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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For 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, Nebraska
68179
(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 Class
Trading Symbol
Name of each exchange on which registered
Common 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 ☐ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
☐ Yes ☑ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. ☑ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). ☑ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “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 period for 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 the effectiveness 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 of the 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 ☑ No
As of June 28, 2024, the aggregate market value of the registrant’s Common Stock held by non-affiliates (using the New York Stock
Exchange closing price) was $137.8 billion.
The number of shares outstanding of the registrant’s Common Stock as of January 31, 2025, was 604,286,378.
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Documents Incorporated by Reference – Portions of the registrant’s definitive Proxy Statement for the Annual Meeting of Shareholders to
be held on May 8, 2025, are incorporated by reference into Part III of this report. The registrant’s Proxy Statement will be filed with the
Securities and Exchange Commission (SEC) within 120 days after the end of the fiscal year that this report relates pursuant to Regulation
14A.
UNION PACIFIC CORPORATION
TABLE OF CONTENTS
CEO’s Letter
3
Directors and Senior Management
4
PART I
Item 1.
Business
5
Item 1A.
Risk Factors
10
Item 1B.
Unresolved Staff Comments
15
Item 1C.
Cybersecurity
15
Item 2.
Properties
17
Item 3.
Legal Proceedings
20
Item 4.
Mine Safety Disclosures
21
Executive Officers of the Registrant and Principal Executive Officers of Subsidiaries
21
PART II
Item 5.
Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
22
Item 6.
[Reserved]
23
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
23
Critical Accounting Estimates
34
Cautionary Information
36
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
37
Item 8.
Financial Statements and Supplementary Data
38
Report of Independent Registered Public Accounting Firm
39
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
68
Item 9A.
Controls and Procedures
69
Management’s Annual Report on Internal Control Over Financial Reporting
69
Report of Independent Registered Public Accounting Firm
70
Item 9B.
Other Information
71
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
71
PART III
Item 10.
Directors, Executive Officers, and Corporate Governance
71
Item 11.
Executive Compensation
71
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
72
Item 13.
Certain Relationships and Related Transactions, and Director Independence
72
Item 14.
Principal Accountant Fees and Services
72
PART IV
Item 15.
Exhibit and Financial Statement Schedules
72
Item 16.
Form 10-K Summary
75
Signatures
76
Certifications
76
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February 7, 2025
Fellow Shareholders:
The Union Pacific team had a very successful 2024, as we executed our strategy of Safety, Service, and Operational Excellence leading to
Growth. The commitment to that strategy enabled the team to achieve strong results across the board and set the Company up for future
success. Although success can be measured in many ways, it’s ultimately about delivering for our owners, putting our company in a great
financial position, and being clear about what success is for our employees, our customers, and the communities where we operate.
In 2024, we reported earnings per diluted share of $11.09, a 6% increase versus 2023. Total volumes increased 3% versus 2023, driven by
strength in international intermodal and agricultural products, more than offsetting a 20% decline in coal and the overall impact of a muted
industrial economy. We achieved an operating ratio of 59.9%, a 240-basis point improvement versus 2023, driven by the day-to-day actions
of our team to improve the efficiency of our network.
This success doesn’t just happen. It’s rooted in that commitment to our strategy. Within Safety, we achieved significant reductions in both our
personal injury and derailment rates. We are seeing the results from our investments in training, safety programs, infrastructure, and
technology. We cannot and will not waiver on our goal to be the best in safety.
Service is what we sold our customers. Committing to what we can do and doing it with excellence. We built on our success in late 2023 to
provide our customers with an even stronger service product throughout 2024. Our full year operating metrics demonstrate that success, as
freight car velocity improved 2% and intermodal and manifest service performance index (SPI) improved 2 and 4 points, respectively. We
also invested $3.4 billion in capital to harden our infrastructure, grow our business, provide better service, and embed new technologies into
our processes. The list is long, but we will reap long-term rewards from investments in the Phoenix Intermodal Terminal, hump yard
improvements, siding extensions, application programming interfaces (API), and new gate technologies, to name only a few.
Operational Excellence is about operating efficiently and productively, delivering value with speed. Yet understanding we need a resource
buffer so we can provide the service we promised and handle the inevitable ups and downs that come with weather, fluctuating volumes, and
securing growth. As evident by the improvements to our operating ratio, we made great strides in 2024 to use our assets more efficiently.
However, that wasn’t done without challenges that tested our resource buffer. During 2024, we saw international intermodal surge on the
west coast, growing over 19% versus 2023. Our ability to handle that volume with minimal impact on the rest of our network demonstrates
the effectiveness of our buffer strategy. More specifically on resource productivity, in 2024, we achieved 6% and 5% improvements in
workforce and locomotive productivity, respectively. In fact, our performance in workforce productivity for the year was a best ever result.
Our ability to excel in those three areas led to Growth in 2024. Operating Revenues grew 1% driven by volume gains and strong core
pricing, which more than offset lower fuel surcharge revenues and an unfavorable business mix. When you remove the impact of fuel, our
freight revenues grew 4%. Key is that in a muted economic environment, and with a significant decline in our coal volume, we still grew. By
executing on our strategy, we are outperforming our markets and positioning ourselves to be ready for even stronger growth when the freight
economy improves.
As we turn the page to 2025, the team is focused on what’s possible and unlocking the value of the Union Pacific franchise. We are ready to
build on these accomplishments to achieve a higher level of success. We understand that we’re the current stewards of this amazing, historic
company. And it’s our responsibility to leave it in a better place than we found it, as those before us had done. We are grateful for that
opportunity and ready to succeed. Thank you for your ownership of Union Pacific.
Chief Executive Officer
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DIRECTORS AND SENIOR MANAGEMENT
BOARD OF DIRECTORS
William J. DeLaney
Former Chief Executive Officer - Sysco
Corporation
Board Committees: Compensation and
Talent (Chair); Safety and Service Quality
David B. Dillon
Former Chairman and CEO - The Kroger
Company
Board Committees: Audit (Chair); Corporate
Governance, Nominating, and Sustainability
Sheri H. Edison
Former Executive Vice President and
General Counsel - Amcor plc
Board Committees: Compensation and
Talent; Corporate Governance, Nominating,
and Sustainability (Chair)
Teresa M. Finley
Former Chief Marketing and Business
Services Officer - United Parcel Service, Inc.
Board Committees: Audit; Finance
Deborah C. Hopkins
Former Chief Executive Officer - Citi Ventures
and Former Chief Innovation Officer - Citi
Board Committees: Compensation and
Talent; Finance (Chair)
Jane H. Lute
Strategic Advisor - SICPA, North America
Board Committees: Corporate Governance,
Nominating, and Sustainability; Safety and
Service Quality (Chair)
Michael R. McCarthy
Chairman - Union Pacific Corporation and
Union Pacific Railroad Company; Chairman -
McCarthy Group, LLC; and Chairman -
Bridges Trust Company
Board Committees: Corporate Governance,
Nominating, and Sustainability; Finance
Doyle R. Simons
Former President and CEO - Weyerhaeuser
Company
Board Committees: Compensation and
Talent; Safety and Service Quality
John K. Tien, Jr.
Former Deputy Secretary - U.S. Department
of Homeland Security
Board Committees: Audit; Finance
V. James Vena
Chief Executive Officer - Union Pacific
Corporation and Union Pacific Railroad
Company
John P. Wiehoff
Former Chairman, President, and CEO - C.H.
Robinson Worldwide, Inc.
Board Committees: Audit; Safety and Service
Quality
Christopher J. Williams
Chairman - Siebert Williams Shank & Co.
Board Committees: Audit; Finance
SENIOR MANAGEMENT
V. James Vena
Chief Executive Officer
Bryan L. Clark
Vice President - Tax
Eric J. Gehringer
Executive Vice President - Operations
Rebecca B. Gregory
Vice President and Chief of Staff
Jennifer L. Hamann
Executive Vice President and Chief Financial
Officer
Rahul Jalali
Executive Vice President and Chief
Information Officer
Michael V. Miller
Vice President and Treasurer
Joshua K. Perkes
Senior Vice President and Chief Human
Resources Officer
Craig V. Richardson
Executive Vice President, Chief Legal Officer,
and Corporate Secretary
Kenny G. Rocker
Executive Vice President - Marketing and
Sales
Todd M. Rynaski
Senior Vice President and Chief Accounting,
Risk, and Compliance Officer
Elizabeth F. Whited
President
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PART I
Item 1. Business
GENERAL
Union Pacific Railroad Company is the principal operating company of Union Pacific Corporation. One of America's most recognized
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, and Premium. Union Pacific serves many of the fastest-
growing U.S. population centers, operates from all major West Coast and Gulf Coast ports to Eastern gateways, connects with Canada's rail
systems, and is the only railroad serving all six major Mexico 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 Douglas Street, Omaha, NE
68179. The telephone number at that address is (402) 544-5000. The common stock of Union Pacific Corporation 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 Union Pacific 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. Together as a team, the
Company will focus on achieving the best safety record in 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 mindset and 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 need to 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 but also maintain a
buffer so our service is resilient, managing the inevitable ups and downs that come with weather, fluctuating volumes, and securing growth.
Growth is the outcome of executing our strategy to be the industry leader in both safety and service resulting in improved margins and
greater cash generation, creating long term enterprise value. The expected outcome of successfully executing our strategy will be an industry
leading operating ratio and return on invested capital.
As we work to transform our railroad, our core values continue to guide us. Our passion for performance will help us win; our high ethical
standards ensure we win in a way that supports all of our stakeholders; and our teamwork ensures we win together.
OPERATIONS
The Railroad, along with its subsidiaries and rail affiliates, is our one reportable operating segment. Although we provide and analyze
revenues by commodity group, we treat the financial results of the Railroad as one segment due to the integrated nature of our rail network.
Additional information regarding our business and operations, including revenues, financial information and data, and other information
regarding environmental matters, is presented in Risk Factors, Item 1A; Legal Proceedings, Item 3; Management’s Discussion and Analysis
of Financial Condition and Results of Operations, Item 7; and the Financial Statements and Supplementary Data, Item 8.
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Operations – UPRR is a Class I railroad operating in the U.S. We have
32,880 route miles, connecting Pacific Coast and Gulf Coast ports with
the Midwest and Eastern U.S. gateways and providing several corridors
to key Mexican and Canadian gateways. We serve the western two-
thirds of the country and maintain coordinated schedules with other rail
carriers to move freight to and from the Atlantic Coast, the Pacific Coast,
the Southeast, the Southwest, Canada, and Mexico. Export and import
traffic moves through Gulf Coast, Pacific Coast, and East Coast ports
and across the Mexican and Canadian borders. In 2024, we generated
freight revenues totaling $22.8 billion from the following three commodity
groups:
2024 Freight Revenues
Bulk – The Company's Bulk shipments consist of grain and grain products, fertilizer, food and refrigerated, and coal and renewables. In 2024,
this group generated 32% of our freight revenues. We access most major grain markets, connecting the Midwest and Western U.S.
producing areas to export terminals in the Pacific Northwest and Gulf Coast ports as well as Mexico. We also serve significant domestic
markets, including grain processors, animal feeders, ethanol, and renewable biofuel 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’s network supports the transportation of coal shipments to independent and
regulated power companies and industrial facilities throughout the U.S. Through interchange gateways and ports, UPRR’s reach extends to
Eastern U.S. utilities as well as to Mexico and other international destinations. Coal traffic originating in the Powder River Basin (PRB) area
of Wyoming is the largest portion of the Railroad’s coal business.
Industrial – Our extensive network facilitates the movement of numerous commodities between thousands of origin and destination 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 37% of our freight revenues in 2024. 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 more complex
chemicals. Plastics shipments support automotive, housing, and the durable and disposable consumer goods markets. Forest product
shipments include lumber and paper commodities. Lumber shipments originate primarily in the Pacific Northwest or Western Canada and
move throughout the U.S. for use in new home construction and repairs and remodeling. Paper shipments primarily support packaging
needs. Oil and gas drilling generates demand for raw steel, finished pipe, stone, and drilling fluid commodities. The Company’s petroleum
and LPG shipments are primarily impacted by refinery utilization rates, regional crude pricing differentials, pipeline capacity, and the use of
asphalt for road programs. Soda ash originates in southwestern Wyoming and California, destined for chemical and glass producing markets
in North America and abroad.
Premium – In 2024, Premium shipments generated 31% of Union Pacific’s total freight revenues. Premium includes finished automobiles,
automotive parts, and merchandise in intermodal containers, both domestic and international. International business consists of import and
export traffic moving in 20 or 40-foot shipping containers, that mainly pass through West Coast ports, destined for one of the Company's
many inland intermodal terminals. Domestic business includes container and trailer traffic picked up and delivered within North America for
intermodal marketing companies (primarily shipper agents and logistics 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. The Railroad’s
extensive franchise accesses six vehicle assembly plants and connects to West Coast ports, all six major Mexico gateways, and the Port of
Houston to accommodate both import and export shipments. In addition to transporting finished vehicles, the Company provides expedited
handling of automotive parts in both boxcars and intermodal containers destined for Mexico, the U.S., and Canada.
Seasonality – Some of the commodities we carry have peak shipping seasons, reflecting either or both the nature of the commodity (such as
certain agricultural and food products that have specific growing and harvesting seasons) and the demand 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 these commodities can vary considerably each year depending upon various factors,
including the strength of domestic and
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international economies and currencies; consumer demand; the strength of harvests, which can be adversely affected by severe weather;
market prices for agricultural products; and supply chain disruptions.
Proud & Engaged Workforce – Our employees are central to our strategy of Safety, Service, and Operational Excellence leading to Growth,
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 of life. Made up
of management and craft professionals, we are focused on attracting, retaining, and developing talent across our entire system.
As of December 31, 2024, the Company employed 32,439 employees. Our workforce includes five generations from Traditionalists (born
before 1946) to Generation Z (born after 1998). The average age is 46.9 with an average tenure of 16.2 years.
Union Pacific works with 13 major rail unions, representing approximately 84% of our workforce. Pursuant to the Railway Labor Act (RLA), a
federal statute enacted in 1926, our collective bargaining agreements are subject to modification every five years. Existing agreements
remain in effect until new agreements are ratified or until the RLA procedures are exhausted. The RLA is designed to bring the railroads and
unions to agreement without disruptions to rail transportation. Local negotiations began on January 1, 2025, related to years 2025-2029.
Our Culture: At Union Pacific, the How Matters – high ethical standards guide the decisions we make and action we take to protect our
employees, communities, and customers. Our passion for performance drives our safety, customer experience, and financial results while we
work as a team to create opportunity for all.
Safety is central to everything we do at Union Pacific. Together, we are committed to cultivating a safety-focused culture, so our employees
return home safely every day. To achieve this, our employees identify risks, initiate action to mitigate those risks, 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-hours worked) and our
derailment incident rate (the number of reportable derailment incidents per million train miles). Reportable personal injuries are defined as on
duty incidents or occupational illnesses that result in employees losing time away from work, modifying or restricting their normal duties, or
receiving any medical treatment above and beyond first aid. Reportable derailment incidents are defined as any occurrence where a wheel of
a locomotive or rail car falls off the track and causes damage to track, equipment, or structures above the Federal Railroad Administration
(FRA) reporting threshold, regardless of ownership ($12,000 for 2024 and $12,400 for 2025) per million train miles. Personal injuries and
derailment incidents that meet reportable criteria are reported to the FRA.
Our 2024 personal injury rate of 0.90 improved 23%, and our derailment incident rate of 2.17 improved 20% versus 2023. (See further
discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 7, of this report.)
Union Pacific is committed to creating an environment where people can be their best, personally and professionally. We believe that a
supportive culture increases employee engagement, improves morale, and allows qualified employees to succeed and contribute to Union
Pacific's success. All of this supports our safety strategy and improves the quality of decision-making, problem-solving, and strategic thinking.
Union Pacific’s commitment, today and for the future, is to further improve and strengthen performance through our workforce, where
everyone is treated fairly, differences are valued, and talent is recognized and rewarded. Union Pacific intends to maintain its standards of
hiring and promoting based on merit, while aspiring to reach 40% people of color and double our female representation to 11% in our
workforce by 2030. As of December 31, 2024, workforce representation of people of color and females was 34.3% and 5.2%, respectively.
The Employee Journey: From recruitment to retirement and milestones in between, we are relentlessly focused on supporting and
engaging employees throughout their Union Pacific journey. We view it as imperative to invest in our employees with meaningful benefit
offerings, developmental experiences, and career opportunities.
The process begins with recruitment, where we strive to attract the most talented employees to join our team. Then, we focus on training and
development, which includes courses and programs designed to help our employees grow into new roles and/or learn a new skill in their
current role so that we can retain our workforce over time.
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Providing competitive compensation and meaningful benefits is key to attracting and retaining talented employees. Union Pacific is
committed to continuously reviewing its compensation programs and comprehensive benefits programs to promote programs that are fair
and competitive. Both are key to enhancing the value of working for Union Pacific and demonstrating the Company’s commitment to the
health and wealth of employees during their career. Benefits vary based on the applicable collective bargaining agreement or an employee’s
management status. The final stage of the employee journey is a fulfilling retirement, which is enabled during their Union Pacific career
through our compensation and benefit programs, particularly contributions to 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 Compensation and Talent
Committee, while collective bargaining agreements govern compensation for our union employees. The median annual compensation for all
employees employed as of December 31, 2024, was $103,190 (excluding the CEO).
Talent is critical - our ability to recruit and retain employees is directly tied to our railroad’s success, as proven by our strong retention rate,
our robust offerings, benefits, and work environment that creates meaningful family-supporting careers. We are focused on effectively
managing workforce levels to the demands of the business and improving quality of life for our employees.
Railroad Security – Our security efforts consist of a wide variety of measures, including employee training, engagement with our customers,
training of emergency responders, and partnerships with numerous federal, state, and local government agencies. While federal law requires
us to protect the confidentiality of our security plans designed to safeguard against terrorism 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 potential or actual threats
as they arise. The plan includes four levels of alert status, each with its own set of countermeasures. We employ our own police force,
consisting of commissioned and highly-trained officers. The police are certified state law enforcement officers with investigative and arrest
powers. The Union Pacific Police Department has achieved accreditation under the Commission on Accreditation for Law Enforcement
Agencies, Inc. (CALEA) for complying with the highest law enforcement standards. Our employees undergo recurrent security and
preparedness training as well as federally mandated hazardous materials and security training. We regularly review the sufficiency of our
employee training programs. We maintain 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, law enforcement, and other
government officials. In cooperation with government officials, we monitor both threats and public events, and, as necessary, we may alter
rail traffic flow at times of concern to minimize risk to communities and our operations. We comply with the hazardous materials routing rules
and other requirements imposed by federal law. We design our operating plan to expedite the movement of Rail Security Sensitive Materials
(RSSM), a subset of particularly hazardous materials, to minimize the time rail cars remain idle at yards and terminals located in or near
major population centers. Additionally, in compliance with Transportation Security Administration (TSA) regulations, we deployed information
systems and instructed employees in tracking and documenting the handoff of RSSM with customers and interchange partners.
We established a number of our own innovative safety and security-oriented initiatives ranging from various investments in technology to The
Officer on Train program, which provides local law enforcement officers with the opportunity to ride with train crews to enhance their
understanding of railroad operations and risks. Our staff of information security professionals continually assess cybersecurity risks and
implement mitigation programs that evolve with the changing technology threat environment. To date, we have not experienced any material
disruption of our operations due to a cyber threat or incident directed at us.
Cooperation with Federal, State, and Local Government Agencies – We work closely on physical and cybersecurity initiatives with
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 the TSA; as well as local police
departments, fire departments, and other first responders.
In compliance with TSA regulations established in 2022, we designated a Cybersecurity Coordinator to oversee our cybersecurity initiatives
and report required incidents to the CISA. We communicated our Cybersecurity Incident Response Plan and conducted a Cybersecurity
Vulnerability Assessment to identify potential risks. Our Cybersecurity Implementation Plan outlines the specific actions taken to meet the
TSA prevention, detection, and response requirements. Additionally, an ongoing assessment program has been implemented to proactively
and regularly evaluate the effectiveness of our cybersecurity program to identify and mitigate emerging risks. These efforts have been
validated by the TSA, confirming our adherence to their standards.
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In conjunction with the Association of American Railroads (AAR), we sponsor Ask Rail, a mobile application that provides first responders
with secure links to electronic information, including commodity and emergency response information required by emergency personnel to
respond to accidents and other situations. We also participate in the National Joint Terrorism Task Force, a multi-agency effort established by
the U.S. Department of Justice and the FBI to combat and prevent terrorism.
We work with the Coast Guard, U.S. Customs and Border Protection (CBP), and the Military Transport Management Command, which
monitor shipments entering the UPRR rail network at U.S. border crossings and ports. We were the first railroad in the U.S. to be named a
partner in CBP’s Customs-Trade Partnership Against Terrorism, a partnership designed to develop, enhance, and maintain effective security
processes throughout the global supply chain.
Cooperation with Customers and Trade Associations – Through TransCAER (Transportation Community Awareness and Emergency
Response), we work with the AAR, the American Chemistry Council, the American Petroleum Institute, and other chemical trade groups to
provide communities with preparedness tools, including the training of emergency responders. In cooperation with the FRA and other
interested groups, we are also working to develop additional improvements to tank car design 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 our environmental 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 will continue to play a critical role in mitigating and abating the
impacts of climate change. According to the AAR, moving freight by rail instead of truck reduces GHG emissions by up to 75%. Therefore,
converting freight transportation from truck to rail typically 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 in Item 1A of this
report.
Key Suppliers – see “We Are Dependent on Certain Key Suppliers of Locomotives and Rail” in the Risk Factors in Item 1A of 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 Form 8-K; our proxy statements;
Forms 3, 4, and 5, filed on behalf of our directors and certain executive officers; and amendments to such reports filed or furnished pursuant
to the Securities Exchange Act of 1934, as amended (the Exchange Act). We provide these reports and statements as soon as reasonably
practicable after such material is electronically filed with, or furnished to, the SEC. We also make available on our website previously filed
SEC reports and exhibits via a link to EDGAR on the SEC’s Internet site at www.sec.gov. Additionally, our corporate governance materials,
including By-Laws, Board Committee charters, governance guidelines and policies, and codes of conduct and ethics for directors, officers,
and employees are available on our website. From time to time, the corporate governance materials on our website may be updated as
necessary to comply with rules issued by the SEC and the NYSE or as desirable to promote the effective and efficient governance of our
Company. Any security holder wishing to receive, without charge, a copy of any of our SEC filings or corporate governance materials should
send a written request to: Secretary, Union Pacific Corporation, 1400 Douglas Street, Omaha, NE 68179.
References to our website address, in this report, including references in Management’s Discussion and Analysis of Financial Condition and
Results of Operations, Item 7, are provided as a convenience and do not constitute, and should not be deemed, an incorporation by
reference of the information contained on, or available through, the website. Therefore, such information 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, generally applicable 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 the regulatory
jurisdiction of the Surface Transportation Board (STB). The STB has jurisdiction over rates charged on certain regulated rail traffic; common
carrier service of regulated traffic; freight car compensation; transfer, extension, or abandonment of rail lines; and acquisition of control of rail
common carriers. The STB 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. The STB also
continues to explore changes to the methodology for determining railroad revenue adequacy, the possible uses of revenue adequacy in
regulating railroad rates,
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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 the authority to initiate investigations, among other things.
The DOT, the Occupational Safety and Health Administration, the Pipeline and Hazardous Materials Safety Administration, and the DHS,
along with other federal agencies, have jurisdiction over certain aspects of safety, movement of hazardous materials and hazardous waste,
emissions requirements, and equipment standards. Additionally, various state and local agencies have jurisdiction over disposal of
hazardous waste and seek to regulate movement of hazardous materials in ways not preempted by federal law.
Environmental Regulation – We are subject to extensive federal and state environmental statutes and regulations pertaining to public
health and the environment. The statutes and regulations are administered and monitored by the Environmental Protection Agency (EPA)
and by various state environmental agencies, such as the California Air Resources Board (CARB) and the Texas Commission on
Environmental Quality (TCEQ), among others. The primary laws affecting our operations are the Resource Conservation and Recovery Act,
regulating the management and disposal of solid and hazardous wastes; the Comprehensive Environmental Response, Compensation, and
Liability Act, regulating the cleanup of contaminated properties; the Clean Air Act, regulating air emissions; and the Clean Water Act,
regulating wastewater discharges.
Information concerning environmental claims and contingencies and estimated remediation costs is set forth in 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 1A. Risk Factors
The following discussion addresses significant factors, events, and uncertainties that make an investment in our securities risky and provides
important information for the understanding of our “forward-looking statements,” which are discussed immediately preceding Item 7A of this
Form 10-K and elsewhere. The risk factors set forth in this Item 1A should be read in conjunction with the rest of the information included in
this report, including Management’s Discussion and Analysis of Financial 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 as the risks
addressed in other reports and materials that we file with the SEC and the other information included or incorporated by reference in this
Form 10-K. When the factors, events, and contingencies described below or elsewhere in this Form 10-K materialize, our business,
reputation, financial condition, results of operations, cash flows, or prospects can be materially adversely affected. In such case, the trading
price of our common stock could decline, and you could lose part or all of your investment. Some of the factors, events, and contingencies
discussed below may have occurred in the past, and the disclosures below are not representations as to whether or not the factors, events,
or contingencies have occurred in the past, but are provided because future occurrences of such factors, events, or contingencies could have
a material adverse effect. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also
materially adversely affect our business, reputation, financial condition, results of operations, cash flows, and prospects.
Strategic and Operational Risks
We Must Manage Fluctuating Demand for Our Services and Network Capacity – Significant reductions in demand for rail services with
respect to one or more commodities or changes in consumer preferences that affect the businesses of our customers can lead to increased
costs associated with resizing our operations, including higher unit operating costs and costs for the storage of locomotives, rail cars, and
other equipment; workforce adjustments; and other related activities, which could have a material adverse effect on our results of operations,
financial condition, and liquidity. If there is significant demand for our services that exceeds the designed capacity of our network or shifts in
traffic flow that are contrary to the designed capacity of our network, we can experience challenges, including congestion and reduced
velocity, that could compromise the level of service we provide to our customers. This level of demand also can compound the impact of
weather and weather-related events on our operations and velocity. We cannot be sure that our efforts to improve our transportation plan,
add capacity, improve operations at our yards and other facilities, and improve our ability to address surges in demand for any reason by
carrying a resource buffer will fully or adequately address any service shortcomings resulting from demand exceeding our planned capacity.
From time to time we also experience other operational or service challenges 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 negatively impact our operational efficiency, any or all of which could have a material adverse effect on our results of operations,
financial condition, and liquidity.
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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 or combustion. Additionally, U.S. laws
impose common carrier obligations on railroads that require us to transport certain hazardous materials regardless of risk or potential
exposure to loss. An accident or other incident on our network, at our facilities, or at the facilities of our customers involving the release or
combustion of hazardous materials can involve significant costs and claims for personal injury, property damage, and environmental
penalties and remediation in excess of our insurance coverage for these risks, which could harm our reputation or 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 all aspects of our
business, including technology systems operated by us (whether created by us or purchased), under control of third parties, and open-source
software. If we do not have sufficient capital or do not deploy sufficient capital in a timely manner to acquire, develop, or implement new
technology or maintain or upgrade current systems, such as Positive Train Control (PTC) or the latest version of our transportation control
systems, we may suffer a rail service outage or competitive disadvantage within the rail industry and with companies providing other modes
of transportation service, which could have a material adverse effect on our results of operations, financial condition, and liquidity.
We Are Subject to Cybersecurity Risks – We rely on information technology in all aspects of our business, including technology systems
operated by us (whether created by us or purchased), under control of third parties, and open-source software. We have experienced and
will likely continue to experience varying degrees of cyber incidents in the normal course of business. There can be no assurance that the
resources we devote to protect our technology systems and proprietary data or the systems we have designed to identify, prevent, or limit the
effects of cyber incidents will be sufficient to prevent or detect such incidents, or to avoid a material adverse impact on our systems after
such incidents do occur. Furthermore, due to the rising numbers and increasing sophistication of cyber-attacks, an increasingly complex
information technology supply chain, and the nature of zero-day exploits, we may be unable to anticipate or implement adequate measures
to prevent a security breach, including by ransomware or as a result of human error or other cyber-attack methods, from materially affecting
our systems or the systems of third-parties upon which we rely. The rapid evolution and increased availability of artificial intelligence may
intensify cybersecurity risks by making cyber-attacks more sophisticated and cybersecurity incidents more difficult to detect, contain, and
mitigate. A cyber incident that results in significant service interruption; safety failure; other operational difficulties; unauthorized access to (or
the loss of access 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 material adverse impact on our
results of operations, financial condition, and liquidity. We may experience security breaches that could remain undetected for an extended
period and, therefore, have a greater impact on us. Additionally, we may be exposed to increased cybersecurity risk because we are a
component of the critical U.S. infrastructure.
Severe Weather and Natural Events Could Result in Significant Business Interruptions and Expenditures – As a railroad with a vast network,
we are 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 or contribute to the severity or
frequency of such weather conditions. Line outages and other interruptions caused by these conditions have in the past and could in the
future adversely affect parts or all of our rail network, potentially negatively affecting revenues, costs, and liabilities, despite efforts we
undertake to plan for these events. Our revenues can also be adversely affected by severe weather that causes damage and disruptions to
our customers. These impacts caused by severe weather or other natural phenomena 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 – Although revenues from
our operations are attributable to transportation services provided in the U.S., a significant portion of our revenues involves the transportation
of commodities to and from international markets, including Mexico, Canada, and Southeast Asia, by various carriers and, at times, various
modes of transportation. Significant and sustained interruptions of trade with Mexico, Canada, or countries in Southeast Asia, including
China, could adversely affect customers and other entities that, directly or indirectly, purchase or rely on rail transportation services in the
U.S. as part of their operations, and any such interruptions, including international armed conflicts such as the Russia-Ukraine and Israel-
Hamas wars, could have a material adverse effect on our results of operations, financial condition, and liquidity. Any one or more of the
following could cause a significant and sustained interruption of trade with Mexico, Canada, or countries in Southeast Asia: (a) a deterioration
of security for international trade and businesses; (b) the adverse impact of new laws, rules, and regulations or the interpretation or
enforcement of laws, rules, and regulations by government entities, courts, or regulatory bodies, including the United States-Mexico-Canada
Agreement (USMCA) or other international trade agreements; (c) actions of taxing authorities that affect our customers doing business in or
with foreign countries; (d) any significant adverse economic developments, such as extended periods of high inflation, material disruptions in
the banking sector or in the capital markets of these foreign countries, and significant changes in the valuation of the currencies of these
foreign countries that could
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materially affect the cost or value of imports or exports; (e) shifts in patterns of international trade, including as a result of changes to
international trade agreements or policies, 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 of pandemic or contagious disease, such as the
coronavirus and its variant strains (COVID). An imposition of tariffs on imports or other changes to U.S. trade policy could cause demand for
shipping from international markets to decrease, and if the declines are significant enough, it could have a material adverse effect on our
results of operations, financial condition, and liquidity.
We Are Dependent on Certain Key Suppliers of Locomotives and Rail – Due to the capital-intensive nature and sophistication of locomotive
equipment, parts, and maintenance, potential new suppliers face high barriers to entry. Therefore, if one of the domestic suppliers of
locomotives discontinues manufacturing locomotives, supplying parts, or providing maintenance for any reason, including bankruptcy or
insolvency or the inability to manufacture locomotives that meet efficiency or regulatory emissions standards, we could experience significant
cost increases and reduced availability of the locomotives that are necessary for our operations. Additionally, we utilize a limited number of
steel producers that meet our specifications. Rail is critical to our operations for rail replacement programs, maintenance, and for adding
additional network capacity, new rail and storage yards, and expansions of existing facilities. This industry similarly has high barriers to entry,
and if there is any significant consolidations or mergers in this industry, or one of these suppliers discontinues operations for any reason,
including bankruptcy or insolvency, we could experience both significant cost increases for rail purchases and difficulty obtaining sufficient rail
for maintenance and other projects. Changes to trade agreements or policies that result in increased tariffs on goods imported into the United
States could also result in significant cost 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 collective bargaining agreements
with various labor unions. The majority of our employees belong to labor unions and are subject to these agreements. Disputes over the
terms of these or future agreements or the terms of such agreements, or our potential inability to negotiate acceptable contracts with these
unions or the renegotiation of them or their term can lead to, among other things, strikes, work stoppages, slowdowns, or lockouts, any or all
of which could compromise our service reliability or cause a significant disruption of our operations, and could increase our costs for wages,
health care, and other benefits, which could have a material adverse effect on our results of operations, financial condition, and liquidity.
Labor disputes, work stoppages, slowdowns, or lockouts at loading/unloading facilities, ports, or other transport access points, or by
employees of our customers or our suppliers, could compromise our service reliability and have a material adverse impact on our results of
operations, financial condition, and liquidity.
The Availability of Qualified Personnel Could Adversely Affect Our Operations – Changes in demographics, training requirements, and
pandemic illnesses or restrictions could negatively affect the availability of qualified personnel for us, our customers, and throughout the
supply chain. Our ability to quickly react to other factors that affect our ability to attract and retain 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 fluidity may exacerbate our risks related to having insufficient qualified personnel, which
could have a negative impact on our operational efficiency and otherwise have a material adverse 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 number of federal,
state, and local authorities covering a variety of health, safety, labor, employment, environmental, economic (as discussed below), tax, social,
and other matters. Many laws and regulations require us to obtain and maintain various licenses, permits, and other authorizations, and we
cannot guarantee that we will continue to be able to do so. Our failure to comply with applicable laws and regulations could have a material
adverse effect on us as a result of litigation or proceedings by private parties, governments, or regulators, including and in addition to those
described in Note 17 to the Consolidated Financial Statements entitled "Commitments and Contingencies." Governments or regulators may
change the legislative or regulatory 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 our traffic
subject to common carrier regulation, business relationships with other railroads, use of embargoes, calculation of our cost of capital or other
inputs relevant to computing our revenue adequacy, the prices we charge, changes in tax rates, enactment of new tax laws or tariffs, and
revision in tax regulations. Significant legislative activity in Congress or regulatory activity by other government branches or agencies, such
as the STB, could expand regulation of railroad operations and pricing for rail services, which could reduce the viability of capital spending on
our rail network, facilities, and equipment, and have a material adverse effect on our results of operations, financial condition, and liquidity.
