate bonds (rated AA by a recognized rating agency).●Expected return on plan assets is based on our asset allocation mix and our historical return, taking into considerationcurrent and expected market conditions. The following tables present the key assumptions used to measure net periodic pension benefit/cost for 2024 and theestimated impact on 2024 net periodic pension benefit/cost relative to a change in those assumptions: Assumptions Discount rate for benefit obligations 5.00%Discount rate for interest on benefit obligations 4.90%Discount rate for service cost 5.05%Discount rate for interest on service cost 5.02%Expected return on plan assets 5.25% SensitivitiesIncrease inExpense Millions Pension 0.25% decrease in discount rates $1 0.25% decrease in expected return on plan assets $12 The following table presents the net periodic pension benefit/cost for the years ended December 31: Est. Millions 2024 2023 2022 2021 Net periodic pension (benefit)/cost $(7) $- $9 $85 CAUTIONARY INFORMATION Certain statements in this report, and statements in other reports or information filed or to be filed with the SEC (as well asinformation included in oral statements or other written statements made or to be made by us), are, or will be, forward-lookingstatements as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-lookingstatements and information include, without limitation, statements in the CEO’s letter preceding Part I; statements regardingplanned capital expenditures under the caption “2024 Capital Plan” in Item 2 of Part I; and statements and information setforth under the captions “2024 Outlook”; “Liquidity and Capital Resources” in Item 7 of Part II regarding our capital plan, sharerepurchase programs, contractual obligations, "Pension Benefits", and "Other Matters" in this Item 7 of Part II. Forward-looking statements and information also include any other statements or information in this report (including informationincorporated herein by reference) regarding: potential impacts of public health crises, including pandemics, epidemics, andthe outbreak of other contagious disease, such as COVID; the Russia-Ukraine and Israel-Hamas wars and any impacts onour business operations, financial results, liquidity, and financial position, and on the world economy (including customers,employees, and supply chains), including as a result of fluctuations in volume and carloadings; closing of customermanufacturing, distribution or production facilities; expectations as to operational or service improvements; expectations as tohiring challenges; availability of employees; expectations regarding the effectiveness of steps taken or to be taken to improveoperations, service, infrastructure improvements, and transportation plan modifications (including those discussed inresponse to increased traffic); expectations as to cost savings, revenue growth, and earnings; the time by which goals,targets, or objectives will be achieved; projections, predictions, expectations, estimates, or forecasts as to our business,financial, and operational results, future economic performance, and general economic conditions; proposed new productsand services; estimates of costs relating to environmental remediation and restoration; estimates and expectations regardingtax matters; expectations that claims, litigation, environmental costs, commitments, contingent liabilities, labor negotiationsor agreements, cyber-attacks or other matters will not have a material adverse effect on our consolidated results ofoperations, financial condition, or liquidity and any other similar expressions concerning matters that are not historical facts.Forward-looking statements may be identified by their use of forward-looking terminology, such as “believes,” “expects,”“may,” “should,” “would,” “will,” “intends,” “plans,” “estimates,” “anticipates,” “projects” and similar words, phrases, orexpressions. 38Table of Contents Forward-looking statements should not be read as a guarantee of future performance, results or outcomes, and will notnecessarily be accurate indications of the times that, or by which, such performance, results or outcomes will be achieved.Forward-looking statements and information are subject to risks and uncertainties that could cause actual performance orresults to differ materially from those expressed in the statements and information. Forward-looking statements andinformation reflect the good faith consideration by management of currently available information, and may be based onunderlying assumptions believed to be reasonable under the circumstances. However, such information and assumptions(and, therefore, such forward-looking statements and information) are or may be subject to variables or unknown orunforeseeable events or circumstances that management has little or no influence or control, and many of these risks anduncertainties are currently amplified by and may continue to be amplified by, or in the future may be amplified by, amongother things, macroeconomic conditions. The Risk Factors in Item 1A of this report could affect our future results and couldcause those results or other outcomes to differ materially from those expressed or implied in any forward-looking statementsor information. To the extent circumstances require or we deem it otherwise necessary, we will update or amend these riskfactors in a Form 10-Q, Form 8-K, or subsequent Form 10-K. All forward-looking statements are qualified by, and should beread in conjunction with, these Risk Factors. Forward-looking statements speak only as of the date the statement was made. We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions, or changes in other factors affecting forward-lookinginformation. If we do update one or more forward-looking statements, no inference should be drawn that we will makeadditional updates with respect thereto or with respect to other forward-looking statements. Item 7A. Quantitative and Qualitative Disclosures about Market Risk Information concerning market risk sensitive instruments is set forth under Management’s Discussion and Analysis ofFinancial Condition and Results of Operations - Other Matters, Item 7.**************************************** 39Table of Contents Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial StatementsPage Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)41 Consolidated Statements of Income For the Years Ended December 31, 2023, 2022, and 202143 Consolidated Statements of Comprehensive Income For the Years Ended December 31, 2023, 2022, and 202143 Consolidated Statements of Financial Position At December 31, 2023 and 202244 Consolidated Statements of Cash Flows For the Years Ended December 31, 2023, 2022, and 202145 Consolidated Statements of Changes in Common Shareholders’ Equity For the Years Ended December 31, 2023, 2022, and 202146 Notes to the Consolidated Financial Statements47 40REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Union Pacific Corporation Opinion on the Financial Statements We have audited the accompanying consolidated statements of financial position of Union Pacific Corporation and Subsidiary Companies (the "Corporation") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in common shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Corporation as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Corporation's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 9, 2024, expressed an unqualified opinion on the Corporation's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on the Corporation's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Capitalization of Properties — Refer to Notes 2 and 11 to the financial statements Critical Audit Matter Description The Corporation’s operations are highly capital intensive and their large network of assets turns over on a continuous basis. Each year, the Corporation develops a capital program for both the replacement of assets and for the acquisition or construction of new assets. In determining whether costs should be capitalized, the Corporation exercises significant judgment in determining whether expenditures meet the applicable minimum units of property criteria and extend the useful life, improve the safety of operations, or improve the operating efficiency of existing assets. The Corporation capitalizes all costs of capital projects necessary to make assets ready for their intended use and because a portion of the Corporation’s assets are self-constructed, management also exercises significant judgment in determining the amount of material, labor, work equipment, and indirect costs that qualify for capitalization. Capitalized costs to Properties, net during 2023 were $3.8 billion. We identified the capitalization of property during 2023 as a critical audit matter because of the significant judgment exercised by management in determining whether costs meet the criteria for capitalization. This, in turn, required a high degree of auditor judgment when performing audit procedures to evaluate whether the criteria to capitalize costs were met and to evaluate sufficiency of audit evidence to support management’s conclusions. How the Critical Audit Matter Was Addressed in the Audit Our procedures related to capitalization of property included the following, among others: · We tested the effectiveness of controls over the Corporation’s determination of whether costs related to the Corporation’s capital investments should be capitalized or expensed. · We evaluated the Corporation’s capitalization policy in accordance with accounting principles generally accepted in the United States of America. · For a selection of capital projects, we performed the following: − Obtained the Corporation’s evaluation of each project and determined whether the amount of costs to be capitalized met the criteria for capitalization as outlined within the Corporation’s policy by unit of property. − Obtained supporting documentation that the project met the applicable minimum units of property criteria and was approved, and evaluated whether the project extended the useful life of an existing asset, improved the safety of operations, or improved the operating efficiency of existing assets. · For a selection of capitalized costs during the year, we performed the following: − Evaluated whether the individual cost selected met the criteria for capitalization. − Evaluated whether the selection was accurately recorded at the appropriate amount based on the evidence obtained. Omaha, Nebraska February 9, 2024 We have served as the Corporation's auditor since 1967. Table of Contents CONSOLIDATED STATEMENTS OF INCOMEUnion Pacific Corporation and Subsidiary Companies Millions, Except Per Share Amounts, for the Years Ended December 31, 2023 2022 2021 Operating revenues: Freight revenues $22,571 $23,159 $20,244 Other revenues 1,548 1,716 1,560 Total operating revenues 24,119 24,875 21,804 Operating expenses: Compensation and benefits 4,818 4,645 4,158 Fuel 2,891 3,439 2,049 Purchased services and materials 2,616 2,442 2,016 Depreciation 2,318 2,246 2,208 Equipment and other rents 947 898 859 Other 1,447 1,288 1,176 Total operating expenses 15,037 14,958 12,466 Operating income 9,082 9,917 9,338 Other income, net (Note 6) 491 426 297 Interest expense (1,340) (1,271) (1,157)Income before income taxes 8,233 9,072 8,478 Income tax expense (Note 7) (1,854) (2,074) (1,955)Net income $6,379 $6,998 $6,523 Share and Per Share (Note 8): Earnings per share - basic $10.47 $11.24 $9.98 Earnings per share - diluted $10.45 $11.21 $9.95 Weighted average number of shares - basic 609.2 622.7 653.8 Weighted average number of shares - diluted 610.2 624.0 655.4 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEUnion Pacific Corporation and Subsidiary Companies Millions, for the Years Ended December 31, 2023 2022 2021 Net income $6,379 $6,998 $6,523 Other comprehensive income/(loss): Defined benefit plans (106) 280 723 Foreign currency translation 58 52 (44)Unrealized gain on derivative instruments 16 - - Total other comprehensive income/(loss) [a] (32) 332 679 Comprehensive income $6,347 $7,330 $7,202 [a]Net of deferred taxes of $31 million, ($92) million, and ($237) million during 2023, 2022, and 2021, respectively. The accompanying notes are an integral part of these Consolidated Financial Statements. 43Table of Contents CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONUnion Pacific Corporation and Subsidiary Companies Millions, Except Share and Per Share Amounts as of December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $1,055 $973 Short-term investments (Note 13) 16 46 Accounts receivable, net (Note 10) 2,073 1,891 Materials and supplies 743 741 Other current assets 261 301 Total current assets 4,148 3,952 Investments 2,605 2,375 Properties, net (Note 11) 57,398 56,038 Operating lease assets (Note 16) 1,643 1,672 Other assets 1,338 1,412 Total assets $67,132 $65,449 Liabilities and Common Shareholders' Equity Current liabilities: Accounts payable and other current liabilities (Note 12) $3,683 $3,842 Debt due within one year (Note 14) 1,423 1,678 Total current liabilities 5,106 5,520 Debt due after one year (Note 14) 31,156 31,648 Operating lease liabilities (Note 16) 1,245 1,300 Deferred income taxes (Note 7) 13,123 13,033 Other long-term liabilities 1,714 1,785 Commitments and contingencies (Note 17) Total liabilities 52,344 53,286 Common shareholders' equity: Common shares, $2.50 par value, 1,400,000,000 authorized; 1,112,854,806 and 1,112,623,886 issued; 609,703,814 and 612,393,321 outstanding, respectively 2,782 2,782 Paid-in-surplus 5,193 5,080 Retained earnings 62,093 58,887 Treasury stock (54,666) (54,004)Accumulated other comprehensive loss (Note 9) (614) (582)Total common shareholders' equity 14,788 12,163 Total liabilities and common shareholders' equity $67,132 $65,449 The accompanying notes are an integral part of these Consolidated Financial Statements. 44Table of Contents CONSOLIDATED STATEMENTS OF CASH FLOWSUnion Pacific Corporation and Subsidiary Companies Millions, for the Years Ended December 31, 2023 2022 2021 Operating Activities Net income $6,379 $6,998 $6,523 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 2,318 2,246 2,208 Deferred and other income taxes 117 262 154 Other operating activities, net (132) (152) (56)Changes in current assets and liabilities: Accounts receivable, net (177) (169) (217)Materials and supplies (2) (120) 17 Other current assets (38) 5 31 Accounts payable and other current liabilities (215) 565 184 Income and other taxes 129 (273) 188 Cash provided by operating activities 8,379 9,362 9,032 Investing Activities Capital investments (3,606) (3,620) (2,936)Other investing activities, net (61) 149 227 Cash used in investing activities (3,667) (3,471) (2,709)Financing Activities Dividends paid (3,173) (3,159) (2,800)Debt repaid (2,190) (2,291) (1,299)Debt issued (Note 14) 1,599 6,080 4,201 Share repurchase programs (Note 18) (705) (6,282) (7,291)Other financing activities, net (156) (235) 31 Cash used in financing activities (4,625) (5,887) (7,158)Net change in cash, cash equivalents, and restricted cash 87 4 (835)Cash, cash equivalents, and restricted cash at beginning of year 987 983 1,818 Cash, cash equivalents, and restricted cash at end of year $1,074 $987 $983 Supplemental Cash Flow Information Non-cash investing and financing activities: Capital investments accrued but not yet paid $137 $152 $263 Term loan renewals - - 100 Common shares repurchased but not yet paid 5 - - Cash paid during the year for: Income taxes, net of refunds $(1,486) $(2,060) $(1,658)Interest, net of amounts capitalized (1,268) (1,156) (1,087) The accompanying notes are an integral part of these Consolidated Financial Statements. 