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We May Be Subject to Various Claims and Lawsuits That Could Result in Significant Expenditures – As a railroad with operations in densely
populated urban areas and a vast rail network, we are exposed to the potential for various claims and litigation related to labor and
employment, personal injury, property damage, environmental liability, and other matters. Any material changes to litigation trends or a
catastrophic rail accident or series of accidents involving any or all of property damage, personal injury, and environmental liability that
exceed our insurance coverage for such risks could have a material adverse effect on our results of operations, financial condition, and
liquidity. In addition, some of these matters could impact the 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, our operations are subject to
extensive federal, state, and local environmental laws and regulations concerning, among other things, emissions to the air; discharges to
waters; handling, storage, transportation, and disposal of waste and other materials; and hazardous material or petroleum releases. We
generate and transport hazardous and non-hazardous waste in our operations. Environmental liability can extend to previously owned or
operated properties, leased properties, properties owned by third parties, as well as properties we currently own. Environmental liabilities
also have arisen and may arise from claims asserted by adjacent landowners or other third parties in toxic tort litigation. We have been and
may be subject to allegations or findings that we have violated, or are strictly liable under, these laws or regulations. We currently have
certain obligations at existing sites for investigation, remediation, and monitoring, and we likely will have obligations at other sites in the
future. We believe we maintain adequate estimated liabilities for these obligations, but fluctuations of potential costs affect our estimates
based on our experience and, as necessary, the advice and assistance of our consultants. However, actual costs may vary from our
estimates due to a variety of factors, including changes to environmental laws or interpretations of such laws, technological changes affecting
investigations and remediation, the participation and financial viability of other parties responsible for any such liability, and the corrective
action or change to corrective actions required to remediate any existing or future sites. We could incur significant costs as a result of any of
the foregoing, and we may be required to incur significant expenses to investigate and remediate known, unknown, or future environmental
contamination, which could have a material adverse effect on our results of operations, financial condition, and liquidity.
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 primary subsidiary, BNSF Railway
Company (BNSF), operates parallel routes in many of our main traffic corridors. In addition, we operate in corridors served by other railroads
and motor carriers. Motor carrier competition exists in all three of our commodity groups. Because of the proximity of our routes to major
inland and Gulf Coast waterways, barges can be particularly competitive, especially for grain and bulk commodities in certain areas where
we operate. In addition to price competition, we face competition with respect to transit times, quality, and reliability of service from motor
carriers and other railroads. Motor carriers in particular can have an advantage over railroads with respect to transit times and timeliness of
service. Additionally, we must build 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 for
some 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 alternative modes of transportation, such as
autonomous or more fuel efficient trucks, (b) legislation that eliminates or significantly increases the existing size or weight limitations applied
to motor carriers, or (c) legislation or regulatory changes that impose operating restrictions or requirements on railroads or that adversely
affect the profitability of some or all railroad traffic. Many movements face product or geographic competition where our customers can use
different products (e.g., natural gas instead of coal, sorghum instead of corn) or commodities from different locations (e.g., grain from states
or countries that we do not serve, crude oil from different regions). Sourcing different commodities or different locations allows shippers to
substitute different carriers, and such competition may reduce our volumes or constrain prices. Additionally, any future consolidation of the
rail industry could materially 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 a material adverse effect on our results of
operations, financial condition, and liquidity on both a long-term and near-term basis. Restrictions, caps, taxes, or other controls on emissions
of GHGs, including diesel exhaust, could significantly increase our operating costs. Restrictions on emissions could also affect our customers
that (a) use commodities that we carry 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, or changes of
consumer preferences for goods or services relating to alternative sources of energy, emissions reductions, and GHG emissions can
materially affect the markets for the commodities we carry and demand for our services, which in turn could have a material adverse effect on
our results of operations, financial condition, and liquidity. Government incentives
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encouraging the use of alternative sources of energy also can affect certain of our customers and the markets for certain of the commodities
we carry in a manner that could unpredictably alter our traffic patterns or reduce demand.
Compliance with laws or regulations related to climate change, along with defending and resolving legal claims and other litigation, could
have a material adverse effect on our results of operations, financial condition, and liquidity. Climate change may cause severe weather
conditions and other natural phenomena, including earthquakes, hurricanes, fires, floods, mudslides or landslides, extreme temperatures,
avalanches, and significant precipitation. Severe weather conditions and other natural phenomena has in the past and could in the future
cause line outages and other interruptions to our infrastructure. Any of these factors, individually or in operation with one or more of the other
factors, or other unpredictable impacts of climate change could reduce the amount of traffic we handle and have a material adverse effect on
our results of operations, financial condition, and liquidity.
Our efforts to achieve emission reduction targets or aspirations could significantly increase our operational costs and capital expenditures. In
addition, stakeholder expectations regarding some of these matters may be evolving and there may be differing views among stakeholders,
which could harm our reputation or increase our costs. Our ability to meet such targets or aspirations can depend on significant technological
advancements, including, for example, suitable alternative fuels and zero-emissions locomotives, and when such technological
advancements will take place, if at all, and whether they will be readily available on commercially reasonable terms is currently unknown.
There can be no assurances we will achieve our emission reduction targets or aspirations, or that the associated costs will not be higher than
expected, or that the regulatory landscape will not have a negative impact on our results of operations, financial condition, and liquidity.
Government mandates may lead to the premature adoption of unproven and unreliable technology, which could negatively affect operational
reliability, customer service and supply chain continuity.
Our Business, Financial Condition, and Results of Operations Have Been Adversely Affected, and in The Future, Could Be Materially
Adversely Affected by Pandemics or Other Public Health Crises – Pandemics, epidemics, and other outbreaks of disease can have
significant and widespread impacts. As we saw during the peaks of the COVID pandemic, outbreaks of disease 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 adverse effects on workforces, customers, and regional and local economies.
The impact of pandemics or public health crises on our results of operations and financial condition will depend on numerous evolving
factors, including, but not limited to: governmental, business, and individuals’ actions taken in response to a global pandemic or other 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; the effect 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 disruptions; facility closures; commodity cost volatility; general macroeconomic uncertainty in key global markets and financial
market volatility; global economic conditions and levels of economic growth; and the pace of recovery as the pandemic subsides as well as
response to a potential reoccurrence. Further, a pandemic or other public health crises, and the volatile regional and global economic
conditions stemming from such an event, could also precipitate and aggravate the other risk factors that we identify, which could materially
adversely affect our business, financial condition, results of operations (including revenues and profitability), and/or stock price. Additionally,
a pandemic or other public health crises also may affect our operating and financial results in a manner 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 effect on our operating results. Although we
currently are able to recover a significant amount of our fuel expenses from our customers through revenues from fuel surcharges, we cannot
be certain that we will always be able to mitigate rising or elevated fuel costs through our fuel surcharges. Additionally, future market
conditions or legislative or regulatory activities could 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 and are from time-to-time a significant source of quarter-over-quarter and year-over-year volatility, particularly in periods of rapidly
changing prices. International, political, and economic factors, events and conditions, including international armed conflicts such as the
Russia-Ukraine and Israel-Hamas wars, and other geopolitical tensions in the Middle East, affect the volatility of fuel prices and supplies.
Weather can also affect fuel supplies and limit domestic refining capacity. A severe shortage of, or disruption to, domestic fuel supplies could
have a material adverse effect on our results of operations, financial condition, and liquidity. Alternatively, lower fuel prices could have a
negative impact on certain commodities we transport, such as coal and domestic drilling-related shipments, which could have a material
adverse effect on our results of operations, financial condition, and liquidity.
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We Rely on Capital Markets – Due to the significant capital expenditures required to operate and maintain a safe and efficient railroad, 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. Significant instability or disruptions of the capital
markets, including, among other things, elevated interest rates in the credit markets and/or changes in interest rates, or deterioration of our
financial condition due to internal or external factors could restrict or prohibit our access to, and significantly increase the cost of, commercial
paper and other financing sources, including bank credit facilities and the issuance of long-term debt, including corporate bonds, and could
also have a material adverse effect on our results of operations, financial condition, and liquidity. A significant deterioration of our financial
condition could result in a reduction of our credit rating to below investment grade, which could restrict us from utilizing our current
receivables securitization facility (Receivables Facility). These developments also could limit our access to external sources of capital and
significantly increase the costs of short and long-term debt financing, which could have a material adverse effect on our results of operations,
financial condition, and liquidity.
General Risk Factors
We Are Affected by General Economic Conditions – Prolonged, severe adverse domestic and global macroeconomic conditions or
disruptions of financial and credit markets, including, for example, the cycles of recessionary fears, inflationary pressures, changes in interest
rates, and/or related monetary policy actions by governments in response to inflation, may affect the producers and consumers of the
commodities we carry and may have a material adverse effect on our access to liquidity, results of operations, and financial condition.
We May Be Affected by Acts of Terrorism, War, or Risk of War – Our rail lines, facilities, and equipment, including rail cars carrying
hazardous materials, could be direct targets or indirect casualties of terrorist attacks. Terrorist attacks, or other similar 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 increase dramatically, or certain coverages may not be available
to us in the future. Also, in the event of a national crisis or emergency, one or more government entities could take actions (such as via the
U.S. Defense Production Act or the International Emergency Economic Powers Act) that could diminish our rights or economic opportunities
with respect to the transportation services we offer.
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 our Company-wide enterprise risk
management framework, we implemented a cybersecurity program whose objective is to assess, 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 security assessments, engage third-party consultants to conduct external security assessments,
and participate in, conduct, and/or administer exercises, drills, and recovery tests as part of this program. We also maintain training programs
and policies and procedures designed to safeguard employee handling and use of data, internet usage, controlled access measures, and
physical protections. We consult with industry groups, monitor threat intelligence reports, and communicate with various government
agencies in an effort to stay up-to-date on changes in the cybersecurity threat landscape. This program, in addition to addressing our own
information systems, is also designed to oversee, identify, and reduce the potential impact of a 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 Vice President 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, including prevention, detection, mitigation, and
remediation of cybersecurity incidents, as well as implementing, monitoring, and maintaining our enterprise-wide security strategy, standards,
architecture, policies, and processes. Our CIO reports directly to our Chief Executive Officer, our CISO reports to our CIO, and reporting to
our CISO are our Deputy Chief Information Security Officer (Deputy CISO) and other experienced information security personnel responsible
for various parts of our business. In addition to our internal cybersecurity capabilities, we also periodically engage assessors, consultants,
auditors, and other third parties
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to assist with assessing, identifying, and managing cybersecurity risks. When the Company learns of a cybersecurity incident at a third-party
service provider, the Company’s respective department contacts maintain communication 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) provides a 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 reporting findings and keeping senior management and
other key stakeholders informed and involved, based on assessments regarding the 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 our operations.
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 to validate our security controls and assess our
infrastructure and applications. All management employees take mandatory security awareness training on the Company’s data security
policies and procedures, which is supplemented by Company-wide testing initiatives, including periodic phishing tests.
Our information security program is designed to align our defenses and resources to identify, assess, and address more likely and more
damaging cyber events, to provide support for our organizational mission and operational objectives, and to position us to deter, detect,
mitigate, and respond to a wide variety of potential attacks in a timely fashion. Our information security program employs quantitative and
qualitative approaches to evaluate the effectiveness of controls and assess the resiliency of critical computing resources. This data is
combined with knowledge of common attack techniques to assess the likelihood of components being compromised and assess potential
financial implications under different scenarios. The results are used to help identify potentially material risks and provide insights which are
taken into account when prioritizing our 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, and remediate
cybersecurity incidents. While we are not aware of having experienced any material effects or reasonably likely material effects on our
Company, its business strategy, results of operations, or financial condition resulting from cybersecurity threats or incidents to date, as a
critical infrastructure provider, we may be a target of well-funded and sophisticated adverse actors. There can be no guarantee that we will
not be the subject of future risks or incidents that have such 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 of personal,
confidential, sensitive, proprietary, and other types of information. Despite ongoing efforts to continue improvement of our and our vendors’
ability to protect against cyber incidents, we may not be able to protect all of the information systems we use. Incidents may lead to
reputational harm, revenue and client loss, legal actions, or statutory penalties, among other consequences. For a more detailed discussion
of these risks, see our discussion in the Risk Factors in Item 1A of this report.
Governance
The Board of Directors has delegated primary oversight of the Company’s cybersecurity risk to the Audit Committee, which receives updates
on cybersecurity risks, risk mitigation initiatives, 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 and committee assignments, the Board
of Directors takes into consideration the cybersecurity experience of directors and director candidates and strives to maintain cybersecurity
expertise on the Board of Directors and Audit Committee. We have protocols 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 skills gained from
over 28 years, 29 years, and 20 years of relevant work experience, respectively, head the Internal Cybersecurity Team 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. Our CISO and Deputy CISO receive reports on cybersecurity threats from a number of experienced information security
professionals for various parts of our business on an ongoing
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basis and, in conjunction with other management personnel, regularly consult on risk management measures implemented by the Company
to identify and mitigate data protection and cybersecurity risks.
In addition, our Risk and Compliance Committee (RCC) is responsible for oversight and support of the Company’s Enterprise Risk
Management and Compliance and Ethics programs and is comprised of the Executive Leadership Team and the Senior Vice President and
Chief Accounting, Risk, and Compliance Officer (Compliance Officer). The RCC also created a subcommittee, 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 - Finance, Compliance and Commercial Litigation, Vice President and
Chief Safety Officer, CISO, Vice President - Strategy and Corporate Development, and Assistant Vice President - Executive Services. The
RCC and ERMC both meet throughout the year and receive periodic updates on cybersecurity from the CISO.
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 the western two-
thirds of the U.S.
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TRACK
Our rail network includes 32,880 route miles. We own 26,291 miles and operate on the remainder pursuant to trackage rights or leases. The
following table describes track miles:
As of December 31,
2024
2023
Route
32,880
32,693
Other main line
7,116
7,117
Passing lines and turnouts
3,526
3,466
Switching and classification yard lines
8,850
8,852
Total miles
52,372
52,128
HEADQUARTERS BUILDING
We own our headquarters building in Omaha, Nebraska. The facility has 1.2 million square feet of space that can accommodate
approximately 4,000 employees.
HARRIMAN DISPATCHING CENTER
The Harriman Dispatching Center (HDC), located in Omaha, Nebraska, is our primary dispatching facility. It is linked to regional dispatching
and locomotive management facilities at various locations along our network. HDC employees coordinate moves of locomotives and trains,
manage traffic and train crews on our network, and coordinate interchanges with other railroads. Generally, around 600 employees work on-
site in the facility. In the event of a disruption of operations at HDC due to a cyber-attack, flooding or severe weather, pandemic outbreak, or
other event, we maintain the capability to conduct critical operations 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 yards for building
trains (classification yards), switching, storage-in-transit (the temporary storage of customer goods in rail cars prior to shipment), and other
activities; offices to administer and manage our operations; dispatching centers to direct traffic on 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 table includes the major yards and terminals on our system:
Major Classification Yards
Major Intermodal Terminals
Houston, Texas
Joliet (Global 4), Illinois
North Platte, Nebraska
Global II (Chicago), Illinois
North Little Rock, Arkansas
East Los Angeles, California
Livonia, Louisiana
ICTF (Long Beach), California
Fort Worth, Texas
Mesquite, Texas
West Colton, California
Marion, Arkansas
Roseville, California
Lathrop, California
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RAIL EQUIPMENT
Our equipment includes owned and leased locomotives and rail cars; heavy maintenance equipment and machinery; other equipment and
tools in our shops, offices, and facilities; and vehicles for maintenance, transportation of crews, and other activities. As of December 31,
2024, we owned or leased the following units of equipment:
Locomotives
Owned
Leased
Total
Average
Age (yrs.)
Multiple purpose
5,973
920
6,893
25.2
Switching
122
-
122
44.6
Other
11
-
11
54
Total locomotives
6,106
920
7,026
N/A
Freight cars
Owned
Leased
Total
Average
Age (yrs.)
Covered hoppers
14,642
8,897
23,539
21.1
Open hoppers
4,658
579
5,237
37.8
Gondolas
6,293
4,251
10,544
23.4
Boxcars
3,741
5,526
9,267
27.2
Refrigerated cars
2,404
945
3,349
20.1
Flat cars
1,966
1,952
3,918
33.4
Other
-
322
322
36.1
Total freight cars
33,704
22,472
56,176
N/A
Highway revenue equipment
Owned
Leased
Total
Average
Age (yrs.)
Containers
46,375
288
46,663
13.1
Chassis
4,356
1,197
5,553
11.6
Total highway revenue equipment
50,731
1,485
52,216
N/A
We continuously assess our need for equipment to run an efficient and reliable network. Many factors cause us to adjust the size of our
active fleets, including changes in carload volumes, weather events, seasonality, customer preferences, and operational efficiency initiatives.
As some of these factors are difficult to assess or can change rapidly, we maintain a buffer to remain agile. Without the buffer, our ability to
react quickly is hindered as equipment suppliers are limited and lead times to acquire equipment are long and may be in excess of a year.
We believe our locomotive and freight car fleets are appropriately sized to meet our current and future business requirements. These fleets
serve as the most reliable and efficient equipment to facilitate growth without additional acquisitions. Locomotive and freight car in service
utilization percentages for the year ended December 31, 2024, were 65% and 75%, respectively.
CAPITAL EXPENDITURES
Our rail network requires significant annual capital investments for replacement, improvement, and expansion. These investments enhance
safety, support the transportation needs of our customers, improve our operational efficiency, and support emission reduction initiatives.
Additionally, we add new equipment to our fleet to replace older equipment and to support growth and customer demand.
2024 Capital Program – During 2024, our capital program totaled approximately $3.4 billion. (See the cash capital investments table in
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources, Item 7, of this
report.)
2025 Capital Plan – In 2025, we expect our capital plan to be approximately $3.4 billion, consistent with 2024. (See further discussion of our
2025 capital plan in Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital
Resources, Item 7, of this report.)
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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 the protection of
the environment. (See discussion within this report of environmental issues in Business - Governmental and Environmental 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. We routinely assess
our liabilities and contingencies in connection with these matters based upon the latest available information and, when necessary, we seek
input from our third-party advisors when making these assessments. Consistent with SEC rules and requirements, we describe below
material pending legal proceedings (other than ordinary routine litigation incidental to our business), material proceedings known to be
contemplated by governmental authorities, other proceedings arising under federal, state, or local environmental laws and regulations
(including governmental proceedings involving potential fines, penalties, or other monetary sanctions in excess of $1,000,000), and such
other pending matters that we may determine to be appropriate. See also Note 17 to the Financial Statements and Supplementary Date, Item
8.
ENVIRONMENTAL MATTERS
We receive notices from the EPA and state environmental agencies alleging that we are or may be liable under federal or state
environmental laws for remediation costs at various sites throughout the U.S., including sites on the Superfund National Priorities List or state
superfund lists. We cannot predict the ultimate impact of these proceedings and suits because of the number of potentially responsible
parties involved, the degree of contamination by various wastes, the scarcity and quality of volumetric 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 in 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.
OTHER MATTERS
Antitrust Litigation – As we reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, 20 rail shippers (many of
whom were represented by the same law firms) filed virtually identical antitrust lawsuits in various federal district courts against us and four
other Class I railroads in the U.S. Currently, UPRR and three other Class I railroads are the named defendants in the lawsuits. The original
plaintiff filed the first of these claims in the U.S. District Court in New Jersey on May 14, 2007. These suits alleged that the named railroads
engaged in price-fixing by establishing common fuel surcharges 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 five plaintiffs remain in this multidistrict
litigation (MDL I) originally filed in 2007. The MDL I claims previously were proceeding on a consolidated basis in the U.S. District of
Columbia District Court before the Honorable Paul L. Friedman. In 2024, they were transferred to the Honorable Beryl A. Howell.
Since the Certification Denial, approximately 106 lawsuits by individual shippers are pending in federal court based on claims essentially
identical to those alleged in MDL I. The Judicial Panel on Multidistrict Litigation consolidated these suits for pretrial proceedings in the U.S.
District Court before the Honorable Beryl A. Howell (MDL II).
As we reported in our Current Report on Form 8-K, filed on June 10, 2011, Oxbow Carbon & Minerals LLC and related entities (Oxbow) filed
a complaint against UPRR in the U.S. District Court on June 7, 2011. In 2019, Oxbow dismissed certain claims and the claims that remain
are the same as the Plaintiffs’ claims in MDL I. Oxbow's claims previously were proceeding in the U.S. District of Columbia District Court
before the Honorable Pail L. Friedman. In 2024, Oxbow's case was transferred to the Honorable Beryl A. Howell.
We continue to deny the allegations that our fuel surcharge programs violate the antitrust laws or any other laws. We believe that these
lawsuits are without merit, and we will vigorously defend our actions. Therefore, we currently believe that these matters will not have a
material adverse effect on any of our results of operations, financial condition, and liquidity.
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Item 4. Mine Safety Disclosures
Not applicable.
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 in conjunction with
the Annual Meeting of Shareholders, and they hold office until their successors are elected. Executive officers also may be elected and
designated throughout the year, as the Board of Directors considers appropriate. There are no family relationships among the officers, nor is
there any arrangement or understanding between any officer and any other person pursuant to officer selection. The following table sets forth
certain information current as of February 7, 2025, relating to the executive officers of UPC and the Railroad.
Name
Position
Age
Business
Experience During
Past Five Years
V. James Vena
Chief Executive Officer
66
[1]
Elizabeth F. Whited
President
59
[2]
Jennifer L. Hamann
Executive Vice President and Chief Financial Officer
57
Current Position
Eric J. Gehringer
Executive Vice President - Operations
45
[3]
Rahul Jalali
Executive Vice President and Chief Information Officer
51
[4]
Craig V. Richardson
Executive Vice President, Chief Legal Officer, and Corporate Secretary
63
[5]
Kenny G. Rocker
Executive Vice President - Marketing and Sales
53
Current Position
Todd M. Rynaski
Senior Vice President and Chief Accounting, Risk, and Compliance Officer
54
[6]
[1]
Mr. Vena was elected Chief Executive Officer effective August 14, 2023. He previously served as a Senior Advisor to the Chairman (January 2021 -
June 2021) and Chief Operating Officer (January 2019 - December 2020).
[2]
Ms. Whited was elected President effective August 14, 2023. Ms. Whited most recently served as Executive Vice President - Sustainability and Strategy
(February 2022 - August 2023). She previously served as Executive Vice President and Chief Human Resources Officer (August 2018 - February 2022).
[3]
Mr. Gehringer was elected Executive Vice President - Operations effective January 1, 2021. Mr. Gehringer previously served as Senior Vice President -
Transportation (July 2020 - December 2020) and Vice President - Mechanical and Engineering (January 2020 - July 2020).
[4]
Mr. Jalali was elected Executive Vice President and Chief Information Officer effective June 1, 2023. Mr. Jalali most recently served as Senior Vice
President and Chief Information Officer (November 2020 - May 2023).
[5]
Mr. Richardson was elected Executive Vice President, Chief Legal Officer, and Corporate Secretary effective December 8, 2020. He most recently
served as Interim Executive Vice President, Chief Legal Officer, and Corporate Secretary (September 2020 - November 2020) and Vice President -
Commercial and Regulatory Law (July 2018 - August 2020).
[6]
Mr. Rynaski was elected Senior Vice President and Chief Accounting, Risk, and Compliance Officer effective July 1, 2022. Mr. Rynaski previously
served as Vice President and Controller (September 2015 - June 2022).
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PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
Our common stock is traded on the NYSE under the symbol “UNP”.
At January 31, 2025, there were 604,286,378 shares of common stock outstanding and 26,755 common shareholders of record. On that
date, the closing price of the common stock on the NYSE was $247.79. We paid dividends to our common shareholders during each of the
past 125 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 the Standard & Poor’s 500 Stock Index (S&P 500).
Period
UNP
Peer Group
DJ Trans
S&P 500
1 Year (2024)
(5.1 %)
(2.4 %)
1.5 %
25.0 %
3 Year (2022 - 2024)
(3.1 %)
(13.0 %)
0.6 %
29.2 %
Five-Year Performance Comparison – The following graph provides an indicator of cumulative total shareholder returns for the Corporation
as compared to the peer group index (described above), the DJ Trans, and the S&P 500. The graph assumes that $100 was invested in the
common stock of Union Pacific Corporation and each index on December 31, 2019, and that all dividends were reinvested. The information
below is historical in nature and is not necessarily indicative of future performance.
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Purchases of Equity Securities – During 2024, we repurchased 6,467,619 shares of our common stock at an average price of $240.51.
The following table presents common stock repurchases during each month for the fourth quarter of 2024:
Period
Total Number of
Shares Purchased [a]
Average Price
Paid Per Share
Total Number of Shares
Purchased as Part of a
Publicly Announced Plan
or Program
Maximum Number of
Shares Remaining
Under the Plan or
Program [b]
Oct. 1 through Oct. 31
2,503,616 $
237.58
2,503,002
74,390,644
Nov. 1 through Nov. 30
303,827
235.43
301,783
74,088,861
Dec. 1 through Dec. 31
274
244.72
-
74,088,861
Total
2,807,717 $
237.35
2,804,785
N/A
[a]
Total number of shares purchased during the quarter includes approximately 2,932 shares delivered or attested to UPC by employees to pay stock
option exercise prices, satisfy excess tax withholding obligations for stock option exercises or vesting of retention 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 by March 31, 2025. These
repurchases may be made on the open market or through other 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 to the Financial
Statements and Supplementary Data, Item 8, and other information in this report, including Risk Factors set forth in Item 1A and Critical
Accounting Estimates and Cautionary Information at the end of this Item 7. The following section generally discusses 2024 and 2023 items
and year-to-year comparisons between 2024 and 2023. Discussions of 2022 items and year-to-year comparisons between 2023 and 2022
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 the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
The Railroad, along with its subsidiaries and rail affiliates, is our one reportable operating segment. Although we provide and analyze
revenues by commodity group, we treat the financial results of the Railroad as one segment due to the integrated nature of our rail network.
EXECUTIVE SUMMARY
2024 Results
•
Safety – 2024 was a transformational year on our journey to becoming the safest railroad. Our strategy is broken into four pillars – Injury
Prevention, Leverage Technology, Situational Awareness Testing, and Peer-to-Peer Engagement.
Injury Prevention efforts focus on specific, critical tasks to reduce the risk of injury or derailment. These critical tasks are those where any
form of non-compliance can result in a serious injury. Training is key to helping our employees understand how to execute those tasks
safely.
We are Leveraging Technology to eliminate or automate activities with the most risk. We have more than 7,000 wayside detectors that
monitor freight cars and locomotives in real time, generating 16 million data points daily to proactively identify and mitigate risks. We are
building safer trains with our proprietary Physics Train Builder technology, which allows us to evaluate train and route characteristics to
enable proactive intervention by our Operating Practices Command Center to prevent derailments. We utilize our autonomous geometry
car fleet to inspect 500,000 miles of track annually. This technology and the data it provides enable us to direct investments and
resources in the right place, helping to significantly reduce track-caused derailments over the last 10 years.
Situational Awareness Testing (a program we call COMMIT) is our program that observes, tests, and coaches our employees to promote
understanding and compliance with our work rules. This goes beyond the classroom, with an emphasis on being in the field with the
employees as they are performing the activities that run the railroad.
Peer-to-Peer Engagement is driving employee ownership through engagement with our safety programs. This is our culture, a personal
commitment to do our jobs with a passion for safety so everyone goes home safely. Employees are encouraged to speak up if they see
unsafe behaviors.
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The focus on these four pillars is driving results. Our personal injury rate (the number of reportable injuries for every 200,000 employee-
hours worked) is down 23% and our derailment incident rate (the number of reportable derailment incidents per million train miles) down
20% compared to 2023 results.
•
Service – Service performance index for both intermodal and manifest products improved 2 and 4 points, respectively, compared to
2023. Throughout the year we improved network fluidity as reflected in 2% faster freight car velocity and record terminal dwell, improved
3% from 2023.
•
Operational Excellence – Network performance throughout 2024 was strong. While we experienced some powerful weather events in
the second quarter and a second half surge in international intermodal shipments, most of our operating metrics improved year-over
year. We maintained a resource buffer that allowed us to strategically integrate crews, locomotives, and freight cars into the network to
efficiently handle the growth and recover from the weather events.
•
Financial Results – Core pricing gains, strong productivity, and 3% volume growth positively impacted our financial results. Operating
income of $9.7 billion increased 7% from 2023, and our operating ratio was 59.9%, improving 2.4 points from 2023. Net income of $6.7
billion translated into earnings of $11.09 per diluted share, up 6% from 2023.
We generated $9.3 billion of cash provided by operating activities, yielded free cash flow of $2.8 billion after reductions of $3.3 billion for
cash used in investing activities and $3.2 billion in dividends paid. Both cash provided by operating activities and free cash flow were
higher by $384 million due to payments in 2023 related to back wages for agreements reached with our labor unions.
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-K and may not be defined and
calculated by other companies in the same manner. We believe free cash flow is important to management and investors in evaluating our
financial performance and measures our ability to generate cash without additional external financing. Free cash flow should be considered
in addition to, rather than as a substitute for, cash provided by operating activities. The following table reconciles cash provided by operating
activities (GAAP measure) to free cash flow (non-GAAP measure):
Millions
2024
2023
2022
Cash provided by operating activities
$
9,346 $
8,379 $
9,362
Cash used in investing activities
(3,325)
(3,667)
(3,471)
Dividends paid
(3,213)
(3,173)
(3,159)
Free cash flow
$
2,808 $
1,539 $
2,732
2025 Outlook
•
Safety – Our goal is to be an industry leader in safety, and we are committed to continuously finding new ways to enhance safety. In
2025, we will continue to focus on our four pillars of safety. Training that engages both new and experienced employees is fundamental
to our success. Critical safety tasks will be reinforced and enhanced by adding critical-thinking scenarios to the classroom curriculum. We
will continue using a comprehensive safety management approach utilizing technology, hazard identification and risk assessments,
employee engagement, training, quality control, and targeted capital investments. In addition, we will continue to collect and utilize data
with the goal of identifying and mitigating exposure to risk, detect rail defects, improve or close grade crossings, and educate the public
and law enforcement agencies about crossing safety through a combination of our own programs (including risk assessment strategies),
industry programs, and local community activities across the network. Safety is paramount to the success of the railroad and deeply
ingrained in our culture, and this will not change in 2025.
•
Service – We are committed to delivering the service we sold to our customers. As we meet with customers to agree on their specific
needs and outcomes, we will continue to measure ourselves against the best service we provided them over the last three years and use
that as a guide for meeting their expectations. We will engage with customers by being the first to act on new opportunities, investing to
grow, and finding innovative solutions to win together.
•
Operational Excellence – To provide our customers with the service we sold, we must run a fluid network. Network fluidity enables us to
effectively utilize all our resources and provides the capacity to respond in an ever-changing environment. Terminal dwell and freight car
velocity are key indicators of that fluidity. We will continue to transform our railroad using technology and automation to further improve
our service product, improve resource utilization, and lower our overall cost structure.
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•
Business Volumes – Macroeconomic uncertainties remain in 2025 that could have a material impact on our 2025 financial and operating
results. Current forecasts for 2025 industrial production show a slight increase versus 2024. In addition, other factors, such as imposition
of higher tariffs and changes in domestic and foreign monetary policy may affect economic activity and demand for rail transportation;
natural gas prices, weather conditions, and demand for other energy sources may impact the coal market; crude oil prices and spreads
may drive demand for petroleum products and drilling materials; available truck capacity could impact our intermodal business; and
international trade agreements could promote or hinder trade. Lower coal demand, resulting from ongoing competitive energy dynamics
and reduced coal-fired electricity production, and lower international intermodal business, due to the west coast volume surge in 2024,
are expected to negatively impact volumes. Additionally, the way our customers are affected by and respond to the implementation of
new tariffs may influence our volume levels and traffic flows. Fuel prices may continue to fluctuate in the current economic environment.
As prices fluctuate, there will be a timing impact on earnings, as our fuel surcharge programs trail increases or decreases in fuel prices
by approximately two months. Regardless of external factors, we will focus on operating a safe railroad and delivering the service we sold
to our customers as well as effective asset utilization, cost control, and seeking new business opportunities.
RESULTS OF OPERATIONS
Operating Revenues
Millions
2024
2023
2022
% Change 2024 v
2023
% Change 2023 v
2022
Freight revenues
$
22,811 $
22,571 $
23,159
1 %
(3)%
Other subsidiary revenues
788
872
884
(10)
(1)
Accessorial revenues
554
584
779
(5)
(25)
Other
97
92
53
5
74
Total
$
24,250 $
24,119 $
24,875
1 %
(3)%
We generate freight revenues by transporting products from our three commodity groups. Freight revenues vary with volumes (carloads) and
average revenue per car (ARC). Changes in price, traffic mix, and fuel surcharges drive ARC. Customer incentives, which are primarily
provided for shipping to/from specific locations or based on cumulative volumes, are recorded as a reduction to operating revenues.
Customer incentives 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 obligation is satisfied. We
recognize freight revenues over time as shipments move from origin to destination. The allocation of revenues between reporting periods is
based on the relative transit time in each reporting period with expenses recognized as incurred.
Other subsidiary revenues (primarily logistics and commuter rail operations) are generally recognized over time as shipments move from
origin to destination. The allocation of revenues between reporting periods is based on the relative transit time in each reporting period with
expenses recognized as incurred. Accessorial revenues are recognized at a point in time as performance obligations are satisfied.
Freight revenues increased 1% year-over-year to $22.8 billion driven by a 3% increase in volumes and core pricing gains, partially offset by
lower fuel surcharge revenues and negative mix of traffic (for example, a relative increase in international intermodal shipments, which have
a lower ARC). Volume increases were primarily driven by international intermodal and grain and grain product shipments, partially offset by
weaker demand for coal and rock shipments.
Our fuel surcharge programs generated freight revenues of $2.6 billion and $3.0 billion in 2024 and 2023, respectively. Fuel surcharge
revenues in 2024 decreased $0.4 billion due to a 15% decrease in fuel prices and the lag impact of fluctuating fuel prices (it can generally
take up to two months for changing fuel prices to affect fuel surcharge recoveries), partially offset by higher volumes.
In 2024, other subsidiary revenues decreased compared to 2023 primarily driven by a weaker demand for intermodal shipments at our
subsidiary that brokers intermodal and transload logistics services and the partial transfer of our commuter operations to Metra. Accessorial
revenues decreased in 2024 compared to 2023 driven by lower intermodal accessorial revenues because of our intermodal equipment sale,
partially offset by a one-time contract settlement.