45Table of Contents CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDERS' EQUITYUnion Pacific Corporation and Subsidiary Companies MillionsCommonSharesTreasuryShares CommonSharesPaid-in-SurplusRetainedEarningsTreasuryStockAOCI [a]Total Balance at January 1, 2021 1,112.2 (440.9) $2,781 $4,864 $51,326 $(40,420) $(1,593) $16,958 Net income - - 6,523 - - 6,523 Other comprehensive income/(loss) - - - - 679 679 Conversion, stock option exercises,forfeitures, ESPP, and other 0.2 0.6 - 91 - 1 - 92 Share repurchase programs (Note 18) - (33.3) - 24 - (7,315) - (7,291)Cash dividends declared ($4.29 pershare) - - - - (2,800) - - (2,800)Balance at December 31, 2021 1,112.4 (473.6) $2,781 $4,979 $55,049 $(47,734) $(914) $14,161 Net income - - 6,998 - - 6,998 Other comprehensive income/(loss) - - - - 332 332 Conversion, stock option exercises,forfeitures, ESPP, and other 0.2 0.5 1 113 - - - 114 Share repurchase programs (Note 18) - (27.1) - (12) - (6,270) - (6,282)Cash dividends declared ($5.08 pershare) - - - - (3,160) - - (3,160)Balance at December 31, 2022 1,112.6 (500.2) $2,782 $5,080 $58,887 $(54,004) $(582) $12,163 Net income - - 6,379 - - 6,379 Other comprehensive income/(loss) - - - - (32) (32)Conversion, stock option exercises,forfeitures, ESPP, and other 0.3 0.5 - 113 - 50 - 163 Share repurchase programs (Note 18) - (3.5) - - - (712) - (712)Cash dividends declared ($5.20 pershare) - - - - (3,173) - - (3,173)Balance at December 31, 2023 1,112.9 (503.2) $2,782 $5,193 $62,093 $(54,666) $(614) $14,788 [a]AOCI = Accumulated Other Comprehensive Income/Loss (Note 9) The accompanying notes are an integral part of these Consolidated Financial Statements. 46Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSUnion Pacific Corporation and Subsidiary Companies For purposes of this report, unless the context otherwise requires, all references herein to "Union Pacific", “Corporation”,“Company”, “UPC”, “we”, “us”, and “our” mean Union Pacific Corporation and its subsidiaries, including Union Pacific RailroadCompany, which will be separately referred to herein as “UPRR” or the “Railroad”. 1. Nature of Operations Operations and Segmentation – We are a Class I railroad operating in the U.S. Our network includes 32,693 route miles,connecting Pacific Coast and Gulf Coast ports with the Midwest and Eastern U.S. gateways and providing several corridors tokey Mexican and Canadian gateways. We own 26,110 miles and operate on the remainder pursuant to trackage rights orleases. We serve the western two-thirds of the country and maintain coordinated schedules with other rail carriers for thehandling of freight to and from the Atlantic Coast, the Pacific Coast, the Southeast, the Southwest, Canada, and Mexico.Export and import traffic is moved through Gulf Coast, Pacific Coast, and East Coast ports and across the Mexican andCanadian borders. The Railroad, along with its subsidiaries and rail affiliates, is our one reportable operating segment. Although we provide andanalyze revenues by commodity group, we treat the financial results of the Railroad as one segment due to the integratednature of our rail network. Our operating revenues are primarily derived from contracts with customers for the transportation offreight from origin to destination. The following table represents a disaggregation of our freight and other revenues: Millions 2023 2022 2021 Bulk $7,358 $7,537 $6,656 Industrial 8,238 8,205 7,323 Premium 6,975 7,417 6,265 Total freight revenues $22,571 $23,159 $20,244 Other subsidiary revenues 872 884 741 Accessorial revenues 584 779 752 Other 92 53 67 Total operating revenues $24,119 $24,875 $21,804 Although our revenues are principally derived from customers domiciled in the U.S., the ultimate points of origination ordestination for some products we transport are outside the U.S. Each of our commodity groups includes revenues fromshipments to and from Mexico. Included in the above table are freight revenues from our Mexico business which amountedto $2.8 billion in 2023, $2.7 billion in 2022, and $2.4 billion in 2021. Basis of Presentation – The Consolidated Financial Statements are presented in accordance with accounting principlesgenerally accepted in the U.S. (GAAP) as codified in the Financial Accounting Standards Board (FASB) AccountingStandards Codification (ASC). Certain prior period amounts have been reclassified to conform to the current period financialstatement presentation. 2. Significant Accounting Policies Principles of Consolidation – The Consolidated Financial Statements include the accounts of Union Pacific Corporationand all of its subsidiaries. Investments in affiliated companies (20% to 50% owned) are accounted for using the equity methodof accounting. All intercompany transactions are eliminated. We currently have no less than majority-owned investments thatrequire consolidation under variable interest entity requirements. Cash, Cash Equivalents, and Restricted Cash – Cash equivalents consist of investments with original maturities of threemonths or less. Amounts included in restricted cash represent those required to be set aside by contractual agreement. 47Table of Contents The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the ConsolidatedStatements of Financial Position that sum to the total of the same such amounts shown on the Consolidated Statements ofCash Flows: Millions 2023 2022 2021 Cash and cash equivalents $1,055 $973 $960 Restricted cash equivalents in other current assets 10 10 19 Restricted cash equivalents in other assets 9 4 4 Total cash, cash equivalents, and restricted cash equivalents$1,074 $987 $983 Accounts Receivable – Accounts receivable includes receivables reduced by an allowance for doubtful accounts. Theallowance is based upon historical losses, credit worthiness of customers, and current economic conditions. Receivables notexpected to be collected in one year and the associated allowances are classified as other assets in our ConsolidatedStatements of Financial Position. Investments – Investments represent our investments in affiliated companies (20% to 50% owned) that are accounted forunder the equity method of accounting, and investments in companies (less than 20% owned) accounted for at fair valuewhen there is a readily determined fair value or at cost minus impairment when there are not readily determinable fair values.Our portion of income/loss on equity method investments that are integral to our operations are recorded in operatingexpenses. Realized and unrealized gains and losses on investments that are not integral to our operations are recorded inother income. Materials and Supplies – Materials and supplies are carried at the lower of average cost or net realizable value. Property and Depreciation – Properties and equipment are carried at cost and are depreciated on a straight-line basis overtheir estimated service lives, which are measured in years, except for rail in high-density traffic corridors (i.e., all raillines except for those lines subject to abandonment, yard tracks, and switching tracks), where lives are measured in millionsof gross tons per mile of track. We use the group method of depreciation where all items with similar characteristics, use,and expected lives are grouped together in asset classes and are depreciated using composite depreciation rates. The groupmethod of depreciation treats each asset class as a pool of resources, not as singular items. We determine the estimatedservice lives of depreciable railroad assets by means of depreciation studies. Under the group method of depreciation, no gainor loss is recognized when depreciable property is retired or replaced in the ordinary course of business. Impairment of Long-Lived Assets – We review long-lived assets, including identifiable intangibles, for impairment whenevents or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If impairmentindicators are present and the estimated future undiscounted cash flows are less than the carrying value of the long-livedassets, the carrying value is reduced to the estimated fair value. Revenue Recognition – Freight revenues are derived from contracts with customers. We account for a contract when it hasapproval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contracthas commercial substance, and collectability of consideration is probable. Our contracts include private agreements, privaterate/letter quotes, public circulars/tariffs, and interline/foreign agreements. The performance obligation in our contracts istypically delivering a specific commodity from a place of origin to a place of destination and our commitment begins with thetendering and acceptance of a freight bill of lading and is satisfied upon delivery at destination. We consider each freightshipment to be a distinct performance obligation. We recognize freight revenues over time as freight moves from origin to destination. The allocation of revenues betweenreporting periods is based on the relative transit time in each reporting period with expenses recognized as incurred.Outstanding performance obligations related to freight moves in transit totaled $149 million at December 31, 2023, and$194 million at December 31, 2022, and are expected to be recognized in the following quarter as we satisfy our remainingperformance obligations and deliver freight to destination. The transaction price is generally specified in a contract and maybe dependent on the commodity, origin/destination, and route. Customer incentives, which are primarily provided for shippingto/from specific locations or based on cumulative volumes, are recorded as a reduction to operating revenues. Customerincentives that include variable consideration based on cumulative volumes are estimated using the expected value method,which is based on available historical, current, and forecasted volumes, and recognized as the related performance obligationis satisfied. 48Table of Contents Under typical payment terms, our customers pay us after each performance obligation is satisfied and there are no materialcontract assets or liabilities associated with our freight revenues. Outstanding freight receivables are presented in ourConsolidated Statements of Financial Position as accounts receivable, net. Freight revenues related to interline transportation services that involve other railroads are reported on a net basis. The portionof the gross amount billed to customers that is remitted by the Company to another party is not reflected as freight revenues. Other revenues consist primarily of revenues earned by our other subsidiaries (primarily logistics and commuter railoperations) and accessorial revenues. Other subsidiary revenues are generally recognized over time as shipments move fromorigin to destination. The allocation of revenues between reporting periods is based on the relative transit time in eachreporting period with expenses recognized as incurred. Accessorial revenues are recognized at a point in time asperformance obligations are satisfied. Translation of Foreign Currency – Our portion of the assets and liabilities related to foreign investments are translated intoU.S. dollars at the exchange rates in effect at the balance sheet date. Revenues and expenses are translated at the averagerates of exchange prevailing during the year. Unrealized gains or losses are reflected within common shareholders’ equity asaccumulated other comprehensive income or loss. Fair Value Measurements – We use a fair value hierarchy that prioritizes the inputs to valuation techniques used tomeasure fair value into three broad levels. The level in the fair value hierarchy within which the fair value measurement in itsentirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.These levels include: Level 1: Quoted market prices in active markets for identical assets or liabilities.Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.Level 3: Unobservable inputs that are not corroborated by market data. We have applied fair value measurements to our short-term investments, certain equity investments, pension plan assets,and short- and long-term debt. Stock-Based Compensation – We issue treasury shares to cover stock option exercises, stock unit vestings, andESPP shares, while new shares are issued when retention shares are granted. We measure and recognize compensation expense for all stock-based awards made to employees, including stock optionsand ESPP awards. Compensation expense is based on the fair value of the awards as measured at the grant date and isexpensed ratably over the service period of the awards (generally the vesting period). The fair value of retention awards is theclosing stock price on the date of grant, the fair value of stock options is determined by using the Black-Scholes optionpricing model, and the fair value of ESPP awards is based on the Company contribution match. Earnings Per Share – Basic earnings per share are calculated on the weighted-average number of common sharesoutstanding during each period. Diluted earnings per share include shares issuable upon exercise of outstanding stockoptions and stock-based awards where the conversion of such instruments would be dilutive. Income Taxes – We account for income taxes by recording taxes payable or refundable for the current year and deferred taxassets and liabilities for the expected future tax consequences of events that are reported in different periods for financialreporting and income tax purposes. The majority of our deferred tax assets relate to expenses that already have beenrecorded for financial reporting purposes but not deducted for tax purposes. The majority of our deferred tax liabilities relate todifferences between the tax bases and financial reporting amounts of our land and depreciable property, due to acceleratedtax depreciation (including bonus depreciation), revaluation of assets in purchase accounting transactions, and differences incapitalization methods. These expected future tax consequences are measured based on current tax law; the effects of futuretax legislation are not anticipated. When appropriate, we record a valuation allowance against deferred tax assets to reflect that these tax assets may not berealized. In determining whether a valuation allowance is appropriate, we consider whether it is more likely than not that all orsome portion of our deferred tax assets will not be realized, based on management’s judgments using available evidence forpurposes of estimating whether future taxable income will be sufficient to realize a deferred tax asset. 