25
Table of Contents
The following tables summarize the year-over-year changes in freight revenues, revenue carloads, and ARC by commodity type:
Freight Revenues
Millions
2024
2023
2022
% Change 2024 v
2023
% Change 2023 v
2022
Grain & grain products
$
3,828 $
3,644 $
3,598
5 %
1 %
Fertilizer
811
757
712
7
6
Food & refrigerated
1,085
1,041
1,093
4
(5)
Coal & renewables
1,483
1,916
2,134
(23)
(10)
Bulk
7,207
7,358
7,537
(2)
(2)
Industrial chemicals & plastics
2,345
2,176
2,158
8
1
Metals & minerals
2,081
2,194
2,196
(5)
-
Forest products
1,326
1,347
1,465
(2)
(8)
Energy & specialized markets
2,688
2,521
2,386
7
6
Industrial
8,440
8,238
8,205
2
-
Automotive
2,452
2,421
2,257
1
7
Intermodal
4,712
4,554
5,160
3
(12)
Premium
7,164
6,975
7,417
3
(6)
Total
$
22,811 $
22,571 $
23,159
1 %
(3)%
Revenue Carloads
Thousands
2024
2023
2022
% Change 2024 v
2023
% Change 2023 v
2022
Grain & grain products
850
798
798
7 %
- %
Fertilizer
213
191
190
12
1
Food & refrigerated
177
175
187
1
(6)
Coal & renewables
702
867
885
(19)
(2)
Bulk
1,942
2,031
2,060
(4)
(1)
Industrial chemicals & plastics
672
645
637
4
1
Metals & minerals
719
793
785
(9)
1
Forest products
213
213
241
-
(12)
Energy & specialized markets
607
582
552
4
5
Industrial
2,211
2,233
2,215
(1)
1
Automotive
824
820
778
-
5
Intermodal [a]
3,357
3,028
3,116
11
(3)
Premium
4,181
3,848
3,894
9
(1)
Total
8,334
8,112
8,169
3 %
(1)%
Average Revenue per Car
2024
2023
2022
% Change 2024 v
2023
% Change 2023 v
2022
Grain & grain products
$
4,505 $
4,567 $
4,509
(1)%
1 %
Fertilizer
3,809
3,962
3,749
(4)
6
Food & refrigerated
6,104
5,929
5,844
3
1
Coal & renewables
2,113
2,211
2,410
(4)
(8)
Bulk
3,710
3,623
3,658
2
(1)
Industrial chemicals & plastics
3,493
3,374
3,388
4
-
Metals & minerals
2,893
2,765
2,797
5
(1)
Forest products
6,229
6,310
6,092
(1)
4
Energy & specialized markets
4,426
4,335
4,320
2
-
Industrial
3,818
3,689
3,704
3
-
Automotive
2,976
2,955
2,902
1
2
Intermodal [a]
1,404
1,504
1,656
(7)
(9)
Premium
1,714
1,813
1,905
(5)
(5)
Average
$
2,737 $
2,782 $
2,835
(2)%
(2)%
[a]
For intermodal shipments, each container or trailer equals one carload.
26
Table of Contents
Bulk – Bulk includes shipments of grain and grain products, fertilizer, food and
refrigerated, and coal and renewables. Freight revenues from bulk shipments
decreased in 2024 compared to 2023 due to lower volumes and lower fuel surcharge
revenues, partially offset by positive mix, from decreased coal shipments, and core
pricing gains. Volumes declined 4% compared to 2023 driven by reduced use of coal in
electricity generation because of low natural gas prices, coal fired plant capacity, and
mild winter weather, partially offset by strength in export grain to Mexico and several
other grain products. Additionally, the volume declines were partially offset by increased
fertilizer shipments due to strong demand and a 2023 customer outage. Volumes for
coal and renewables and food and refrigerated shipments were negatively impacted by
outages and service challenges due to repeated snow events in Wyoming and flooding
in California in the first quarter of 2023 positively impacting the year-over-year
comparisons.
Industrial – Industrial includes shipments of industrial chemicals and plastics, metals
and minerals, forest products, and energy and specialized markets. Freight revenues
from industrial shipments increased in 2024 versus 2023 due to core pricing gains and
positive mix of traffic from decreased short haul rock shipments and increased
petroleum shipments, partially offset by lower fuel surcharge revenues and lower
volumes. Volumes decreased 1% compared to 2023 driven by lower demand for rock,
due to weather, high inventories, and softness in Southern markets, and decreased
sand shipments due to the use of local sources, partially offset by strength in petroleum,
industrial chemicals, and plastics.
Premium – Premium includes shipments of finished automobiles, automotive parts, and
merchandise in intermodal containers, both domestic and international. Freight
revenues from premium shipments increased driven by higher volumes and core pricing
gains, partially offset by lower fuel surcharge revenues and negative mix. Starting in the
third quarter of 2024, international intermodal experienced heavy demand due to
increased U.S. West Coast imports, a result of freight shifting from the East Coast and
Canadian ports due to uncertainty related to labor negotiations, driving volumes up over
30% in the second half of the year compared to the second half of 2023. In addition,
business development efforts in domestic intermodal drove volume growth in 2024
compared to 2023. Automotive shipments were flat year-over-year as business
development wins were offset by market weakness and unplanned production
decreases.
2024 Bulk Carloads
2024 Industrial Carloads
2024 Premium Carloads
Mexico Business – Freight revenues from each of our commodity groups includes revenues from shipments to and from Mexico, which
amounted to $3.0 billion in 2024, up 8% compared to 2023, driven by a 3% volumes increase and a 4% increase in ARC. The volume
increases were driven by higher grain and grain product shipments and finished vehicle shipments, partially offset by lower automotive parts
shipments.
Operating Expenses
Millions
2024
2023
2022
% Change 2024 v
2023
% Change 2023 v
2022
Compensation and benefits
$
4,899 $
4,818 $
4,645
2 %
4 %
Purchased services and materials
2,520
2,616
2,442
(4)
7
Fuel
2,474
2,891
3,439
(14)
(16)
Depreciation
2,398
2,318
2,246
3
3
Equipment and other rents
920
947
898
(3)
5
Other
1,326
1,447
1,288
(8)
12
Total
$
14,537 $
15,037 $
14,958
(3)%
1 %
27
Table of Contents
Operating expenses decreased $500 million, or 3%, in 2024
compared to 2023 driven by lower fuel prices, productivity, a
gain on the sale of intermodal equipment in 2024, partially offset
by inflation, volume-related costs, and higher depreciation. In
addition, positively impacting the year-over-year comparison are
lower labor agreement ratification charges as we reached
agreements impacting crew staffing in both years, and lower
weather-related costs from less impactful winter weather in the
first quarter of 2024 compared to 2023.
2024 Operating Expenses
Compensation and Benefits – Compensation and benefits include wages, payroll taxes, health and welfare costs, pension costs, and
incentive costs. In 2024, expenses increased 2% compared to 2023 due to wage inflation, which includes the impact of labor agreements to
modernize work rules and improve availability, higher incentive compensation, and increased crew needs associated with labor agreements
and increased volumes, partially offset by 4% lower employee levels. Train, engine, and yard (TE&Y) force levels were flat compared to 2023
as improved network fluidity allowed us to handle a 3% increase in volumes and the increased needs associated with labor agreements
without increasing the size of that workforce.
Purchased Services and Materials – Expense for purchased services and materials includes the costs of services purchased from outside
contractors and other service providers (including equipment maintenance and contract expenses incurred by our subsidiaries for external
transportation services); materials used to maintain the Railroad’s lines, structures, and equipment; costs of operating facilities jointly used by
UPRR and other railroads; transportation and lodging for train crew employees; trucking and contracting costs for intermodal containers;
leased automobile maintenance expenses; and tools and supplies. Purchased services and materials decreased 4% in 2024 compared
to 2023 driven by declines in locomotive maintenance expense due to a smaller active fleet as productivity improved year-over-year,
decreased volume-related drayage cost incurred at one of our subsidiaries, and a favorable contract settlement, partially offset by inflation
and volume-related costs.
Fuel – Fuel includes locomotive fuel and gasoline for highway and non-highway vehicles and heavy equipment. Fuel expense decreased
compared to 2023 due to a decrease in locomotive diesel fuel prices, which averaged $2.64 per gallon (including taxes and transportation
costs) in 2024 compared to $3.09 per gallon in 2023, resulting in a $0.4 billion decrease in expense (excluding any impact from decreased
volumes year-over-year), and a 1% improvement to the fuel consumption rate in 2024 (computed as gallons of fuel consumed divided by
gross ton-miles), partially offset by a 1% increase in gross ton-miles.
Depreciation – The majority of depreciation relates to road property, including rail, ties, ballast, and other track material. Depreciation
expense was up 3% in 2024 compared to 2023 due to a higher depreciable asset base.
Equipment and Other Rents – Equipment and other rents expense primarily includes rental expense that the Railroad pays for freight cars
owned by other railroads or private companies; freight car, intermodal, and locomotive leases; and office and other rent expenses, offset by
equity income from certain equity method investments. Equipment and other rents expense decreased 3% compared to 2023 due to lower
lease expense and improved cycle times, partially offset by increased demand in commodities utilizing freight cars owned by others and
inflation.
Other – Other expenses include state and local taxes; freight, equipment, and property damage; utilities; insurance; personal
injury; environmental; employee travel; telephone and cellular; computer software; bad debt; and other general expenses. Other expenses
decreased 8% in 2024 compared to 2023 driven by lower personal injury costs, a 2024 gain on the sale of intermodal equipment, and a 2023
write-off, partially offset by higher freight loss and damage and other casualty cost.
Non-Operating Items
Millions
2024
2023
2022
% Change 2024 v
2023
% Change 2023 v
2022
Other income, net
$
350 $
491 $
426
(29)%
15 %
Interest expense
(1,269)
(1,340)
(1,271)
(5)
5
Income tax expense
$
(2,047) $
(1,854) $
(2,074)
10 %
(11)%
Other Income, net – Other income decreased in 2024 compared to 2023 driven by a $107 million real estate transaction in 2023 and lower
income from other real estate transactions, partially offset by interest received in 2024 from the IRS on refund claims. See Note 6 to the
Financial Statements and Supplementary Data, Item 8, for additional detail.
28
Table of Contents
Interest Expense – Interest expense decreased in 2024 compared to 2023 due to a decreased weighted-average debt level of $31.6 billion in
2024 from $33.2 billion in 2023. The effective interest rate was 4.0% in both periods.
Income Tax Expense – Income tax expense increased in 2024 compared to 2023 driven by higher pre-tax income in 2024 and higher
deferred tax expense reductions in 2023, partially offset by the benefit of purchased federal tax credits in 2024. In 2024, the states of
Louisiana and Arkansas enacted legislation to reduce their corporate income tax rates for future years resulting in a $34 million reduction of
our deferred tax expense. In 2023, the states of Nebraska, Iowa, Kansas, and Arkansas enacted legislation to reduce their corporate income
tax rates for future years resulting in a $114 million reduction of our deferred tax expense. Our effective tax rates for 2024 and 2023 were
23.3% and 22.5%, respectively.
OTHER OPERATING/PERFORMANCE AND FINANCIAL STATISTICS
We
report
a
number
of
key
performance
measures
weekly
to
the
STB.
We
provide
these
on
our
website
at
https://investor.unionpacific.com/key-performance-metrics.
Operating/Performance Statistics
Management continuously monitors these key operating metrics to evaluate our operational efficiency in striving to deliver the service product
we sold to our customers.
Railroad performance measures are included in the table below:
2024
2023
2022
% Change 2024 v
2023
% Change 2023 v
2022
Gross ton-miles (GTMs) (billions)
847.4
837.5
843.4
1
%
(1) %
Revenue ton-miles (billions)
409.7
413.3
420.8
(1)
(2)
Freight car velocity (daily miles per car) [a]
208
204
191
2
7
Average train speed (miles per hour) [a]
23.6
24.2
23.8
(2)
2
Average terminal dwell time (hours) [a]
22.6
23.4
24.4
(3)
(4)
Locomotive productivity (GTMs per horsepower day)
135
129
125
5
3
Train length (feet)
9,469
9,356
9,329
1
-
Intermodal service performance index (%)
90
88
76
2 pts
12 pts
Manifest service performance index (%)
89
85
77
4 pts
8 pts
Workforce productivity (car miles per employee)
1,062
1,000
1,036
6
(3)
Total employees (average)
30,336
31,490
30,717
(4)
3
Operating ratio (%)
59.9
62.3
60.1
(2.4) pts
2.2 pts
[a]
As reported to the STB.
Gross and Revenue Ton-Miles – Gross ton-miles are calculated by multiplying the weight of loaded and empty freight cars by the number of
miles hauled. Revenue ton-miles are calculated by multiplying the weight of freight by the number of tariff miles. In 2024, gross ton-miles
increased 1% and revenue ton-miles decreased 1%, while carloadings were up 3% year-over-year. Changes in commodity mix drove the
year-over-year variances between gross ton-miles, revenue ton-miles, and carloads due to lower coal shipments, which are heavier, and
increased international intermodal shipments that are lighter.
Freight Car Velocity – Freight car velocity measures the average daily miles per car on our network. The two key drivers of this 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 increased 2% driven by record terminal dwell levels. The 2023 metrics were negatively impacted by operational
challenges caused by weather in the first quarter and train crew shortages in some locations in the first half of 2023, positively impacting the
year-over-year comparison.
Locomotive Productivity – Locomotive productivity is gross ton-miles per average daily locomotive horsepower. Locomotive productivity
improved 5% in 2024 compared to 2023 driven by improved network fluidity and asset utilization despite maintaining a buffer in 2024 to flex
the fleet size as we experienced and subsequently recovered from certain weather events and reacted to higher volume levels.
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Table of Contents
Train Length – Train length is the average maximum train length on a route measured in feet. Our train length increased 1% compared to
2023 due to train length improvement initiatives and increases in international intermodal shipments, which generally move on longer trains,
partially offset by declines in coal train length.
Service Performance Index (SPI) – SPI is a ratio of the service customers are currently receiving relative to the best monthly performance
over the last three years. Measuring our performance relative to a historical benchmark demonstrates our focus on continuously improving
service for our customers, and we believe it is a better indicator of service performance than the previously disclosed trip plan compliance.
SPI does not replace the service commitments we have contractually agreed to with a small number of customers. SPI is calculated for
intermodal and manifest products. Intermodal SPI improved 2 points, at the same time international volume surged. Manifest SPI improved 4
points in 2024 compared to 2023.
Workforce Productivity – Workforce productivity is average daily car miles per employee. Workforce productivity improved 6% in 2024 as
average daily car miles increased 2% and employees decreased 4% compared to 2023. Our active TE&Y workforce increased to support
carload demand and increased crew needs associated with labor agreements that went into effect in the third quarter of 2023. In addition, we
are maintaining an adequate training pipeline to provide a capacity buffer to enable responsiveness in an ever-changing demand and
operating environment.
Operating Ratio – Operating ratio is our operating expenses reflected as a percentage of operating revenues. Our operating ratio of 59.9%
improved 2.4 points compared to 2023 driven by productivity initiatives, core pricing gains, and the year-over-year impact from lower fuel
prices, partially offset by inflation and other costs. In addition, operating ratio year-over-year comparison was positively impacted by 2024
contract settlements, a 2024 gain on the sale of intermodal equipment, and lower labor agreement ratification charges than in 2023.
Return on Average Common Shareholders’ Equity
Millions, Except Percentages
2024
2023
2022
Net income
$
6,747
$
6,379
$
6,998
Average equity
$
15,839
$
13,476
$
13,162
Return on average common shareholders' equity
42.6 %
47.3 %
53.2 %
Return on Invested Capital as Adjusted (ROIC)
Millions, Except Percentages
2024
2023
2022
Net income
$
6,747
$
6,379
$
6,998
Interest expense
1,269
1,340
1,271
Interest on average operating lease liabilities
55
58
56
Taxes on interest
(308)
(315)
(304)
Net operating profit after taxes as adjusted
$
7,763
$
7,462
$
8,021
Average equity
$
15,839
$
13,476
$
13,162
Average debt
31,886
32,953
31,528
Average operating lease liabilities
1,436
1,616
1,695
Average invested capital as adjusted
$
49,161
$
48,045
$
46,385
Return on invested capital as adjusted
15.8 %
15.5 %
17.3 %
ROIC is considered a non-GAAP financial measure by SEC Regulation G and Item 10 of SEC Regulation S-K and may not be defined and
calculated by other companies in the same manner. We believe this measure is important to management and investors in evaluating the
efficiency and effectiveness of our long-term capital investments. In addition, we currently use ROIC as a performance criterion in
determining certain elements of equity compensation for our executives. ROIC should be considered in addition to, rather than as a
substitute for, other information provided in accordance with GAAP. The most comparable GAAP measure is return on average common
shareholders’ equity. The tables above provide a reconciliation from return on average common shareholders’ equity to ROIC. At
December 31, 2024, 2023, and 2022, the incremental borrowing rate on operating leases was 3.8%, 3.6%, and 3.3%, respectively.
30
Table of Contents
Debt / Net Income
Millions, Except Ratios
2024
2023
2022
Debt
$
31,192 $
32,579 $
33,326
Net income
$
6,747 $
6,379 $
6,998
Debt / net income
4.6
5.1
4.8
Adjusted Debt / Adjusted EBITDA
Millions, Except Ratios
2024
2023
2022
Net income
$
6,747 $
6,379 $
6,998
Add:
Income tax expense
2,047
1,854
2,074
Depreciation
2,398
2,318
2,246
Interest expense
1,269
1,340
1,271
EBITDA
$
12,461 $
11,891 $
12,589
Adjustments:
Other income, net
(350)
(491)
(426)
Interest on operating lease liabilities
48
58
54
Adjusted EBITDA (a)
$
12,159 $
11,458 $
12,217
Debt
$
31,192 $
32,579 $
33,326
Operating lease liabilities
1,271
1,600
1,631
Adjusted debt (b)
$
32,463 $
34,179 $
34,957
Adjusted debt / adjusted EBITDA (b/a)
2.7
3.0
2.9
Adjusted debt (total debt plus operating lease liabilities plus after-tax unfunded pension and OPEB (other post-retirement benefit) obligations)
to adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and adjustments for other income and interest on present
value of operating leases) is considered a non-GAAP financial measure by SEC Regulation G and Item 10 of SEC Regulation S-K and may
not be defined and calculated by other companies in the same manner. We believe this measure is important to management and investors
in evaluating the Company’s ability to sustain given debt levels (including leases) with the cash generated from operations. In addition, a
comparable measure is used by rating agencies when reviewing the Company’s credit rating. Adjusted debt to adjusted EBITDA should be
considered in addition to, rather than as a substitute for, other information provided in accordance with GAAP. The most comparable GAAP
measure is debt to net income ratio. The tables above provide reconciliations from net income to adjusted EBITDA, debt to adjusted debt,
and debt to net income to adjusted debt to adjusted EBITDA. At December 31, 2024, 2023, and 2022, the incremental borrowing rate on
operating leases was 3.8%, 3.6%, and 3.3%, respectively. Pension and OPEB were funded at December 31, 2024, 2023, and 2022.
LIQUIDITY AND CAPITAL RESOURCES
We are continually evaluating our financial condition and liquidity. We analyze a wide range of economic scenarios and the impact on our
ability to generate cash. These analyses inform our liquidity plans and activities outlined below and indicate we have sufficient borrowing
capacity to sustain an extended period of lower volumes.
At both December 31, 2024 and 2023, we had a working capital deficit due to upcoming debt maturities. It is not unusual for us to have a
working capital deficit, and we believe it is not an indication of a lack of liquidity. We generate strong cash from operations and also maintain
adequate resources, including our credit facility and, when necessary, access the capital markets to meet foreseeable cash requirements.
During 2024, we generated $9.3 billion of cash provided by operating activities, paid down $1.3 billion of long-term debt, paid $3.2 billion in
dividends, and repurchased shares totaling $1.5 billion. We have been, and we expect to continue to be, in compliance with our debt
covenants.
Our principal sources of liquidity include cash and cash equivalents, our Receivables Facility, our revolving credit facility, as well as the
availability of commercial paper and other sources of financing through the capital markets. On December 31, 2024, we had $1.0 billion of
cash and cash equivalents, $2.0 billion of committed credit available under our revolving credit facility, and up to $800 million undrawn on the
Receivables Facility. As of December 31, 2024, none of the revolving credit
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Table of Contents
facility was drawn, and we did not draw on our revolving credit facility at any time during 2024. Our access to the Receivables Facility may be
reduced or restricted if our bond ratings fall to certain levels below investment grade. If our bond rating were to deteriorate, it could have an
adverse impact on our liquidity. Access to commercial paper as well as other capital market financing is dependent on market conditions.
Deterioration of our operating results or financial condition due to internal or external factors could negatively impact our ability to access
capital markets as a source of liquidity. Access to liquidity through the capital markets is also dependent on our financial stability. We expect
that we will continue to have access to liquidity 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
other debt securities to public or private investors based on our assessment of the current condition of the credit markets. The Company’s
$2.0 billion revolving credit facility is intended to support the issuance of commercial paper by UPC and also serves as an additional source
of liquidity to fund short-term needs. The Company currently does not intend to make any borrowings under this facility.
As described in the notes to the Consolidated Financial Statements and as referenced in the table below, we have contractual obligations
that may affect our financial condition. Based on our assessment of the underlying provisions and circumstances of our contractual
obligations, other than the risks that we and other similarly situated companies face with respect 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 a material adverse effect on our consolidated results of operations, financial condition, or
liquidity. In addition, our commercial obligations, financings, and commitments are customary transactions that are like those of other
comparable corporations, particularly within the transportation industry.
The following table identifies material contractual obligations as of December 31, 2024:
Payments Due by December 31,
Millions
Total
2025
2026
2027
2028
2029
After
2029
Debt [a]
$
57,906 $
2,591 $
2,617 $
2,348 $
2,294 $
2,253 $
45,803
Purchase obligations [b]
2,110
999
590
240
160
121
-
Operating leases [c]
1,401
352
281
227
200
128
213
Other post-retirement benefits [d]
378
39
39
38
38
38
186
Finance lease obligations [e]
118
42
35
30
11
-
-
Total contractual obligations
$
61,913 $
4,023 $
3,562 $
2,883 $
2,703 $
2,540 $
46,202
[a]
Excludes finance lease obligations of $109 million as well as unamortized discount and deferred issuance costs of ($1,693) million. Includes an interest
component of $25,130 million.
[b]
Purchase obligations include locomotive maintenance contracts; purchase commitments for ties, ballast, and rail; and agreements to purchase other
goods and services.
[c]
Includes leases for locomotives, freight cars, other equipment, and real estate. Includes an interest component of $130 million.
[d]
Includes estimated other post-retirement, medical, and life insurance payments, and payments made under the unfunded pension plan for the next ten
years.
[e]
Represents total obligations, including interest component of $9 million.
Cash Flows
Millions
2024
2023
2022
Cash provided by operating activities
$
9,346 $
8,379 $
9,362
Cash used in investing activities
(3,325)
(3,667)
(3,471)
Cash used in financing activities
(6,067)
(4,625)
(5,887)
Net change in cash, cash equivalents, and restricted cash
$
(46) $
87 $
4
Operating Activities
Cash provided by operating activities increased in 2024 compared to 2023 due primarily to $384 million of payments in 2023 related to back
wages for agreements reached with our labor unions and increased net income.
Cash flow conversion is defined as cash provided by operating activities less cash used in capital investments as a ratio of net income. Cash
flow conversion rate is not considered a financial measure under GAAP by SEC Regulation G and Item 10 of SEC Regulation S-K and may
not be defined and calculated by other companies in the same manner. We believe cash
32
Table of Contents
flow conversion rate is important to management and investors in evaluating our financial performance and measures our ability 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 operating activities (GAAP measure) to cash flow conversion
rate (non-GAAP measure):
Millions, Except Percentages
2024
2023
2022
Cash provided by operating activities
$
9,346
$
8,379
$
9,362
Cash used in capital investments
(3,452)
(3,606)
(3,620)
Total (a)
5,894
4,773
5,742
Net income (b)
$
6,747
$
6,379
$
6,998
Cash flow conversion rate (a/b)
87 %
75 %
82 %
Investing Activities
Cash used in investing activities in 2024 decreased compared to 2023 primarily driven by less capital investments and higher proceeds from
asset sales, including a sale of intermodal equipment. Roughly half of the year-over-year decrease in capital investments is attributable to the
2023 purchase of a small trucking and transload operator and related real estate assets.
The following table detail cash capital investments for the years ended December 31:
Millions
2024
2023
2022
Ties
$
503 $
565 $
544
Rail and other track material
493
454
437
Ballast
197
194
216
Other [a]
740
691
693
Total road infrastructure replacements
1,933
1,904
1,890
Line expansion and other capacity projects
183
239
276
Commercial facilities
317
425
308
Total capacity and commercial facilities
500
664
584
Locomotives and freight cars [b]
788
728
800
Technology and other
231
310
346
Total cash capital investments [c]
$
3,452 $
3,606 $
3,620
[a] Other includes bridges and tunnels, signals, other road assets, and road work equipment.
[b]
Locomotives and freight cars include lease buyouts of $143 million, $57 million, and $70 million in 2024, 2023, and 2022, respectively.
[c]
Weather-related damages for 2024, 2023, and 2022 are immaterial.
Capital Plan – In 2025, we expect our capital plan to be approximately $3.4 billion, consistent with 2024. We plan to continue to make
investments to support our growth strategy, improve the safety, resiliency, and operational efficiency of the network, harden our infrastructure,
and replace older assets, including modernization of our locomotive fleet and acquiring freight cars to support replacement and growth
opportunities. In addition, the plan includes investments in growth-related projects to drive more carloads to the network and enhance
productivity. This includes siding construction and extension projects, terminal investments supporting our manifest network, and invest in
certain ramps to efficiently handle volumes from new and existing intermodal customers. The capital plan may be revised if business
conditions warrant or if laws or regulations affect our ability to generate sufficient returns on these investments.
Financing Activities
Cash used in financing activities increased in 2024 compared to 2023 driven by an increase in share repurchases and a decrease in debt
issued, partially offset by a decrease in the repayment of commercial paper.
See Note 14 to the Financial Statements and Supplementary Data, Item 8, for a description of all our outstanding financing arrangements
and significant new borrowings, and Note 18 to the Financial Statements and Supplementary Data, Item 8, for a description of our share
repurchase programs.
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OTHER MATTERS
Inflation – For capital-intensive companies, inflation significantly increases asset replacement costs for long-lived assets. As a result,
assuming that we replace all operating assets at current price levels, depreciation charges (on an inflation-adjusted basis) would be
substantially greater than historically reported amounts.
Sensitivity Analyses – The sensitivity analyses that follow illustrate the economic effect that hypothetical changes in interest and tax rates
could have on our results of operations and financial condition. These hypothetical changes do not consider other factors that could impact
actual results.
Interest Rates – At December 31, 2024, 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 1% decrease in interest rates
as of December 31, 2024, and totals an increase of approximately $3.0 billion to the fair value of our debt at December 31, 2024. We
estimated the fair values of our fixed-rate debt by considering the impact of the hypothetical 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 a change in the
federal corporate tax rate, could have a material impact on our financial condition, results of operations, or liquidity. For example, a future,
permanent 1% increase in our federal income tax rate would increase our deferred tax liability by approximately $525 million. Similarly, a
future, permanent 1% decrease in our federal income tax rate would decrease our deferred 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 Risk Factors under Item
1A of this report). We utilize climate scenario analyses to better understand climate-related risks and opportunities the Company may face in
the future under a range of potential scenarios. We continue to refine our approach to understand 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 financial impact 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 improving our
operational fluidity to increase fuel efficiency, modernizing locomotives for improved reliability and fuel consumption, using renewable fuels,
and exploring and testing low- and zero-emissions propulsion technologies. These initiatives are aligned with our strategy of Safety, Service,
and Operational Excellence leading to Growth. (See further discussion in "Sustainable Future" in the Operations 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 financial statements
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 the circumstances. The results form the basis
for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The following critical
accounting estimates are a subset of our significant accounting policies described in Note 2 to the Financial Statements and Supplementary
Data, Item 8. These critical accounting estimates affect significant areas of our financial statements and involve judgment and estimates. If
these estimates differ significantly from actual results, the impact on our Consolidated Financial Statements may be material.
Personal Injury – See Note 17 to the Financial Statements and Supplementary Data, Item 8, and "We May Be Subject to Various 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 evolving trends in litigation.
There were no material changes to the assumptions used in the latest actuarial analysis.
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Our personal injury liability balance and claims activity was as follows:
2024
2023
2022
Ending liability balance at December 31 (millions)
$
379 $
383 $
361
Open claims, beginning balance
1,871
2,036
2,027
New claims
2,842
3,008
2,747
Settled or dismissed claims
(3,146)
(3,173)
(2,738)
Open claims, ending balance at December 31
1,567
1,871
2,036
Environmental Costs – See Note 17 to the Financial Statements and Supplementary Data, Item 8; "We Are Subject to Significant
Environmental Laws and Regulations" in the Risk Factors, Item 1A; and Environmental Matters in the Legal Proceedings, 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 alleged contamination, evolving trends in remediation
techniques and final remedies, and changes in laws and regulations.
Our environmental liability balance and site activity was as follows:
2024
2023
2022
Ending liability balance at December 31 (millions)
$
268 $
245 $
253
Open sites, beginning balance
333
353
376
New sites
84
74
69
Closed sites
(65)
(94)
(92)
Open sites, ending balance at December 31
352
333
353
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, asset strategies, and
other factors that will have an impact on the retirement profiles of our assets. We are not aware of any specific factors that are reasonably
likely to significantly change the estimated service lives of our assets. Actual use and retirement of our assets may vary from our current
estimates, which would impact the amount of depreciation expense recognized in future periods.
Changes in estimated useful lives of our assets due to the results of our depreciation studies could significantly impact future periods’
depreciation expense and have a material impact on our Consolidated Financial Statements. If the estimated useful lives of all depreciable
assets were increased by one year, annual depreciation expense would decrease by approximately $73 million. If the estimated useful lives
of all depreciable assets were decreased by one year, annual depreciation expense would increase by approximately $78 million. We are
projecting an increase in our depreciation expense of approximately 3% to 4% in 2025 versus 2024. This is driven by an increase in our
projected depreciable asset base.
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 of return on pension
assets.
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 individual spot rates
matched with separate cash flows for each future year. Discount rates are based on a Mercer yield curve of high-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 consideration current and
expected market conditions.
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The following tables present the key assumptions used to measure net periodic pension benefit/cost for 2025 and the estimated impact on
2025 net periodic pension benefit/cost relative to a change in those assumptions:
Assumptions
Discount rate for benefit obligations
5.61 %
Discount rate for interest on benefit obligations
5.32 %
Discount rate for service cost
5.75 %
Discount rate for interest on service cost
5.68 %
Expected return on plan assets
5.25 %
Sensitivities
Millions
Increase in
Expense
Pension
0.25% decrease in discount rates
$
-
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:
Millions
Est.
2025
2024
2023
2022
Net periodic pension (benefit)/cost
$
(10) $
(3) $
- $
9
CAUTIONARY INFORMATION
Certain statements in this report, and statements in other reports or information filed or to be filed with the SEC (as well as information
included in oral statements or other written statements made or to be made by us), are, or will be, forward-looking statements as defined by
the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements and information include, without
limitation, statements in the CEO’s letter preceding Part I; statements regarding planned capital expenditures under the caption “2025 Capital
Plan” in Item 2 of Part I; and statements and information set forth under the captions “2025 Outlook”; “Liquidity and Capital Resources” in
Item 7 of Part II regarding our capital plan, share repurchase 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
information incorporated herein by reference) regarding: potential impacts of public health crises, including pandemics, epidemics, and the
outbreak of other contagious disease, such as COVID; the Russia-Ukraine and Israel-Hamas wars and other geopolitical tensions in the
Middle East, and any impacts on our 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 volumes and carloadings; closing of customer
manufacturing, distribution or production facilities; expectations as to operational or service improvements; expectations as to hiring
challenges; availability of employees; expectations regarding the effectiveness of steps taken or to be taken to improve operations, service,
infrastructure improvements, and transportation plan modifications (including those discussed in response to increased traffic); expectations
as to cost savings, revenue growth, and earnings; the time by which goals, targets, aspirations, 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 products and services; estimates of costs relating to environmental remediation and restoration;
estimates and expectations regarding tax matters; estimates and expectations regarding potential tariffs; expectations that claims, litigation,
environmental costs, commitments, contingent liabilities, labor negotiations or agreements, cyber-attacks, or other matters will not have a
material adverse effect on our consolidated results of operations, 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, or
expressions.
Forward-looking statements should not be read as a guarantee of future performance, results, or outcomes, and will not necessarily be
accurate indications of the times that, or by which, such performance, results or outcomes will be achieved, if ever. Forward-looking
statements and information are subject to risks and uncertainties that could cause actual performance or results to differ materially from
those expressed in the statements and information. Forward-looking statements and information reflect the good faith consideration by
management of currently available information, and may be based on underlying 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 or
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unforeseeable events or circumstances over which management has little or no influence or control, and many of these risks and
uncertainties are currently amplified by and may continue to be amplified by, or in the future may be amplified by, among other things,
macroeconomic and geopolitical conditions.
The Risk Factors in Item 1A of this report could affect our future results and could cause those results or other outcomes to differ materially
from those expressed or implied in any forward-looking statements or information. To the extent circumstances require or we deem it
otherwise necessary, we will update or amend these risk factors in a Form 10-Q, Form 8-K, or subsequent Form 10-K. All forward-looking
statements are qualified by, and should be read 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-looking information. If we do
update one or more forward-looking statements, no inference should be drawn that we will make additional 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 of Financial Condition and
Results of Operations - Other Matters, Item 7.
****************************************
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Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
39
Consolidated Statements of Income
For the Years Ended December 31, 2024, 2023, and 2022
41
Consolidated Statements of Comprehensive Income
For the Years Ended December 31, 2024, 2023, and 2022
41
Consolidated Statements of Financial Position
At December 31, 2024 and 2023
42
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2024, 2023, and 2022
43
Consolidated Statements of Changes in Common Shareholders’ Equity
For the Years Ended December 31, 2024, 2023, and 2022
44
Notes to the Consolidated Financial Statements
45
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REPORT 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, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in
common stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2024, 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, 2024, 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 7,
2025, 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.
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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 2024
were $3.7 billion.
We identified the capitalization of property during 2024 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.
/s/ Deloitte & Touche LLP
Omaha, Nebraska
February 7, 2025
We have served as the Corporation's auditor since 1967.