49Table of Contents We recognize tax benefits that are more likely than not to be sustained upon examination by tax authorities. The amountrecognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement.A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in our tax returns that do not meet theserecognition and measurement standards. Leases – We determine if an arrangement is or contains a lease at inception. Operating lease assets and operating leaseliabilities are recognized based on the present value of the future minimum lease payments over the lease term atcommencement date. When an implicit rate is not available, we use a collateralized incremental borrowing rate for operatingleases based on the information available at commencement date, including lease term, in determining the present value offuture payments. The operating lease asset also includes any lease payments made and excludes lease incentives and initialdirect costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain thatthe option will be exercised. Operating leases are included in operating lease assets, accounts payable and other currentliabilities, and operating lease liabilities on our Consolidated Statements of Financial Position. Finance leases are included inproperties, net, debt due within one year, and debt due after one year on our Consolidated Statements of Financial Position.Operating lease expense is recognized on a straight-line basis over the lease term and primarily reported in equipment andother rents and financing lease expense is recorded as depreciation and interest expense in our Consolidated Statements ofIncome. We have lease agreements with lease and non-lease components, and we have elected to not separate lease and non-leasecomponents for all classes of underlying assets. Leases with an initial term of 12 months or less are not recorded on ourConsolidated Statements of Financial Position. Leases with initial terms in excess of 12 months are recorded as operating orfinancing leases in our Consolidated Statements of Financial Position. Pension Benefits – In order to measure the expense associated with pension benefits, we must make various assumptionsincluding discount rates used to value certain liabilities, expected return on plan assets used to fund these expenses,compensation increases, employee turnover rates, and anticipated mortality rates. The assumptions used by us are basedon our historical experience as well as current facts and circumstances. We use an actuarial analysis to measure theexpense and liability associated with these benefits. Personal Injury – The cost of injuries to employees and others on our property is charged to expense based on estimates ofthe ultimate cost and number of incidents each year. We use an actuarial analysis to measure the expense and liability,including unasserted claims. Our personal injury liability is not discounted to present value due to the uncertainty surroundingthe timing of future payments. Legal fees and incidental costs are expensed as incurred. Environmental – When environmental issues have been identified with respect to property currently or formerly owned,leased, or otherwise used in the conduct of our business, we perform, with the assistance of our consultants, environmentalassessments on such property. We expense the cost of the assessments as incurred. We accrue the cost of remediationwhere our obligation is probable and such costs can be reasonably estimated. We do not discount our environmentalliabilities when the timing of the anticipated cash payments is not fixed or readily determinable. Legal fees and incidentalcosts are expensed as incurred. Use of Estimates – The preparation of our Consolidated Financial Statements in conformity with GAAP requiresmanagement to make estimates and assumptions that affect certain reported assets and liabilities, the disclosure of certaincontingent assets and liabilities as of the date of the Consolidated Financial Statements, as well as the reported amounts ofrevenues and expenses during the reporting period. Actual future results may differ from such estimates. 3. Accounting Pronouncements In December 2023, the FASB issued Accounting Standards Update No. (ASU) 2023-09, Income Taxes (Topic 740):Improvements to Income Tax Disclosures, which requires business entities to expand their annual disclosures of the effectiverate reconciliation and income taxes paid. The ASU is effective for fiscal years beginning after December 15, 2024, may beadopted on a prospective or retrospective basis, and early adoption is permitted. The Company is currently evaluating theeffect that the new guidance will have on our related disclosures. 50Table of Contents In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable SegmentDisclosures, which requires business entities to enhance disclosures about significant segment expenses. The ASU iseffective for fiscal years beginning after December 15, 2023, on a retrospective basis, and early adoption is permitted. TheCompany is currently evaluating the effect that the new guidance will have on our related disclosures. 4. Stock Options and Other Stock Plans In April 2000, the shareholders approved the Union Pacific Corporation 2000 Directors Plan (Directors Plan) whereby2,200,000 shares of our common stock were reserved for issuance to our non-employee directors. Under the Directors Plan,each non-employee director, upon his or her initial election to the Board of Directors, received a grant of 4,000 retentionshares or retention stock units. In July 2018, the Board of Directors eliminated the retention grant for directors newly electedin 2018 and all future years. As of December 31, 2023, 16,000 restricted shares were outstanding under the Directors Plan. The Union Pacific Corporation 2013 Stock Incentive Plan (2013 Plan) was approved by shareholders in May 2013. The 2013Plan reserved 78,000,000 shares of our common stock for issuance, plus any shares subject to awards made under previousplans as of February 28, 2013, that are subsequently cancelled, expired, forfeited, or otherwise not issued under previousplans. Under the 2013 Plan, non-qualified stock options, incentive stock options, retention shares, stock units, and incentivebonus awards may be granted to eligible employees of the Corporation and its subsidiaries. Non-employee directors are noteligible for awards under the 2013 Plan. As of December 31, 2023, 1,090,770 stock options and 245,107 retention shares andstock units were outstanding under the 2013 Plan. We no longer grant any stock options or other stock or unit awards underthis plan. The Union Pacific Corporation 2021 Stock Incentive Plan (2021 Plan) was approved by shareholders in May 2021. The2021 Plan reserved 23,000,000 shares of our common stock for issuance, plus any shares subject to awards made underprevious plans as of December 31, 2020, that are subsequently cancelled, expired, forfeited, or otherwise not issued underprevious plans. Under the 2021 Plan, non-qualified stock options, incentive stock options, retention shares, stock units, andincentive bonus awards may be granted to eligible employees of the Corporation and its subsidiaries. Non-employee directorsare not eligible for awards under the 2021 Plan. As of December 31, 2023, 981,484 stock options and 1,059,344 retentionshares were outstanding under the 2021 Plan. The Union Pacific Corporation 2021 Employee Stock Purchase Plan (2021 ESPP) was approved by shareholders in May2021. The 2021 ESPP reserved 10,000,000 shares of our common stock for issuance. Under the 2021 ESPP, eligibleemployees of the Corporation and its subsidiaries may elect to purchase shares with a Company match award. Non-employee directors are not eligible for awards under the 2021 ESPP. As of December 31, 2023, 754,708 shares were issuedunder the 2021 ESPP. Pursuant to the above plans 31,979,909; 33,185,971; and 34,011,624 shares of our common stock were authorized andavailable for grant at December 31, 2023, 2022, and 2021, respectively. Stock-Based Compensation – We have several stock-based compensation plans where employees receive nonvestedstock options, nonvested retention shares, and nonvested stock units. We refer to the nonvested shares and stock unitscollectively as “retention awards”. Employees also are able to participate in our ESPP. 51Table of Contents Information regarding stock-based compensation expense appears in the table below: Millions 2023 2022 2021 Stock-based compensation expense, before tax: Stock options $16 $14 $15 Retention awards 71 68 66 ESPP 20 17 7 Total stock-based compensation expense, before tax $107 $99 $88 Excess income tax benefits from equity compensation plans $11 $21 $26 Stock Options – Stock options are granted at the closing price on the date of grant, have 10-year contractual terms, and vestno later than 3 years from the date of grant. None of the stock options outstanding at December 31, 2023, are subject toperformance or market-based vesting conditions. The table below shows the annual weighted-average assumptions used for Black-Scholes valuation purposes: Weighted-Average Assumptions 2023 2022 2021 Risk-free interest rate 3.9% 1.6% 0.4%Dividend yield 2.6% 1.9% 1.9%Expected life (years) 4.5 4.4 4.6 Volatility 29.3% 28.7% 28.3%Weighted-average grant-date fair value of options granted $48.31 $51.92 $39.97 The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant; the expected dividend yield iscalculated as the ratio of dividends paid per share of common stock to the stock price on the date of grant; the expected lifeis based on historical and expected exercise behavior; and expected volatility is based on the historical volatility of our stockprice over the expected life of the stock option. A summary of stock option activity during 2023 is presented below: Options(thous.)Weighted-AverageExercise PriceWeighted-AverageRemaining ContractualTerm (yrs.)Aggregate IntrinsicValue (millions) Outstanding at January 1, 2023 1,974 $169.64 6.0 $86 Granted 351 202.81 N/A N/A Exercised (233) 118.29 N/A N/A Forfeited or expired (20) 218.46 N/A N/A Outstanding at December 31, 2023 2,072 $180.56 5.9 $135 Vested or expected to vest at December 31, 20232,053 $180.23 5.9 $134 Options exercisable at December 31, 2023 1,423 $164.48 4.8 $115 At December 31, 2023, there was $16 million of unrecognized compensation expense related to nonvested stock options,which is expected to be recognized over a weighted-average period of 1.0 year. Additional information regarding stock optionexercises appears in the following table: Millions 2023 2022 2021 Intrinsic value of stock options exercised $23 $53 $84 Cash received from option exercises 27 27 58 Treasury shares repurchased for employee payroll taxes (5) (8) (15)Income tax benefit realized from option exercises 5 8 16 Aggregate grant-date fair value of stock options vested $14 $13 $14 Retention Awards – Retention awards are granted at no cost to the employee, vest over periods lasting up to 4 years,and dividends and dividend equivalents are paid to participants during the vesting periods. 52Table of Contents Changes in our retention awards during 2023 were as follows: Shares (thous.)Weighted-Average Grant-Date Fair Value Nonvested at January 1, 2023 1,069 $196.47 Granted 297 202.88 Vested (317) 165.34 Forfeited (53) 206.43 Nonvested at December 31, 2023 996 $207.76 At December 31, 2023, there was $82 million of total unrecognized compensation expense related to nonvested retentionawards, which is expected to be recognized over a weighted-average period of 1.4 years. Performance Stock Unit Awards – In February 2023, our Board of Directors approved performance stock unit grants. Thebasic terms of these performance stock units are identical to those granted in February 2022, including the annual return oninvested capital (ROIC) and operating income growth (OIG) performance targets. The OIG performance targets compare tocompanies in the S&P 100 Industrials Index plus the Class I railroads. We define ROIC as net operating profit adjusted forinterest expense (including interest on average operating lease liabilities) and taxes on interest divided by average investedcapital adjusted for average operating lease liabilities. The February 2023 stock units awarded to executives are subject to continued employment for 37 months, the attainment ofcertain levels of ROIC, and the relative three-year OIG. We expense two-thirds of the fair value of the units that are probable ofbeing earned based on our forecasted ROIC over the three-year performance period, and with respect to the third year of theplan, we expense the remaining one-third of the fair value subject to the relative three-year OIG. We measure the fair value ofperformance stock units based upon the closing price of the underlying common stock as of the date of grant. Dividendequivalents are accumulated during the service period and paid to participants only after the units are earned. Changes in our performance stock unit awards during 2023 were as follows: Shares (thous.)Weighted-Average Grant-Date Fair Value Nonvested at January 1, 2023 594 $199.82 Granted 251 202.81 Vested (78) 189.29 Unearned (127) 186.11 Forfeited (23) 218.31 Nonvested at December 31, 2023 617 $204.50 At December 31, 2023, there was $13 million of total unrecognized compensation expense related to nonvested performancestock unit awards, which is expected to be recognized over a weighted-average period of 0.8 years. This expense is subjectto achievement of the performance measures established for the performance stock unit grants. Employee Stock Purchase Plan - Our ESPP started in July 2021. Employee and Company contributions are used to issuetreasury shares the month after employee contributions are withheld based on the settlement date closing price. TheCompany matches 40% contributed by the employee up to a maximum employee contribution of 5% of monthly salary(limited to $15,000 annually). We expense the Company contributions in the month the employee services were rendered(i.e., the month the employee contributions were withheld). 53Table of Contents 5. Retirement Plans Pension Benefits We provide defined benefit retirement income to eligible non-union employees through qualified and non-qualified(supplemental) pension plans. Qualified and non-qualified pension benefits are based on years of service and the highestcompensation during the latest years of employment, with specific reductions made for early retirements. Non-unionemployees hired on or after January 1, 2018, are no longer eligible for pension benefits, but are eligible for an enhanced401(k) benefit as described below in other retirement programs. Funded Status We are required by GAAP to separately recognize the overfunded or underfunded status of our pension plans as an asset orliability. The funded status represents the difference between the projected benefit obligation (PBO) and the fair value of theplan assets. Our non-qualified (supplemental) pension plan is unfunded by design. The PBO of the pension plans is thepresent value of benefits earned to date by plan participants, including the effect of assumed future compensationincreases. Plan assets are measured at fair value. We use a December 31 measurement date for plan assets and obligationsfor all our retirement plans. Changes in our PBO and plan assets were as follows for the years ended December 31: Funded Status Millions 2023 2022 Projected Benefit Obligation Projected benefit obligation at beginning of year $3,725 $5,296 Service cost 52 93 Interest cost 187 123 Actuarial loss/(gain) 146 (1,557)Gross benefits paid (230) (230)Projected benefit obligation at end of year $3,880 $3,725 Plan Assets Fair value of plan assets at beginning of year $4,363 $5,554 Actual return/(loss) on plan assets 235 (992)Non-qualified plan benefit contributions 32 31 Gross benefits paid (230) (230)Fair value of plan assets at end of year $4,400 $4,363 Funded status at end of year $520 $638 Actuarial losses that increase the PBO were driven by a decrease in 2023 discount rates from 5.21% to 5.00%. Actuarialgains that decreased the PBO were driven by an increase in 2022 discount rates from 2.80% to 5.21%. Amounts recognized in the statement of financial position as of December 31, 2023 and 2022, consist of: Millions 2023 2022 Noncurrent assets $924 $1,033 Current liabilities (31) (31)Noncurrent liabilities (373) (364)Net amounts recognized at end of year $520 $638 Pre-tax amounts recognized in accumulated other comprehensive income/loss consist of $643 million and $493 million netactuarial loss as of December 31, 2023 and 2022, respectively. Pre-tax changes recognized in other comprehensive income/loss as of December 31, 2023, 2022, and 2021, were as follows: Millions 2023 2022 2021 Net actuarial (loss)/gain $(159) $272 $813 Amortization of: Actuarial loss 9 86 141 Total $(150) $358 $954 54Table of Contents Underfunded Accumulated Benefit Obligation – The accumulated benefit obligation (ABO) is the present value of benefitsearned to date, assuming no future compensation growth. The underfunded accumulated benefit obligation represents thedifference between the ABO and the fair value of plan assets. The following table discloses only the PBO, ABO, and fair value of plan assets for pension plans where the accumulatedbenefit obligation is in excess of the fair value of the plan assets as of December 31: Underfunded Accumulated Benefit Obligation Millions 2023 2022 Projected benefit obligation $404 $394 Accumulated benefit obligation $399 $382 Fair value of plan assets - - Underfunded accumulated benefit obligation $(399) $(382) The ABO for all defined benefit pension plans was $3.6 billion and $3.5 billion at December 31, 2023 and 2022, respectively. Assumptions – The weighted-average actuarial assumptions used to determine benefit obligations at December 31: Percentages 2023 2022 Discount rate 5.00% 5.21%Compensation increase 4.00% 4.10% Expense Pension expense is determined based upon the annual service cost of benefits (the actuarial cost of benefits earned during aperiod) and the interest cost on those liabilities, less the expected return on plan assets. The expected long-term rate ofreturn on plan assets is applied to a calculated value of plan assets that recognizes changes in fair value over a 5-year period.This practice is intended to reduce year-to-year volatility in pension expense, but it can have the effect of delaying therecognition of differences between actual returns on assets and expected returns based on long-term rate of returnassumptions. Differences in actual experience in relation to assumptions are not recognized in net income immediately butare deferred in accumulated other comprehensive income/loss and, if necessary, amortized as pension expense. The components of our net periodic pension benefit/cost were as follows for the years ended December 31: Millions 2023 2022 2021 Net Periodic Pension Cost: Service cost $52 $93 $110 Interest cost 187 123 104 Expected return on plan assets (248) (293) (270)Amortization of: Actuarial loss 9 86 141 Net periodic pension cost $- $9 $85 Assumptions – The weighted-average actuarial assumptions used to determine expense were as follows: Percentages 2023 2022 2021 Discount rate for benefit obligations 5.21% 2.80% 2.42%Discount rate for interest on benefit obligations 5.14% 2.40% 1.90%Discount rate for service cost 5.19% 2.91% 2.61%Discount rate for interest on service cost 5.21% 2.86% 2.53%Expected return on plan assets 5.25% 6.25% 6.25%Compensation increase 4.10% 4.10% 4.40% We measure the service cost and interest cost components of our net periodic pension benefit/cost by using individual spotdiscount rates matched with separate cash flows for each future year. The discount rates were based on a yield curve of high-quality corporate bonds. The expected return on plan assets is based on our asset allocation mix and our historical return,taking into account current and expected market conditions. The actual return/(loss) on pension plan assets, net of fees, wasapproximately 6% in 2023, (18%) in 2022, and 15% in 2021. 