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CONSOLIDATED STATEMENTS OF INCOME
Union Pacific Corporation and Subsidiary Companies
Millions, Except Per Share Amounts, for the Years Ended December 31,
2024
2023
2022
Operating revenues:
Freight revenues
$
22,811 $
22,571 $
23,159
Other revenues
1,439
1,548
1,716
Total operating revenues
24,250
24,119
24,875
Operating expenses:
Compensation and benefits
4,899
4,818
4,645
Purchased services and materials
2,520
2,616
2,442
Fuel
2,474
2,891
3,439
Depreciation
2,398
2,318
2,246
Equipment and other rents
920
947
898
Other
1,326
1,447
1,288
Total operating expenses
14,537
15,037
14,958
Operating income
9,713
9,082
9,917
Other income, net (Note 6)
350
491
426
Interest expense
(1,269)
(1,340)
(1,271)
Income before income taxes
8,794
8,233
9,072
Income tax expense (Note 7)
(2,047)
(1,854)
(2,074)
Net income
$
6,747 $
6,379 $
6,998
Share and Per Share (Note 8):
Earnings per share - basic
$
11.10 $
10.47 $
11.24
Earnings per share - diluted
$
11.09 $
10.45 $
11.21
Weighted average number of shares - basic
607.6
609.2
622.7
Weighted average number of shares - diluted
608.6
610.2
624.0
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Union Pacific Corporation and Subsidiary Companies
Millions, for the Years Ended December 31,
2024
2023
2022
Net income
$
6,747 $
6,379 $
6,998
Other comprehensive income/(loss):
Defined benefit plans
(14)
(106)
280
Foreign currency translation
(95)
58
52
Unrealized gain on derivative instruments
-
16
-
Total other comprehensive income/(loss) [a]
(109)
(32)
332
Comprehensive income
$
6,638 $
6,347 $
7,330
[a]
Net of deferred taxes of $6 million, $31 million, and ($92) million during 2024, 2023, and 2022, respectively.
The accompanying notes are an integral part of these Consolidated Financial Statements.
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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Union Pacific Corporation and Subsidiary Companies
Millions, Except Share and Per Share Amounts as of December 31,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
1,016 $
1,055
Short-term investments (Note 13)
20
16
Accounts receivable, net (Note 10)
1,894
2,073
Materials and supplies
769
743
Other current assets
322
261
Total current assets
4,021
4,148
Investments
2,664
2,605
Properties, net (Note 11)
58,343
57,398
Operating lease assets (Note 16)
1,297
1,643
Other assets
1,390
1,338
Total assets
$
67,715 $
67,132
Liabilities and Common Shareholders' Equity
Current liabilities:
Accounts payable and other current liabilities (Note 12)
$
3,829 $
3,683
Debt due within one year (Note 14)
1,425
1,423
Total current liabilities
5,254
5,106
Debt due after one year (Note 14)
29,767
31,156
Operating lease liabilities (Note 16)
925
1,245
Deferred income taxes (Note 7)
13,151
13,123
Other long-term liabilities
1,728
1,714
Commitments and contingencies (Note 17)
Total liabilities
50,825
52,344
Common shareholders' equity:
Common shares, $2.50 par value, 1,400,000,000 authorized; 1,113,018,733 and 1,112,854,806 issued;
604,241,260 and 609,703,814 outstanding, respectively
2,783
2,782
Paid-in-surplus
5,334
5,193
Retained earnings
65,628
62,093
Treasury stock
(56,132)
(54,666)
Accumulated other comprehensive loss (Note 9)
(723)
(614)
Total common shareholders' equity
16,890
14,788
Total liabilities and common shareholders' equity
$
67,715 $
67,132
The accompanying notes are an integral part of these Consolidated Financial Statements.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
Union Pacific Corporation and Subsidiary Companies
Millions, for the Years Ended December 31,
2024
2023
2022
Operating Activities
Net income
$
6,747 $
6,379 $
6,998
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation
2,398
2,318
2,246
Deferred and other income taxes
28
117
262
Other operating activities, net
(13)
(132)
(152)
Changes in current assets and liabilities:
Accounts receivable, net
179
(177)
(169)
Materials and supplies
(26)
(2)
(120)
Other current assets
(69)
(38)
5
Accounts payable and other current liabilities
189
(215)
565
Income and other taxes
(87)
129
(273)
Cash provided by operating activities
9,346
8,379
9,362
Investing Activities
Capital investments
(3,452)
(3,606)
(3,620)
Other investing activities, net
127
(61)
149
Cash used in investing activities
(3,325)
(3,667)
(3,471)
Financing Activities
Dividends paid
(3,213)
(3,173)
(3,159)
Debt repaid
(2,226)
(2,190)
(2,291)
Share repurchase programs (Note 18)
(1,505)
(705)
(6,282)
Debt issued (Note 14)
800
1,599
6,080
Other financing activities, net
77
(156)
(235)
Cash used in financing activities
(6,067)
(4,625)
(5,887)
Net change in cash, cash equivalents, and restricted cash
(46)
87
4
Cash, cash equivalents, and restricted cash at beginning of year
1,074
987
983
Cash, cash equivalents, and restricted cash at end of year
$
1,028 $
1,074 $
987
Supplemental Cash Flow Information
Non-cash investing and financing activities:
Capital investments accrued but not yet paid
$
165 $
137 $
152
Cash paid during the year for:
Income taxes, net of refunds
$
(1,340) $
(1,486) $
(2,060)
Interest, net of amounts capitalized
(1,260)
(1,268)
(1,156)
The accompanying notes are an integral part of these Consolidated Financial Statements.
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CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDERS' EQUITY
Union Pacific Corporation and Subsidiary Companies
Millions
Common
Shares
Treasury
Shares
Common
Shares
Paid-in-
Surplus
Retained
Earnings
Treasury
Stock
AOCI [a]
Total
Balance at January 1, 2022
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 per share)
-
-
-
-
(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 per share)
-
-
-
-
(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
Net income
-
-
6,747
-
-
6,747
Other comprehensive income/(loss)
-
-
-
-
(109)
(109)
Conversion, stock option exercises, forfeitures,
ESPP, and other
0.1
0.7
1
141
-
49
-
191
Share repurchase programs (Note 18)
-
(6.3)
-
-
-
(1,515)
-
(1,515)
Cash dividends declared ($5.28 per share)
-
-
-
-
(3,212)
-
-
(3,212)
Balance at December 31, 2024
1,113.0
(508.8) $
2,783 $
5,334 $
65,628 $
(56,132) $
(723) $
16,890
[a]
AOCI = Accumulated Other Comprehensive Income/Loss (Note 9)
The accompanying notes are an integral part of these Consolidated Financial Statements.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Union 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 Railroad Company, 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 32,880 route miles, connecting
Pacific Coast and Gulf Coast ports with the Midwest and Eastern U.S. gateways and providing several corridors to key Mexican and
Canadian gateways. We own 26,291 miles and operate on the remainder pursuant to trackage rights or leases. We serve the western two-
thirds of the country and maintain coordinated schedules with other rail carriers for the handling 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 and Canadian borders.
The Railroad, along with its subsidiaries and rail affiliates, is our one reportable operating segment. Although we provide and analyze
revenues by commodity group, we treat the financial results of the Railroad as one segment due to the integrated nature of our rail network.
The accounting policies of the Railroad segment are the same as those described in Note 2 Significant Accounting Policies.
The Company’s Chief Operating Decision Maker (CODM) is our Chief Executive Officer. The CODM assesses performance for our rail
network and decides how to allocate resources based on net income as reported on our Consolidated Statements of Income. The measure
of segment assets is reported on our Consolidated Statements of Financial Position as total assets.
Our operating revenues are primarily derived from contracts with customers for the transportation of freight from origin to destination.
Although our revenues are principally derived from customers domiciled in the U.S., the ultimate points of origination or destination for some
products we transport are outside the U.S. Freight revenues from each of our commodity groups, as described in the table below, includes
revenues from shipments to and from Mexico, which amounted to $3.0 billion in 2024, $2.8 billion in 2023, and $2.7 billion in 2022.
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Our significant segment expenses as monitored by the CODM are shown in the table below. This breakout of revenues and expenses is used
by the CODM to monitor and assess the financial performance of our rail network by comparing actual results to prior years and plans.
Millions
2024
2023
2022
Bulk
$
7,207 $
7,358 $
7,537
Industrial
8,440
8,238
8,205
Premium
7,164
6,975
7,417
Total freight revenues
$
22,811 $
22,571 $
23,159
Other subsidiary revenues
788
872
884
Accessorial revenues
554
584
779
Other
97
92
53
Total operating revenues
$
24,250 $
24,119 $
24,875
Operating [a]
6,795
6,729
6,212
Administrative [a]
757
761
700
Locomotive fuel
2,418
2,815
3,321
Other segment items [b]
2,169
2,414
2,479
Depreciation
2,398
2,318
2,246
Other income, net
(350)
(491)
(426)
Interest expense
1,269
1,340
1,271
Income tax expense
2,047
1,854
2,074
Net income
$
6,747 $
6,379 $
6,998
[a] Operating and Administrative includes compensation and benefits, purchased services and materials, equipment and other rents, non-locomotive fuel,
and other expenses.
[b] Other segment items includes car hire and leases, casualty costs, state and local taxes, subsidiary expense, and other overhead expense.
Basis of Presentation – The Consolidated Financial Statements are presented in accordance with accounting principles generally accepted
in the U.S. (GAAP) as codified in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). Certain prior
period amounts have been reclassified to conform to the current period financial statement presentation.
2. Significant Accounting Policies
Principles of Consolidation – The Consolidated Financial Statements include the accounts of Union Pacific Corporation and all of its
subsidiaries. Investments in affiliated companies (20% to 50% owned) are accounted for using the equity method of accounting. All
intercompany transactions are eliminated. We currently have no less than majority-owned investments that require consolidation under
variable interest entity requirements.
Cash, Cash Equivalents, and Restricted Cash – Cash equivalents consist of investments with original maturities of three months or less.
Amounts included in restricted cash represent those required to be set aside by contractual agreement.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Statements of
Financial Position that sum to the total of the same such amounts shown on the Consolidated Statements of Cash Flows:
Millions
2024
2023
2022
Cash and cash equivalents
$
1,016 $
1,055 $
973
Restricted cash equivalents in other current assets
4
10
10
Restricted cash equivalents in other assets
8
9
4
Total cash, cash equivalents, and restricted cash equivalents
$
1,028 $
1,074 $
987
Accounts Receivable – Accounts receivable includes receivables reduced by an allowance for doubtful accounts. The allowance is based
upon historical losses, credit worthiness of customers, and current economic conditions. Receivables not
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expected to be collected in one year and the associated allowances are classified as other assets in our Consolidated Statements of
Financial Position.
Investments – Investments represent our investments in affiliated companies (20% to 50% owned) that are accounted for under the equity
method of accounting, and investments in companies (less than 20% owned) accounted for at fair value when 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 operating expenses. Realized and unrealized gains and losses on investments
that are not integral to our operations are recorded in other 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 over their estimated
service lives, which are measured in years, except for rail in high-density traffic corridors (i.e., all rail lines except for those lines subject to
abandonment, yard tracks, and switching tracks), where lives are measured in millions of 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 group method of depreciation treats each asset class as a pool of resources, not as
singular items. We determine the estimated service lives of depreciable railroad assets by means of depreciation studies. Under the group
method of depreciation, no gain or 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 when events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. If impairment indicators are present and the
estimated future undiscounted cash flows are less than the carrying value of the long-lived assets, 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 has approval and
commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance,
and collectability of consideration is probable. Our contracts include private agreements, private rate/letter quotes, public circulars/tariffs, and
interline/foreign agreements. The performance obligation in our contracts is typically delivering a specific commodity from a place of origin to
a place of destination and our commitment begins with the tendering and acceptance of a freight bill of lading and is satisfied upon delivery at
destination. We consider each freight shipment to be a distinct performance obligation.
We recognize freight revenues over time as freight moves from origin to destination. The allocation of revenues between reporting 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 $159 million at December 31, 2024, and $149 million at December 31, 2023, and are expected to be
recognized in the following quarter as we satisfy our remaining performance obligations and deliver freight to destination. The transaction
price is generally specified in a contract and may be dependent on the commodity, origin/destination, and route. Customer incentives, which
are primarily provided for shipping to/from specific locations or based on cumulative volumes, are recorded as a reduction to operating
revenues. Customer incentives 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 obligation is
satisfied.
Under typical payment terms, our customers pay us after each performance obligation is satisfied and there are no material contract assets
or liabilities associated with our freight revenues. Outstanding freight receivables are presented in our Consolidated 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 portion of 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 rail operations) and
accessorial revenues. Other subsidiary revenues are generally recognized over time as shipments move from origin to destination. The
allocation of revenues between reporting periods is based on the relative transit time in each reporting period with expenses recognized as
incurred. Accessorial revenues are recognized at a point in time as performance obligations are satisfied.
Translation of Foreign Currency – Our portion of the assets and liabilities related to foreign investments are translated into U.S. dollars at
the exchange rates in effect at the balance sheet date. Revenues and expenses are translated at the average
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rates of exchange prevailing during the year. Unrealized gains or losses are reflected within common shareholders’ equity as accumulated
other comprehensive income or loss.
Fair Value Measurements – We use a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into
three broad levels. The level in the fair value hierarchy within which the fair value measurement in its entirety 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, and ESPP 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 options and ESPP
awards. Compensation expense is based on the fair value of the awards as measured at the grant date and is expensed ratably over the
service period of the awards (generally the vesting period). The fair value of retention awards is the closing stock price on the date of grant,
the fair value of stock options is determined by using the Black-Scholes option pricing 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 shares outstanding during each
period. Diluted earnings per share include shares issuable upon exercise of outstanding stock options 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 tax assets and
liabilities for the expected future tax consequences of events that are reported in different periods for financial reporting and income tax
purposes. The majority of our deferred tax assets relate to expenses that already have been recorded for financial reporting purposes but not
deducted for tax purposes. The majority of our deferred tax liabilities relate to differences between the tax bases and financial reporting
amounts of our land and depreciable property, due to accelerated tax depreciation (including bonus depreciation), revaluation of assets in
purchase accounting transactions, and differences in capitalization methods. These expected future tax consequences are measured based
on current tax law; the effects of future tax legislation are not anticipated.
When appropriate, we record a valuation allowance against deferred tax assets to reflect that these tax assets may not be realized. In
determining whether a valuation allowance is appropriate, we consider whether it is more likely than not that all or some portion of our
deferred tax assets will not be realized, based on management’s judgments using available evidence for purposes of estimating whether
future taxable income will be sufficient to realize a deferred tax asset.
We recognize tax benefits that are more likely than not to be sustained upon examination by tax authorities. The amount recognized 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 these recognition and measurement standards.
Leases – We determine if an arrangement is or contains a lease at inception. Operating lease assets and operating lease liabilities are
recognized based on the present value of the future minimum lease payments over the lease term at commencement date. When an implicit
rate is not available, we use a collateralized incremental borrowing rate for operating leases based on the information available at
commencement date, including lease term, in determining the present value of future payments. The operating lease asset also includes any
lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or
terminate the lease when it is reasonably certain that the option will be exercised. Operating leases are included in operating lease assets,
accounts payable and other current liabilities, and operating lease liabilities on our Consolidated Statements of Financial Position. Finance
leases are included in properties, 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 and other
rents and financing lease expense is recorded as depreciation and interest expense in our Consolidated Statements of Income.
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We have lease agreements with lease and non-lease components, and we have elected to not separate lease and non-lease components for
all classes of underlying assets. Leases with an initial term of 12 months or less are not recorded on our Consolidated Statements of
Financial Position. Leases with initial terms in excess of 12 months are recorded as operating or financing leases in our Consolidated
Statements of Financial Position.
Pension Benefits – In order to measure the expense associated with pension benefits, we must make various assumptions including
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 based on our historical experience as well as
current facts and circumstances. We use an actuarial analysis to measure the expense 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 of the 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 surrounding the 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, environmental assessments on such property. We
expense the cost of the assessments as incurred. We accrue the cost of remediation where our obligation is probable and such costs can be
reasonably estimated. We do not discount our environmental liabilities when the timing of the anticipated cash payments is not fixed or
readily determinable. Legal fees and incidental costs are expensed as incurred.
Use of Estimates – The preparation of our Consolidated Financial Statements in conformity with GAAP requires management to make
estimates and assumptions that affect certain reported assets and liabilities, the disclosure of certain contingent assets and liabilities as of
the date of the Consolidated Financial Statements, as well as the reported amounts of revenues and expenses during the reporting period.
Actual future results may differ from such estimates.
3. Accounting Pronouncements
In November 2023, the FASB issued Accounting Standards Update No. (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosures, which requires business entities to enhance disclosures about significant segment expenses. We adopted
the ASU effective for fiscal year ended December 31, 2024. The adoption of this ASU only impacted our disclosures. See Note 1 Nature of
Operations.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires
business entities to expand their annual disclosures of the effective rate reconciliation and income taxes paid. The ASU is effective for fiscal
years beginning after December 15, 2024, may be adopted on a prospective or retrospective basis, and early adoption is permitted. The
Company is currently evaluating the effect that the new guidance will have on our related disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation
Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure of additional information about
specific expense categories in the notes to the financial statements. The ASU is effective for fiscal years beginning after December 15, 2026,
and interim periods within fiscal years beginning after December 15, 2027, may be adopted on a prospective or retrospective basis, with
early adoption permitted. The Company 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) whereby 2,200,000 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 retention shares or retention stock units. In July 2018, the Board
of Directors eliminated the retention grant for directors newly elected in 2018 and all future years. As of December 31, 2024, 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 2013 Plan reserved
78,000,000 shares of our common stock for issuance, plus any shares subject to awards made under previous plans as of February 28,
2013, that are subsequently cancelled, expired, forfeited, or otherwise not issued under previous plans. Under the 2013 Plan, non-qualified
stock options, incentive stock options, retention shares, stock units, and incentive bonus awards may be granted to eligible employees of the
Corporation and its subsidiaries. Non-employee directors are not
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eligible for awards under the 2013 Plan. As of December 31, 2024, 777,939 stock options and no retention shares and stock units were
outstanding under the 2013 Plan. We no longer grant any stock options or other stock or unit awards under this plan.
The Union Pacific Corporation 2021 Stock Incentive Plan (2021 Plan) was approved by shareholders in May 2021. The 2021 Plan reserved
23,000,000 shares of our common stock for issuance, plus any shares subject to awards made under previous plans as of December 31,
2021, that are subsequently cancelled, expired, forfeited, or otherwise not issued under previous plans. Under the 2021 Plan, non-qualified
stock options, incentive stock options, retention shares, stock units, and incentive bonus awards may be granted to eligible employees of the
Corporation and its subsidiaries. Non-employee directors are not eligible for awards under the 2021 Plan. As of December 31, 2024,
1,203,484 stock options and 1,218,529 retention shares were outstanding under the 2021 Plan.
The Union Pacific Corporation 2021 Employee Stock Purchase Plan (2021 ESPP) was approved by shareholders in May 2021. The 2021
ESPP reserved 10,000,000 shares of our common stock for issuance. Under the 2021 ESPP, eligible employees 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, 2024, 1,121,859 shares were issued under the 2021 ESPP.
Pursuant to the above plans 31,063,392; 31,979,909; and 33,185,971 shares of our common stock were authorized and available for grant at
December 31, 2024, 2023, and 2022, respectively.
Stock-Based Compensation – We have several stock-based compensation plans where employees receive nonvested stock options,
nonvested retention shares, and nonvested stock units. We refer to the nonvested shares and stock units collectively as “retention awards”.
Employees may also participate in our ESPP.
Information regarding stock-based compensation expense appears in the table below:
Millions
2024
2023
2022
Stock-based compensation, before tax:
Stock options
$
18 $
16 $
14
Retention awards
77
71
68
ESPP
23
20
17
Total stock-based compensation, before tax
$
118 $
107 $
99
Excess income tax benefits from equity compensation plans
$
15 $
11 $
21
Stock Options – Stock options are granted at the closing price on the date of grant, have 10-year contractual terms, and vest no later than 3
years from the date of grant. None of the stock options outstanding at December 31, 2024, is subject to performance or market-based
vesting conditions.
The table below shows the annual weighted-average assumptions used for Black-Scholes valuation purposes:
Weighted-Average Assumptions
2024
2023
2022
Risk-free interest rate
4.2 %
3.9 %
1.6 %
Dividend yield
2.1 %
2.6 %
1.9 %
Expected life (years)
4.4
4.5
4.4
Volatility
28.7 %
29.3 %
28.7 %
Weighted-average grant-date fair value of options granted
$
61.75
$
48.31
$
51.92
The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant; the expected dividend yield is calculated as the ratio
of dividends paid per share of common stock to the stock price on the date of grant; the expected life is based on historical and expected
exercise behavior; and expected volatility is based on the historical volatility of our stock price over the expected life of the stock option.
A summary of stock option activity during 2024 is presented below:
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Options
(thous.)
Weighted-Average
Exercise Price
Weighted-Average
Remaining Contractual
Term (yrs.)
Aggregate Intrinsic
Value (millions)
Outstanding at January 1, 2024
2,072 $
180.56
5.9 $
135
Granted
305
248.82
N/A
N/A
Exercised
(347)
146.25
N/A
N/A
Forfeited or expired
(49)
231.93
N/A
N/A
Outstanding at December 31, 2024
1,981 $
195.81
5.8 $
74
Vested or expected to vest at December 31, 2024
1,964 $
195.51
5.8 $
74
Options exercisable at December 31, 2024
1,392 $
180.71
4.7 $
69
At December 31, 2024, there was $15 million of unrecognized compensation expense related to nonvested stock options, which is expected
to be recognized over a weighted-average period of 0.8 years. Additional information regarding stock option exercises appears in the
following table:
Millions
2024
2023
2022
Intrinsic value of stock options exercised
$
35 $
23 $
53
Cash received from option exercises
46
27
27
Treasury shares repurchased for employee payroll taxes
(8)
(5)
(8)
Income tax benefit realized from option exercises
7
5
8
Aggregate grant-date fair value of stock options vested
$
15 $
14 $
13
Retention Awards – Retention awards are granted at no cost to the employee, vest over periods lasting up to 4 years, and have dividends
and dividend equivalents paid to participants during the vesting periods.
Changes in our retention awards during 2024 were as follows:
Shares (thous.)
Weighted-Average Grant-
Date Fair Value
Nonvested at January 1, 2024
996 $
207.76
Granted
213
248.66
Vested
(252)
186.86
Forfeited
(42)
219.41
Nonvested at December 31, 2024
915 $
222.50
At December 31, 2024, there was $70 million of total unrecognized compensation expense related to nonvested retention awards, which is
expected to be recognized over a weighted-average period of 1.1 years.
Performance Stock Unit Awards – In February 2024, our Board of Directors approved performance stock unit grants. This plan is based on
performance targets for annual return on invested capital (ROIC) and operating income growth (OIG) compared to companies in the S&P 100
Industrials Index plus the Class I railroads. We define ROIC as net operating profit adjusted for interest expense (including interest on
average operating lease liabilities) and taxes on interest divided by average invested capital adjusted for average operating lease liabilities.
The February 2024 stock units awarded to executives are subject to continued employment for 37 months, the attainment of certain levels of
ROIC, and the relative three-year OIG. We expense two-thirds of the fair value of the units that are probable of being earned based on our
forecasted ROIC over the three-year performance period, and with respect to the third year of the plan, we expense the remaining one-third
of the fair value subject to the relative three-year OIG. We measure the fair value of performance stock units based upon the closing price of
the underlying common stock as of the date of grant. Dividend equivalents are accumulated during the service period and paid to participants
only after the units are earned.
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Changes in our performance stock unit awards during 2024 were as follows:
Shares (thous.)
Weighted-Average Grant-
Date Fair Value
Nonvested at January 1, 2024
617 $
204.50
Granted
227
248.82
Vested
(119)
204.67
Unearned
(70)
204.45
Forfeited
(48)
229.39
Nonvested at December 31, 2024
607 $
219.08
At December 31, 2024, there was $15 million of total unrecognized compensation expense related to nonvested performance stock unit
awards, which is expected to be recognized over a weighted-average period of 1.1 years. This expense is subject to achievement of the
performance measures established for the performance stock unit grants.
Employee Stock Purchase Plan – Employee and Company contributions are used to issue treasury shares the month after employee
contributions are withheld based on the settlement date closing price. The Company 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).
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 highest compensation during the latest years of
employment, with specific reductions made for early retirements. Non-union employees hired on or after January 1, 2018, are no longer
eligible for pension benefits, but are eligible for an enhanced 401(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 or liability. The
funded status represents the difference between the projected benefit obligation (PBO) and the fair value of the plan assets. Our non-
qualified (supplemental) pension plan is unfunded by design. The PBO of the pension plans is the present value of benefits earned to date by
plan participants, including the effect of assumed future compensation increases. Plan assets are measured at fair value. We use a
December 31 measurement date for plan assets and obligations for all our retirement plans.
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Changes in our PBO and plan assets were as follows for the years ended December 31:
Funded Status
Millions
2024
2023
Projected Benefit Obligation
Projected benefit obligation at beginning of year
$
3,880 $
3,725
Service cost
52
52
Interest cost
186
187
Actuarial loss/(gain)
(269)
146
Gross benefits paid
(336)
(230)
Projected benefit obligation at end of year
$
3,513 $
3,880
Plan Assets
Fair value of plan assets at beginning of year
$
4,400 $
4,363
Actual return/(loss) on plan assets
(28)
235
Non-qualified plan benefit contributions
32
32
Gross benefits paid
(336)
(230)
Fair value of plan assets at end of year
$
4,068 $
4,400
Funded status at end of year
$
555 $
520
Actuarial gains that decrease the PBO were driven by an increase in 2024 discount rates from 5.00% to 5.61%. Actuarial losses that increase
the PBO were driven by a decrease in 2023 discount rates from 5.21% to 5.00%.
Amounts recognized in the statement of financial position as of December 31, 2024 and 2023, consist of:
Millions
2024
2023
Noncurrent assets
$
950 $
924
Current liabilities
(32)
(31)
Noncurrent liabilities
(363)
(373)
Net amounts recognized at end of year
$
555 $
520
Pre-tax amounts recognized in accumulated other comprehensive income/loss consist of $644 million and $643 million net actuarial loss as
of December 31, 2024 and 2023, respectively.
Pre-tax changes recognized in other comprehensive income/loss as of December 31, 2024, 2023, and 2022, were as follows:
Millions
2024
2023
2022
Net actuarial (loss)/gain
$
(11) $
(159) $
272
Amortization of:
Actuarial loss
11
9
86
Total
$
- $
(150) $
358
Underfunded Accumulated Benefit Obligation – The accumulated benefit obligation (ABO) is the present value of benefits earned to date,
assuming no future compensation growth. The underfunded accumulated benefit obligation represents the difference between the ABO and
the fair value of plan assets.
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The following table discloses only the PBO, ABO, and fair value of plan assets for pension plans where the accumulated benefit obligation is
in excess of the fair value of the plan assets as of December 31:
Underfunded Accumulated Benefit Obligation
Millions
2024
2023
Projected benefit obligation
$
395 $
404
Accumulated benefit obligation
$
389 $
399
Fair value of plan assets
-
-
Underfunded accumulated benefit obligation
$
(389) $
(399)
The ABO for all defined benefit pension plans was $3.3 billion and $3.6 billion at December 31, 2024 and 2023, respectively.
Assumptions – The weighted-average actuarial assumptions used to determine benefit obligations at December 31:
Percentages
2024
2023
Discount rate
5.61 %
5.00 %
Compensation increase
4.00 %
4.00 %
Expense
Pension expense is determined based upon the annual service cost of benefits (the actuarial cost of benefits earned during a period) and the
interest cost on those liabilities, less the expected return on plan assets. The expected long-term rate of return 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 the recognition of differences between actual returns on assets and
expected returns based on long-term rate of return assumptions. Differences in actual experience in relation to assumptions are not
recognized in net income immediately but are 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
2024
2023
2022
Service cost
$
52 $
52 $
93
Interest cost
186
187
123
Expected return on plan assets
(252)
(248)
(293)
Amortization of actuarial loss
11
9
86
Net periodic pension (benefit)/cost
$
(3) $
- $
9
Assumptions – The weighted-average actuarial assumptions used to determine expense were as follows:
Percentages
2024
2023
2022
Discount rate for benefit obligations
5.00 %
5.21 %
2.80 %
Discount rate for interest on benefit obligations
4.91 %
5.14 %
2.40 %
Discount rate for service cost
5.05 %
5.19 %
2.91 %
Discount rate for interest on service cost
5.02 %
5.21 %
2.86 %
Expected return on plan assets
5.25 %
5.25 %
6.25 %
Compensation increase
4.00 %
4.10 %
4.10 %
We measure the service cost and interest cost components of our net periodic pension benefit/cost by using individual spot discount 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.
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Cash Contributions
The following table details cash contributions, if any, for the qualified and non-qualified (supplemental) pension plans:
Millions
Qualified
Non-qualified
2024
$
- $
32
2023
$
- $
32
Our policy with respect to funding the qualified pension plans is to fund at least the minimum required by law and not more than the
maximum amount deductible for tax purposes.
The non-qualified pension plan is not funded and is not subject to any minimum regulatory funding requirements. Benefit payments for each
year represent supplemental pension payments. We anticipate our 2025 supplemental pension payments will be made from cash generated
from operations.
Benefit Payments
The following table details expected benefit payments for the years 2025 through 2034:
Millions
2025
$
231
2026
230
2027
230
2028
230
2029
231
Years 2030 - 2034
$
1,177
Asset Allocation Strategy
Our pension plan asset allocation at December 31, 2024 and 2023, and target allocation for 2025, are as follows:
Target
Allocation 2025
Percentage of Plan Assets
December 31,
2024
2023
Equity securities
20% to 30%
24 %
24 %
Debt securities
70% to 80%
75
75
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 a broadly diversified
portfolio designed to achieve our target average long-term rate of return of 5.25%. While we believe we can achieve 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 that reduces fluctuations in investment returns. Asset allocation target
ranges for equity, debt, and other portfolios are evaluated at least every three years with the assistance of an independent consulting firm.
Actual asset allocations are monitored monthly, and rebalancing actions are executed at least quarterly, as needed.
The average credit rating of the debt portfolio was AA- at both December 31, 2024 and 2023. The debt portfolio is also broadly diversified
and invested primarily in U.S. Treasury, mortgage, and corporate securities. The weighted-average maturity of the debt portfolio was 22
years at both December 31, 2024 and 2023.
The investment of pension plan assets in securities issued by UPC is explicitly prohibited by the plan for both the equity and debt portfolios,
other than through index fund holdings.
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Fair Value Measurements
The pension plan assets are valued at fair value. The following is a description of the valuation methodologies used for the investments
measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy.
Federal Government Securities – Federal Government Securities consist of bills, notes, bonds, and other fixed income securities issued
directly by the U.S. Treasury or by government-sponsored enterprises. These assets are valued using a bid evaluation process with bid data
provided by independent pricing sources. Federal Government Securities are classified as Level 2 investments.
Bonds and Debentures – Bonds and debentures consist of debt securities issued by U.S. and non-U.S. corporations as well as state and
local governments. These assets are valued using a bid evaluation process with bid data provided by independent 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 bid evaluation process with bid data provided by
independent pricing sources. Preferred stock is classified as a Level 2 investment.
Venture Capital and Buyout Partnerships – This investment category is comprised of interests in limited partnerships that invest primarily
in privately-held companies. Due to the private nature of the partnership investments, pricing inputs are not readily observable. Asset
valuations are developed by the general partners that manage the partnerships. These valuations are based on the application of public
market multiples to private company cash flows, market transactions that provide valuation information for comparable companies, and other
methods. The fair value recorded by the plan is calculated using each partnership’s net asset value (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 on readily observable inputs and are
primarily derived from property appraisals. The fair value recorded by the plan is calculated using the NAV for each investment.
Collective Trust and Other Funds – Collective trust and other funds are comprised of shares or units in commingled funds and limited
liability companies that are not publicly traded. The underlying assets in these entities (global stock funds and short-term investment funds)
are publicly traded on exchanges and price quotes for the assets held by these funds are readily available. The fair value recorded by the
plan is calculated using NAV for each investment.
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As of December 31, 2024, the pension plan assets measured at fair value on a recurring basis were as follows:
Millions
Quoted Prices
in Active
Markets for
Identical Inputs
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Plan assets at fair value:
Federal government securities
$
- $
1,448 $
- $
1,448
Bonds and debentures
-
1,512
-
1,512
Corporate stock
220
6
-
226
Total plan assets at fair value
$
220 $
2,966 $
- $
3,186
Plan assets at NAV:
Venture capital and buyout partnerships
446
Real estate funds
26
Collective trust and other funds
370
Total plan assets at NAV
$
842
Other assets/(liabilities) [a]
40
Total plan assets
$
4,068
As of December 31, 2023, the pension plan assets measured at fair value on a recurring basis were as follows:
Millions
Quoted Prices
in Active
Markets for
Identical Inputs
(Level 1)
Significant
Other
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Plan assets at fair value:
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:
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) [a]
49
Total plan assets
$
4,400
[a]
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 the ownership percentage as described in the
partnership agreements.
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 determined based upon the annual service
cost of benefits and the interest cost on those liabilities plus amortization of net (gain)/loss amounts offset by amortization of prior service
credits recorded in AOCI. Our OPEB liability was $104 million at both December 31, 2024 and 2023. The liability is based on discount rate
assumptions of 5.53% and 4.97% at December 31,
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2024 and 2023, respectively. OPEB net periodic (benefit)/cost was ($5) million in 2024, ($7) million in 2023, and ($2) million in 2022.
401(k)/Thrift Plan – For non-union employees hired prior to January 1, 2018, and eligible union employees for whom we make matching
contributions, we provide a defined contribution plan (401(k)/thrift plan). We match 50% for each dollar contributed by employees up to the
first 6% of compensation contributed. For non-union employees hired on or after January 1, 2018, we match 100% for each dollar, up to the
first 6% of compensation contributed, in addition to contributing an annual amount of 3% of the employee’s annual base salary. Our plan
contributions were $28 million in 2024, $27 million in 2023, and $24 million in 2022.
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 $671 million in 2024, $711 million in 2023, and $586 million in 2022.
Collective Bargaining Agreements – Under collective bargaining agreements, we participate in multi-employer benefit plans that provide
certain post retirement health care and life insurance benefits for eligible union employees. Premiums paid under these plans are expensed
as incurred and amounted to $12 million in 2024, $16 million in 2023, and $20 million in 2022.
6. Other Income
Other income included the following for the years ended December 31:
Millions
2024
2023
2022
Real estate income [a]
$
263 $
414 $
381
Net periodic pension benefit/(costs)
55
52
84
Interest income [b]
52
52
23
Non-operating property environmental remediation and restoration
(37)
(37)
(47)
Interest from IRS refund claims
24
-
-
Other [b]
(7)
10
(15)
Total
$
350 $
491 $
426
[a]
2023 includes a one-time $107 million transaction. 2022 includes a $79 million gain from a land sale to the Illinois State Toll Highway Authority and a
$35 million gain from a sale to the Colorado Department of Transportation.
[b] Prior periods have been reclassified to conform to the current period disclosure.
7. Income Taxes
Components of income tax expense were as follows for the years ended December 31:
Millions
2024
2023
2022
Current tax expense:
Federal
$
1,649 $
1,417 $
1,465
State
359
314
340
Foreign
11
6
7
Total current tax expense
2,019
1,737
1,812
Deferred and other tax expense/(benefit):
Federal
47
219
320
State [a]
(24)
(104)
(59)
Foreign
5
2
1
Total deferred and other tax expense
28
117
262
Total income tax expense
$
2,047 $
1,854 $
2,074
[a]
In 2024, Louisiana and Arkansas enacted corporate income tax legislation that resulted in a $34 million reduction of our deferred tax expense. In 2023,
Nebraska, Iowa, Kansas, and Arkansas enacted corporate income tax legislation that resulted in a $114 million reduction of our deferred tax expense. In
2022, Nebraska, Iowa, Arkansas, and Idaho enacted corporate income tax legislation that resulted in a $95 million reduction of our deferred tax
expense.
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For the years ended December 31, reconciliations between statutory and effective tax rates are as follows:
Tax Rate Percentages
2024
2023
2022
Federal statutory tax rate
21.0 %
21.0 %
21.0 %
State statutory rates, net of federal benefits
3.2
3.4
3.6
Dividends received deduction
(0.5)
(0.6)
(0.5)
Excess tax benefits from equity compensation plans
(0.2)
(0.1)
(0.2)
Deferred tax adjustments
-
(1.2)
(1.0)
Other [a]
(0.2)
-
-
Effective tax rate
23.3 %
22.5 %
22.9 %
[a]
The effective income tax rate for 2024 includes tax benefits from purchases of federal tax credits.
Deferred income tax assets/(liabilities) were comprised of the following at December 31:
Millions
2024
2023
Deferred income tax liabilities:
Property
$
(13,020) $
(12,987)
Operating lease assets
(314)
(404)
Other
(581)
(556)
Total deferred income tax liabilities
(13,915)
(13,947)
Deferred income tax assets:
Operating lease liabilities
308
394
Accrued casualty costs
172
168
Accrued wages
51
50
Stock compensation
28
26
Other
205
186
Total deferred income tax assets
764
824
Net deferred income tax liability
$
(13,151) $
(13,123)
In 2024 and 2023, there were no valuation allowances against deferred tax assets.
A reconciliation of changes in unrecognized tax benefits liabilities/(assets) from the beginning to the end of the reporting period is as follows:
Millions
2024
2023
2022
Unrecognized tax benefits at January 1
$
30 $
34 $
38
Refunds from/(payments to) and settlements with taxing authorities
7
-
-
Decreases for positions taken in prior years
(6)
(1)
(4)
Increases/(decreases) for interest and penalties
1
-
-
Lapse of statutes of limitations
-
(4)
(3)
Increases for positions taken in current year
-
1
3
Unrecognized tax benefits at December 31
$
32 $
30 $
34
We recognize interest and penalties as part of income tax expense. Total accrued liabilities/(receivables) for interest and penalties were
$4 million and ($4) million at December 31, 2024 and 2023, respectively. Total interest and penalties recognized as part of income tax
expense/(benefit) were $1 million for 2024, ($1) million for 2023, and ($2) million for 2022.
Several state tax authorities are examining our state income tax returns for years 2018 through 2023.
We do not expect our unrecognized tax benefits to change significantly in the next 12 months. The portion of our unrecognized tax benefits
that relates to permanent changes in tax and interest would reduce our effective tax rate, if recognized. The remaining unrecognized tax
benefits relate to tax positions for which only the timing of the benefit is
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uncertain. The unrecognized tax benefits that would reduce our effective tax rate are $32 million for 2024, $30 million for 2023, and $31
million for 2022.
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
2024
2023
2022
Net income
$
6,747 $
6,379 $
6,998
Weighted-average number of shares outstanding:
Basic
607.6
609.2
622.7
Dilutive effect of stock options
0.4
0.4
0.6
Dilutive effect of retention shares and units
0.6
0.6
0.7
Diluted
608.6
610.2
624.0
Earnings per share - basic
$
11.10 $
10.47 $
11.24
Earnings per share - diluted
$
11.09 $
10.45 $
11.21
Common stock options totaling 0.6 million, 0.9 million, and 0.3 million for 2024, 2023, and 2022, respectively, were excluded from the
computation of diluted earnings per share because the exercise prices of these stock options exceeded the average market price of our
common stock for the respective periods, and the effect of their inclusion would be anti-dilutive.
9. Accumulated Other Comprehensive Income/Loss
Reclassifications out of accumulated other comprehensive income/loss were as follows (net of tax):
Millions
Defined
benefit plans
Foreign
currency
translation
Unrealized gain on
derivative
instruments [a]
Total
Balance at January 1, 2024
$
(484) $
(146) $
16 $
(614)
Other comprehensive income/(loss) before reclassifications
2
(95)
-
(93)
Amounts reclassified from accumulated other comprehensive income/(loss) [b]
(16)
-
-
(16)
Net year-to-date other comprehensive income/(loss), net of taxes of $6 million
(14)
(95)
-
(109)
Balance at December 31, 2024
$
(498) $
(241) $
16 $
(723)
Balance at January 1, 2023
$
(378) $
(204) $
- $
(582)
Other comprehensive income/(loss) before reclassifications
5
58
16
79
Amounts reclassified from accumulated other comprehensive income/(loss) [b]
(111)
-
-
(111)
Net year-to-date other comprehensive income/(loss), net of taxes of $31 million
(106)
58
16
(32)
Balance at December 31, 2023
$
(484) $
(146) $
16 $
(614)
[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) net actuarial loss, which are both
included in the computation of net periodic pension benefit/cost. See Note 5 Retirement Plans for additional details.
10. Accounts Receivable
Accounts receivable include freight and other receivables reduced by an allowance for doubtful accounts. At December 31, 2024 and 2023,
our accounts receivable were reduced by $6 million and $9 million, respectively. Receivables not expected to be collected in one year and
the associated allowances are classified as other assets in our Consolidated Statements of Financial Position. At December 31, 2024 and
2023, receivables classified as other assets were reduced by allowances of $69 million and $71 million, respectively.
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Receivables Securitization Facility – The Railroad maintains an $800 million, 3-year receivables securitization facility (the Receivables
Facility) maturing in July 2025. Under the Receivables Facility, the Railroad sells most of its eligible third-party receivables to Union Pacific
Receivables, Inc. (UPRI), a consolidated, wholly-owned, bankruptcy-remote subsidiary that may subsequently transfer, without recourse, an
undivided interest in accounts receivable to investors. The investors have no recourse to the Railroad’s other assets except for customary
warranty and indemnity claims. Creditors of the Railroad do not have recourse to the assets of UPRI.
The amount recorded under the Receivables Facility was $0 at both December 31, 2024 and 2023. During the year ended December 31,
2024, we issued $800 million and repaid $800 million under the Receivables Facility. The Receivables Facility was supported by $1.6 billion
and $1.7 billion of accounts receivable as collateral at December 31, 2024 and 2023, respectively, which, as a retained interest, is included in
accounts receivable, net in our Consolidated Statements 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 eligible receivables, business volumes, and credit
risks, including receivables payment quality measures such as default and dilution ratios. If default or dilution ratios increase one percent, the
allowable outstanding amount under the Receivables Facility would not materially change.
The costs of the Receivables Facility include interest, which will vary based on prevailing benchmark and commercial paper rates, program
fees paid to participating banks, commercial paper issuance costs, and fees of participating banks for unused commitment availability. The
costs of the Receivables Facility are included in interest expense and were $8 million, $9 million, and $10 million for 2024, 2023, and 2022,
respectively.
11. Properties
The following tables list the major categories of property and equipment as well as the weighted-average estimated useful life for each
category (in years):
Millions, Except Estimated Useful Life
Cost
Accumulated
Depreciation
Net Book
Value
Estimated
Useful Life
As of December 31, 2024
Land
$
5,441
N/A $
5,441
N/A
Road:
Rail and other track material
19,283 $
7,642
11,641
46
Ties
12,358
4,109
8,249
34
Ballast
6,495
2,182
4,313
34
Other roadway [a]
23,913
5,681
18,232
47
Total road
62,049
19,614
42,435
N/A
Equipment:
Locomotives
9,517
3,724
5,793
18
Freight cars
3,011
1,037
1,974
22
Work equipment and other [b]
1,222
482
740
17
Total equipment
13,750
5,243
8,507
N/A
Technology and other
1,431
640
791
12
Construction in progress
1,169
-
1,169
N/A
Total
$
83,840 $
25,497 $
58,343
N/A
[a]
Other roadway includes grading, bridges and tunnels, signals, buildings, and other road assets.
[b]
For retirements of depreciable railroad properties that do not occur in the normal course of business, a gain or loss may be recognized 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. In the second quarter of 2024, we sold a large portion of an intermodal equipment asset class resulting in a $46 million
gain recognized in other expense in our Consolidated Statements of Income.
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Millions, Except Estimated Useful Life
Cost
Accumulated
Depreciation
Net Book
Value
Estimated
Useful Life
As of December 31, 2023
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
[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 assets and for the acquisition or
construction of assets that enable us to enhance our operations or provide new service offerings to customers. We currently have more than
60 depreciable asset classes, and we may increase or decrease the number of asset 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 perform depreciation 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.
For rail in high-density traffic corridors, we measure estimated service lives in millions of gross tons per mile of track. It has been our
experience that the lives of rail in high-density traffic corridors are closely correlated to usage (i.e., the amount of weight carried over the rail).
The service lives also vary based on rail weight, rail condition (e.g., new or secondhand), and rail type (e.g., straight or curve). Our
depreciation studies for rail in high-density traffic corridors consider each of these factors in determining the estimated service lives. For rail
in high-density traffic corridors, we calculate depreciation rates annually by dividing the number of gross ton-miles carried over the rail (i.e.,
the weight of loaded and empty freight cars, locomotives, and maintenance of way equipment transported over the rail) by the estimated
service lives of the rail measured in millions of gross tons per mile. For all other depreciable assets, we compute depreciation based on the
estimated service lives of our assets as determined from the analysis of our depreciation studies. Changes in the estimated service lives of
our assets and their 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 replaced in the ordinary
course of business is charged to accumulated depreciation and no gain or loss is recognized. The historical cost of certain track assets is
estimated by multiplying the current replacement cost of track assets by a historical index factor derived from (a) inflation indices published
by the Bureau of Labor Statistics and (b) the estimated useful lives of the assets as determined by our depreciation studies. The indices were
selected because they closely correlate with the major costs of the properties comprising the applicable track asset classes. Because of the
number of estimates inherent in the depreciation and retirement processes and because it is impossible to precisely estimate each of these
variables until a group of property is completely retired, we continually monitor the estimated service lives of our assets and the accumulated
depreciation associated with each asset class to ensure our depreciation rates are appropriate. In addition, we determine if the recorded
amount of accumulated depreciation is deficient (or in excess) of the amount indicated by our depreciation studies. Any
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deficiency (or excess) is amortized as a component of depreciation expense over the remaining service lives of the 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 be recognized 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 other income when we sell land or dispose of
assets that are not part of our railroad operations.
In 2024, we sold a large portion of an intermodal equipment asset class resulting in a gain recognized in other expense in our Consolidated
Statements of Income. No gains or losses were recognized due to the retirement of depreciable railroad properties in 2023 or 2022.
We review construction in progress assets that have not yet been placed into service, for impairment when events or changes in
circumstances indicate that the carrying amount of a long-lived asset or assets may not be recoverable. If impairment indicators are present
and the estimated future undiscounted cash flows are less than the carrying value of construction in progress assets when grouped with
other assets and liabilities at the lowest level where identifiable cash flows are largely independent, 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, many of our assets
are self-constructed. A large portion of our capital expenditures is for replacement of existing track assets and other road properties, which is
typically performed by our employees, and for track line expansion and other capacity projects. Costs that are directly attributable to capital
projects (including overhead costs) are capitalized. Direct costs that are capitalized as part of self-constructed assets include material, labor,
and work equipment. Indirect costs are capitalized if they 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 are capitalized,
while normal repairs and maintenance are expensed as incurred. Total expense for repairs and maintenance incurred was approximately
$2.3 billion for 2024, $2.5 billion for 2023, and $2.4 billion for 2022.
Assets held under finance leases are recorded at the lower of the net present value of the minimum lease payments or the fair value of the
leased asset at the inception of the lease. Amortization expense is computed using the straight-line method over the shorter of the estimated
useful lives of the assets or the period of the related lease.
12. Accounts Payable and Other Current Liabilities
Millions
Dec.31,
2024
Dec.31,
2023
Accounts payable
$
847 $
856
Compensation-related accruals
618
533
Income and other taxes payable
605
685
Interest payable
372
389
Current operating lease liabilities (Note 16)
346
355
Accrued casualty costs
319
307
Equipment rents payable
109
98
Other
613
460
Total accounts payable and other current liabilities
$
3,829 $
3,683
13. Financial Instruments
Short-Term Investments – All of the Company’s short-term investments consist of time deposits and government agency securities. These
investments are considered Level 2 investments and are valued at amortized cost, which approximates fair value. As of December 31, 2024
and 2023, the Company had $20 million and $16 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 value price 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 obtained from an independent source. At
December 31, 2024, the fair value of total debt was $25.3 billion, approximately $5.9 billion less
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than the carrying value. At December 31, 2023, the fair value of total debt was $28.5 billion, approximately $4.1 billion less than the carrying
value. The fair value of the Corporation’s debt is a measure of its current value under present market conditions. The fair value of our cash
equivalents approximates their carrying value due to the short-term maturities of these instruments.
14. Debt
Total debt as of December 31, 2024 and 2023, is summarized below:
Millions
2024
2023
Notes and debentures, 2.2% to 7.1% due through February 14, 2072
$
32,044 $
33,383
Equipment obligations, 2.6% to 6.2% due through January 2, 2031 [a]
732
770
Finance leases, 3.1% to 6.8% due through December 10, 2028
109
158
Unamortized discount and deferred issuance costs
(1,693)
(1,732)
Total debt
31,192
32,579
Less: current portion
(1,425)
(1,423)
Total long-term debt
$
29,767 $
31,156
[a]
Equipment obligations are secured by an interest in certain railroad equipment with a carrying value of approximately $0.8 billion and $0.9 billion at
December 31, 2024 and 2023, respectively.
Debt Maturities – The following table presents aggregate debt maturities as of December 31, 2024, excluding market value adjustments:
Millions
2025
$
1,426
2026
1,516
2027
1,285
2028
1,235
2029
1,258
Thereafter
26,165
Total principal
32,885
Unamortized discount and deferred issuance costs
(1,693)
Total debt
$
31,192
Credit Facilities – At December 31, 2024, we had $2.0 billion of credit available under our revolving credit facility (the Facility), which is
designated for general corporate purposes and supports the issuance of commercial paper. Credit facility withdrawals totaled $0 during 2024.
Commitment fees and interest rates payable under the Facility are similar to fees and rates available to comparably rated, investment-grade
borrowers. The Facility allows for borrowings at floating rates based on Term Secured Overnight 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 other things, certain
credit arrangements, finance leases, guarantees, unfunded and vested pension benefits under Title IV of Employee Retirement Income
Security Act of 1974 (ERISA), and unamortized debt discount and deferred debt issuance costs. At December 31, 2024, the Company was in
compliance with the adjusted debt-to-EBITDA coverage ratio, which allows us to carry up to $46.7 billion of debt (as defined in the Facility),
and we had $32.9 billion of debt (as defined in the Facility) outstanding at that date. The Facility does not include any other financial
restrictions, credit rating triggers (other than rating-dependent pricing), or any other provision that could require us to post collateral. The
Facility also includes a $150 million cross-default provision and a change-of-control provision.
During 2024, we issued $823 million and repaid $823 million of commercial paper with maturities ranging from 13 to 57 days. As of both
December 31, 2024 and 2023, we had $0 of commercial paper outstanding. Our revolving credit facility supports our outstanding commercial
paper balances, and, unless we change the terms of our commercial paper program, our aggregate issuance of commercial paper will not
exceed the amount of borrowings available under the Facility.
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Shelf Registration Statement and Significant New Borrowings – We filed an automatic shelf registration statement with the SEC that
became effective on February 13, 2024. Under our shelf registration, we may issue, from time to time, any combination of debt securities,
preferred stock, common stock, or warrants for debt securities or preferred stock in one or more offerings. The Board of Directors authorized
the issuance of up to $9.0 billion of debt securities, replacing the prior Board authorization in February 2022, which had $5.6 billion of
authority remaining.
During the year ended December 31, 2024, we did not issue any debt securities under this registration statement. At December 31, 2024, we
had remaining authority from the Board of Directors to issue up to $9.0 billion of debt securities under our shelf registration.
Receivables Securitization Facility – As of both December 31, 2024 and 2023, we recorded $0 of borrowings under our Receivables
Facility, as secured debt. (See further discussion in the "Receivables Securitization Facility" section of 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 and facilities) and have no other
activities, assets, or liabilities outside of the lease transactions. Within these lease arrangements, 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 not expected to be significant.
We maintain and operate the assets based on contractual obligations within the lease arrangements, which set specific guidelines consistent
within the railroad industry. As such, we have no control over activities that could materially impact the fair value of the leased assets. We do
not hold the power to direct the activities of the VIEs and, therefore, do not control the ongoing activities that have a significant impact on the
economic performance of the VIEs. Additionally, we do not have the obligation to absorb losses of the VIEs or the right to receive benefits of
the VIEs that could potentially be significant to the VIEs.
We are not considered to be the primary beneficiary and do not consolidate these VIEs because our actions and decisions do not have the
most significant effect on the VIE’s performance and our fixed-price purchase options are not considered to be potentially significant to the
VIEs. The future minimum lease payments associated with the VIE leases totaled $609 million as of December 31, 2024, and are recorded
as operating lease liabilities at present value in our Consolidated Statements of Financial Position.
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:
Millions
Classification
Dec 31, 2024
Dec 31, 2023
Assets
Operating leases
Operating lease assets
$
1,297 $
1,643
Finance leases
Properties, net [a]
172
244
Total leased assets
$
1,469 $
1,887
Liabilities
Current
Operating
Accounts payable and other current liabilities
$
346 $
355
Finance
Debt due within one year
37
49
Noncurrent
Operating
Operating lease liabilities
925
1,245
Finance
Debt due after one year
72
109
Total lease liabilities
$
1,380 $
1,758
[a]
Finance lease assets are recorded net of accumulated amortization of $472 million and $497 million as of December 31, 2024 and 2023, respectively.
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The lease cost components are classified as follows:
Millions
Dec 31, 2024
Dec 31, 2023
Operating lease cost [a]
$
340 $
369
Short-term lease cost
24
24
Variable lease cost
37
41
Finance lease cost
Amortization of leased assets [b]
31
38
Interest on lease liabilities [c]
5
8
Net lease cost
$
437 $
480
[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, 2024:
Millions
Operating
Leases Finance Leases
Total
2025
$
352 $
42 $
394
2026
281
35
316
2027
227
30
257
2028
200
11
211
2029
128
-
128
After 2029
213
-
213
Total lease payments
$
1,401 $
118 $
1,519
Less: Interest
130
9
139
Present value of lease liabilities
$
1,271 $
109 $
1,380
The following table presents the weighted average remaining lease term and discount rate:
Dec 31, 2024
Weighted-average remaining lease term (years)
Operating leases
5.4
Finance leases
2.8
Weighted-average discount rate (%)
Operating leases
3.8
Finance leases
4.4
The following table presents other information related to our operating and finance leases for the years ended December 31:
Millions
2024
2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
$
319 $
323
Investing cash flows from operating leases
32
33
Operating cash flows from finance leases
6
9
Financing cash flows from finance leases
47
65
Leased assets obtained in exchange for operating lease liabilities
$
119 $
241
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17. Commitments and Contingencies
Asserted and Unasserted Claims – Various claims and lawsuits are pending against us and certain of our subsidiaries. We cannot fully
determine the effect of all asserted and unasserted claims on our consolidated results of operations, financial condition, or liquidity. We have
recorded a liability where asserted and unasserted claims are considered probable and where such 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 of operations, financial condition, or liquidity after taking into account liabilities and
insurance recoveries previously recorded for these matters.
In December 2019, we received a putative class action complaint under the Illinois Biometric Information Privacy Act, alleging violation due to
the use of a finger scan system developed and managed by third parties. While we believe that we have strong defenses to the claims made
in the complaint and will vigorously defend ourselves, there is no assurance regarding the ultimate outcome. The outcome of this litigation is
inherently 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. Under FELA, damages are
assessed based on a finding of fault through litigation or out-of-court settlements. We offer a comprehensive variety of services and
rehabilitation programs for employees who are injured at work.
Because of the uncertainty surrounding the ultimate outcome of personal injury claims, it is reasonably possible that future costs to settle
these claims may range from approximately $379 million to $495 million. We record 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
2024
2023
2022
Beginning balance
$
383 $
361 $
325
Current year accruals
121
112
107
Changes in estimates for prior years
(14)
89
55
Payments
(111)
(179)
(126)
Ending balance at December 31
$
379 $
383 $
361
Current portion, ending balance at December 31
$
106 $
113 $
84
Environmental Costs – We are subject to federal, state, and local environmental laws and regulations. We have identified 352 sites where
we are or may be liable for remediation costs associated with alleged contamination or for violations of environmental requirements. This
includes 31 sites that are the subject of actions taken by the U.S. government, including 19 that are currently on the Superfund National
Priorities List. Certain federal legislation imposes joint and several liability for the remediation of identified sites; consequently, our ultimate
environmental liability may include costs relating to activities of other parties, in addition to costs relating to our own activities at each site.
Our environmental liability activity was as follows:
Millions
2024
2023
2022
Beginning balance
$
245 $
253 $
243
Accruals
129
99
84
Payments
(106)
(107)
(74)
Ending balance at December 31
$
268 $
245 $
253
Current portion, ending balance at December 31
$
83 $
91 $
67
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 liability for remediation is difficult to determine
because of the number of potentially responsible parties, site-specific cost sharing arrangements with other potentially responsible parties,
the degree of contamination by various wastes, the scarcity and quality of volumetric data related to many of the sites, and the speculative
nature of remediation costs. Estimates of liability
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may vary over time due to changes in federal, state, and local laws governing environmental remediation. Current obligations are not
expected to have a material adverse effect on our consolidated results of operations, financial condition, or liquidity.
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 the agreements. Due to uncertainty as to
whether claims will be made or how they will be resolved, we cannot reasonably determine the probability of an adverse claim or reasonably
estimate any adverse liability or the total maximum exposure under these indemnification arrangements. We do not have any reason to
believe that we will be required to make any material 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 by March 31, 2025.
As of December 31, 2024, we repurchased a total of 25.9 million shares of our common stock under the 2022 authorization. These
repurchases may be made on the open market or through other transactions. Our management has sole discretion with respect to
determining the timing and amount of these transactions.
The table below represents shares repurchased under repurchase programs during 2024 and 2023:
Number of Shares Purchased
Average Price Paid
2024
2023
2024
2023
First quarter
-
2,908,703 $
- $
203.19
Second quarter
492,320
606,581
225.96
199.81
Third quarter
3,006,061
-
245.44
-
Fourth quarter
2,804,785
-
237.43
-
Total
6,303,166
3,515,284 $
240.35 $
202.61
Remaining number of shares that may be repurchased under current authority
74,088,861
Management's assessments of market conditions and other pertinent factors guide the timing, manner, and volume of all repurchases. We
expect to fund any share repurchases under this program through cash generated from operations, the sale or lease of various operating and
non-operating properties, debt issuances, and cash on hand. Open market repurchases are recorded in treasury stock at cost, which
includes any applicable commissions, fees, and excise taxes.
On February 6, 2025, the Board of Directors approved a new share repurchase authorization, enabling the Company to buy up to 100 million
shares of its common stock by March 31, 2028. The new authorization is effective April 1, 2025, and replaces the current authorization, which
will expire on March 31, 2025.
19. Related Parties
UPRR and other North American railroad companies jointly own TTX Company (TTX). UPRR has a 37.03% economic interest in TTX while
the other North American railroads own the remaining interest. In accordance with ASC 323 Investments - 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 assists railroads in
meeting the needs of their customers by providing rail cars in an efficient, pooled environment. All railroads may utilize TTX rail cars through
car hire by renting rail cars at stated rates.
UPRR had $1.9 billion and $1.8 billion recognized as investments related to TTX in our Consolidated Statements of Financial Position as of
December 31, 2024 and 2023, respectively. TTX car hire expense of $432 million in 2024, $399 million in 2023, and $402 million in 2022 are
included in equipment and other rents in our Consolidated Statements of Income. In addition, UPRR had accounts payable to TTX of $70
million and $60 million at December 31, 2024 and 2023, respectively.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
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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 with the participation
of the Corporation’s management, including the Corporation’s Chief Executive Officer (CEO) and Executive Vice President and Chief
Financial Officer (CFO), of the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures pursuant to
Exchange Act Rules 13a-15 and 15d-15. In designing and evaluating the disclosure controls and procedures, management recognized that
any controls and procedures, no matter how well designed and 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 controls and procedures were effective to provide reasonable assurance that information required to be disclosed in
our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified by the SEC, and that such
information is accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions
regarding required disclosure.
Additionally, the CEO and CFO determined that there were no changes to the Corporation’s internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the last fiscal quarter that materially affected, or are 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 and maintaining
adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). The Corporation’s internal
control system was designed to provide reasonable assurance to the Corporation’s management and Board 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 systems determined to be
effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
The Corporation’s management assessed the effectiveness of the Corporation’s internal control over financial reporting as of December 31,
2024. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control - Integrated Framework (2013). Based on our assessment, management believes that, as of December 31, 2024,
the Corporation’s internal control over financial reporting is effective based on those criteria.
The Corporation’s independent registered public accounting firm has issued an attestation report on the effectiveness of the Corporation’s
internal control over financial reporting. This report appears on the next page.
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REPORT 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, 2024, 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, 2024, 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, 2024, of the Corporation and our report dated February 7,
2025, 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.
/s/ Deloitte & Touche LLP
Omaha, Nebraska
February 7, 2025
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Item 9B. Other Information
None.
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, business experience during the
past five years, and certain other directorships held by each director or person nominated to become a director of UPC is set forth in the
Election of Directors segment of the Proxy Statement and is incorporated herein by reference.
Information concerning our Audit Committee and the independence of its members, along with information about the audit committee
financial expert(s) serving on the Audit Committee, is set forth in the Audit Committee segment of the Proxy Statement 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 under Information 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 the Delinquent 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 Financial Officers (the
Code). A copy of the Code may be found on the Internet at our website https://investor.unionpacific.com/governance/governance-
overview. We intend to disclose any amendments to the Code or any waiver from a provision of the Code on our website.
(e) Insider Trading Arrangements and Policies.
Information concerning UPC's Confidentiality and Insider Trading Policy is set forth in the Insider Trading Arrangements and Policies
segment of the Proxy Statement and is incorporated herein by reference. UPC's Confidentiality and Insider Trading Policy is included as
an exhibit to this report.
Item 11. Executive Compensation
Information concerning compensation received by our directors and our named executive officers is presented in the Compensation
Discussion and Analysis, Summary Compensation Table, Grants of Plan-Based Awards in Fiscal Year 2024, Outstanding Equity Awards at
2024 Fiscal Year-End, Option Exercises and Stock Vested in Fiscal Year 2024, Pension Benefits at 2024 Fiscal Year-End, Nonqualified
Deferred Compensation at 2024 Fiscal Year-End, Potential Payments Upon Termination or Change in Control and Director Compensation in
Fiscal Year 2024 segments of the Proxy Statement and is incorporated herein by reference. Additional information regarding compensation
of directors, including Board committee members, is set forth in the By-Laws of UPC and the Stock Unit Grant and Deferred Compensation
Plan for the Board of Directors, both of which are included as exhibits to this report. Information regarding the Compensation and Talent
Committee is set forth in the Compensation Committee segment of the Proxy Statement and is incorporated herein by reference.
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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 for director, our
named executive officers, our directors and executive officers as a group, and certain beneficial owners is set forth in the Security Ownership
of Certain Beneficial Owners and Management segment of the Proxy Statement and is incorporated herein by reference.
The following table summarizes the equity compensation plans under which UPC common stock may be issued as of December 31, 2024:
(a)
(b)
(c)
Plan Category
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding options,
warrants and rights
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
Equity compensation plans approved by security holders
2,330,352 [1] $
195.83
[1]
31,063,392
[2]
Total
2,330,352
$
195.83
31,063,392
[1]
Includes 348,929 retention units that do not have an exercise price. Does not include 885,600 retention shares that have been issued 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 Statement and is
incorporated herein by reference. We do not have any relationship with any outside third-party that would enable such a 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 Proxy Statement 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 services comprising 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 and Services 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-audit services rendered by
our independent registered public accounting firm is set forth in the Pre-approval of Audit and Non-Audit Services 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 Supplementary Data, Item 8, on
page 38.
(2)Financial Statement Schedules
Schedules have been omitted because they are not applicable or not required or the information required to be set forth therein is
included in the Financial Statements and Supplementary Data, Item 8, or notes thereto.
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(3)Exhibits
Exhibits are listed in the exhibit index beginning on page 73. 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) of Regulation S-K.
UNION PACIFIC CORPORATION
Exhibit Index
Exhibit No.
Description
Filed with this Statement
10(a)†
Form of Performance Stock Unit Agreement dated February 6, 2025.
10(b)†
Form of Non-Qualified Stock Option Agreement for Executives dated February 6, 2025.
19
Union Pacific Corporation Confidentiality and Insider Trading Policy dated October 1, 2024.
21
List of the Corporation’s significant subsidiaries and their respective states of incorporation.
23
Independent Registered Public Accounting Firm’s Consent.
24
Powers 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 Section 302 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 Section 302 of the Sarbanes-Oxley
Act of 2002 - Jennifer L. Hamann.
32
Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
- V. James Vena and Jennifer L. Hamann.
101
The following financial and related information from Union Pacific Corporation’s Annual Report on Form 10-K for the year
ended December 31, 2024 (filed with the SEC on February 7, 2025), formatted in Inline Extensible Business Reporting
Language (iXBRL) includes (a) Consolidated Statements of Income for the years ended December 31, 2024, 2023, and
2022, (b) Consolidated Statements of Comprehensive Income for the years ended December 31, 2024, 2023, and 2022,
(c) Consolidated Statements of Financial Position at December 31, 2024 and 2023, (d) Consolidated Statements of Cash
Flows for the years ended December 31, 2024, 2023, and 2022, (e) Consolidated Statements of Changes in Common
Shareholders’ Equity for the years ended December 31, 2024, 2023, and 2022, and (f) the Notes to the Consolidated
Financial Statements.
104
Cover 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 as further amended May
15, 2014, are incorporated herein by reference to Exhibit 3(a) to the Corporation’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 reference to 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 by reference to Exhibit
4(a) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019.
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4(b)
Indenture, dated as of December 20, 1996, between UPC and Wells Fargo Bank, National Association, as successor to
Citibank, N.A., as Trustee, is incorporated herein by reference to Exhibit 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 JP Morgan Chase Bank,
formerly The Chase Manhattan Bank, as Trustee, is incorporated herein by reference to Exhibit 4.2 to UPC’s Registration
Statement on Form S-3 (No. 333-75989).
Certain instruments evidencing long-term indebtedness of UPC are not filed as exhibits because the 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 copy of any such instrument upon request by the Commission.
10(c)†
Transition and Separation Agreement between the Corporation, the Railroad and Lance M. Fritz dated August 11, 2023, is
incorporated by reference to Exhibit 10.1 to the Corporation’s Current Report on Form 8-K dated August 11, 2023.
10(d)†
Union Pacific Corporation Key Employee Continuity Plan, as amended December 10, 2021, is incorporated herein by
reference to Exhibit 10(c) to the Corporation's Annual Report on Form 10-K for the year ended December 31, 2021.
10(e)†
Supplemental Thrift Plan (409A Grandfathered Component) of Union Pacific Corporation, effective as of January 1, 2009,
including all amendments adopted through August 1, 2024, is incorporated herein by reference to Exhibit 10(a) to the
Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.
10(f)†
Supplemental Thrift Plan (409A Non-Grandfathered Component) of Union Pacific Corporation, effective as of January 1,
2009, including all amendments adopted through August 1, 2024, is incorporated herein by reference to Exhibit 10(b) to
the Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.
10(g)†
Supplemental Pension Plan for Officers and Managers (409A Grandfathered Component) of Union Pacific Corporation and
Affiliates, as amended and restated in its entirety effective January 1, 1989, including all amendments adopted through
August 1, 2024, is incorporated herein by reference to Exhibit 10(c) to the Corporation’s Quarterly Report on Form 10-Q for
the quarter ended September 30, 2024.
10(h)†
Supplemental Pension Plan or Officers and Managers (409A Non-Grandfathered Component) of Union Pacific Corporation
and Affiliates, as amended and restated in its entirety effective January 1, 1989, including all amendments adopted through
August 1, 2024, is incorporated by reference to Exhibit 10(d) to the Corporation’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2024.
10(i)†
Deferred Compensation Plan (409A Grandfathered Component) of Union Pacific Corporation, originally effective as of
January 1, 2009, as amended and restated including amendments adopted through August 1, 2024, is incorporated herein
by reference to Exhibit 10(e) to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30,
2024.
10(j)†
Deferred Compensation Plan (409A Non-Grandfathered Component) of Union Pacific Corporation, originally effective as of
January 1, 2009, as amended and restated including amendments adopted through August 1, 2024, is incorporated herein
by reference to Exhibit 10(f) to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30,
2024.