55Table of Contents Cash Contributions The following table details cash contributions, if any, for the qualified and non-qualified (supplemental) pension plans: Millions Qualified Non-qualified 2023 $- $32 2022 $- $31 Our policy with respect to funding the qualified pension plans is to fund at least the minimum required by law and not morethan the maximum amount deductible for tax purposes. The non-qualified pension plans are not funded and are not subject to any minimum regulatory funding requirements. Benefitpayments for each year represent supplemental pension payments. We anticipate our 2024 supplemental pension paymentswill be made from cash generated from operations. Benefit Payments The following table details expected benefit payments for the years 2024 through 2033: Millions 2024 $230 2025 229 2026 229 2027 230 2028 231 Years 2029 - 2033 $1,188 Asset Allocation Strategy Our pension plan asset allocation at December 31, 2023 and 2022, and target allocation for 2024, are as follows: Percentage of Plan Assets TargetDecember 31, Allocation 20242023 2022 Equity securities 20% to 30% 24% 48%Debt securities 70% to 80% 75 51 Real estate 0% to 2% 1 1 Total 100% 100% The pension plan investments are held in a master trust. The investment strategy for pension plan assets is to maintain abroadly diversified portfolio designed to achieve our target average long-term rate of return of 5.25%. While we believe we canachieve a long-term average rate of return of 5.25%, we cannot be certain that the portfolio will perform to our expectations.Assets are strategically allocated among equity, debt, and other investments in order to achieve a diversification level thatreduces fluctuations in investment returns. Asset allocation target ranges for equity, debt, and other portfolios are evaluated atleast every three years with the assistance of an independent consulting firm. Actual asset allocations are monitoredmonthly, and rebalancing actions are executed at least quarterly, as needed. Since 2020, the asset allocation targets for equity and debt have been adjusted annually to move from equity to debt as a de-risking measure. We met our target endpoint of 25% equity and 75% debt in 2023. The average credit rating of the debtportfolio was AA- and A+ at December 31, 2023 and 2022, respectively. The debt portfolio is also broadly diversified andinvested primarily in U.S. Treasury, mortgage, and corporate securities. The weighted-average maturity of the debt portfoliowas 22 years and 21 years at December 31, 2023 and 2022, respectively. The investment of pension plan assets in securities issued by UPC is explicitly prohibited by the plan for both the equity anddebt portfolios, other than through index fund holdings. 56Table of Contents Fair Value Measurements The pension plan assets are valued at fair value. The following is a description of the valuation methodologies used for theinvestments measured at fair value, including the general classification of such instruments pursuant to the valuationhierarchy. Temporary Cash Investments – These investments consist of U.S. dollars and foreign currencies. Foreign currencies heldare reported in terms of U.S. dollars based on currency exchange rates readily available in active markets. U.S. dollars andforeign currencies are classified as Level 1 investments. Registered Investment Companies – Registered Investment Companies are entities primarily engaged in the business ofinvesting in securities and are registered with the SEC. The plan’s prior holdings of Registered Investment Companiesincluded both public and private fund vehicles. The public vehicles are exchange-traded funds (stocks), which are classified asLevel 1 investments. The private vehicles (bonds) do not have published pricing and are valued using Net Asset Value (NAV). Federal Government Securities – Federal Government Securities consist of bills, notes, bonds, and other fixed incomesecurities issued directly by the U.S. Treasury or by government-sponsored enterprises. These assets are valued using a bidevaluation process with bid data provided by independent pricing sources. Federal Government Securities are classified asLevel 2 investments. Bonds and Debentures – Bonds and debentures consist of debt securities issued by U.S. and non-U.S. corporations aswell as state and local governments. These assets are valued using a bid evaluation process with bid data provided byindependent pricing sources. Corporate, state, and municipal bonds and debentures are classified as Level 2 investments. Corporate Stock – This investment category consists of common and preferred stock issued by U.S. and non-U.S.corporations. Most common shares are traded actively on exchanges and price quotes for these shares are readily available.Common stock is classified as a Level 1 investment. Preferred shares included in this category are valued using a bidevaluation process with bid data provided by independent pricing sources. Preferred stock is classified as a Level 2investment. Venture Capital and Buyout Partnerships – This investment category is comprised of interests in limited partnerships thatinvest primarily in privately-held companies. Due to the private nature of the partnership investments, pricing inputs are notreadily observable. Asset valuations are developed by the general partners that manage the partnerships. These valuationsare based on the application of public market multiples to private company cash flows, market transactions that providevaluation information for comparable companies, and other methods. The fair value recorded by the plan is calculated usingeach partnership’s NAV. Real Estate Funds – The plan’s real estate investments are primarily interests in private real estate investment trusts,partnerships, limited liability companies, and similar structures. Valuations for the holdings in this category are not based onreadily observable inputs and are primarily derived from property appraisals. The fair value recorded by the plan is calculatedusing the NAV for each investment. Collective Trust and Other Funds – Collective trust and other funds are comprised of shares or units in commingled fundsand limited liability companies that are not publicly traded. The underlying assets in these entities (global stock funds andshort-term investment funds) are publicly traded on exchanges and price quotes for the assets held by these funds are readilyavailable. The fair value recorded by the plan is calculated using NAV for each investment. 57Table of Contents As of December 31, 2023, the pension plan assets measured at fair value on a recurring basis were as follows: Quoted PricesSignificant in ActiveOtherSignificant Markets forObservableUnobservable Identical InputsInputsInputs Millions(Level 1)(Level 2)(Level 3)Total Plan assets at fair value: Temporary cash investments $- $- $- $- Registered investment companies [a] - - - - Federal government securities - 1,508 - 1,508 Bonds and debentures - 1,696 - 1,696 Corporate stock 176 5 - 181 Total plan assets at fair value $176 $3,209 $- $3,385 Plan assets at NAV: Registered investment companies [b] - Venture capital and buyout partnerships 554 Real estate funds 30 Collective trust and other funds 382 Total plan assets at NAV $966 Other assets/(liabilities) [c] 49 Total plan assets $4,400 As of December 31, 2022, the pension plan assets measured at fair value on a recurring basis were as follows: Quoted PricesSignificant in ActiveOtherSignificant Markets forObservableUnobservable Identical InputsInputsInputs Millions(Level 1)(Level 2)(Level 3)Total Plan assets at fair value: Temporary cash investments $1 $- $- $1 Registered investment companies [a] 6 - - 6 Federal government securities - 803 - 803 Bonds and debentures - 1,069 - 1,069 Corporate stock 1,104 7 - 1,111 Total plan assets at fair value $1,111 $1,879 $- $2,990 Plan assets at NAV: Registered investment companies [b] 68 Venture capital and buyout partnerships 611 Real estate funds 37 Collective trust and other funds 622 Total plan assets at NAV $1,338 Other assets/(liabilities) [c] 35 Total plan assets $4,363 [a]Registered investment companies measured at fair value are stock investments.[b]Registered investment companies measured at NAV include bond investments.[c]Includes accrued receivables, net payables, and pending broker settlements. The master trust’s investments in limited partnerships and similar structures (used to invest in private equity and real estate)are valued at fair value based on their proportionate share of the partnerships’ fair value as recorded in the limited partnerships’audited financial statements. The limited partnerships allocate gains, losses, and expenses to the partners based on theownership percentage as described in the partnership agreements. At December 31, 2023 and 2022, the master trust hadfuture commitments for additional contributions to private equity partnerships totaling $80 million and $91 million, respectively,and to real estate partnerships and funds totaling $5 million and $5 million, respectively. 58Table of Contents Other Retirement Programs Other Post Retirement Benefits – We provide medical and life insurance benefits for eligible retirees hired before January 1,2004. These benefits are funded as medical claims and life insurance premiums are paid. OPEB expense is determinedbased upon the annual service cost of benefits and the interest cost on those liabilities plus amortization of net (gain)/lossamounts offset by amortization of prior service credits recorded in AOCI. Our OPEB liability was $104 million and $134 millionat December 31, 2023 and 2022, respectively. The liability is based on discount rate assumptions of 4.97% and 5.23% atDecember 31, 2023 and 2022, respectively. OPEB net periodic (benefit)/cost was ($7) million in 2023, ($2) million in 2022,and ($3) million in 2021. 401(k)/Thrift Plan – For non-union employees hired prior to January 1, 2018, and eligible union employees for whom wemake matching contributions, we provide a defined contribution plan (401(k)/thrift plan). We match 50% for each dollarcontributed by employees up to the first 6% of compensation contributed. For non-union employees hired on or after January1, 2018, we match 100% for each dollar, up to the first 6% of compensation contributed, in addition to contributing an annualamount of 3% of the employee’s annual base salary. Our plan contributions were $27 million in 2023, $24 million in 2022, and$21 million in 2021. Railroad Retirement System – All Railroad employees are covered by the Railroad Retirement System (the System).Contributions made to the System are expensed as incurred and amounted to approximately $711 million in 2023,$586 million in 2022, and $550 million in 2021. Collective Bargaining Agreements – Under collective bargaining agreements, we participate in multi-employer benefitplans that provide certain post retirement health care and life insurance benefits for eligible union employees. Premiums paidunder these plans are expensed as incurred and amounted to $16 million in 2023, $20 million in 2022, and $30 million in2021. 6. Other Income Other income included the following for the years ended December 31: Millions 2023 2022 2021 Real estate income [a] [b] $414 $381 $263 Net periodic pension benefit/(costs) 52 84 25 Interest income [a] 52 23 4 Environmental remediation and restoration (37) (47) (17)Gain from sale of investment - - 36 Other [a] 10 (15) (14)Total $491 $426 $297 [a]Prior periods have been reclassified to conform to the current period disclosure.[b]2023 includes a one-time $107 million transaction. 2022 includes a $79 million gain from a land sale to the Illinois State TollHighway Authority and a $35 million gain from a sale to the Colorado Department of Transportation. 2021 includes a $50 milliongain from a sale to the Colorado Department of Transportation. 59Table of Contents 7. Income Taxes Components of income tax expense were as follows for the years ended December 31: Millions 2023 2022 2021 Current tax expense: Federal $1,417 $1,465 $1,446 State 314 340 347 Foreign 6 7 8 Total current tax expense 1,737 1,812 1,801 Deferred and other tax expense/(benefit): Federal 219 320 199 State [a] (104) (59) (44)Foreign 2 1 (1)Total deferred and other tax expense 117 262 154 Total income tax expense $1,854 $2,074 $1,955 [a]In 2023, Nebraska, Iowa, Kansas, and Arkansas enacted corporate income tax legislation that resulted in a $114 millionreduction of our deferred tax expense. In 2022, Nebraska, Iowa, Arkansas, and Idaho enacted corporate income tax legislationthat resulted in a $95 million reduction of our deferred tax expense. In 2021, Nebraska, Oklahoma, Idaho, Louisiana, andArkansas enacted corporate income tax legislation that resulted in a $32 million reduction of our deferred tax expense. For the years ended December 31, reconciliations between statutory and effective tax rates are as follows: Tax Rate Percentages 2023 2022 2021 Federal statutory tax rate 21.0% 21.0% 21.0%State statutory rates, net of federal benefits 3.4 3.6 3.7 Deferred tax adjustments (1.2) (1.0) (0.6)Dividends received deduction (0.6) (0.5) (0.5)Excess tax benefits from equity compensation plans (0.1) (0.2) (0.3)Other - - (0.2)Effective tax rate 22.5% 22.9% 23.1% Deferred income tax assets/(liabilities) were comprised of the following at December 31: Millions 2023 2022 Deferred income tax liabilities: Property $(12,987) $(12,910)Operating lease assets (404) (411)Other (556) (591)Total deferred income tax liabilities (13,947) (13,912)Deferred income tax assets: Operating lease liabilities 394 401 Accrued casualty costs 168 164 Accrued wages 50 50 Stock compensation 26 26 Other 186 238 Total deferred income tax assets 824 879 Net deferred income tax liability $(13,123) $(13,033) In 2023 and 2022, there were no valuation allowances against deferred tax assets. 60Table of Contents A reconciliation of changes in unrecognized tax benefits liabilities/(assets) from the beginning to the end of the reportingperiod is as follows: Millions 2023 2022 2021 Unrecognized tax benefits at January 1 $34 $38 $74 Lapse of statutes of limitations (4) (3) (1)Decreases for positions taken in prior years (1) (4) (24)Increases for positions taken in current year 1 3 3 Refunds from/(payments to) and settlements with taxing authorities - - (12)Increases/(decreases) for interest and penalties - - (3)Increases for positions taken in prior years - - 1 Unrecognized tax benefits at December 31 $30 $34 $38 We recognize interest and penalties as part of income tax expense. Total accrued liabilities/(receivables) for interest andpenalties were ($4) million and ($3) million at December 31, 2023 and 2022, respectively. Total interest and penaltiesrecognized as part of income tax expense/(benefit) were ($1) million for 2023, ($2) million for 2022, and ($5) million for 2021. Several state tax authorities are examining our state income tax returns for years 2018 through 2022. We do not expect our unrecognized tax benefits to change significantly in the next 12 months. The portion of ourunrecognized tax benefits that relates to permanent changes in tax and interest would reduce our effective tax rate, ifrecognized. The remaining unrecognized tax benefits relate to tax positions for which only the timing of the benefit isuncertain. The unrecognized tax benefits that would reduce our effective tax rate are $30 million for 2023, $31 million for 2022,and $31 million for 2021. 8. Earnings Per Share The following table provides a reconciliation between basic and diluted earnings per share for the years ended December 31: Millions, Except Per Share Amounts 2023 2022 2021 Net income $6,379 $6,998 $6,523 Weighted-average number of shares outstanding: Basic 609.2 622.7 653.8 Dilutive effect of stock options 0.4 0.6 0.8 Dilutive effect of retention shares and units 0.6 0.7 0.8 Diluted 610.2 624.0 655.4 Earnings per share - basic $10.47 $11.24 $9.98 Earnings per share - diluted $10.45 $11.21 $9.95 Common stock options totaling 0.9 million, 0.3 million, and 0.2 million for 2023, 2022, and 2021, respectively, were excludedfrom the computation of diluted earnings per share because the exercise prices of these stock options exceeded the averagemarket price of our common stock for the respective periods, and the effect of their inclusion would be anti-dilutive. 61Table of Contents 9. Accumulated Other Comprehensive Income/Loss Reclassifications out of accumulated other comprehensive income/loss were as follows (net of tax): Millions Definedbenefitplans ForeigncurrencytranslationUnrealized gainon derivativeinstruments [a] Total Balance at January 1, 2023 $(378) $(204) $- $(582)Other comprehensive income/(loss) before reclassifications 5 58 16 79 Amounts reclassified from accumulated other comprehensiveincome/(loss) [b] (111) - - (111)Net year-to-date other comprehensive income/(loss), net of taxesof $31 million (106) 58 16 (32)Balance at December 31, 2023 $(484) $(146) $16 $(614) Balance at January 1, 2022 $(658) $(256) $- $(914)Other comprehensive income/(loss) before reclassifications - 52 - 52 Amounts reclassified from accumulated other comprehensiveincome/(loss) [b] 280 - - 280 Net year-to-date other comprehensive income/(loss), net of taxesof ($92) million 280 52 - 332 Balance at December 31, 2022 $(378) $(204) $- $(582) [a]Related to interest rate swaps from equity method investments.[b]The accumulated other comprehensive income/loss reclassification components are 1) prior service cost/credit and 2) netactuarial loss, which are both included in the computation of net periodic pension benefit/cost. See Note 5 Retirement Plans foradditional details. 10. Accounts Receivable Accounts receivable includes freight and other receivables reduced by an allowance for doubtful accounts. At December 31,2023 and 2022, our accounts receivable were reduced by $9 million and $10 million, respectively. Receivables not expectedto be collected in one year and the associated allowances are classified as other assets in our Consolidated Statements ofFinancial Position. At December 31, 2023 and 2022, receivables classified as other assets were reduced by allowances of$71 million and $58 million, respectively. Receivables Securitization Facility – The Railroad maintains an $800 million, 3-year receivables securitization facility (theReceivables Facility) maturing in July 2025. Under the Receivables Facility, the Railroad sells most of its eligible third-partyreceivables to Union Pacific Receivables, Inc. (UPRI), a consolidated, wholly-owned, bankruptcy-remote subsidiary that maysubsequently transfer, without recourse, an undivided interest in accounts receivable to investors. The investors have norecourse to the Railroad’s other assets except for customary warranty and indemnity claims. Creditors of the Railroad do nothave recourse to the assets of UPRI. The amount recorded under the Receivables Facility was $0 and $100 million at December 31, 2023 and 2022, respectively.The Receivables Facility was supported by $1.7 billion and $1.6 billion of accounts receivable as collateral at December 31,2023 and 2022, respectively, which, as a retained interest, is included in accounts receivable, net in our ConsolidatedStatements of Financial Position. The outstanding amount the Railroad maintains under the Receivables Facility may fluctuate based on current cash needs.The maximum allowed under the Receivables Facility is $800 million with availability directly impacted by eligiblereceivables, business volumes, and credit risks, including receivables payment quality measures such as default and dilutionratios. If default or dilution ratios increase one percent, the allowable outstanding amount under the Receivables Facilitywould not materially change. The costs of the Receivables Facility include interest, which will vary based on prevailing benchmark and commercial paperrates, program fees paid to participating banks, commercial paper issuance costs, and fees of participating banks for unusedcommitment availability. The costs of the Receivables Facility are included in interest expense and were $9 million,$10 million, and $4 million for 2023, 2022, and 2021, respectively. 62Table of Contents 11. Properties The following tables list the major categories of property and equipment as well as the weighted-average estimated useful lifefor each category (in years): Millions, Except Estimated Useful Life Accumulated Net Book Estimated As of December 31, 2023 Cost Depreciation Value Useful Life Land $5,426 $N/A $5,426 N/A Road: Rail and other track material 18,837 7,344 11,493 42 Ties 11,985 3,895 8,090 34 Ballast 6,345 2,061 4,284 34 Other roadway [a] 23,175 5,368 17,807 47 Total road 60,342 18,668 41,674 N/A Equipment: Locomotives 9,295 3,591 5,704 18 Freight cars 2,765 956 1,809 23 Work equipment and other 1,344 546 798 17 Total equipment 13,404 5,093 8,311 N/A Technology and other 1,388 574 814 12 Construction in progress 1,173 - 1,173 N/A Total $81,733 $24,335 $57,398 N/A Millions, Except Estimated Useful Life Accumulated Net Book Estimated As of December 31, 2022 Cost Depreciation Value Useful Life Land $5,344 $N/A $5,344 N/A Road: Rail and other track material 18,419 7,096 11,323 43 Ties 11,676 3,699 7,977 34 Ballast 6,222 1,950 4,272 34 Other roadway [a] 22,411 4,970 17,441 47 Total road 58,728 17,715 41,013 N/A Equipment: Locomotives 9,166 3,606 5,560 18 Freight cars 2,562 898 1,664 23 Work equipment and other 1,253 473 780 17 Total equipment 12,981 4,977 8,004 N/A Technology and other 1,254 525 729 12 Construction in progress 948 - 948 N/A Total $79,255 $23,217 $56,038 N/A [a]Other roadway includes grading, bridges and tunnels, signals, buildings, and other road assets. Property and Depreciation – Our railroad operations are highly capital-intensive, and our large base of homogeneous,network-type assets turns over on a continuous basis. Each year we develop a capital program for the replacement of assetsand for the acquisition or construction of assets that enable us to enhance our operations or provide new service offerings tocustomers. We currently have more than 60 depreciable asset classes, and we may increase or decrease the number ofasset classes due to changes in technology, asset strategies, or other factors. We determine the estimated service lives of depreciable railroad assets by means of depreciation studies. We performdepreciation studies at least every 3 years for equipment and every 6 years for track assets (i.e., rail and other track material,ties, and ballast) and other road property. Our depreciation studies take into account the following factors: ●Statistical analysis of historical patterns of use and retirements of each of our asset classes,●Evaluation of any expected changes in current operations and the outlook for continued use of the assets,●Evaluation of technological advances and changes to maintenance practices, and●Expected salvage to be received upon retirement. 63Table of Contents For rail in high-density traffic corridors, we measure estimated service lives in millions of gross tons per mile of track. It hasbeen our experience that the lives of rail in high-density traffic corridors are closely correlated to usage (i.e., the amount ofweight carried over the rail). The service lives also vary based on rail weight, rail condition (e.g., new or secondhand), and railtype (e.g., straight or curve). Our depreciation studies for rail in high-density traffic corridors consider each of these factors indetermining the estimated service lives. For rail in high-density traffic corridors, we calculate depreciation rates annually bydividing the number of gross ton-miles carried over the rail (i.e., the weight of loaded and empty freight cars, locomotives, andmaintenance of way equipment transported over the rail) by the estimated service lives of the rail measured in millions ofgross tons per mile. For all other depreciable assets, we compute depreciation based on the estimated service lives of ourassets as determined from the analysis of our depreciation studies. Changes in the estimated service lives of our assets andtheir related depreciation rates are implemented prospectively. Under the group method of depreciation, the historical cost (net of salvage) of depreciable property that is retired or replacedin the ordinary course of business is charged to accumulated depreciation and no gain or loss is recognized. The historicalcost of certain track assets is estimated by multiplying the current replacement cost of track assets by a historical indexfactor derived from (a) inflation indices published by the Bureau of Labor Statistics and (b) the estimated useful lives of theassets as determined by our depreciation studies. The indices were selected because they closely correlate with the majorcosts of the properties comprising the applicable track asset classes. Because of the number of estimates inherent in thedepreciation and retirement processes and because it is impossible to precisely estimate each of these variables until agroup of property is completely retired, we continually monitor the estimated service lives of our assets and the accumulateddepreciation associated with each asset class to ensure our depreciation rates are appropriate. In addition, we determine ifthe recorded amount of accumulated depreciation is deficient (or in excess) of the amount indicated by our depreciationstudies. Any deficiency (or excess) is amortized as a component of depreciation expense over the remaining service lives ofthe applicable classes of assets. For retirements of depreciable railroad properties that do not occur in the normal course of business, a gain or loss may berecognized if the retirement meets each of the following three conditions: (a) is unusual, (b) is material in amount, and (c)varies significantly from the retirement profile identified through our depreciation studies. A gain or loss is recognized in otherincome when we sell land or dispose of assets that are not part of our railroad operations. We review construction in progress assets that have not yet been placed into service, for impairment when events or changesin circumstances indicate that the carrying amount of a long-lived asset or assets may not be recoverable. If impairmentindicators are present and the estimated future undiscounted cash flows are less than the carrying value of construction inprogress assets when grouped with other assets and liabilities at the lowest level where identifiable cash flows are largelyindependent, the carrying value is reduced to the estimated fair value. When we purchase an asset, we capitalize all costs necessary to make the asset ready for its intended use. However, manyof our assets are self-constructed. A large portion of our capital expenditures is for replacement of existing track assets andother road properties, which is typically performed by our employees, and for track line expansion and other capacityprojects. Costs that are directly attributable to capital projects (including overhead costs) are capitalized. Direct costs thatare capitalized as part of self-constructed assets include material, labor, and work equipment. Indirect costs are capitalized ifthey clearly relate to the construction of the asset. Costs incurred that extend the useful life of an asset, improve the safety of our operations, or improve operating efficiency arecapitalized, while normal repairs and maintenance are expensed as incurred. These costs are allocated using appropriatestatistical bases. Total expense for repairs and maintenance incurred was $2.5 billion for 2023, $2.4 billion for 2022, and$2.1 billion for 2021. Assets held under finance leases are recorded at the lower of the net present value of the minimum lease payments or thefair value of the leased asset at the inception of the lease. Amortization expense is computed using the straight-line methodover the shorter of the estimated useful lives of the assets or the period of the related lease. 64Table of Contents 12. Accounts Payable and Other Current Liabilities Dec. 31,Dec. 31, Millions 2023 2022 Accounts payable $856 $784 Income and other taxes payable 685 628 Compensation-related accruals 533 938 Interest payable 389 379 Current operating lease liabilities (Note 16) 355 331 Accrued casualty costs 307 242 Equipment rents payable 98 109 Other 460 431 Total accounts payable and other current liabilities $3,683 $3,842 13. Financial Instruments Short-Term Investments – All of the Company’s short-term investments consist of time deposits and government agencysecurities. These investments are considered Level 2 investments and are valued at amortized cost, which approximates fairvalue. As of December 31, 2023 and 2022, the Company had $16 million and $46 million of short-term investments,respectively. All short-term investments have a maturity of less than one year and are classified as held-to-maturity. Fair Value of Financial Instruments – The fair value of our short- and long-term debt was estimated using a market valueprice model, which utilizes applicable U.S. Treasury rates along with current market quotes on comparable debt securities.All of the inputs used to determine the fair market value of the Corporation’s long-term debt are Level 2 inputs and obtainedfrom an independent source. At December 31, 2023, the fair value of total debt was $28.5 billion, approximately $4.1 billionless than the carrying value. At December 31, 2022, the fair value of total debt was $28.1 billion, approximately $5.2 billionless than the carrying value. The fair value of the Corporation’s debt is a measure of its current value under present marketconditions. The fair value of our cash equivalents approximates their carrying value due to the short-term maturities of theseinstruments. 