10(k)†
Union Pacific Corporation 2000 Directors Plan, effective as of April 21, 2000, as amended November 16, 2006, January
30, 2007 and January 1, 2009 is incorporated herein by reference to Exhibit 10(j) to the Corporation’s Annual Report on
Form 10-K for the year ended December 31, 2008.
10(l)†
Union Pacific Corporation Stock Unit Grant and Deferred Compensation Plan for the Board of Directors (409A Non-
Grandfathered Component), effective as of January 1, 2009 is incorporated herein by reference to Exhibit 10(k) to the
Corporation’s Annual Report on Form 10-K for the year ended December 31, 2008.
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10(m)†
Union Pacific Corporation Stock Unit Grant and Deferred Compensation Plan for the Board of Directors (409A
Grandfathered Component), as amended and restated in its entirety, effective as of January 1, 2009 is incorporated herein
by reference to Exhibit 10(l) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2008.
10(n)†
Union Pacific Corporation 2013 Stock Incentive Plan, effective May 16, 2013, as amended effective as of January 1, 2020
is incorporated herein by reference to Exhibit 10(d) to the Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2019.
10(o)†
Union Pacific Corporation Executive Incentive Plan, effective May 5, 2005, amended and restated effective January 1,
2020 is incorporated herein by reference to Exhibit 10(e) to the Corporation’s Annual Report on Form 10-K for the year
ended December 31, 2019.
10(p)†
Union Pacific Corporation 2021 Stock Incentive Plan, effective as of May 13, 2021 is incorporated by reference to Exhibit
99.1 to the Corporation's Form S-8 dated May 25, 2021.
10(q)
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) is incorporated herein by reference to Annex J
to the Joint Proxy Statement/Prospectus included in Post-Effective Amendment No. 2 to UPC’s Registration Statement on
Form S-4 (No. 33-64707).
10(r)
Agreement, dated September 25, 1995, among UPC, UPRR, Missouri Pacific Railroad Company (MPRR), SP, Southern
Pacific Transportation Company (SPT), The Denver & Rio Grande Western Railroad Company (D&RGW), St. Louis
Southwestern Railway Company (SLSRC) and SPCSL Corp. (SPCSL), on the one hand, and Burlington Northern Railroad
Company (BN) and The Atchison, Topeka and Santa Fe Railway Company (Santa Fe), on the other hand, is incorporated
by reference to Exhibit 10.11 to UPC’s Registration Statement on Form S-4 (No. 33-64707).
10(s)
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, is incorporated herein by reference to Exhibit 10.12 to
UPC’s Registration Statement on Form S-4 (No. 33-64707).
10(t)†
Form of Non-Qualified Stock Option Agreement for Executives is incorporated herein by reference to Exhibit 10(c) to the
Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013.
10(u)†
Form of 2022 Long Term Plan Performance Stock Unit Agreement is incorporated herein by reference to Exhibit 10(a) to
the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021.
10(v)†
Form of 2023 Long Term Plan Performance Stock Unit Agreement is incorporated herein by reference to Exhibit 10(a) to
the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022.
10(w)†
Form of 2024 Long Term Plan Performance Stock Unit Agreement is incorporated herein by reference to Exhibit 10(a) to
the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023.
10(x)†
Executive Incentive Plan (2005) - Deferred Compensation Program, dated December 21, 2005 is incorporated herein by
reference to Exhibit 10(g) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2005.
97
Union Pacific Corporation Policy for Recoupment of Certain Compensation, amended and restated effective October 2,
2023, is incorporated by reference to Exhibit 10(a) to the Corporation Quarterly Report 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.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on this 7th day of February, 2025.
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 7th day of February, 2025,
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, Jr.*
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
76
Exhibit 10(a)
UNION PACIFIC CORPORATION
GRANT NOTICE FOR 2021 STOCK INCENTIVE PLAN
PERFORMANCE STOCK UNITS
FOR GOOD AND VALUABLE CONSIDERATION, Union Pacific Corporation (the “Company”), hereby grants to Participant named below
(for purposes hereof, references herein to “you” or “your” shall refer to such Participant) the number of Stock Units specified below (the
“Award”), upon the terms and subject to the conditions set forth in this Grant Notice, the Union Pacific Corporation 2021 Stock Incentive
Plan (the “Plan”), the Standard Terms and Conditions (the “Standard Terms and Conditions”) adopted under such Plan and described in this
Grant Notice, and the Union Pacific Corporation Long Term Plan (the “Long Term Plan”) approved and adopted by the Compensation and
Benefits Committee of the Company’s Board of Directors (the “Committee”), and the Policy for Recoupment of Certain Compensation, each
as amended from time to time. In addition, if you become eligible for and entitled to severance benefits under a broad based severance pay
policy of the Company that include waiver of the continuous employment requirement applicable to the Stock Units (the “Severance
Policy”), the Award also shall be subject to the terms of such Severance Policy.
Each Stock Unit subject to this Award represents the right to receive one share of the Company’s common stock, par value $2.50 (the
“Common Stock”), subject to the conditions set forth in this Grant Notice, the Plan, the Standard Terms and Conditions, and the Long Term
Plan. This Award is granted pursuant to the Plan and the Long Term Plan and is subject to and qualified in its entirety by the Standard Terms
and Conditions.
Name of Participant:
Grant Date:
February 7, 2025
Grant Number:
Target Number of Stock Units subject to the
Award:
The maximum number of stock units subject
to the award is two times the amount shown.
The participant is eligible to receive up to the
maximum number of stock units in accordance
with the program design in the Long Term Plan
Summary. The actual number of shares paid, if
any, depends on the achievement level of the
applicable performance criteria.
Restriction Period:
3 years
Restriction Period Commencement Date:
February 7, 2025
Restriction Period Termination Date:
February 7, 2028
By electronically accepting this Award, you acknowledge that you have received and read, and agree that this Award shall be subject to, the
terms of this Grant Notice, the Plan, the Standard Terms and Conditions, and the Long Term Plan (including, but not limited to, the
Committee’s discretionary authority under the Long Term Plan to determine the number of Stock Units payable with respect to the Award)
and, if applicable, the Severance Policy (including, but not limited to, the Severance Policy’s requirement, if any, that you execute a general
release of employment-related claims) and the Policy for Recoupment of Certain Compensation. You also hereby consent to the delivery of
information (including, without limitation, information required to be delivered to you pursuant to applicable securities laws) regarding the
Company and the Subsidiaries, the Plan, and the Stock Units via Company website or other electronic delivery.
YOU HAVE ONE HUNDRED AND EIGHTY (180) DAYS FROM THE GRANT DATE SET FORTH IN THIS GRANT NOTICE TO
ELECTRONICALLY ACCEPT THIS AWARD AND THE STANDARD TERMS AND CONDITIONS. IF YOU DO NOT ACCEPT THIS
AWARD AND THE STANDARD TERMS AND CONDITIONS IN THE APPLICABLE 180 DAY PERIOD, YOU WILL FORFEIT THE
PERFORMANCE STOCK UNITS THAT ARE THE SUBJECT OF THIS AWARD.
UNION PACIFIC CORPORATION
STANDARD TERMS AND CONDITIONS FOR
PERFORMANCE STOCK UNITS
These Standard Terms and Conditions apply to the Award of performance stock units granted pursuant to the Union Pacific Corporation 2021
Stock Incentive Plan, as amended (the “Plan”), which are evidenced by a Grant Notice that specifically refers to these Standard Terms and
Conditions. In addition to these Standard Terms and Conditions, the performance stock units shall be subject to the terms of the Plan and the
Long-Term Plan and, if applicable, the Severance Policy and the Policy for Recoupment of Certain Compensation, each as amended from
time to time, which are incorporated into these Standard Terms and Conditions by reference. Capitalized terms not otherwise defined herein
shall have the meaning set forth in the Plan. For purposes of these Standard Terms and Conditions and the Grant Notice, any reference to the
Company (as defined below) shall include a reference to any Subsidiary for which you are or have been employed. Additionally, references
in these Standard Terms and Conditions to “you” or “your” shall refer to the Participant named in the Grant Notice provided to the
Participant herewith (the “Grant Notice”), and such Participant’s heirs and beneficiaries.
By electronically accepting the Award and these Standard Terms and Conditions, you acknowledge and agree to be bound by the following,
which will survive your termination from employment and the vesting or forfeiture of the Award:
PERFORMANCE STOCK UNITS
1. TERMS OF PERFORMANCE STOCK UNITS
Union Pacific Corporation, a Utah corporation (the “Company”), has granted to you an award of a target number of performance stock
units that may be earned at between 0% and 200% of the specified target level (the “Award” or the “Stock Units”) specified in the
Grant Notice. Each Stock Unit represents the right to receive (i) one share of the Company’s common stock, $2.50 par value per share
(the “Common Stock”) and (ii) a payment in cash equal to the amount of dividends that would have been payable on one share of
Common Stock had you owned such Common Stock from the Grant Date specified in the Grant Notice through the payment date for
such Stock Units (“Dividend Equivalent Payments”), in each case to the extent that the applicable Performance Criteria described
below have been satisfied. The Award is subject to the terms and conditions set forth in the Grant Notice, these Standard Terms and
Conditions, the Plan, the Long Term Plan and, if applicable, the Severance Policy and the Policy for Recoupment of Certain
Compensation, each as amended.
2. VESTING OF PERFORMANCE STOCK UNITS
The Award shall not be vested as of the Grant Date set forth in the Grant Notice and shall be forfeitable until the end of the Restriction
Period as set forth in the Grant Notice (the “Restriction Period Termination Date”), unless otherwise provided under these Standard
Terms and Conditions and, for the avoidance of doubt, specifically subject to Section 3 hereof. After the end of the Restriction Period,
subject to your continued employment with the Company through the Restriction Period Termination Date and to termination or
acceleration as provided in these Standard Terms and Conditions, the Plan, the Long Term Plan and, if applicable, the Severance
Policy, and to the extent certified by the Committee as described below, the Award (including related Dividend Equivalent Payments)
shall become vested as of the Restriction Period Termination Date with respect to that number of Stock Units determined by the
Committee to be paid pursuant to the Award. Unless the Committee shall determine otherwise, any period of time in which you are on
a leave of absence during the Restriction Period in accordance with a leave of absence policy adopted by the Company shall count
toward satisfaction of the Restriction Period.
3. PERFORMANCE CRITERIA
The “Performance Criteria” are average annual Return on Invested Capital (“ROIC”) and relative Operating Income Growth (“OIG”).
The definition and calculation of annual ROIC and relative OIG shall be determined in accordance with the Long-Term Plan.
You may earn Stock Units at the conclusion of the Restriction Period (or such earlier time as may be provided in Section 6) based on
the Company’s satisfaction of the Performance Criteria in accordance with the ROIC targets and payout schedule and the relative OIG
targets and payout schedule approved by the Committee, as determined and certified by the Committee (or the Committee’s delegate)
in its sole discretion (the “Certification Date”). To the extent certified by the Committee, you may earn up to two times the Stock Unit
Target Award as shown on the Grant Notice based on the average of all three fiscal years (2025, 2026 and 2027) of ROIC performance
achieved and the Company’s relative OIG percentile ranking (which is based on the Company’s OIG performance over the three fiscal
year period as compared to the OIG performance over that period of the constituent companies of the S&P 100 Industrials Index and
Class I Railroads as set forth in the Long Term Plan), as determined and certified by the Committee (or the Committee’s delegate) in its
sole discretion. Notwithstanding the foregoing, the Committee retains the discretion under the Long-Term Plan to determine the
number of Stock Units payable with respect to your Award.
4. DIVIDEND EQUIVALENT PAYMENTS
You are not entitled to receive cash dividends on the Stock Units, but will receive Dividend Equivalent Payments in an amount equal to
the value of the cash dividends that would have been paid (based on the record date for such dividends) on the number of shares of
Common Stock equal to the number of Stock Units which are earned (as determined by the Committee) based on the achievement of
the applicable Performance Criteria as if such shares had been outstanding between the Grant Date and the payment date of such shares
of Common Stock. Dividend Equivalent Payments shall not be adjusted for interest, earnings or assumed reinvestment. Except as
provided in the immediately following paragraph, Dividend Equivalent Payments shall be paid to you at the time the earned shares of
Common Stock to which those Dividend Equivalent Payments relate are delivered (or would be delivered in the absence of a deferral
election made by you as described in Section 6(vii)) under Section 6(i) – (vi), as applicable. Distribution of Dividend Equivalent
Payments shall be subject to the Company’s collection of all tax withholding obligations applicable to such distribution. No Dividend
Equivalent Payment shall be paid or distributed on Stock Units (or shares underlying the Stock Units) that are forfeited or that
otherwise do not vest and are not issued or issuable under the Award.
If you have elected to defer receipt of earned Stock Units in accordance with the terms of the Deferred Compensation Plan of Union
Pacific Corporation (the “Deferred Compensation Plan”), Dividend Equivalent Payments with respect to such earned and deferred
Stock Units which relate to dividends paid on and after the date of the deferral of such Stock Units (i.e., the date that the Stock Units
would have been payable to you under the Plan had such Stock Units not been deferred under the Company’s Deferred Compensation
Plan) shall be credited as part of the Award Account (as defined in the Deferred Compensation Plan) under the Company’s Deferred
Compensation Plan, and shall be deferred for payment at the same time as the Award Account is paid under the terms of the
Company’s Deferred Compensation Plan.
Notwithstanding the foregoing, the Company may delay payment of a Dividend Equivalent Payment as described in Section 6(viii)
hereof.
5. RESTRICTIONS
Unless provided otherwise by the Committee, the following restrictions apply to the Stock Units:
(i) You shall be entitled to delivery of the shares of Common Stock underlying the Stock Units only as specified in Section 6
hereof;
(ii) All of the Stock Units shall be forfeited and all of your rights to such Stock Units and the right to receive Common Stock (and
related Dividend Equivalent Payments) shall terminate without further obligation on the part of the Company in the event of your
Separation from Service with the Company without having a right to delivery of shares of Common Stock under Section 6 hereof; and
(iii) Any Stock Units not earned as of the Restriction Period Termination Date shall be forfeited and all of your rights to such Stock
Units, including any Dividend Equivalent Payments, shall terminate without further obligation on the part of the Company.
6. ACCELERATION/LAPSE OF RESTRICTION PERIOD
Unless determined otherwise by the Committee and subject to Sections 6(vii) and 6(viii) hereof, the Stock Units shall be treated as
follows:
(i) Following the end of the Restriction Period and provided you have remained continuously employed by the Company through
the Restriction Period Termination Date and absent any Change of Control before the Restriction Period Termination Date in which the
acquiring or surviving company in the transaction does not assume or continue the outstanding Stock Units, shares of Common Stock
equal to the number of Stock Units which are earned (as determined by the Committee) based on the achievement of the applicable
Performance Criteria shall be delivered to you (through your account at the Company's third party stock plan administrator, if
applicable) free of all restrictions except subject to the covenants contained in these Standard Terms and Conditions. The payment of
the Stock Units under this Section 6(i) shall be made to you within thirty (30) days of the Restriction Period Termination Date, but in
no event later than the last day of the calendar year that includes the Restriction Period Termination Date.
(ii) If you: (A) have a Separation from Service with the Company due to (1) death, or (2) Retirement (as such term is defined
below in this Section 6(ii)); or (B) are determined to be disabled under the provisions of an applicable long-term disability plan of the
Company (“Disability”) (each a “Lapse Event”), prior to the Restriction Period Termination Date and prior to a Change in Control in
which the acquiring or surviving company in the transaction does not assume or continue the outstanding Stock Units, you, your estate
or your beneficiary, as applicable (each a “Payee”), shall be entitled to receive shares of Common Stock equal to the number of Stock
Units which are earned (as determined by the Committee) based on the average of all three fiscal years (2025, 2026 and 2027) of the
applicable ROIC and relative OIG performance achieved. The payment of the Stock Units earned under this Section 6(ii) shall be made
within thirty (30) days of the Restriction Period Termination Date, but in no event later than the last day of the calendar year that
includes the Restriction Period Termination Date. The Stock Units paid in accordance with this Section 6(ii) remain subject to the
covenants contained in these Standard Terms and Conditions. If you have a Lapse Event and subsequently return to employment with
the Company before the end of the Restriction Period, you will not be eligible to earn additional Stock Units beyond those described in
this Section 6(ii). “Retirement” shall mean your Separation from Service occurring on or after both December 31, 2025 and your
attainment of one of the following: (i) age 55 with at least 10 years of vesting service; (ii) age 60 with at least 5 years of vesting
service; or (iii) age 65. For this purpose, vesting service shall be calculated by applying the rules for determining “Vesting Service”
under the Pension Plan for Salaried Employees of Union Pacific Corporation and Affiliates (“UPC Pension Plan”), regardless of
whether you were ever a participant in the UPC Pension Plan.
(iii) If there is a Change in Control in which the acquiring or surviving company in the transaction does not assume or continue
the outstanding Stock Units and such Change in Control occurs prior to both your Separation from Service for any reason and the
Restriction Period Termination Date, shares of Common Stock equal to the number of Stock Units which are earned (as determined by
the Committee) based on achievement of the applicable Performance Criteria through the end of each fiscal year ending prior to the
occurrence of such Change in Control and through the end of the most recent fiscal quarter ending prior to the date of the Change in
Control shall be delivered to you (through
your account at the Company’s third party administrator, if applicable) free of all restrictions except subject to the covenants contained
in these Standard Terms and Conditions. No additional Stock Units granted as part of the Award may be earned following the Change
in Control. Shares of Common Stock to which you are entitled pursuant to this Section 6(iii) shall be delivered as soon as
administratively practicable following the date on which the Change in Control occurs, but in no event later than two and one-half (2½)
months following the end of the calendar year that includes the date on which the Change in Control occurs.
(iv) Except as provided in Section 6(v) hereof, if you have a Separation from Service with the Company prior to both you having
satisfied the age and service criteria for Retirement and the Restriction Period Termination Date and, as a result of such Separation
from Service, you are eligible for and entitled to payment of severance benefits under the provisions of a Severance Policy that include
waiver of the continuous employment requirement applicable to the Stock Units, shares of Common Stock equal to the number or
portion of the Stock Units determined under such Severance Policy, which are earned (as determined by the Committee) based on
achievement of the Performance Criteria through the end of the fiscal year 2025, 2026 or 2027 (or portion thereof), as established
under the Severance Policy, and for which the continuous employment requirement has been waived under the Severance Policy shall
be delivered to you (through your account at the Company's third party stock plan administrator, if applicable) free of all restrictions
except subject to the covenants contained in these Standard Terms and Conditions. The payment of the Stock Units under this Section
6(iv) shall be made at the time designated under the Severance Policy, but in no event later than two and one-half (2½) months
following the end of the calendar year that includes the date on which the Separation from Service occurs.
(v) If you have not satisfied the age and service criteria for Retirement and have a Separation from Service prior to the Restriction
Period Termination Date because your employment is involuntarily terminated by the Company (other than a termination as a result of
your Disability, cause or gross misconduct as determined by the Committee), within twenty-four (24) months following a Change in
Control, shares of Common Stock equal to the number of Stock Units which are earned (as determined by the Committee) based on
achievement of the applicable Performance Criteria through the end of each fiscal year ending prior to the occurrence of such Change
in Control and through the end of the most recent fiscal quarter ending prior to the date of the Change in Control shall be delivered to
you (through your account at the Company’s third party administrator, if applicable) free of all restrictions except subject to the
covenants contained in these Standard Terms and Conditions. The payment of the Stock Units under this Section 6(v) shall be made as
soon as administratively practicable following your Separation from Service, but in no event later than two and one-half (2½) months
following the end of the calendar year that includes the date on which the Separation from Service occurs.
(vi) Except as otherwise provided in this Section 6, all of the Stock Units shall be forfeited and all of your rights to such Stock
Units shall terminate without further obligation on the part of the Company unless you remain in the continuous employment of the
Company (such continuous employment shall, for this purpose, include a period of time during which you are absent from active
employment in accordance with a leave of absence policy adopted by the Company) until the earlier of the Restriction Period
Termination Date or a Change in Control in which the acquiring or surviving company in the transaction does not assume or continue
the outstanding Stock Units. Notwithstanding the foregoing, the Committee may, if it finds that the circumstances in the particular case
so warrant and subject to your satisfaction of any conditions the Company may require, allow you, even if you cease to be so
continuously employed and have a Separation from Service prior to the earlier of the Restriction Period Termination Date or such
Change in Control, to vest in some or all of the Stock Units which are earned (as determined by the Committee) based on achievement
of the applicable Performance Criteria through the end of the fiscal year ending prior to the year in which such Separation from Service
occurs. In such event, the payment of the Stock Units under this Section 6(vi) shall be made as soon as administratively practicable
following the date on which the Committee authorizes such payment, but in no event later than two and one-half (2½) months
following the end of the calendar year that includes the date on which your Separation from Service occurs. The Stock Units paid in
accordance with this Section 6(vi) remain subject to the covenants contained in these Standard Terms and Conditions.
(vii) Notwithstanding the foregoing, you may elect to defer receipt of payment of shares underlying the Stock Units to the extent
and according to the terms, if any, provided by the Deferred Compensation Plan. If you so elect to defer payment of shares underlying
the Stock Units, such payments will be made in accordance with the Deferred Compensation Plan and with any payments of Dividend
Equivalent Payments made in accordance with the provisions of Section 4.
(viii) Notwithstanding the foregoing, the Company shall not be obligated to deliver any shares of Common Stock during any
period when the Company determines that the delivery of shares hereunder would violate any federal, state or other applicable laws
and/or may issue shares subject to any restrictive legend that, as determined by the Company’s counsel, is necessary to comply with
securities or other regulatory requirements. Furthermore, the date on which shares are delivered to you (and any Dividend Equivalent
Payment thereon) may include a delay to provide the Company such time as it determines appropriate to calculate and certify the extent
to which the Performance Criteria were satisfied and to calculate and address tax withholding and/or other administrative matters;
provided, however, that delivery of shares of Common Stock underlying the Stock Units (including any Dividend Equivalent
Payments) for Stock Units that are determined to be exempt from the requirements of Internal Revenue Code § 409A shall in all events
be made at a time that satisfies the “short-term deferral” exception described in Treas. Reg. section 1.409A-1(b)(4) and for Stock Units
subject to Internal Revenue Code section 409A shall in all events be made at a time that satisfies Treas. Reg. 1.409A-2(b)(7).
7. PROTECTION OF CONFIDENTIAL INFORMATION AND TRADE SECRETS
A. CONFIDENTIAL INFORMATION AND TRADE SECRETS
You acknowledge that the Company regards certain information relating to its business and operations as confidential. This includes all
confidential and proprietary information concerning the assets, business or affairs of the Company or any customers thereof
("Confidential Information"). You further acknowledge that the Company has certain information that derives economic value from not
being known to the general public or to others who could obtain economic value from its disclosure or use, as to which the Company
takes reasonable efforts to protect its secrecy of ("Trade Secrets").
B. TYPES OF CONFIDENTIAL INFORMATION OR TRADE SECRETS
You acknowledge that you did have, currently have, and/or in the future will have developed, obtained, and/or been given access to the
Company's Confidential Information or Trade Secrets. By way of example only, the Company's Confidential Information or Trade
Secrets may include, but are not limited to: information about rates or costs; customer or supplier agreements and negotiations;
business opportunities; scheduling and delivery methods; business and marketing plans; financial information or plans;
communications within the attorney-client privilege or other privileges; operating procedures and methods; construction methods and
plans; proprietary computer systems design, programming or software; strategic plans; succession plans; proprietary company training
programs; employee performance, compensation or benefits; negotiations or strategies relating to collective bargaining agreements
and/or labor disputes; and policies and internal or external claims or complaints regarding personal injuries, employment laws or
policies, environmental protection, or hazardous materials. You agree that any unauthorized disclosures by you to any third party of
such Confidential Information or Trade Secrets would be a material violation of this Agreement, would constitute gross misconduct,
and would cause irreparable harm to the Company.
Notwithstanding the foregoing, in accordance with the Defend Trade Secrets Act of 2016, you will not be held criminally or civilly
liable under any federal or state trade secret law for the disclosure of a Trade Secret that is made (i) in confidence to a federal, state or
local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a
suspected violation of law; or is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made
under seal.
C. AGREEMENT TO MAINTAIN CONFIDENTIAL INFORMATION
You agree to not, unless you received prior written consent from the senior human resources officer or such other person designated in
writing by the Company (hereinafter collectively referred to as the "Sr. HR Officer"), or unless ordered by a court or government
agency, (i) divulge, use, furnish or disclose to any subsequent employer or, except to the extent necessary to perform your job
responsibilities with the Company, any other person, whether or not a competitor of the Company, any Confidential Information or
Trade Secrets, or (ii) retain or take with you when you leave the Company any property of the Company or any documents (including
any electronic or computer records) relating to any Confidential Information or Trade Secrets.
D. PRIOR NOTICE OF EMPLOYMENT
You acknowledge that if you become an employee, contractor, or consultant for any other person or entity engaged in the Business of
the Company, as defined in Section (G), it would create a substantial risk that you would, intentionally or unintentionally, disclose or
rely upon the Company’s Confidential Information or Trade Secrets for the benefit of the other person or entity to the detriment of the
Company. You further acknowledge that such disclosures would be particularly damaging if made shortly after you leave the Company.
You agree that while you are employed by or working for the Company and for a period of two (2) years after you leave the Company,
before accepting any employment or affiliation with another person or entity, you will give written notice to the Sr. HR Officer of your
intention to accept such employment or affiliation. You also agree to confer in good faith with the Sr. HR Officer concerning whether
your proposed employment or affiliation could reasonably be expected to be performed without improper disclosure of Confidential
Information or Trade Secrets.
E. NON-SOLICITATION OF CUSTOMERS
In consideration for your employment with the Company, the financial and other benefits you received from that employment, the
Award, and/or access to Confidential Information and/or Trade Secrets, as defined in this Agreement, you agree that during
employment with the Company, and for a period of two (2) years following your departure from the Company, you will not (directly or
indirectly, in association with others or otherwise) call on or solicit any of the Company’s customers with whom you had personal
contact or about whom you received Confidential Information during the period from the Grant Date of this Award until the Restriction
Period Termination Date (or, if earlier, the date your employment with the Company ceased), for the purpose of providing the
customers with goods and/or services similar in nature to those provided by the Company in its Business as defined below in Section
(G).
F. NON-SOLICITATION OF EMPLOYEES
In consideration for your employment with the Company, the financial and other benefits you received from that employment, the
Award, and/or access to Confidential Information and/or Trade Secrets, as defined in this Agreement, you agree that during
employment with the Company, and for a period of two (2) years following your departure from the Company, you will not (directly or
indirectly, in association with others or otherwise), participate in hiring or attempting to hire away a Company employee or contractor,
or induce or encourage any employees or contractors of the Company to terminate their relationship with the Company, without prior
written consent of the Sr. HR Officer.
G. NON-COMPETITION
In consideration for your employment with the Company, the financial and other benefits you received from that employment, the
Award, and/or access to Confidential Information and/or Trade Secrets, as defined in this Agreement, you agree that during
employment with the Company, and for a period of two (2) years following your departure from the Company, you will not (directly or
indirectly, in association with others or otherwise) engage in any activity for a competitive Business (as defined below) in which (i) the
use, disclosure, or misappropriation of the Confidential Information and/or Trade Secrets you had access to or obtained during your
employment with the Company may provide the competitive Business with a competitive advantage against the Company, and/or
otherwise cause harm to the Company; or (ii) you would be in a position to solicit or otherwise contact, on behalf of the competitive
Business, any current or prospective Company customers and clients with whom you had personal contact or about whom you learned
Confidential Information and/or Trade Secrets. The foregoing includes, without limitation, engagement as an officer, director,
proprietor, employee, partner, manager, member, investor (other than as a holder of less than 2% of the outstanding capital stock of a
publicly traded corporation), guarantor, consultant, advisor, agent, sales representative or other participant within any State in which
the Company does business. For the avoidance of doubt, the term “State” as used in this agreement shall be interpreted to include any
legal territory of the United States where the Company does business, including, by way of example, the District of Columbia, except
as set forth in Section H.
Further, for purposes of these Standard Terms and Conditions, the term “Business” means the transportation of goods in interstate
commerce and related services in or through or for any State in which the Company or any of its affiliates provides such services
directly or indirectly and any other activity that supports such operations including by the way of example but not limitation,
marketing, information systems, logistics, technology development or implementation, terminal services and any other activity of the
Company or any of its affiliates related to providing such services. This Section (G) is not intended to prevent you from engaging in
any activity that is not substantially the same as or competitive with the Company’s Business.
H. SPECIFIC STATE LAW LIMITATIONS
This Section 7 is subject to the following limitations or agreements for employees based in the specific States listed below. The
Company agrees to these limitations solely for the purpose of compliance with each State’s laws. If your employment with the
Company is not based in the following States, you agree that the paragraphs above apply to you in full.
(i) For employees based in California:
(a) Section (E) does not apply to you, except that you agree that you will be prohibited from solicitation of the
Company’s clients using the Company’s trade secrets, and/or providing services for anyone other than the Company using the
Company’s trade secrets.
(b) Sections (F) and (G) do not apply to you.
(ii) For employees based in Colorado, Section (G) does not apply to you unless your annualized cash compensation from the
Company exceeds the threshold set by the Colorado Department of Labor and Employment, Division of Labor Standards and
Statistics. This threshold was $123,750 for 2024. This threshold is scheduled to be $127,091 for 2025. If your annualized cash
compensation does exceed these thresholds, Section (G) still only restricts you from engaging in any activity for a competitive
Business (as defined above) in which the use, disclosure, or misappropriation of Trade Secrets you had access to or obtained during
your employment with the Company may provide the competitive Business with a competitive advantage against the Company, and/or
otherwise cause harm to the Company. Section (E) does not apply to you unless your annualized cash compensation from the Company
exceeds the threshold set by the Colorado Department of Labor and Employment, Division of Labor Standards and Statistics. As of
2024, this threshold was $74,250. For 2025, this threshold is scheduled to be $76,254.
(iii) For employees based in the District of Columbia, Sections (E) and (G) do not apply to you unless you are reasonably expected
to earn in a consecutive 12-month period or have earned in the preceding 12-month period, compensation greater than or equal to the
threshold set by the District of Columbia Non-Compete Agreements Amendment Act of 2020, as amended. As of 2024, this threshold
was $154,200, and the District of Columbia may announce a higher threshold for 2025. For purposes of this agreement, an employee
based in the District of Columbia who meets this compensation threshold shall be deemed a “Highly Compensated Employee.” Further,
Section (G), if it applies to you, is limited in time to 12 months from the date of your termination of employment.
(iv) For employees based in Illinois, Section (G) does not apply to you (a) unless you earn more than $75,000 per year (or any
higher amount set by the Illinois Freedom to Work Act for future years), or (b) if the Company terminates, furloughs, or lays you off as
the result of business circumstances or governmental orders related to the COVID-19 pandemic or under circumstances that are similar
to the COVID-19 pandemic, unless enforcement of the covenant not to compete includes compensation equivalent to your base salary
at the time of termination for the period of enforcement minus compensation earned through subsequent employment during the period
of enforcement. Sections (E) and (F) do not apply to you (a) unless you earn more than $45,000 per year (or any higher amount set by
the Illinois Freedom to Work Act for future years), or (b) if the Company terminates, furloughs, or lays you off as the result of business
circumstances or governmental orders related to the COVID-19 pandemic or under circumstances that are similar to the COVID-19
pandemic, unless enforcement of the covenant not to compete includes compensation equivalent to the your base salary at the time of
termination for the period of enforcement minus compensation earned through subsequent employment during the period of
enforcement.
(v) For employees based in Louisiana, you agree that the Company operates throughout the State of Louisiana, and that Section 7
therefore applies in every parish and municipality in the State, which include Acadia Parish, Allen Parish, Ascension Parish,
Assumption Parish, Avoyelles Parish, Beauregard Parish, Bienville Parish, Bossier Parish, Caddo Parish, Calcasieu Parish, Caldwell
Parish, Cameron Parish, Catahoula Parish, Claiborne Parish, Concordia Parish, De Soto Parish, East Baton Rouge Parish, East Carroll
Parish, East Feliciana Parish, Evangeline Parish, Franklin Parish, Grant Parish, Iberia Parish, Iberville Parish, Jackson Parish, Jefferson
Davis Parish, Jefferson Parish, La Salle Parish, Lafayette Parish, Lafourche Parish, Lincoln Parish, Livingston Parish, Madison Parish,
Morehouse Parish, Natchitoches Parish, Orleans Parish, Ouachita Parish, Plaquemines Parish, Pointe Coupee Parish, Rapides Parish,
Red River Parish, Richland Parish, Sabine Parish, St. Bernard Parish, St. Charles Parish, St. Helena Parish, St. James Parish, St. John
the Baptist Parish, St. Landry Parish, St. Martin Parish, St. Mary Parish, St. Tammany Parish, Tangipahoa Parish, Tensas Parish,
Terrebonne Parish, Union Parish, Vermilion Parish, Vernon Parish, Washington Parish, Webster Parish, West Baton Rouge Parish, West
Carroll Parish, West Feliciana Parish, and Winn Parish.
(vi) For employees based in Maine, Section G will not apply to you unless your annual compensation exceeds a threshold of
400% percent of the federal poverty level. For 2024, this threshold was $60,240. For 2025, this threshold may be different.
(vii) For employees based in Minnesota, Section (G) does not apply to you.
(viii) For employees based in Nevada, Section (G) does not apply to you if you are paid solely on an hourly wage basis, exclusive
of any tips or gratuities. Further, if the termination of your employment is the result of a reduction of force, reorganization, or similar
restructuring, Section (G) will only be enforceable during the period in which the Company is paying your salary, benefits, or
equivalent compensation, including severance pay.
(ix) For employees based in New York, Section (E) does not apply to any customer that became a customer of the Company only
as a result of your independent contact and business development efforts with the customer before and independent from your
employment with the Company.
(x) For employees based in North Dakota, Sections (E) and (G) do not apply to you.
(xi) For employees based in Oklahoma:
(a) Section (E) only restricts you from directly (not indirectly) engaging in calling upon or soliciting the Company’s
customers with whom you had personal contact or about whom you received Confidential or Trade Secret information, for the
purpose of providing the customers with goods and/or services similar in nature to those provided by the Company in its
Business as defined in Section (G), within any State in which the Company does business.
(b) Sections (F) and (G) do not apply to you.