14. Debt Total debt as of December 31, 2023 and 2022, is summarized below: Millions 2023 2022 Notes and debentures, 2.2% to 7.1% due through February 14, 2072 $33,383 $33,658 Equipment obligations, 2.6% to 6.2% due through January 2, 2031 [a] 770 809 Finance leases, 3.1% to 6.8% due through December 10, 2028 158 234 Commercial paper - 200 Receivables Facility (Note 10) - 100 Term loans - 100 Unamortized discount and deferred issuance costs (1,732) (1,775)Total debt 32,579 33,326 Less: current portion (1,423) (1,678)Total long-term debt $31,156 $31,648 [a]Equipment obligations are secured by an interest in certain railroad equipment with a carrying value of approximately $0.9billion at both December 31, 2023 and 2022. 65Table of Contents Debt Maturities – The following table presents aggregate debt maturities as of December 31, 2023, excluding market valueadjustments: Millions 2024 $1,427 2025 1,426 2026 1,515 2027 1,285 2028 1,235 Thereafter 27,423 Total principal 34,311 Unamortized discount and deferred issuance costs (1,732)Total debt $32,579 Debt Redemption – On April 15, 2022, we redeemed all $750 million of outstanding 4.163% notes due July 15, 2022, at aredemption price equal to 100% of the principal amount of the notes plus accrued and unpaid interest. Credit Facilities – At December 31, 2023, we had $2.0 billion of credit available under our revolving credit facility, which isdesignated for general corporate purposes and supports the issuance of commercial paper. Credit facility withdrawals totaled$0 during 2023. Commitment fees and interest rates payable under the Facility are similar to fees and rates available tocomparably rated, investment-grade borrowers. The Facility allows for borrowings at floating rates based on Term SecuredOvernight Financing Rate (SOFR), plus a spread, depending upon credit ratings for our senior unsecured debt. The Facility,set to expire May 20, 2027, requires UPC to maintain an adjusted debt-to-EBITDA (earnings before interest, taxes,depreciation, and amortization) coverage ratio. The definition of debt used for purposes of calculating the adjusted debt-to-EBITDA coverage ratio includes, among otherthings, certain credit arrangements, finance leases, guarantees, unfunded and vested pension benefits under Title IV ofERISA, and unamortized debt discount and deferred debt issuance costs. At December 31, 2023, the Company was incompliance with the adjusted debt-to-EBITDA coverage ratio, which allows us to carry up to $44.4 billion of debt (as defined inthe Facility), and we had $34.3 billion of debt (as defined in the Facility) outstanding at that date. The Facility does notinclude any other financial restrictions, credit rating triggers (other than rating-dependent pricing), or any other provision thatcould require us to post collateral. The Facility also includes a $150 million cross-default provision and a change-of-controlprovision. During 2023, we issued $1.4 billion and repaid $1.6 billion of commercial paper with maturities ranging from 11 to 64 days. Asof December 31, 2023 and 2022, we had $0 and $200 million of commercial paper outstanding, respectively. Our revolvingcredit facility supports our outstanding commercial paper balances, and, unless we change the terms of our commercialpaper program, our aggregate issuance of commercial paper will not exceed the amount of borrowings available under theFacility. 66Table of Contents Shelf Registration Statement and Significant New Borrowings – In 2022, the Board of Directors reauthorized theissuance of up to $12.0 billion of debt securities. Under our shelf registration, we may issue, from time to time, anycombination of debt securities, preferred stock, common stock, or warrants for debt securities or preferred stock in one ormore offerings. During 2023, we issued the following unsecured, fixed-rate debt securities under our shelf registration: DateDescription of SecuritiesFebruary 21, 2023$0.50 billion of 4.750% Notes due February 21, 2026 $0.50 billion of 4.950% Notes due May 15, 2053 We used the net proceeds from the offerings for general corporate purposes, including the repurchase of common stockpursuant to our share repurchase programs. These debt securities include change-of-control provisions. At December 31,2023, we had remaining authority to issue up to $5.6 billion of debt securities under our shelf registration. Receivables Securitization Facility – As of December 31, 2023 and 2022, we recorded $0 and $100 million, respectively,of borrowings under our Receivables Facility, as secured debt. (See further discussion of our "Receivables SecuritizationFacility" section in Note 10.) 15. Variable Interest Entities We have entered into various lease transactions in which the structure of the leases contain variable interest entities (VIEs).These VIEs were created solely for the purpose of doing lease transactions (principally involving railroad equipment andfacilities) and have no other activities, assets, or liabilities outside of the lease transactions. Within these leasearrangements, we have the right to purchase some or all of the assets at fixed prices. Depending on market conditions, fixed-price purchase options available in the leases could potentially provide benefits to us; however, these benefits are notexpected to be significant. We maintain and operate the assets based on contractual obligations within the lease arrangements, which set specificguidelines consistent within the railroad industry. As such, we have no control over activities that could materially impact thefair value of the leased assets. We do not hold the power to direct the activities of the VIEs and, therefore, do not control theongoing activities that have a significant impact on the economic performance of the VIEs. Additionally, we do not have theobligation to absorb losses of the VIEs or the right to receive benefits of the VIEs that could potentially be significant to theVIEs. We are not considered to be the primary beneficiary and do not consolidate these VIEs because our actions and decisionsdo not have the most significant effect on the VIE’s performance and our fixed-price purchase options are not considered tobe potentially significant to the VIEs. The future minimum lease payments associated with the VIE leases totaled$831 million as of December 31, 2023, and are recorded as operating lease liabilities at present value in our ConsolidatedStatements of Financial Position. 67Table of Contents 16. Leases We lease certain locomotives, freight cars, and other property for use in our rail operations. The following are additional details related to our lease portfolio: Dec. 31,Dec. 31, MillionsClassification 2023 2022 Assets Operating leasesOperating lease assets $1,643 $1,672 Finance leasesProperties, net [a] 244 310 Total leased assets $1,887 $1,982 Liabilities Current OperatingAccounts payable and other current liabilities $355 $331 FinanceDebt due within one year 49 67 Noncurrent OperatingOperating lease liabilities 1,245 1,300 FinanceDebt due after one year 109 167 Total lease liabilities $1,758 $1,865 [a]Finance lease assets are recorded net of accumulated amortization of $497 million and $658 million as of December 31, 2023and 2022, respectively. The lease cost components are classified as follows: MillionsDec 31,2023Dec 31,2022 Operating lease cost [a] $369 $338 Short-term lease cost 24 18 Variable lease cost 41 13 Finance lease cost Amortization of leased assets [b] 38 52 Interest on lease liabilities [c] 8 12 Net lease cost $480 $433 [a]Operating lease cost is primarily reported in equipment and other rents in our Consolidated Statements of Income.[b]Amortization of leased assets is reported in depreciation in our Consolidated Statements of Income.[c]Interest on lease liabilities is reported in interest expense in our Consolidated Statements of Income. The following table presents aggregate lease maturities as of December 31, 2023: MillionsOperatingLeasesFinanceLeasesTotal 2024 $361 $55 $416 2025 375 42 417 2026 296 35 331 2027 237 30 267 2028 199 11 210 After 2028 300 - 300 Total lease payments $1,768 $173 $1,941 Less: Interest 168 15 183 Present value of lease liabilities $1,600 $158 $1,758 68Table of Contents The following table presents the weighted average remaining lease term and discount rate: Dec. 31, 2023 Weighted-average remaining lease term (years) Operating leases 5.8 Finance leases 3.5 Weighted-average discount rate (%) Operating leases 3.6 Finance leases 4.5 The following table presents other information related to our operating and finance leases for the years ended December 31: Millions 2023 2022 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $323 $319 Investing cash flows from operating leases 33 31 Operating cash flows from finance leases 9 15 Financing cash flows from finance leases 65 91 Leased assets obtained in exchange for finance lease liabilities - - Leased assets obtained in exchange for operating lease liabilities $241 $173 17. Commitments and Contingencies Asserted and Unasserted Claims – Various claims and lawsuits are pending against us and certain of our subsidiaries. Wecannot fully determine the effect of all asserted and unasserted claims on our consolidated results of operations, financialcondition, or liquidity. We have recorded a liability where asserted and unasserted claims are considered probable and wheresuch claims can be reasonably estimated. We currently do not expect that any known lawsuits, claims, environmental costs,commitments, contingent liabilities, or guarantees will have a material adverse effect on our consolidated results ofoperations, financial condition, or liquidity after taking into account liabilities and insurance recoveries previously recorded forthese matters. In December 2019, we received a putative class action complaint under the Illinois Biometric Information Privacy Act, allegingviolation due to the use of a finger scan system developed and managed by third parties. Union Pacific and the plaintiff arecurrently in the discovery phase. While we believe that we have strong defenses to the claims made in the complaint and willvigorously defend ourselves, there is no assurance regarding the ultimate outcome. Therefore, the outcome of this litigation isinherently uncertain, and we cannot reasonably estimate any loss or range of loss that may arise from this matter. Personal Injury – The Federal Employers’ Liability Act (FELA) governs compensation for work-related accidents. UnderFELA, damages are assessed based on a finding of fault through litigation or out-of-court settlements. We offer acomprehensive variety of services and rehabilitation programs for employees who are injured at work. Approximately 95% of the recorded liability is related to asserted claims and approximately 5% is related to unassertedclaims at December 31, 2023. Because of the uncertainty surrounding the ultimate outcome of personal injury claims, it isreasonably possible that future costs to settle these claims may range from approximately $383 million to $494 million. Werecord an accrual at the low end of the range as no amount of loss within the range is more probable than any other.Estimates can vary over time due to evolving trends in litigation. Our personal injury liability activity was as follows: Millions 2023 2022 2021 Beginning balance $361 $325 $270 Current year accruals 112 107 93 Changes in estimates for prior years 89 55 48 Payments (179) (126) (86)Ending balance at December 31 $383 $361 $325 Current portion, ending balance at December 31 $113 $84 $64 69Table of Contents Environmental Costs – We are subject to federal, state, and local environmental laws and regulations. We have identified333 sites where we are or may be liable for remediation costs associated with alleged contamination or for violations ofenvironmental requirements. This includes 32 sites that are the subject of actions taken by the U.S. government,including 20 that are currently on the Superfund National Priorities List. Certain federal legislation imposes joint and severalliability for the remediation of identified sites; consequently, our ultimate environmental liability may include costs relating toactivities of other parties, in addition to costs relating to our own activities at each site. Our environmental liability activity was as follows: Millions 2023 2022 2021 Beginning balance $253 $243 $233 Accruals 99 84 69 Payments (107) (74) (59)Ending balance at December 31 $245 $253 $243 Current portion, ending balance at December 31 $91 $67 $60 The environmental liability includes future costs for remediation and restoration of sites, as well as ongoing monitoring costs,but excludes any anticipated recoveries from third-parties. Cost estimates are based on information available for each site,financial viability of other potentially responsible parties, and existing technology, laws, and regulations. The ultimate liabilityfor remediation is difficult to determine because of the number of potentially responsible parties, site-specific cost sharingarrangements with other potentially responsible parties, the degree of contamination by various wastes, the scarcity andquality of volumetric data related to many of the sites, and the speculative nature of remediation costs. Estimates of liabilitymay vary over time due to changes in federal, state, and local laws governing environmental remediation. Current obligationsare not expected to have a material adverse effect on our consolidated results of operations, financial condition, or liquidity. Insurance – The Company has a consolidated, wholly-owned captive insurance subsidiary (the Captive), that providesinsurance coverage for certain risks including general liability, property, cyber, and FELA claims that are subject toreinsurance. The Captive entered into annual reinsurance treaty agreements that insure workers compensation, generalliability, auto liability, and FELA risk. The Captive cedes a portion of its FELA exposure through the treaty and assumes aproportionate share of the entire risk. The Captive receives direct premiums, which are netted against the Company’spremium costs in other expenses in the Consolidated Statements of Income. The treaty agreements provide for certainprotections against the risk of treaty participants’ non-performance, and we do not believe our exposure to treaty participants’non-performance is material at this time. We record both liabilities and reinsurance receivables using an actuarial analysisbased on historical experience in our Consolidated Statements of Financial Position. Effective January 2019, the Captiveinsurance subsidiary no longer participates in the reinsurance treaty agreement. The Company established a trust in thefourth quarter of 2018 for the purpose of providing collateral as required under the reinsurance treaty agreement for prior years’participation. Indemnities – Our maximum potential exposure under indemnification arrangements, including certain tax indemnifications,can range from a specified dollar amount to an unlimited amount, depending on the nature of the transactions and theagreements. Due to uncertainty as to whether claims will be made or how they will be resolved, we cannot reasonablydetermine the probability of an adverse claim or reasonably estimate any adverse liability or the total maximum exposureunder these indemnification arrangements. We do not have any reason to believe that we will be required to make anymaterial payments under these indemnity provisions. 18. Share Repurchase Programs Effective April 1, 2022, our Board of Directors authorized the repurchase of up to 100 million shares of our common stock byMarch 31, 2025. As of December 31, 2023, we repurchased a total of 19.6 million shares of our common stock under the2022 authorization. These repurchases may be made on the open market or through other transactions. Our managementhas sole discretion with respect to determining the timing and amount of these transactions. Our previous authorization, which was effective April 1, 2019, through March 31, 2022, was approved by our Board ofDirectors for up to 150 million shares of common stock. As of March 31, 2022, we repurchased a total of 83.3 million sharesof our common stock under the 2019 authorization. 