(xii) For employees based in Oregon, Section (G) does not apply to you unless your annual compensation exceeds the statutory
threshold (adjusted annually for inflation pursuant to the Consumer Price Index for All Urban Consumers, West Region (All Items)
published by the Bureau of Labor Statistics of the United States Department of Labor). For 2024, this threshold was $113,241. For
2025, this threshold may be higher. Section (G) also does not apply to you unless you (i) perform predominantly intellectual,
managerial, or creative tasks; (ii) exercise discretion and independent judgment; and (iii) are paid on a salary basis. Section (G) also
does not apply to you unless (1) you personally received notice that you would be subject to a non-compete at least two weeks before
you began employment, or (2) you became eligible to enter into these Standard Terms and Conditions by virtue of a promotion or other
bona fide advancement. Further, Section (G), if it applies to you, is limited in time to 12 months from the date of your termination of
employment.
(xiii) For employees based in Virginia, Section (G) does not apply to you if your average weekly earnings, calculated as provided
under Code of Virginia section 40.1-28.7:7 (the “Virginia Act”), are less than the average weekly wage of the Commonwealth as
determined pursuant to subsection B of section 65.2-500, or you otherwise qualify as a “low-wage employee” under the Virginia Act.
For 2024, this threshold was $73,320. For 2025, this threshold may be different. You will not be considered a “low-wage employee” if
your earnings are derived, in whole or in predominant part, from sales commissions, incentives, or bonuses paid by the Company. You
also agree that the restrictive covenants in these Standard Terms and Conditions are reasonably limited in nature and do not prohibit
your employment with a competing business in a non-competitive position.
(xiv) For employees based in the State of Washington:
(a) Section (G) does not apply to you unless your annual earnings from your employment with the Company exceed the threshold
established by the Washington Department of Labor and Industries pursuant to RCW 49.62.040. As of 2024, this threshold was
$120,559.99. The Department has announced that this threshold is set to be $123,394.17 for 2025. If your employment with the
Company is terminated as the result of a layoff, Section (G) does not apply unless, during the period of enforcement, the
Company pays you compensation equivalent to your final base pay at the time of the termination of employment, minus the
amount of any compensation you earn through employment after the end of your employment with the Company, which new
employment and compensation you agree to promptly and fully disclose. For purposes of this section, “layoff” means
termination of your employment by the Company for reasons of the Company’s insolvency or other purely economic factors,
and specifically excludes termination of your employment for any other reason, either with or without cause. In addition,
nothing herein will restrict you from, while working for the Company, having an additional job, supplementing your income by
working for another employer, working as an independent contractor, or being self-employed from this additional employment,
if you do not earn at least twice the Washington minimum hourly wage, though you will be subject to the terms of the Standard
Terms and Conditions, the Company’s applicable policies, and the common law duty of loyalty. In addition to the other forms
of protected conduct, nothing herein prohibits disclosure or discussion of conduct you reasonably believe to be illegal
discrimination, illegal harassment, illegal retaliation, a wage-and-hour violation, or sexual assault,
or that is recognized as against a clear mandate of public policy. Further, Section (G), if it applies to you, is limited in time to
18 months from the date of your termination of employment.
(b) Section (E) does not restrict solicitation of former customers of the Company or the mere acceptance or transaction of business with
a customer, unless Section (G) also applies to you pursuant to the terms of Section (H)(xiv)(a). For the avoidance of doubt,
even if Section (G) does not apply to you, Section (E) still restricts the solicitation of current customers of the Company.
8. INJUNCTIVE RELIEF
You agree that each of the restraints contained herein is, in consideration for, and necessary for the protection of the goodwill,
Confidential Information, Trade Secrets and other legitimate interests of the Company; that each and every one of these restraints is
reasonable in respect to subject matter, length of time and geographic area, to the extent they apply in the State in which your
employment with the Company is based; and that these restraints, neither individually nor in the aggregate, will not prevent you from
obtaining other suitable employment during the period in which you are bound by such restraints. You further acknowledge that, if you
breach any one or more of the covenants contained in Section 7, the damage to the Company would be irreparable. You therefore agree
that the Company, in addition to any other remedies available to it, including, without limitation, the remedies set forth in Sections 9
and 10, shall be entitled to injunctive relief against your breach or threaten breach of said covenants, to the extent they apply in the
State in which your employment with the Company is based.
9. VIOLATION OF PROMISES
You agree that if you violate any one or more of the promises set forth in Section 7 then, in lieu of or in addition to any other remedies
available to Company as permitted by applicable law, all unvested Stock Options subject to this Grant shall be immediately forfeited. If
at any time the Committee or the Sr. HR Officer notifies (the date such notice is provided, the “Notice Date”) the Company that they
reasonably believe that you have violated any one or more of the promises set forth in Section 7, the vesting of this Award may be
suspended pending a determination of whether you violated any such provision by a tribunal as specified in Section 10 and 12. In
addition, in lieu of or in addition to any remedy provided for in Section 8, at any time the Company may seek in any proceeding that
you be required to immediately deliver to the Company any shares of Common Stock (or the fair market value thereof) and any related
Dividend Equivalent Payments earned by or issued to you pursuant to this Grant at any time during the three (3) full fiscal years
preceding your violation of Section 7. You agree that you will deliver such shares of Common Stock (or the fair market value thereof)
and any related Dividend Equivalent Payments to the Company on such terms and conditions as may be required by the Company. You
further agree that the Company will be entitled to enforce this repayment obligation by all legal means available, including, without
limitation, to set off the market value of any such shares of Common Stock and any related Dividend Equivalent Payments against any
amount that might be owed to you by the Company. For the avoidance of doubt, this paragraph shall apply only to the extent you
violate a promise set forth in Section 7 that is applicable in the State in which your employment with the Company is based, pursuant
to Section 7(H).
GENERAL
10. DISPUTE RESOLUTION
(i) You and the Company each agree that any controversy, claim, or dispute arising out of or relating to these Standard Terms and
Conditions or arising out of or relating to your employment relationship with the Company or any of its affiliates, the termination of
such relationship, your conduct following the termination of such relationship, or any application you submitted for employment with
the Company, shall be resolved by binding arbitration before a neutral arbitrator on an individual basis only, and not in any form of
class, collective, or private attorney general representative proceeding. By way of example only, claims subject to this agreement to
arbitrate include claims litigated under federal, state and local statutory or common law, such as the Family Medical Leave Act, the
Age Discrimination in Employment Act of 1967, Older Workers Benefit Protection Act of 1990, Title VII of the Civil Rights Act of
1964, the Civil Rights Act of 1990, the Americans with Disabilities Act, the Federal Employers Liability Act, the Federal Railway
Safety Act, the Worker Adjustment and Retraining Notification Act, the Genetic Information Nondiscrimination Act, the law of
contract and the law of tort. You and the Company each agree that such claims may be brought in an appropriate administrative forum,
but if you or the Company seek a judicial forum to resolve the matter, this agreement for binding arbitration will become immediately
effective, and you and the Company each hereby knowingly and voluntarily waive any right to have any such dispute tried and
adjudicated by a judge or jury.
(ii) For disputes arising under Sections 7 and 9 of these Terms and Conditions, the parties will submit the dispute, within 30
business days following service of notice of such dispute by one party on the other, to the American Arbitration Association (AAA) for
prompt resolution in the State in which your employment with the Company is based, under AAA rules for employment disputes. For
all other disputes within the scope of subpart (i), the parties will submit the dispute, within 30 business days following service of notice
of such dispute by one party on the other, to AAA for prompt resolution in Salt Lake City, Utah, also under AAA rules for employment
disputes. In either case, there shall be a single arbitrator, chosen in accordance with AAA rules, who at such time shall be on AAA’s
Judicial Panel. If there are no AAA arbitrators in the applicable State, another arbitrator shall be selected from that State or a
neighboring State, but the arbitration will still be conducted in the State in which your employment with the Company is based. The
decision of the arbitrator will be final and binding upon the parties, and judgment may be entered thereon in accordance with
applicable law in any court having jurisdiction. The arbitrator shall have the authority to make an award of monetary damages and
interest thereon. The arbitrator shall have no authority to award, and the parties hereby waive any right to seek or receive, specific
performance or an injunction, punitive or exemplary damages, except that the arbitrator shall have authority to issue injunctive relief to
enforce the covenants in Sections 7 and 9, to the extent those covenants apply in the State in which your employment with the
Company is based. The arbitrator will have no authority to order a modification or amendment of these Standard Terms and
Conditions, except that if the arbitrator finds any covenant in Sections 7 and 9 of this agreement to be unenforceable as written, the
arbitrator shall deem the agreement amended in order to give each such covenant its maximum effect, to the extent permitted by law in
the State in which your employment with the Company is based. The arbitrator shall have the authority to award costs of arbitration,
including reasonable attorney’s fees, to the prevailing party, but in the absence of such award the parties shall bear their own attorney
and filing fees unless otherwise agreed upon mutually by the parties or required by law. The Company shall bear the cost of the
arbitrator’s fees.
(iii) Notwithstanding the foregoing, the Company may seek injunctive relief to enforce any one or more of the covenants set forth
in Sections 7 or 9 of these Terms and Conditions, in a court of competent jurisdiction, as set forth in Section 12 below. You specifically
agree that a court of competent jurisdiction may enter preliminary injunctive relief to restrain violations of any of the covenants in
Sections 7 or 9 of these Terms and Conditions, pending arbitration or other litigation. For the avoidance of doubt, this provision only
applies to the promises set forth in Sections 7 or 9 to the extent those Sections are applicable in the State in which your employment
with the Company is based.
11. SEVERABILITY
If any provision of these Standard Terms and Conditions is, becomes, or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction, such provision shall be construed or deemed amended or limited in scope to conform to applicable laws or, in the
discretion of the Company, it shall be stricken and the remainder of these Standard Terms and Conditions shall remain in force and
effect.
12. CHOICE OF LAW; JURISDICTION
All questions pertaining to the construction, regulation, validity, and effect of these Standard Terms and Conditions shall be determined
in accordance with the laws of the State of Utah, without regard to the conflict of laws doctrine, with the exception of Sections 7 or 9.
All questions pertaining to the construction, regulation, validity, and effect of Sections 7 or 9 shall be determined in accordance with
the laws of the State in which your employment with the Company is based. With respect to any claim or dispute involving your Grant
and/or these Standard Terms and Conditions that is not subject to the arbitration pursuant to Section 12 hereof, other than those arising
from Sections 7 or 9, you and the Company each hereby consent and submit to the personal jurisdiction and venue of any state or
federal court located in the county of Salt Lake City within the State of Utah and, recognizing the appropriateness of the State of Utah
for any such matters due to the Company being incorporated in Utah, you and the Company hereby agree and consent to the state and
federal courts located in the county of Salt Lake City within the State of Utah as the sole and exclusive forum for resolution of any and
all claims, causes of action or disputes arising out of or related to your Award and these Standard Terms and Conditions (including all
terms incorporated by reference into these Standard Terms and Conditions).
You and the Company further agree that, if any one or more of the provisions of Section 7 are determined to be
unenforceable by reason of it being overly broad, such provision shall be deemed to be modified to permit its enforcement
to the maximum extent permitted by law.
13. AMENDMENTS
The Plan and these Standard Terms and Conditions may be amended or altered by the Committee or the Company’s Board of Directors
to the extent provided in the Plan.
14. RESTRICTIONS ON RESALES OF SHARES
The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any
resales by you or other subsequent transfers by you of any Common Stock issued in respect of vested Stock Units, including without
limitation (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner of
sales by you and other holders and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers.
15. INCOME TAXES
The Company shall not deliver shares in respect of any Stock Units unless and until you have made satisfactory arrangements to pay or
otherwise satisfy all applicable tax withholding obligations. Unless you pay the tax withholding obligations to the Company by cash or
check in connection with the delivery of the Common Stock and any related Dividend Equivalent Payments, withholding may be
effected, at the Company’s option, by withholding Common Stock issuable in connection with the vesting of the Stock Units (provided
that shares of Common Stock may be withheld only to the extent that such tax withholding will not result in adverse accounting
treatment for the Company) or withholding any related Dividend Equivalent Payments. You acknowledge that the Company shall have
the right to deduct any taxes required to be withheld by law in connection with the Stock Units from any amounts payable by it to you
(including, without limitation, future cash wages).
16. NON-TRANSFERABILITY OF AWARD
You understand, acknowledge and agree that, except as otherwise provided in the Plan, the Stock Units may not be sold, assigned,
transferred, pledged or otherwise directly or indirectly encumbered or disposed of prior to the payment of the Common Stock to you as
provided in Section 16 hereof. Your beneficiaries and anyone claiming an interest in the Stock Units through you are subject to all of
the terms and conditions applicable to you, other than the covenants set forth in Section 7.
17. CLAWBACK AND RECOUPMENT
If you are or become a Covered Executive or Other Executive under the Company’s Policy for Recoupment of Certain Compensation,
you agree that your Award is subject to recoupment, including in connection with a financial restatement or any detrimental conduct,
pursuant to and in accordance with the Company’s Policy for Recoupment of Certain Compensation, as amended from time to time,
and pursuant to any other policy the Company may adopt pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection
Act, other applicable law, or stock exchange listing standard. No recovery of compensation under such a clawback policy shall be
treated as an event giving rise to a right to terminate employment for “good reason” or “constructive termination” (or any similar term)
under any agreement with the Company. In addition, if you are or become a Covered Executive or Other Executive under the
Company’s Policy for Recoupment of Certain Compensation, you agree that that the Company shall not indemnify you against any
liability or loss (including without limitation the loss of any incentive-based compensation, any payment or reimbursement for the cost
of third-party insurance purchased by you to fund potential recovery obligations with respect to the Company’s Policy for Recoupment
of Certain Compensation, or any judgments, fines, taxes, penalties or amounts paid in settlement by or on behalf of you) incurred by
you in connection with or as a result of any action taken by the Company to enforce the terms of the Company’s Policy for
Recoupment of Certain Compensation (a “Clawback Proceeding”), or provide any indemnification or advancement of expenses
(including attorneys’ fees) incurred by you in connection with any such Clawback Proceeding.
18. LIMITATION OF INTEREST IN SHARES SUBJECT TO RESTRICTED STOCK UNITS
Neither you (individually or as a member of a group) nor any beneficiary or other person claiming, under or through you shall have any
right, title, interest, or privilege in or to any shares of Common Stock allocated or reserved for the purpose of the Plan or the Key
Employee Continuity Plan, or subject to the Grant Notice or these Standard Terms and Conditions, except as to such shares of
Common Stock, if any, as shall have been issued to such person upon vesting of the Stock Units, which shares shall remain subject to
the conditions set forth in these Standard Terms and Conditions. Nothing in the Plan, in the Key Employee Continuity Plan, in the
Grant Notice, in these Standard Terms and Conditions, or in any other instrument executed pursuant to the Plan shall confer upon you
any right to continue in the Company’s employ or service nor limit in any way the Company’s right to terminate your employment at
any time for any lawful reason.
19. OTHER AGREEMENTS SUPERSEDED
The Grant Notice, these Standard Terms and Conditions, the Plan and the Long-Term Plan constitute the entire understanding between
you and the Company regarding the Stock Units. Any prior agreements, commitments or negotiations concerning the Stock Units are
superseded.
20. REVIEW PERIOD/NOTICE FOR CERTAIN EMPLOYEES
IF YOU ARE EMPLOYED BY THE COMPANY IN THE STATE OF COLORADO AND ARE SUBJECT TO THE
RESTRICTIONS IN SECTIONS 7(E), (F) and (G), YOU ACKNOWLEDGE THAT YOU RECEIVED THIS AGREEMENT
BEFORE THE EARLIER OF ITS EFFECTIVE DATE OR THE EFFECTIVE DATE OF ANY ADDITIONAL COMPENSATION OR
CHANGE IN THE TERMS OR CONDITIONS OF EMPLOYMENT THAT PROVIDES CONSIDERATION FOR THE
COVENANTS IN THIS AGREEMENT. YOU ACKNOWLEDGE THAT YOU HAVE 14 CALENDAR DAYS FROM THE DAY
YOU RECEIVED THIS AGREEMENT TO REVIEW IT AND THAT YOU ARE ADVISED TO CONSULT LEGAL COUNSEL
PRIOR TO SIGNING IT.
IF YOU ARE EMPLOYED BY THE COMPANY IN THE DISTRICT OF COLUMBIA AS A “HIGHLY COMPENSATED
EMPLOYEE,” AS DEFINED IN SECTION 7(H), YOU ACKNOWLEDGE THAT YOU HAVE HAD AT LEAST 14 CALENDAR
DAYS BEFORE YOU BEGAN YOUR EMPLOYMENT TO REVIEW THIS AGREEMENT, OR IF YOU ARE A CURRENT
EMPLOYEE, 14 DAYS FROM THE DAY YOU RECEIVED THIS AGREEMENT TO REVIEW IT. PLEASE ALSO TAKE
NOTICE THAT THE DISTRICT’S BAN ON NON-COMPETE AGREEMENTS AMENDMENT ACT OF 2020, AS
AMENDED, LIMITS THE USE OF NON-COMPETE AGREEMENTS. IT ALLOWS EMPLOYERS TO REQUEST NON-
COMPETE AGREEMENTS FROM HIGHLY COMPENSATED EMPLOYEES, AS THAT TERM IS DEFINED IN THE BAN ON
NON-COMPETE AGREEMENTS AMENDMENT ACT OF 2020, AS AMENDED, UNDER CERTAIN CONDITIONS. IF YOU
MEET THE COMPENSATION THRESHOLDS SET FORTH IN SECTIONS 7(E) AND (G), THE COMPANY HAS DETERMINED
THAT YOU ARE A HIGHLY COMPENSATED EMPLOYEE. FOR MORE INFORMATION ABOUT THE BAN ON NON-
COMPETE AGREEMENTS AMENDMENT ACT OF 2020, AS AMENDED, CONTACT THE DISTRICT OF COLUMBIA
DEPARTMENT OF EMPLOYMENT SERVICES (DOES).
IF YOU ARE EMPLOYED BY THE COMPANY IN THE STATE OF ILLINOIS, YOU ACKNOWLEDGE THAT YOU HAVE AT
LEAST 14 CALENDAR DAYS FROM THE DAY YOU RECEIVED THIS AGREEMENT TO REVIEW IT AND THAT YOU ARE
ADVISED TO CONSULT LEGAL COUNSEL PRIOR TO SIGNING IT.
IF YOU ARE EMPLOYED BY THE COMPANY IN THE COMMONWEALTH OF VIRGINIA, YOU
ACKNOWLEDGE THAT YOU HAVE BEEN PROVIDED A COPY OF THIS AGREEMENT AT LEAST THREE
BUSINESS DAYS BEFORE THE DEADLINE TO SIGN THIS AGREEMENT.
IF YOU ARE EMPLOYED BY THE COMPANY IN THE STATE OF WASHINGTON, YOU ACKNOWLEDGE THAT
IF THIS AGREEMENT IS ENTERED INTO AFTER THE START OF YOUR EMPLOYMENT, YOU RECEIVED
INDEPENDENT CONSIDERATION FOR ENTERING INTO THIS AGREEMENT. IF YOU ARE A NEW EMPLOYEE,
YOU ACKNOWLEDGE THAT YOU HAVE RECEIVED THIS AGREEMENT OR A WRITTEN DESCRIPTION OF
ITS COVENANTS NO LATER THAN THE TIME OF THE INITIAL ORAL OR WRITTEN ACCEPTANCE OF THE
OFFER OF EMPLOYMENT.
Exhibit 10(b)
UNION PACIFIC CORPORATION
GRANT NOTICE FOR 2021 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION
FOR GOOD AND VALUABLE CONSIDERATION, Union Pacific Corporation (the “Company”), hereby grants to Participant named below
(for purposes hereof, references herein to “you” or “your” shall refer to such Participant) the nonqualified stock option (the “Option”) to
purchase any part or all of the number of shares of its common stock, par value $2.50 (the “Common Stock”), that are covered by this
Option, as specified below, at the Exercise Price per share specified below and upon the terms and subject to the conditions set forth in this
Grant Notice, the Union Pacific Corporation 2021 Stock Incentive Plan (the “Plan”) the Standard Terms and Conditions (the “Standard Terms
and Conditions”) adopted under such Plan and provided to you, and, if applicable, the Union Pacific Corporation Key Employee Continuity
Plan (the “Key Employee Continuity Plan”) and the Policy for Recoupment of Certain Compensation, each as amended from time to time. In
addition, if you become eligible for and entitled to severance benefits under a broad-based severance pay policy of the Company that include
waiver of the vesting period and/or extension of the exercise period with respect to the Option (the “Severance Policy”), the Option also shall
be subject to the terms of such Severance Policy.
This Option is granted pursuant to the Plan and is subject to and qualified in its entirety by the Standard Terms and Conditions.
Name of Participant:
Grant Date:
February 7, 2025
Grant Number:
Number of Shares of Common Stock covered by
Option:
Exercise Price Per Share:
Expiration Date:
February 7, 2035
Vesting Schedule:
Shares
Vest Date
February 8, 2026
February 8, 2027
February 8, 2028
This Option is not intended to qualify as an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended.
By electronically accepting this Option, you acknowledge that you have received and read, and agree that this Option shall be subject to, the
terms of this Grant Notice, the Plan, the Standard Terms and Conditions and, if applicable, the Key Employee Continuity Plan and/or the
Severance Policy (including, but not limited to, the Key Employee Continuity Plan’s or Severance Policy’s requirement, if any, that you
execute a general release of employment-related claims) and the Policy for Recoupment of Certain Compensation. You also hereby consent
to the delivery of information (including, without limitation, information required to be delivered to you pursuant to applicable securities
laws) regarding the Company and the Subsidiaries, the Plan, and the Option via Company website or other electronic delivery.
YOU HAVE ONE HUNDRED AND EIGHTY (180) DAYS FROM THE GRANT DATE SET FORTH IN THIS GRANT NOTICE TO
ELECTRONICALLY ACCEPT THIS AWARD AND THE STANDARD TERMS AND CONDITIONS. IF YOU DO NOT ACCEPT THIS
AWARD AND THE STANDARD TERMS AND CONDITIONS IN THE APPLICABLE 180 DAY PERIOD, YOU WILL FORFEIT THE
NONQUALIFIED STOCK OPTION THAT IS THE SUBJECT OF THIS AWARD.
UNION PACIFIC CORPORATION
STANDARD TERMS AND CONDITIONS FOR
NONQUALIFIED STOCK OPTION
These Standard Terms and Conditions apply to the Option granted pursuant to the Union Pacific Corporation 2021 Stock Incentive Plan, as
amended (the “Plan”), which is identified as nonqualified stock option and is evidenced by a Grant Notice that specifically refers to these
Standard Terms and Conditions. In addition to these Standard Terms and Conditions, the Option shall be subject to the terms of the Plan and,
if applicable, the Key Employee Continuity Plan, the Severance Policy and/or the Policy for Recoupment of Certain Compensation, each as
amended from time to time, which are incorporated into these Standard Terms and Conditions by this reference. Capitalized terms not
otherwise defined herein shall have the meaning set forth in the Plan. For purposes of these Standard Terms and Conditions and the Grant
Notice, any reference to the Company (as defined below) shall include a reference to any Subsidiary for which you are or have been
employed. Additionally, references in these Standard Terms and Conditions to “you” or “your” shall refer to the Participant named in the
Grant Notice provided to the Participant herewith (the “Grant Notice”), and such Participant’s heirs and beneficiaries.
By electronically accepting the grant of the Option and these Standard Terms and Conditions, you acknowledge and agree to be bound by the
following, which will survive your termination from employment and the vesting or forfeiture of the Option:
OPTION
1. TERMS OF OPTION
Union Pacific Corporation (the “Company”), has granted to you a nonqualified stock option (the “Option”) to purchase up to the
number of shares of the Company’s common stock (the “Common Stock”), set forth in the Grant Notice. The exercise price per share
and the other terms and conditions of the Option are set forth in the Grant Notice, these Standard Terms and Conditions, the Plan and,
if applicable, the Key Employee Continuity Plan, the Severance Policy and/or the Policy for Recoupment of Certain Compensation,
each as amended.
2. NONQUALIFIED STOCK OPTION
The Option is not intended to be an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”) and will be interpreted accordingly.
3. EXERCISE OF OPTION
The Option shall not be exercisable as of the Grant Date set forth in the Grant Notice. After the Grant Date, to the extent not
previously exercised, and subject to termination or acceleration as provided in these Standard Terms and Conditions, the Plan and, if
applicable, the Key Employee Continuity Plan, the Severance Policy and/or the Policy for Recoupment of Certain Compensation, the
Option shall be exercisable only to the extent it becomes vested, as described in the Grant Notice, these Standard Terms and
Conditions, the terms of the Plan and, if applicable, the Key Employee Continuity Plan, the Severance Policy and/or the Policy for
Recoupment of Certain Compensation, to purchase up to that number of shares of Common Stock as set forth in the Grant Notice,
provided that (except as may be provided otherwise in Section 4 below) you remain employed with the Company and do not
experience a termination of employment.
The exercise price (the “Exercise Price”) of the Option is set forth in the Grant Notice. The Company shall not be obligated to issue
any shares of Common Stock until you have paid the total Exercise Price for that number of shares of Common Stock. To exercise
the Option (or any part thereof), you must deliver to the Company appropriate notice specifying the number of whole shares of
Common Stock you wish to purchase accompanied by valid payment in the form of (i) a check, (ii) an attestation form confirming
your current ownership of whole shares of Common Stock equal in value to the total Exercise Price for that number of shares of
Common Stock, and/or (iii) an authorization to sell shares equal in value to the total Exercise Price for that number of shares of
Common Stock. Notices and authorizations shall be delivered and all checks shall be payable to the Company’s third party stock plan
administrator, or as otherwise directed by the Company.
Fractional shares may not be exercised. Shares of Common Stock will be issued as soon as practicable after exercise.
Notwithstanding the above, for administrative or other reasons, including, but not limited to the Company’s determination that
exercisability of the Option would violate any federal, state or other applicable laws, the Company may from time to time suspend
your ability to exercise an Option for limited periods of time, which suspensions shall not change the period in which the Option is
exercisable, except as otherwise provided in the Plan.
4. EXPIRATION OF OPTION
Except as otherwise may be provided by the Committee consistent with the terms of the Plan, the Option shall expire and cease to be
exercisable as of the earlier of (a) the Expiration Date set forth in the Grant Notice or (b) the date specified below in Sections 4A
through 4H, as applicable.
A.
If your termination of employment is by reason of death or you are determined to be disabled under the provisions of the
Company’s long-term disability plan, then any vesting period with respect to the Option shall be deemed to be satisfied and the
Option shall become fully vested and exercisable (by you or your estate, beneficiary or legal representative, as the case may
be) at the date of such termination of employment or the first day on which you are determined to be disabled under such long-
term disability plan, as the case may be, until the date that is five (5) years following the date of such termination of
employment or the first day of disability as determined under such long-term disability plan, as the case may be.
B.
If you remain continuously employed with the Company until December 31, 2025, (which shall include a period of time during
which you are absent from active employment in accordance with a leave of absence policy adopted by the Company), and
have a termination of employment at or after attaining Retirement Status as defined below in this Section 4B, then the Option
shall be exercisable in accordance with and at the times it becomes vested, as described in the Grant Notice, notwithstanding
your termination of employment with the Company, until the date that is five (5) years following the date of such termination
of employment. “Retirement Status” means the Participant has attained either: (i) age 55 with at least 10 years of vesting
service; (ii) age 60 with at least 5 years of vesting service; or (iii) age 65. For this purpose, vesting service shall be calculated
by applying the rules for determining “Vesting Service” under the Pension Plan for Salaried Employees of Union Pacific
Corporation and Affiliates (“UPC Pension Plan”), regardless of whether you were ever a participant in the UPC Pension Plan.
C.
If there is a Change in Control that occurs prior to your termination of employment in which the acquiring or surviving
company in the transaction does not assume or continue the Option upon the Change in Control, any vesting period with
respect to the Option shall be deemed to be satisfied and the Option shall become fully vested and exercisable (provided that
the Option may be canceled upon the consummation of the Change in Control without payment of any additional consideration
if the exercise price of the Option is less than the consideration per Share payable to shareholders of the Company in such
Change in Control) and you may exercise the Option not assumed or continued until the date that is five (5) years following the
date of such Change in Control. If you terminate employment following such Change in Control for a reason described in 4H,
any unexercised portion of the Option shall be immediately forfeited and canceled as of the date of such termination of
employment.
D.
Except as provided in Section 4E hereof, if you terminate employment with the Company prior to attaining Retirement Status,
and as a result of such termination of employment you are eligible for and entitled to payment of severance benefits under the
provisions of a Severance Policy that include extension of the exercise period with respect to such Option, and provided you
satisfy the conditions of the Severance Policy, you may exercise any portion of the Option that is vested and exercisable at the
time of your termination of employment until the date established under the Severance Policy, provided that in no event will
such date extend beyond the Expiration Date set forth in the Grant Notice.
E.
If your employment is involuntarily terminated by the Company (other than a termination as a result of disability determined
under the provisions of the Company’s long-term disability plan, or cause or gross misconduct as determined by the
Committee) within two (2) years following a Change in Control, any vesting period with respect to the Option shall be deemed
to be satisfied and you may exercise the Option upon the date of such termination of employment, and the Option shall remain
exercisable until the date that is three (3) years following the date of such termination of employment (or until the date that is
five (5) years following the date of such termination of employment in the case of a termination of employment by reason of
your death or a termination of employment described in Section 4B hereof). Furthermore, the Option exercise period shall be
as described in Section 4A in the event you are determined to be disabled under the provisions of the Company’s long-term
disability plan prior to your termination of employment described in this Section 4E.
F.
Notwithstanding the foregoing Sections 4A through 4E, if you are an Eligible Employee (within the meaning of the Key
Employee Continuity Plan) in the Key Employee Continuity Plan and incur a Severance (within the meaning of the Key
Employee Continuity Plan), the Option shall vest and be exercisable in accordance with the terms and conditions of the Key
Employee Continuity Plan.
G.
Except as otherwise provided in the foregoing Sections 4A through 4F: (i) you may exercise any portion of the Option that is
vested and exercisable at the time of your termination of employment until the date that is three (3) months following the date
of such termination of employment; and (ii) any portion of the Option that is not vested and exercisable at the time of such
termination of employment shall be forfeited and canceled as of the date of such termination of employment.
H.
Notwithstanding any other provision of this Section 4, if your employment is terminated by the Company for deliberate, willful
or gross misconduct (as determined by the Committee), the unexercised portion of the Option, whether or not then vested and
exercisable, shall be immediately forfeited and canceled as of the date of such termination of employment.
5. PROTECTION OF CONFIDENTIAL INFORMATION AND TRADE SECRETS
A. CONFIDENTIAL INFORMATION AND TRADE SECRETS
You acknowledge that the Company regards certain information relating to its business and operations as confidential. This
includes all confidential and proprietary information concerning the assets, business or affairs of the Company or any
customers thereof (“Confidential Information”). You further acknowledge that the Company has certain information that
derives economic value from not being known to the general public or to others who could obtain economic value from its
disclosure or use, as to which the Company takes reasonable efforts to protect its secrecy (“Trade Secrets”).
B. TYPES OF CONFIDENTIAL INFORMATION OR TRADE SECRETS
You acknowledge that you did have, currently have, and/or in the future will have developed, obtained, and/or been given
access to the Company's Confidential Information or Trade Secrets. By way of example only, the Company's Confidential
Information or Trade Secrets may include, but are not limited to: information about rates or costs; customer or supplier
agreements and negotiations; business opportunities; scheduling and delivery methods; business and marketing plans;
financial information or plans; communications within the attorney-client privilege or other privileges; operating procedures
and methods; construction methods and plans; proprietary computer systems design, programming or software; strategic
plans; succession plans; proprietary company training programs; employee performance, compensation or benefits;
negotiations or strategies relating to collective bargaining agreements and/or labor disputes; and policies and internal or
external claims or complaints regarding personal injuries, employment laws or policies, environmental protection, or
hazardous materials. You agree that any unauthorized disclosures by you to any third party of such Confidential Information
or Trade Secrets would be a material violation of this Agreement, would constitute gross misconduct, and would cause
irreparable harm to the Company.
Notwithstanding the foregoing, in accordance with the Defend Trade Secrets Act of 2016, you will not be held criminally or
civilly liable under any federal or state trade secret law for the disclosure of a Trade Secret that is made (i) in confidence to a
federal, state or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of
reporting or investigating a suspected violation of law; or is made in a complaint or other document filed in a lawsuit or other
proceeding, if such filing is made under seal.
C. AGREEMENT TO MAINTAIN CONFIDENTIAL INFORMATION
You agree to not, unless you received prior written consent from the senior human resources officer or such other person
designated in writing by the Company (hereinafter collectively referred to as the Sr. HR Officer), or unless ordered by a court
or government agency, (i) divulge, use, furnish or disclose to any subsequent employer or, except to the extent necessary to
perform your job responsibilities with the Company, any other person, whether or not a competitor of the Company, any
Confidential Information or Trade Secrets, or (ii) retain or take with you when you leave the Company any property of the
Company or any documents (including any electronic or computer records) relating to any Confidential Information or Trade
Secrets
D. PRIOR NOTICE OF EMPLOYMENT
You acknowledge that if you become an employee, contractor, or consultant for any other person or entity engaged in the
Business of the Company, as defined in Section (G), it would create a substantial risk that you would, intentionally or
unintentionally, disclose or rely upon the Company’s Confidential Information or Trade Secrets for the benefit of the other
person or entity to the detriment of the Company. You further acknowledge that such disclosures would be particularly
damaging if made shortly after you leave the Company. You agree that while you are employed by or working for the
Company and for a period of two (2) years after you leave the Company, before accepting any employment or affiliation with
another person or entity, you will give written notice to the Sr. HR Officer of your intention to accept such employment or
affiliation. You also agree to confer in good faith with the Sr. HR Officer concerning whether your proposed employment or
affiliation could reasonably be expected to be performed without improper disclosure of Confidential Information or Trade
Secrets.
E. NON-SOLICITATION OF CUSTOMERS
In consideration for your employment with the Company, the financial and other benefits you received from that
employment, the Award, and/or access to Confidential Information and/or Trade Secrets, as defined in this Agreement, you
agree that during employment with the Company, and for a period of two (2) years following your departure from the
Company, you will not (directly or indirectly, in association with others or otherwise) call on or solicit any of the Company’s
customers with whom you had personal contact or about whom you received Confidential Information during the period
from the Grant Date of this Award until the Restriction Period Termination Date (or, if earlier, the date your employment
with the Company ceased), for the purpose of providing the customers with goods and/or services similar in nature to those
provided by the Company in its Business as defined below in Section (G).