70Table of Contents The table below represents shares repurchased under repurchase programs during 2023 and 2022: Number of Shares Purchased Average Price Paid [a] 2023 2022 2023 2022 First quarter [b] 2,908,703 11,014,201 $203.19 $249.95 Second quarter [c] 606,581 3,100,683 199.81 232.87 Third quarter - 9,490,339 - 221.52 Fourth quarter - 3,501,667 - 201.33 Total 3,515,284 27,106,890 $202.61 $231.76 Remaining number of shares that may be repurchased under current authority 80,392,027 [a]In the period of the final settlement, the average price paid under the accelerated share repurchase programs is calculatedbased on the total program value less the value assigned to the initial delivery of shares. The average price of thecompleted 2022 accelerated share repurchase programs was $248.32.[b]Includes 7,012,232 shares repurchased in 2022 under accelerated share repurchase programs.[c]Includes an incremental 1,847,185 shares received upon final settlement in 2022 under accelerated share repurchaseprograms. Management's assessments of market conditions and other pertinent factors guide the timing, manner, and volume of allrepurchases. We expect to fund any share repurchases under this program through cash generated from operations, the saleor lease of various operating and non-operating properties, debt issuances, and cash on hand. Open market repurchases arerecorded in treasury stock at cost, which includes any applicable commissions, fees, and excise taxes. Accelerated Share Repurchase Programs – The Company has established accelerated share repurchase programs(ASRs) with financial institutions to repurchase shares of our common stock. These ASRs have been structured so that atthe time of commencement, we pay a specified amount to the financial institutions and receive an initial delivery of shares.Additional shares may be received at the time of settlement. The final number of shares to be received is based on thevolume weighted average price of the Company’s common stock during the ASR term, less a discount and subject topotential adjustments pursuant to the terms of such ASR. On February 18, 2022, the Company received 7,012,232 shares of its common stock repurchased under ASRs for anaggregate of $2.2 billion. Upon settlement of these ASRs in the second quarter of 2022, we received 1,847,185 additionalshares. ASRs are accounted for as equity transactions, and at the time of receipt, shares are included in treasury stock at fairmarket value as of the corresponding initiation or settlement date. The Company reflects shares received as a repurchase ofcommon stock in the weighted average common shares outstanding calculation for basic and diluted earnings per share. 19. Related Parties UPRR and other North American railroad companies jointly own TTX Company (TTX). UPRR has a 37.03% economic andvoting interest in TTX while the other North American railroads own the remaining interest. In accordance with ASC 323Investments - Equity Method and Joint Venture, UPRR applies the equity method of accounting to our investment in TTX. TTX is a rail car pooling company that owns rail cars and intermodal wells to serve North America’s railroads. TTX assistsrailroads in meeting the needs of their customers by providing rail cars in an efficient, pooled environment. All railroads havethe ability to utilize TTX rail cars through car hire by renting rail cars at stated rates. 71Table of Contents UPRR had $1.8 billion and $1.7 billion recognized as investments related to TTX in our Consolidated Statements of FinancialPosition as of December 31, 2023 and 2022, respectively. TTX car hire expenses of $399 million in 2023, $402 million in2022, and $375 million in 2021 are included in equipment and other rents in our Consolidated Statements of Income. Inaddition, UPRR had accounts payable to TTX of $60 million and $68 million at December 31, 2023 and 2022, respectively. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A. Controls and Procedures As of the end of the period covered by this report, the Corporation carried out an evaluation, under the supervision and withthe participation of the Corporation’s management, including the Corporation’s Chief Executive Officer (CEO) and ExecutiveVice President and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Corporation’sdisclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. In designing and evaluating thedisclosure controls and procedures, management recognized that any controls and procedures, no matter how well designedand operated, can provide only reasonable assurance of achieving the desired control objectives. Based upon that evaluation,the CEO and the CFO concluded that, as of the end of the period covered by this report, the Corporation’s disclosure controlsand procedures were effective to provide reasonable assurance that information required to be disclosed in our Exchange Actreports is recorded, processed, summarized, and reported within the time periods specified by the SEC, and that suchinformation is accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timelydecisions regarding required disclosure. Additionally, the CEO and CFO determined that there were no changes to the Corporation’s internal control over financialreporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the last fiscal quarter that materially affected, orare reasonably likely to materially affect, the Corporation’s internal control over financial reporting. MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING The management of Union Pacific Corporation and Subsidiary Companies (the Corporation) is responsible for establishing andmaintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). TheCorporation’s internal control system was designed to provide reasonable assurance to the Corporation’s management andBoard of Directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systemsdetermined to be effective can provide only reasonable assurance with respect to financial statement preparation andpresentation. The Corporation’s management assessed the effectiveness of the Corporation’s internal control over financial reporting as ofDecember 31, 2023. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizationsof the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013). Based on our assessment,management believes that, as of December 31, 2023, the Corporation’s internal control over financial reporting is effectivebased on those criteria. The Corporation’s independent registered public accounting firm has issued an attestation report on the effectiveness of theCorporation’s internal control over financial reporting. This report appears on the next page. February 8, 2024 72REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Union Pacific Corporation Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Union Pacific Corporation and Subsidiary Companies (the “Corporation”) as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Corporation and our report dated February 9, 2024, expressed an unqualified opinion on those financial statements. Basis for Opinion The Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Corporation’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Omaha, Nebraska February 9, 2024 Table of Contents Item 9B. Other Information On October 24, 2023, Elizabeth F. Whited, President, adopted a trading plan intended to satisfy Rule 10b5-1(c) to sell up to7,500 shares of Union Pacific Corporation common stock, of which 7,500 are to be acquired upon the exercise of vestedstock options, between February 14, 2024, and April 18, 2024, subject to certain conditions. On December 15, 2023, Todd M. Rynaski, Senior Vice President and Chief Accounting, Risk, and Compliance Officer,adopted a trading plan intended to satisfy Rule 10b5-1(c) to sell up to 5,271 shares of Union Pacific Corporation commonstock, of which 5,271 are to be acquired upon the exercise of vested stock options, between March 15, 2024, and September16, 2024, subject to certain conditions. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. PART III Item 10. Directors, Executive Officers, and Corporate Governance (a)Directors of Registrant. Information as to the names, ages, positions, and offices with UPC, terms of office, periods of service, businessexperience during the past five years, and certain other directorships held by each director or person nominated tobecome a director of UPC is set forth in the Election of Directors segment of the Proxy Statement and is incorporatedherein by reference. Information concerning our Audit Committee and the independence of its members, along with information about the auditcommittee financial expert(s) serving on the Audit Committee, is set forth in the Audit Committee segment of the ProxyStatement and is incorporated herein by reference. (b)Executive Officers of Registrant. Information concerning the executive officers of UPC and its subsidiaries is presented in Part I of this report underInformation About Our Executive Officers and Principal Executive Officers of Our Subsidiaries. (c)Delinquent Section 16(a) Reports. Information concerning compliance with Section 16(a) of the Securities Exchange Act of 1934 is set forth in theDelinquent Section 16(a) Reports segment of the Proxy Statement and is incorporated herein by reference. (d)Code of Ethics for Chief Executive Officer and Senior Financial Officers of Registrant. The Board of Directors of UPC has adopted the UPC Code of Ethics for the Chief Executive Officer and Senior FinancialOfficers (the Code). A copy of the Code may be found on the Internet at our website www.up.com/investor/governance.We intend to disclose any amendments to the Code or any waiver from a provision of the Code on our website. Item 11. Executive Compensation Information concerning compensation received by our directors and our named executive officers is presented in theCompensation Discussion and Analysis, Summary Compensation Table, Grants of Plan-Based Awards in Fiscal Year 2023,Outstanding Equity Awards at 2023 Fiscal Year-End, Option Exercises and Stock Vested in Fiscal Year 2023, PensionBenefits at 2023 Fiscal Year-End, Nonqualified Deferred Compensation at 2023 Fiscal Year-End, Potential Payments UponTermination or Change in Control and Director Compensation in Fiscal Year 2023 segments of the Proxy Statement and isincorporated herein by reference. Additional information regarding compensation of directors, including Board committeemembers, is set forth in the By-Laws of UPC and the Stock Unit Grant and Deferred Compensation Plan for the Board ofDirectors, both of which are included as exhibits to this report. Information regarding the Compensation and BenefitsCommittee is set forth in the Compensation Committee segment of the Proxy Statement and is incorporated herein byreference. 74Table of Contents Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information as to the number of shares of our equity securities beneficially owned by each of our directors and nominees fordirector, our named executive officers, our directors and executive officers as a group, and certain beneficial owners is setforth in the Security Ownership of Certain Beneficial Owners and Management segment of the Proxy Statement and isincorporated herein by reference. The following table summarizes the equity compensation plans under which UPC common stock may be issued asof December 31, 2023: (a) (b) (c) Plan Category Number of securities tobe issued uponexercise of outstandingoptions, warrants andrights Weighted-averageexercise price ofoutstanding options,warrants and rights Number of securitiesremaining available forfuture issuance underequity compensationplans (excludingsecurities reflected incolumn (a)) Equity compensation plans approved bysecurity holders 2,438,300 [1] $147.06 [1] 31,979,909 [2]Total 2,438,300 $147.06 31,979,909 [1]Includes 366,046 retention units that do not have an exercise price. Does not include 954,405 retention shares that have beenissued and are outstanding.[2]Does not include the retention units or retention shares described above in footnote [1]. Item 13. Certain Relationships and Related Transactions, and Director Independence Information on related transactions is set forth in the Related Party Policy and Procedures segment of the Proxy Statementand is incorporated herein by reference. We do not have any relationship with any outside third-party that would enable sucha party to negotiate terms of a material transaction that may not be available to, or available from, other parties on an arm’s-length basis. Information regarding the independence of our directors is set forth in the Director Independence segment of the ProxyStatement and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services Information concerning the fees billed by our independent registered public accounting firm and the nature of servicescomprising the fees for each of the two most recent fiscal years in each of the following categories: (a) audit fees, (b) audit-related fees, (c) tax fees, and (d) all other fees, is set forth in the Independent Registered Public Accounting Firm’s Fees andServices segment of the Proxy Statement and is incorporated herein by reference. Information concerning our Audit Committee’s policies and procedures pertaining to pre-approval of audit and non-auditservices rendered by our independent registered public accounting firm is set forth in the Pre-approval of Audit and Non-AuditServices Policy segment of the Proxy Statement and is incorporated herein by reference. PART IV Item 15. Exhibit and Financial Statement Schedules (a)Financial Statements, Financial Statement Schedules, and Exhibits: (1) Financial Statements The financial statements filed as part of this filing are listed on the index to the Financial Statements and SupplementaryData, Item 8, on page 40. 75Table of Contents (2) Financial Statement Schedules Schedules have been omitted because they are not applicable or not required or the information required to be set forththerein is included in the Financial Statements and Supplementary Data, Item 8, or notes thereto. (3) Exhibits Exhibits are listed in the exhibit index beginning on page 76. The exhibits include management contracts,compensatory plans and arrangements required to be filed as exhibits to the Form 10-K by Item 601 (10) (iii) ofRegulation S-K. UNION PACIFIC CORPORATIONExhibit Index Exhibit No.Description Filed with this Statement 10(a)†Form of Performance Stock Unit Agreement dated February 8, 2024. 10(b)†Form of Non-Qualified Stock Option Agreement for Executives dated February 8, 2024. 10(c)†Performance Stock Unit Agreement dated February 8, 2024, for V. James Vena. 10(d)†Non-Qualified Option Agreement dated February 8, 2024, for V. James Vena. 10(e)†Supplemental Pension Plan for Officers and Managers (409A Non-Grandfathered Component) ofUnion Pacific Corporation and Affiliates, as amended November 1, 2023. 21List of the Corporation’s significant subsidiaries and their respective states of incorporation. 23Independent Registered Public Accounting Firm’s Consent. 24Powers of attorney executed by the directors of UPC. 31(a)Certifications Pursuant to Rule 13a-14(a), of the Exchange Act, as Adopted pursuant to Section302 of the Sarbanes-Oxley Act of 2002 - V. James Vena. 31(b)Certifications Pursuant to Rule 13a-14(a), of the Exchange Act, as Adopted pursuant to Section302 of the Sarbanes-Oxley Act of 2002 - Jennifer L. Hamann. 32Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002 - V. James Vena and Jennifer L. Hamann. 76Table of Contents 101The following financial and related information from Union Pacific Corporation’s Annual Report onForm 10-K for the year ended December 31, 2023 (filed with the SEC on February 9, 2024),formatted in Inline Extensible Business Reporting Language (iXBRL) includes (a) ConsolidatedStatements of Income for the years ended December 31, 2023, 2022, and 2021, (b) ConsolidatedStatements of Comprehensive Income for the years ended December 31, 2023, 2022, and 2021, (c)Consolidated Statements of Financial Position at December 31, 2023 and 2022, (d) ConsolidatedStatements of Cash Flows for the years ended December 31, 2023, 2022, and 2021, (e)Consolidated Statements of Changes in Common Shareholders’ Equity for the years endedDecember 31, 2023, 2022, and 2021, and (f) the Notes to the Consolidated Financial Statements. 104Cover Page Interactive Data File, formatted in Inline XBRL (contained in Exhibit 101). Incorporated by Reference 3(a)Restated Articles of Incorporation of UPC, as amended and restated through June 27, 2011, and asfurther amended May 15, 2014, are incorporated herein by reference to Exhibit 3(a) to theCorporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014. 3(b)By-Laws of UPC, as amended, effective November 19, 2015, are incorporated herein by referenceto Exhibit 3.2 to the Corporation’s Current Report on Form 8-K dated November 19, 2015. 4(a)Description of securities registered under Section 12 of the Exchange Act is incorporated herein byreference to Exhibit 4(a) to the Corporation’s Annual Report on Form 10-K for the year endedDecember 31, 2019. 4(b)Indenture, dated as of December 20, 1996, between UPC and Wells Fargo Bank, NationalAssociation, as successor to Citibank, N.A., as Trustee, is incorporated herein by reference toExhibit 4.1 to UPC’s Registration Statement on Form S-3 (No. 333-18345). 4(c)Indenture, dated as of April 1, 1999, between UPC and The Bank of New York, as successor to JPMorgan Chase Bank, formerly The Chase Manhattan Bank, as Trustee, is incorporated herein byreference to Exhibit 4.2 to UPC’s Registration Statement on Form S-3 (No. 333-75989). 4(d)Form of 4.750% Note due 2026 is incorporated by reference to Exhibit 4.1 to the Corporation’sCurrent Report on Form 8-K dated February 21, 2023. 4(e)Form of 4.950% Note due 2053 is incorporated by reference to Exhibit 4.2 to the Corporation’sCurrent Report on Form 8-K dated February 21. 2023. Certain instruments evidencing long-term indebtedness of UPC are not filed as exhibits becausethe total amount of securities authorized under any single such instrument does not exceed 10%of the Corporation’s total consolidated assets. UPC agrees to furnish the Commission with a copyof any such instrument upon request by the Commission. 10(f)†Transition and Separation Agreement between the Corporation, the Railroad and Lance M. Fritzdated August 11, 2023, is incorporated by reference to Exhibit 10.1 to the Corporation’s CurrentReport on Form 8-K dated August 11, 2023. 10(g)†Union Pacific Corporation Key Employee Continuity Plan, as amended December 10, 2021, isincorporated herein by reference to Exhibit 10(c) to the Corporation's Annual Report on Form 10-Kfor the year ended December 31, 2021. 77Table of Contents 10(h)†Supplemental Thrift Plan (409A Grandfathered Component) of Union Pacific Corporation, asamended March 1, 2013, is incorporated herein by reference to Exhibit 10(d) to the Corporation’sQuarterly Report on Form 10-Q for the quarter ended March 31, 2013. 10(i)†Supplemental Thrift Plan (409A Non-Grandfathered Component) of Union Pacific Corporation, asamended January 1, 2018, is incorporated herein by reference to Exhibit 10(d) to the Corporation’sAnnual Report on Form 10-K for the year ended December 31, 2017. 10(j)†Supplemental Pension Plan for Officers and Managers (409A Grandfathered Component) of UnionPacific Corporation and Affiliates, as amended February 1, 2013, and March 1, 2013 isincorporated herein by reference to Exhibit 10(f) to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013. 10(k)†Deferred Compensation Plan (409A Grandfathered Component) of Union Pacific Corporation, asamended March 1, 2013, is incorporated herein by reference to Exhibit 10(b) to the Corporation’sQuarterly Report on Form 10-Q for the quarter ended March 31, 2013. 10(l)†Deferred Compensation Plan (409A Non-Grandfathered Component) of Union Pacific Corporation,as amended December 9, 2020, is incorporated herein by reference to Exhibit 10(c) to theCorporation’s Annual Report on Form 10-K for the year ended December 31, 2020. 10(m)†Union Pacific Corporation 2000 Directors Plan, effective as of April 21, 2000, as amendedNovember 16, 2006, January 30, 2007 and January 1, 2009 is incorporated herein by reference toExhibit 10(j) to the Corporation’s Annual Report on Form 10-K for the year ended December 31,2008. 10(n)†Union Pacific Corporation Stock Unit Grant and Deferred Compensation Plan for the Board ofDirectors (409A Non-Grandfathered Component), effective as of January 1, 2009 is incorporatedherein by reference to Exhibit 10(k) to the Corporation’s Annual Report on Form 10-K for the yearended December 31, 2008. 10(o)†Union Pacific Corporation Stock Unit Grant and Deferred Compensation Plan for the Board ofDirectors (409A Grandfathered Component), as amended and restated in its entirety, effective as ofJanuary 1, 2009 is incorporated herein by reference to Exhibit 10(l) to the Corporation’s AnnualReport on Form 10-K for the year ended December 31, 2008. 10(p)†Union Pacific Corporation 2013 Stock Incentive Plan, effective May 16, 2013, as amended effectiveas of January 1, 2020 is incorporated herein by reference to Exhibit 10(d) to the Corporation’sAnnual Report on Form 10-K for the year ended December 31, 2019. 10(q)†Union Pacific Corporation Executive Incentive Plan, effective May 5, 2005, amended and restatedeffective January 1, 2020 is incorporated herein by reference to Exhibit 10(e) to the Corporation’sAnnual Report on Form 10-K for the year ended December 31, 2019. 78Table of Contents 10(r)† Union Pacific Corporation 2021 Stock Incentive Plan, effective as of May 13, 2021 is incorporatedby reference to Exhibit 99.1 to the Corporation's Form S-8 dated May 25, 2021. 10(s)Amended and Restated Registration Rights Agreement, dated as of July 12, 1996, among UPC,UP Holding Company, Inc., Union Pacific Merger Co. and Southern Pacific Rail Corporation (SP) isincorporated herein by reference to Annex J to the Joint Proxy Statement/Prospectus included inPost-Effective Amendment No. 2 to UPC’s Registration Statement on Form S-4 (No. 33-64707). 10(t)Agreement, dated September 25, 1995, among UPC, UPRR, Missouri Pacific Railroad Company(MPRR), SP, Southern Pacific Transportation Company (SPT), The Denver & Rio Grande WesternRailroad Company (D&RGW), St. Louis Southwestern Railway Company (SLSRC) and SPCSLCorp. (SPCSL), on the one hand, and Burlington Northern Railroad Company (BN) and TheAtchison, Topeka and Santa Fe Railway Company (Santa Fe), on the other hand, is incorporatedby reference to Exhibit 10.11 to UPC’s Registration Statement on Form S-4 (No. 33-64707). 10(u)Supplemental Agreement, dated November 18, 1995, between UPC, UPRR, MPRR, SP, SPT,D&RGW, SLSRC and SPCSL, on the one hand, and BN and Santa Fe, on the other hand, isincorporated herein by reference to Exhibit 10.12 to UPC’s Registration Statement on Form S-4(No. 33-64707). 10(v)†Form of Non-Qualified Stock Option Agreement for Executives is incorporated herein by referenceto Exhibit 10(c) to the Corporation’s Annual Report on Form 10-K for the year ended December 31,2013. 10(w)†Form of 2021 Long Term Plan Stock Unit Agreement is incorporated herein by reference to Exhibit10(a) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020. 10(x)†Form of 2022 Long Term Plan Stock Unit Agreement is incorporated herein by reference to Exhibit10(a) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021. 10(y)†Form of 2023 Long Term Plan Stock Unit Agreement is incorporated herein by reference to Exhibit10(a) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022. 10(z)†Executive Incentive Plan (2005) - Deferred Compensation Program, dated December 21, 2005 isincorporated herein by reference to Exhibit 10(g) to the Corporation’s Annual Report on Form 10-Kfor the year ended December 31, 2005. 97Union Pacific Corporation Policy for Recoupment of Certain Compensation, amended and restatedeffective October 2, 2023, is incorporated by reference to Exhibit 10(a) to the Corporation QuarterlyReport on Form 10-Q for the quarter ended September 30, 2023. † Indicates a management contract or compensatory plan or arrangement. Item 16. Form 10-K Summary None. 79Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly causedthis report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 9th day of February, 2024. UNION PACIFIC CORPORATION By/s/ V. James Vena V. James Vena, Chief Executive Officer Union Pacific Corporation Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below, on this 9th day ofFebruary, 2024, by the following persons on behalf of the registrant and in the capacities indicated. PRINCIPAL EXECUTIVE OFFICER AND DIRECTOR: By/s/ V. James Vena V. James Vena, Chief Executive Officer Union Pacific Corporation PRINCIPAL FINANCIAL OFFICER: By/s/ Jennifer L. Hamann Jennifer L. Hamann Executive Vice President and Chief Financial Officer PRINCIPAL ACCOUNTING OFFICER: By/s/ Todd M. Rynaski Todd M. Rynaski, Senior Vice President and Chief Accounting, Risk, and Compliance Officer DIRECTORS: William J. DeLaney*Michael R. McCarthy*David B. Dillon*Doyle R. Simons*Sheri H. Edison*John K. Tien*Teresa M. Finley*John P. Wiehoff*Deborah C. Hopkins*Christopher J. Williams*Jane H. Lute* * By/s/ Craig V. Richardson Craig V. Richardson, Attorney-in-fact 80Exhibit 21 SIGNIFICANT SUBSIDIARIES OF UNION PACIFIC CORPORATION Name of Corporation State ofIncorporation Union Pacific Railroad Company Delaware Exhibit 23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in the Post-Effective Amendment No.1 to Registration Statement No. 33-12513, Registration Statement No. 33-53968, Registration Statement No. 33-49785, Registration Statement No. 33-49849, Registration Statement No. 333-10797, Registration Statement No. 333-88709, Registration Statement No. 333-42768, Registration Statement No. 333-106707, Registration Statement No. 333-106708, Registration Statement No. 333-105714, Registration Statement No. 333- 105715, Registration Statement No. 333-116003, Registration Statement No. 333-132324, Registration Statement No. 333-155708, Registration Statement No. 333-170209, Registration Statement No. 333- 170208, Registration Statement No. 333-188671, Registration Statement No. 333-260789, Registration Statement No. 333-260788, Registration Statement No. 333-256460, Registration Statement No. 333- 276121, and Registration Statement No.333-276122 on Form S-8, Registration Statement No. 333- 214407, Registration Statement No. 333-236860, Registration Statement No. 333-258422, and Registration Statement No. 333-252948 on Form S-4, and Registration Statement No. 333-201958, Registration Statement No. 333-222979, and Registration Statement No. 333-252947 on Form S-3 of our reports dated February 9, 2024, relating to the consolidated financial statements of Union Pacific Corporation and Subsidiary Companies (the Corporation), and the effectiveness of the Corporation's internal control over financial reporting, appearing in this Annual Report on Form 10-K for the year ended December 31, 2023. Omaha, Nebraska February 9, 2024 Exhibit 24 UNION PACIFIC CORPORATIONPowers of Attorney Each of the undersigned directors of Union Pacific Corporation, a Utah corporation (the Company), do hereby appoint each of V.James Vena and Craig V. Richardson his or her true and lawful attorney-in-fact and agent, to sign on his or her behalf theCompany’s Annual Report on Form 10-K, for the year ended December 31, 2023, and any and all amendments thereto, and tofile the same, with all exhibits thereto, with the Securities and Exchange Commission. IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney as of February 8, 2024. /s/ William J. DeLaney /s/ Michael R. McCarthyWilliam J. DeLaney Michael R. McCarthy /s/ David B. Dillon /s/ Doyle R. SimonsDavid B. Dillon Doyle R. Simons /s/ Sheri H. Edison /s/ John K. TienSheri H. Edison John K. Tien /s/ Teresa M. Finley /s/ John P. WiehoffTeresa M. Finley John P. Wiehoff /s/ Deborah C. Hopkins /s/ Christopher J. WilliamsDeborah C. Hopkins Christopher J. Williams /s/ Jane H. Lute Jane H. Lute Exhibit 31(a) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, V. James Vena, certify that: 1. I have reviewed this annual report on Form 10-K of Union Pacific Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periodspresented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined inExchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designedunder our supervision, to ensure that material information relating to the registrant, including its consolidatedsubsidiaries, is made known to us by others within those entities, particularly during the period in which this report isbeing prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered bythis report based on such evaluation; and (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during theregistrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that hasmaterially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or personsperforming the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financialinformation; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting. Date: February 9, 2024 /s/ V. James Vena V. James Vena Chief Executive Officer Exhibit 31(b) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER I, Jennifer L. Hamann, certify that: 1. I have reviewed this annual report on Form 10-K of Union Pacific Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periodspresented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined inExchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designedunder our supervision, to ensure that material information relating to the registrant, including its consolidatedsubsidiaries, is made known to us by others within those entities, particularly during the period in which this report isbeing prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered bythis report based on such evaluation; and (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during theregistrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that hasmaterially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or personsperforming the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financialinformation; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting. Date: February 9, 2024 /s/ Jennifer L. Hamann Jennifer L. Hamann Executive Vice President and Chief Financial Officer Exhibit 32 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the accompanying Annual Report of Union Pacific Corporation (the Corporation) on Form 10-K for the periodending December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, V. JamesVena, Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906of the Sarbanes-Oxley Act of 2002 that: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results ofoperations of the Corporation. By:/s/ V. James Vena V. James Vena Chief Executive Officer Union Pacific Corporation February 9, 2024 A signed original of this written statement required by Section 906 has been provided to the Corporation and will be retained bythe Corporation and furnished to the Securities and Exchange Commission or its staff upon request. CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the accompanying Annual Report of Union Pacific Corporation (the Corporation) on Form 10-K for the periodending December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Jennifer L.Hamann, Executive Vice President and Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results ofoperations of the Corporation. By:/s/ Jennifer L. Hamann Jennifer L. Hamann Executive Vice President and Chief Financial Officer Union Pacific Corporation February 9, 2024 A signed original of this written statement required by Section 906 has been provided to the Corporation and will be retained bythe Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

Continue reading text version or see original annual report in PDF format above