F. NON-SOLICITATION OF EMPLOYEES
In consideration for your employment with the Company, the financial and other benefits you received from that
employment, the Award, and/or access to Confidential Information and/or Trade Secrets, as defined in this Agreement, you
agree that during employment with the Company, and for a period of two (2) years following your departure from the
Company, you will not (directly or indirectly, in association with others or otherwise), participate in hiring or attempting to
hire away a Company employee or contractor, or induce or encourage any employees or contractors of the Company to
terminate their relationship with the Company, without prior written consent of the Sr. HR Officer.
G. NON-COMPETITION
In consideration for your employment with the Company, the financial and other benefits you received from that
employment, the Award, and/or access to Confidential Information and/or Trade Secrets, as defined in this Agreement, you
agree that during employment with the Company, and for a period of two (2) years following your departure from the
Company, you will not (directly or indirectly, in association with others or otherwise) engage in any activity for a
competitive Business (as defined below) in which (i) the use, disclosure, or misappropriation of the Confidential Information
and/or Trade Secrets you had access to or obtained during your employment with the Company may provide the competitive
Business with a competitive advantage against the Company, and/or otherwise cause harm to the Company; or (ii) you would
be in a position to solicit or otherwise contact, on behalf of the competitive Business, any current or prospective Company
customers and clients with whom you had personal contact or about whom you learned Confidential Information and/or
Trade Secrets. The foregoing includes, without limitation, engagement as an officer, director, proprietor, employee, partner,
manager, member, investor (other than as a holder of less than 2% of the outstanding capital stock of a publicly traded
corporation), guarantor, consultant, advisor, agent, sales representative or other participant within any State in which the
Company does business. For the avoidance of doubt, the term “State” as used in this agreement shall be interpreted to
include any legal territory of the United States where the Company does business, including, by way of example, the District
of Columbia, except as set forth in Section H.
Further, for purposes of these Standard Terms and Conditions, the term “Business” means the transportation of goods in
interstate commerce and related services in or through or for any State in which the Company or any of its affiliates provides
such services directly or indirectly and any other activity that supports such operations including by the way of example but
not limitation, marketing, information systems, logistics, technology development or implementation, terminal services and
any other activity of the Company or any of its affiliates related to providing such services. This Section (G) is not intended
to prevent you from engaging in any activity that is not substantially the same as or competitive with the Company’s
Business.
H. SPECIFIC STATE LAW LIMITATIONS
This Section 5 is subject to the following limitations or agreements for employees based in the specific States listed below.
The Company agrees to these limitations solely for the purpose of compliance with each State’s laws. If your employment
with the Company is not based in the following States, you agree that the paragraphs above apply to you in full.
(i) For employees based in California:
(a) Section (E) does not apply to you, except that you agree that you will be prohibited from solicitation of the
Company’s clients using the Company’s trade secrets, and/or providing services for anyone other than the Company
using the Company’s trade secrets.
(b) Sections (F) and (G) do not apply to you.
(ii) For employees based in Colorado, Section (G) does not apply to you unless your annualized cash compensation from
the Company exceeds the threshold set by the Colorado Department of Labor and Employment, Division of Labor
Standards and Statistics. This threshold was $123,750 for 2024. This threshold is scheduled to be $127,091 for
2025. If your annualized cash compensation does exceed these thresholds, Section (G) still only restricts you from
engaging in any activity for a competitive Business (as defined above) in which the use, disclosure, or
misappropriation of Trade Secrets you had access to or obtained during your employment with the Company may
provide the competitive Business with a competitive advantage against the Company, and/or otherwise cause harm to
the Company. Section (E) does not apply to you unless your annualized cash compensation from the Company
exceeds the threshold set by the Colorado Department of Labor and Employment, Division of Labor Standards and
Statistics. As of 2024, this threshold was $74,250. For 2025, this threshold is scheduled to be $76,254.
(iii) For employees based in the District of Columbia, Sections (E) and (G) do not apply to you unless you are reasonably
expected to earn in a consecutive 12-month period or have earned in the preceding 12-month period, compensation
greater than or equal to the threshold set by the District of Columbia Non-Compete Agreements Amendment Act of
2020, as amended. As of 2024, this threshold was $154,200, and the District of Columbia may announce a higher
threshold for 2025. For purposes of this agreement, an employee based in the District of Columbia who meets this
compensation threshold shall be deemed a “Highly Compensated Employee.” Further, Section (G), if it applies to
you, is limited in time to 12 months from the date of your termination of employment.
(iv) For employees based in Illinois, Section (G) does not apply to you (a) unless you earn more than $75,000 per year
(or any higher amount set by the Illinois Freedom to Work Act for future years), or (b) if the Company terminates,
furloughs, or lays you off as the result of business circumstances or governmental orders related to the COVID-19
pandemic or under circumstances that are similar to the COVID-19 pandemic, unless enforcement of the covenant
not to compete includes compensation equivalent to your base salary at the time of termination for the period of
enforcement
minus
compensation
earned
through
subsequent
employment
during
the
period
of
enforcement. Sections (E) and (F) do not apply to you (a) unless you earn more than $45,000 per year (or any higher
amount set by the Illinois Freedom to Work Act for future years), or (b) if the Company terminates, furloughs, or
lays you off as the result of business circumstances or governmental orders related to the COVID-19 pandemic or
under circumstances that are similar to the COVID-19 pandemic, unless enforcement of the covenant not to compete
includes compensation equivalent to the your base salary at the time of termination for the period of enforcement
minus compensation earned through subsequent employment during the period of enforcement.
(v) For employees based in Louisiana, you agree that the Company operates throughout the State of Louisiana, and that
Section 6 therefore applies in every parish and municipality in the State, which
include Acadia Parish, Allen Parish, Ascension Parish, Assumption Parish, Avoyelles Parish, Beauregard Parish,
Bienville Parish, Bossier Parish, Caddo Parish, Calcasieu Parish, Caldwell Parish, Cameron Parish, Catahoula
Parish, Claiborne Parish, Concordia Parish, De Soto Parish, East Baton Rouge Parish, East Carroll Parish, East
Feliciana Parish, Evangeline Parish, Franklin Parish, Grant Parish, Iberia Parish, Iberville Parish, Jackson Parish,
Jefferson Davis Parish, Jefferson Parish, La Salle Parish, Lafayette Parish, Lafourche Parish, Lincoln Parish,
Livingston Parish, Madison Parish, Morehouse Parish, Natchitoches Parish, Orleans Parish, Ouachita Parish,
Plaquemines Parish, Pointe Coupee Parish, Rapides Parish, Red River Parish, Richland Parish, Sabine Parish, St.
Bernard Parish, St. Charles Parish, St. Helena Parish, St. James Parish, St. John the Baptist Parish, St. Landry Parish,
St. Martin Parish, St. Mary Parish, St. Tammany Parish, Tangipahoa Parish, Tensas Parish, Terrebonne Parish, Union
Parish, Vermilion Parish, Vernon Parish, Washington Parish, Webster Parish, West Baton Rouge Parish, West Carroll
Parish, West Feliciana Parish, and Winn Parish.
(vi) For employees based in Maine, Section G will not apply to you unless your annual compensation exceeds a
threshold of 400% percent of the federal poverty level. For 2024, this threshold was $60,240. For 2025, this
threshold may be different.
(vii) For employees based in Minnesota, Section (G) does not apply to you.
(viii) For employees based in Nevada, Section (G) does not apply to you if you are paid solely on an hourly wage basis,
exclusive of any tips or gratuities. Further, if the termination of your employment is the result of a reduction of force,
reorganization, or similar restructuring, Section (G) will only be enforceable during the period in which the
Company is paying your salary, benefits, or equivalent compensation, including severance pay.
(ix) For employees based in New York, Section (E) does not apply to any customer that became a customer of the
Company only as a result of your independent contact and business development efforts with the customer before
and independent from your employment with the Company.
(x) For employees based in North Dakota, Sections (E) and (G) do not apply to you.
(xi) For employees based in Oklahoma:
(a) Section (E) only restricts you from directly (not indirectly) engaging in calling upon or soliciting the
Company’s customers with whom you had personal contact or about whom you received Confidential or Trade
Secret information, for the purpose of providing the customers with goods and/or services similar in nature to those
provided by the Company in its Business as defined in Section (G), within any State in which the Company does
business.
(b) Sections (F) and (G) do not apply to you.
(xii) For employees based in Oregon, Section (G) does not apply to you unless your annual compensation exceeds the
statutory threshold (adjusted annually for inflation pursuant to the Consumer Price Index for All Urban Consumers,
West Region (All Items) published by the Bureau of Labor Statistics of the United States Department of Labor). For
2024, this threshold was $113,241. For 2025, this threshold may be higher. Section (G) also does not apply to you
unless you (i) perform predominantly intellectual, managerial, or creative tasks; (ii) exercise discretion and
independent judgment; and (iii) are paid on a salary basis. Section (G) also does not apply to you unless (1) you
personally received notice that you would be subject to a non-compete at least two weeks before you began
employment, or (2) you became eligible to enter into these Standard Terms and Conditions by virtue of a promotion
or other bona fide advancement. Further, Section (G), if it applies to you, is limited in time to 12 months from the
date of your termination of employment.
(xiii) For employees based in Virginia, Section (G) does not apply to you if your average weekly earnings, calculated as
provided under Code of Virginia section 40.1-28.7:7 (the “Virginia Act”), are less than the average weekly wage of
the Commonwealth as determined pursuant to subsection B of
section 65.2-500, or you otherwise qualify as a “low-wage employee” under the Virginia Act. For 2024, this
threshold was $73,320. For 2025, this threshold may be different. You will not be considered a “low-wage
employee” if your earnings are derived, in whole or in predominant part, from sales commissions, incentives, or
bonuses paid by the Company. You also agree that the restrictive covenants in these Standard Terms and Conditions
are reasonably limited in nature and do not prohibit your employment with a competing business in a non-
competitive position.
(xiv) For employees based in the State of Washington:
(a) Section (G) does not apply to you unless your annual earnings from your employment with the Company exceed
the threshold established by the Washington Department of Labor and Industries pursuant to RCW 49.62.040. As of
2024, this threshold was $120,559.99. The Department has announced that this threshold is set to be $123,394.17 for
2025. If your employment with the Company is terminated as the result of a layoff, Section (G) does not apply
unless, during the period of enforcement, the Company pays you compensation equivalent to your final base pay at
the time of the termination of employment, minus the amount of any compensation you earn through employment
after the end of your employment with the Company, which new employment and compensation you agree to
promptly and fully disclose. For purposes of this section, “layoff” means termination of your employment by the
Company for reasons of the Company’s insolvency or other purely economic factors, and specifically excludes
termination of your employment for any other reason, either with or without cause. In addition, nothing herein will
restrict you from, while working for the Company, having an additional job, supplementing your income by working
for another employer, working as an independent contractor, or being self-employed from this additional
employment, if you do not earn at least twice the Washington minimum hourly wage, though you will be subject to
the terms of the Standard Terms and Conditions, the Company’s applicable policies, and the common law duty of
loyalty. In addition to the other forms of protected conduct, nothing herein prohibits disclosure or discussion of
conduct you reasonably believe to be illegal discrimination, illegal harassment, illegal retaliation, a wage-and-hour
violation, or sexual assault, or that is recognized as against a clear mandate of public policy. Further, Section (G), if
it applies to you, is limited in time to 18 months from the date of your termination of employment.
(b) Section (E) does not restrict solicitation of former customers of the Company or the mere acceptance or
transaction of business with a customer, unless Section (G) also applies to you pursuant to the terms of Section (H)
(xiv)(a). For the avoidance of doubt, even if Section (G) does not apply to you, Section (E) still restricts the
solicitation of current customers of the Company.
6. INJUNCTIVE RELIEF
You agree that each of the restraints contained herein is, in consideration for, and necessary for the protection of the goodwill,
Confidential Information, Trade Secrets and other legitimate interests of the Company; that each and every one of these restraints is
reasonable in respect to subject matter, length of time and geographic area, to the extent they apply in the State in which your
employment with the Company is based; and that these restraints, neither individually nor in the aggregate, will not prevent you from
obtaining other suitable employment during the period in which you are bound by such restraints. You further acknowledge that, if
you breach any one or more of the covenants contained in Section 5, the damage to the Company would be irreparable. You therefore
agree that the Company, in addition to any other remedies available to it, including, without limitation, the remedies set forth in
Sections 7 and 8, shall be entitled to injunctive relief against your breach or threaten breach of said covenants, to the extent they
apply in the State in which your employment with the Company is based.
7. VIOLATION OF PROMISES
You agree that if you violate any one or more of the promises set forth in Section 6 then, in lieu of or in addition to any other
remedies available to Company as permitted by applicable law, all unvested Stock Units subject to this Grant shall be immediately
forfeited. If at any time the Committee or the Sr. HR Officer notifies (the date such notice is provided, the “Notice Date”) the
Company that they reasonably believe that you have violated any one or more of the promises set forth in Section 5, the vesting of
this Grant may be suspended pending a determination of whether you violated any such provision by a tribunal as specified in
Section 8 and 10. In addition, in lieu of or in addition to any remedy provided for in Section 6, at any time the Company may seek in
any proceeding that you be required to immediately deliver to the Company any shares of Common Stock (or the fair market value
thereof) and any related Dividend Equivalent Payments earned by or issued to you pursuant to this Grant at any time during the three
(3) full fiscal years preceding your violation of Section 5. You agree that you will deliver such shares of Common Stock (or the fair
market value thereof) and any related Dividend Equivalent Payments to the Company on such terms and conditions as may be
required by the Company. You further agree that the Company will be entitled to enforce this repayment obligation by all legal means
available, including, without limitation, to set off the market value of any such shares of Common Stock and any related Dividend
Equivalent Payments against any amount that might be owed to you by the Company. For the avoidance of doubt, this paragraph
shall apply only to the extent you violate a promise set forth in Section 5 that is applicable in the State in which your employment
with the Company is based, pursuant to Section 5(H).
GENERAL
8. DISPUTE RESOLUTION
(i) You and the Company each agree that any controversy, claim, or dispute arising out of or relating to these Standard Terms
and Conditions or arising out of or relating to your employment relationship with the Company or any of its affiliates, the termination
of such relationship, your conduct following the termination of such relationship, or any application you submitted for employment
with the Company, shall be resolved by binding arbitration before a neutral arbitrator on an individual basis only, and not in any form
of class, collective, or private attorney general representative proceeding. By way of example only, claims subject to this agreement
to arbitrate include claims litigated under federal, state and local statutory or common law, such as the Family Medical Leave Act,
the Age Discrimination in Employment Act of 1967, Older Workers Benefit Protection Act of 1990, Title VII of the Civil Rights Act
of 1964, the Civil Rights Act of 1990, the Americans with Disabilities Act, the Federal Employers Liability Act, the Federal Railway
Safety Act, the Worker Adjustment and Retraining Notification Act, the Genetic Information Nondiscrimination Act, the law of
contract and the law of tort. You and the Company each agree that such claims may be brought in an appropriate administrative
forum, but if you or the Company seek a judicial forum to resolve the matter, this agreement for binding arbitration will become
immediately effective, and you and the Company each hereby knowingly and voluntarily waive any right to have any such dispute
tried and adjudicated by a judge or jury.
(ii) For disputes arising under Sections 5 and 7 of these Terms and Conditions, the parties will submit the dispute, within 30 business
days following service of notice of such dispute by one party on the other, to the American Arbitration Association (AAA) for
prompt resolution in the State in which your employment with the Company is based, under AAA rules for employment disputes. For
all other disputes within the scope of subpart (i), the parties will submit the dispute, within 30 business days following service of
notice of such dispute by one party on the other, to AAA for prompt resolution in Salt Lake City, Utah, also under AAA rules for
employment disputes. In either case, there shall be a single arbitrator, chosen in accordance with AAA rules, who at such time shall
be on AAA’s Judicial Panel. If there are no AAA arbitrators in the applicable State, another arbitrator shall be selected from that State
or a neighboring State, but the arbitration will still be conducted in the State in which your employment with the Company is based.
The decision of the arbitrator will be final and binding upon the parties, and judgment may be entered thereon in accordance with
applicable law in any court having jurisdiction. The arbitrator shall have the authority to make an award of monetary damages and
interest thereon. The arbitrator shall have no authority to award, and the parties hereby waive any right to seek or receive, specific
performance or an injunction, punitive or exemplary damages, except that the arbitrator shall have authority to issue injunctive relief
to enforce the covenants in Sections 6 and 8, to the extent those covenants apply in the State in which your employment with the
Company is based. The arbitrator will have no authority to order a modification or amendment of these Standard Terms and
Conditions, except that if the arbitrator finds any covenant in Sections 5 and 7 of this agreement to be unenforceable as written, the
arbitrator shall deem the agreement amended in order to give each such covenant its maximum effect, to the extent permitted by law
in the State in which your employment with the Company is based. The arbitrator shall have the authority to award costs of
arbitration, including reasonable attorney’s fees, to the prevailing party, but in the absence of such award the parties shall bear their
own attorney and filing fees unless otherwise agreed upon mutually by the parties or required by law. The Company shall bear the
cost of the arbitrator’s fees.
(iii) Notwithstanding the foregoing, the Company may seek injunctive relief to enforce any one or more of the covenants set
forth in Sections 5 or 7 of these Terms and Conditions, in a court of competent jurisdiction, as set forth in Section 10 below. You
specifically agree that a court of competent jurisdiction may enter preliminary injunctive relief to restrain violations of any of the
covenants in Sections 5 or 7 of these Terms and Conditions, pending arbitration or other litigation. For the avoidance of doubt, this
provision only applies to the promises set forth in Sections 5 or 7, to the extent those Sections are applicable in the State in which
your employment with the Company is based.
9. SEVERABILITY
If any provision of these Standard Terms and Conditions is, becomes, or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction, such provision shall be construed or deemed amended or limited in scope to conform to applicable laws or, in the
discretion of the Company, it shall be stricken and the remainder of these Standard Terms and Conditions shall remain in force and
effect.
10. CHOICE OF LAW; JURISDICTION
All questions pertaining to the construction, regulation, validity, and effect of these Standard Terms and Conditions shall be
determined in accordance with the laws of the State of Utah, without regard to the conflict of laws doctrine, with the exception of
Sections 5 or 7. All questions pertaining to the construction, regulation, validity, and effect of Sections 5 or 7 shall be determined in
accordance with the laws of the State in which your employment with the Company is based. With respect to any claim or dispute
involving your Grant and/or these Standard Terms and Conditions that is not subject to the arbitration pursuant to Section 10 hereof,
other than those arising from Sections 5 or 7, you and the Company each hereby consent and submit to the personal jurisdiction and
venue of any state or federal court located in the county of Salt Lake City within the State of Utah and, recognizing the
appropriateness of the State of Utah for any such matters due to the Company being incorporated in Utah, you and the Company
hereby agree and consent to the state and federal courts located in the county of Salt Lake City within the State of Utah as the sole
and exclusive forum for resolution of any and all claims, causes of action or disputes arising out of or related to your Award and
these Standard Terms and Conditions (including all terms incorporated by reference into these Standard Terms and Conditions).
You and the Company further agree that, if any one or more of the provisions of Section 5 are determined to be unenforceable by
reason of it being overly broad, such provision shall be deemed to be modified to permit its enforcement to the maximum extent
permitted by law.
11. AMENDMENTS
The Plan and these Standard Terms and Conditions may be amended or altered by the Committee or the Company’s Board of
Directors to the extent provided in the Plan.
12. RESTRICTIONS ON RESALES OF SHARES
The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any
resales by you or other subsequent transfers by you of any Common Stock issued in respect of vested Stock Units, including without
limitation (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner
of sales by you and other holders and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers.
13. INCOME TAXES
The Company shall not deliver shares in respect of any Stock Units unless and until you have made satisfactory arrangements to pay
or otherwise satisfy all applicable tax withholding obligations. Unless you pay the tax withholding obligations to the Company by
cash or check in connection with the delivery of the Common Stock, withholding may be effected, at the Company’s option, by
withholding Common Stock issuable in connection with the vesting of the Stock Units (provided that shares of Common Stock may
be withheld only to the extent that such tax withholding will not result in adverse accounting treatment for the Company). You
acknowledge that the Company shall have the right to deduct any taxes required to be withheld by law in connection with the
delivery of the Stock Units from any amounts payable by it to you (including, without limitation, future cash wages).
14. NON-TRANSFERABILITY OF AWARD
You understand, acknowledge and agree that, except as otherwise provided in the Plan, the Stock Units may not be sold, assigned,
transferred, pledged or otherwise directly or indirectly encumbered or disposed of prior to the payment of the Common Stock to you
as provided in Section 4 hereof. Your beneficiaries and anyone claiming an interest in the Stock Units through you are subject to all
of the terms and conditions applicable to you, other than the covenants set forth in Section 5.
15. CLAWBACK AND RECOUPMENT
If you are or become a Covered Executive or Other Executive under the Company’s Policy for Recoupment of Certain
Compensation, you agree that your Award is subject to recoupment, including in connection with a financial restatement or any
detrimental conduct, pursuant to and in accordance with the Company’s Policy for Recoupment of Certain Compensation, as
amended from time to time, and pursuant to any other policy the Company may adopt pursuant to the Dodd-Frank Wall Street
Reform and Consumer Protection Act, other applicable law, or stock exchange listing standard. No recovery of compensation under
such a clawback policy shall be treated as an event giving rise to a right to terminate employment for “good reason” or “constructive
termination” (or any similar term) under any agreement with the Company. In addition, if you are or become a Covered Executive or
Other Executive under the Company’s Policy for Recoupment of Certain Compensation, you agree that that the Company shall not
indemnify you against any liability or loss (including without limitation the loss of any incentive-based compensation, any payment
or reimbursement for the cost of third-party insurance purchased by you to fund potential recovery obligations with respect to the
Company’s Policy for Recoupment of Certain Compensation, or any judgments, fines, taxes, penalties or amounts paid in settlement
by or on behalf of you) incurred by you in connection with or as a result of any action taken by the Company to enforce the terms of
the Company’s Policy for Recoupment of Certain Compensation (a “Clawback Proceeding”), or provide any indemnification or
advancement of expenses (including attorneys’ fees) incurred by you in connection with any such Clawback Proceeding.
16. LIMITATION OF INTEREST IN SHARES SUBJECT TO STOCK UNITS
Neither you (individually or as a member of a group) nor any beneficiary or other person claiming under or through you shall have
any right, title, interest, or privilege in or to any shares of Common Stock allocated or reserved for the purpose of the Plan or the Key
Employee Continuity Plan, or subject to the Grant Notice or these Standard Terms and Conditions, except as to such shares of
Common Stock, if any, as shall have been issued to such person upon vesting of the Stock Units, which shares shall remain subject to
the conditions set forth in these Standard Terms and Conditions. Nothing in the Plan, in the Key Employee Continuity Plan, in the
Grant Notice, in these Standard Terms and Conditions, or in any other instrument executed pursuant to the Plan shall confer upon
you any right to continue in the Company’s employ or service nor limit in any way the Company’s right to terminate your
employment at any time for any lawful reason.
17. OTHER AGREEMENTS SUPERSEDED
The Grant Notice, these Standard Terms and Conditions, the Plan and, as applicable, the Key Employee Continuity Plan constitute
the entire understanding between you and the Company regarding the Stock Units. Any prior agreements, commitments or
negotiations concerning the Stock Units are superseded.
18. REVIEW PERIOD/NOTICE FOR CERTAIN EMPLOYEES
IF YOU ARE EMPLOYED BY THE COMPANY IN THE STATE OF COLORADO AND ARE SUBJECT TO THE
RESTRICTIONS IN SECTIONS 5(E), (F) and (G), YOU ACKNOWLEDGE THAT YOU RECEIVED THIS AGREEMENT
BEFORE THE EARLIER OF ITS EFFECTIVE DATE OR THE EFFECTIVE DATE OF ANY ADDITIONAL COMPENSATION
OR CHANGE IN THE TERMS OR CONDITIONS OF EMPLOYMENT THAT PROVIDES CONSIDERATION FOR THE
COVENANTS IN THIS AGREEMENT. YOU ACKNOWLEDGE THAT YOU HAVE 14 CALENDAR DAYS FROM THE DAY
YOU RECEIVED THIS AGREEMENT TO REVIEW IT AND THAT YOU ARE ADVISED TO CONSULT LEGAL COUNSEL
PRIOR TO SIGNING IT.
IF YOU ARE EMPLOYED BY THE COMPANY IN THE DISTRICT OF COLUMBIA AS A “HIGHLY COMPENSATED
EMPLOYEE,” AS DEFINED IN SECTION 5(H), YOU ACKNOWLEDGE THAT YOU HAVE HAD AT LEAST 14 CALENDAR
DAYS BEFORE YOU BEGAN YOUR EMPLOYMENT TO REVIEW THIS AGREEMENT, OR IF YOU ARE A CURRENT
EMPLOYEE, 14 DAYS FROM THE DAY YOU RECEIVED THIS AGREEMENT TO REVIEW IT. PLEASE ALSO TAKE
NOTICE THAT THE DISTRICT’S BAN ON NON-COMPETE AGREEMENTS AMENDMENT ACT OF 2020, AS
AMENDED LIMITS THE USE OF NON-COMPETE AGREEMENTS. IT ALLOWS EMPLOYERS TO REQUEST NON-
COMPETE AGREEMENTS FROM HIGHLY COMPENSATED EMPLOYEES, AS THAT TERM IS DEFINED IN THE BAN ON
NON-COMPETE AGREEMENTS AMENDMENT ACT OF 2020, AS AMENDED, UNDER CERTAIN CONDITIONS. IF YOU
MEET THE COMPENSATION THRESHOLDS SET FORTH IN SECTIONS 5(E) AND (G), THE COMPANY HAS
DETERMINED THAT YOU ARE A HIGHLY COMPENSATED EMPLOYEE. FOR MORE INFORMATION ABOUT THE BAN
ON NON-COMPETE AGREEMENTS AMENDMENT ACT OF 2020, AS AMENDED, CONTACT THE DISTRICT OF
COLUMBIA DEPARTMENT OF EMPLOYMENT SERVICES (DOES).
IF YOU ARE EMPLOYED BY THE COMPANY IN THE STATE OF ILLINOIS, YOU ACKNOWLEDGE THAT YOU HAVE
AT LEAST 14 CALENDAR DAYS FROM THE DAY YOU RECEIVED THIS AGREEMENT TO REVIEW IT AND THAT YOU
ARE ADVISED TO CONSULT LEGAL COUNSEL PRIOR TO SIGNING IT.
IF YOU ARE EMPLOYED BY THE COMPANY IN THE COMMONWEALTH OF VIRGINIA, YOU ACKNOWLEDGE THAT
YOU HAVE BEEN PROVIDED A COPY OF THIS AGREEMENT AT LEAST THREE BUSINESS DAYS BEFORE THE
DEADLINE TO SIGN THIS AGREEMENT.
IF YOU ARE EMPLOYED BY THE COMPANY IN THE STATE OF WASHINGTON, YOU ACKNOWLEDGE THAT IF THIS
AGREEMENT IS ENTERED INTO AFTER THE START OF YOUR EMPLOYMENT, YOU RECEIVED INDEPENDENT
CONSIDERATION FOR ENTERING INTO THIS AGREEMENT. IF YOU ARE A NEW EMPLOYEE, YOU ACKNOWLEDGE
THAT YOU HAVE RECEIVED THIS AGREEMENT OR A WRITTEN DESCRIPTION OF ITS COVENANTS NO LATER
THAN THE TIME OF THE INITIAL ORAL OR WRITTEN ACCEPTANCE OF THE OFFER OF EMPLOYMENT.
Exhibit 19
Union Pacific Corporation
Confidentiality And Insider Trading Policy
This Policy applies to all employees, executives and directors (all such persons are referred to as “Company Persons”) of Union Pacific
Corporation and its subsidiaries (the “Company”), as well as members of their immediate family, and Controlled Entities, all as explained
and defined in Part IV of this Policy (all such persons subject to this Policy are referred to as “Covered Persons”).
I.
Confidential Information
A. General Statement
All Company Persons are expected to maintain in strict confidence all information about the Company gained in the course of their
duties. Such information may not be used for personal advantage or for the benefit of others. These same restrictions apply to
information learned about customers, suppliers, competitors and other companies in the course of work for the Company.
Company Persons with access to “material nonpublic information” (as defined in Part IV of this Policy) should distribute such
information within the Company only on a strict “need to know basis” and should not provide such information to any person outside of
the Company unless expressly authorized to do so by one of the Company’s executive officers or legally mandated.
Company Persons, other than specifically designated persons, should not respond to inquiries from the investment community, which
includes shareholders, investors, securities analysts, institutional investors, investment advisers, investment companies and related
persons. Any such inquiries should be directed to Bradley Stock, Assistant Vice President---Investor Relations, at (402) 544-4227.
II. Insider Trading
A. General Statement
No Company Person may purchase, sell, gift, or otherwise engage in a transaction in the securities of a company at any time when the
person has material nonpublic information about that company learned in the course of their work with Union Pacific. No Company
Person may communicate material nonpublic information to a third party or suggest that anyone purchase, sell, gift, or otherwise
engage in a transaction in any company’s securities (i.e., “tipping” information) while aware of material nonpublic information about
that company learned in the course of their work with Union Pacific. These restrictions on “insider trading” and “tipping” are not limited
to Company securities, but also include trading in the securities of other companies, such as customers, suppliers, and competitors of
the Company, when the person is in possession of material nonpublic information relevant to the other company as a result of the
Company Person’s employment or relationship with the Company. The foregoing restrictions apply to a Company Person’s immediate
family members and Controlled Entities to the same extent that they apply to the Company Person.
These restrictions apply to stock market as well as off-market transactions, including transactions in securities held in a brokerage
account or within the Company’s 401(k) or similar thrift plans, as well a gifts or donations of securities. With respect to Company
securities, these restrictions on insider trading are applicable to the Company’s common stock, options to purchase or sell or other
“derivative securities” with a value tied to that of the Company’s common stock (regardless of
whether the option was issued by the Company or is a market-traded option), and any other type of securities that the Company may
issue, such as preferred stock, convertible debentures and warrants.
B. Additional Guidelines and Restrictions
Additional guidelines and restrictions are discussed in Part V of this Policy. All Covered Persons are subject to the prohibition on hedging
transactions and short sales set forth in Part V, Section B. Members of the Union Pacific Board of Directors and certain executives and
other employees who are so designated and notified from time to time by electronic communication from the Company’s Stock
Administration Department and/or the Law Department, as well as their Family Members and Controlled Entities (all such persons and
entities, “Restricted Persons”) are subject to additional restrictions as set forth in Part V, Section C. Members of the Union Pacific Board
of Directors and executives who are subject to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as
well as their Family Members and Controlled Entities (all such persons and entities, “Section 16 Persons”) and certain other Restricted
Persons are further subject to the restrictions set forth in Part V, Sections D through G.
III. Compliance and Certification
A. Consequences of Violation
Violations of this Policy may subject a Covered Person to disciplinary action including, in appropriate circumstances, termination of
employment. In addition, violations of this Policy may result in prosecution by the SEC or criminal prosecution by the Department of
Justice. The SEC may seek substantial civil penalties against a person who engages in insider trading or tipping. Any person who violates
the federal insider trading laws, including by tipping another person who trades, may have to pay penalties and civil fines of up to three
times the profit gained or loss avoided by such trading. The Company may also face civil penalties for employees’ insider trading
violations. In addition, insider trading can result in criminal fines and imprisonment. The SEC and several U.S. Attorneys’ offices in recent
years have been vigorously enforcing the insider trading laws against both individuals and institutions, including cases involving a
relatively small number of shares where the violation resulted in little or no profits.
B. Certification
Restricted Persons and certain other employees are required annually to certify their understanding of and agreement to comply with
this Policy.
IV. Definitions and Scope of This Policy
A. Covered Persons
All persons subject to this Policy are referred to as “Covered Persons”. This Policy applies to:
•
“Company Persons,” defined as all employees, executives and directors of Union Pacific Corporation and its subsidiaries;
•
“Family Members,” which means any family member of a Company Person who resides with the Company Person (including a
spouse, a child, stepchildren, grandchildren, parents, stepparents, grandparents, siblings and in-laws), anyone else who lives in a
Company Person’s household (other than household employees), and any family members who do not live in their household
but whose transactions in Company securities are directed by a Covered Person or are subject to a Covered Person’s influence or
control, such as parents or children who consult with you before they trade in Company securities (collectively referred to as
“Family Members”); and
2
•
“Controlled Entities,” which means any corporation, partnership, trust or other entity controlled, influenced or managed by a
Company Person or their Family Members.
B. Definition of Material Nonpublic Information
Information about the Company is considered material if there is a substantial likelihood that a reasonable investor would:
consider the information important in making an investment decision; or
view the information as significantly altering the total mix of information about the Company available in the marketplace.
Either positive or negative information may be material. Under these standards, Company information that may be material includes,
but is not limited to:
information about earnings, revenues or capital expenditures, including any updates or reaffirmations of such information that was
previously disseminated to the public and any unexpected financial results or unpublished financial reports or projections;
new and substantial products or contracts, or significant developments regarding significant customers or suppliers;
significant changes in product offerings, or price changes;
interruption of operations or other aspects of the business due to an accident, fire, natural disaster, breakdown of labor negotiations
or any major shutdowns;
service metrics and volume data (other than those made available publicly through the American Association of Railroads or the
Surface Transportation Board, including any internal alternative calculations of publicly available metrics);
information about new and significant operational initiatives or similar plans, and the proposed implementation schedules for such
initiatives and plans;
information regarding investors or potential investors, including nonpublic information regarding meetings with investors and
investments in Company securities;
changes in control or in directors or senior management of the Company;
mergers, acquisitions, tender offers, joint ventures or other significant changes to Company assets;
major environmental incidents;
major marketing changes;
a cybersecurity incident, whether or not known to be critical or potentially significant;
changes in the Company’s auditors or a notification from its auditors that the Company may no longer rely on the auditors’ audit
report;
significant labor disputes;
institution of, or developments in, significant litigation, investigation, regulatory actions or governmental proceedings; and
major events regarding the Company’s securities, such as dividend policy changes, the declaration of a stock split, or the proposed or
contemplated issuance, redemption, or repurchase of securities.
Information about the Company is considered public once it has been distributed in a manner that makes it available to investors
generally and enough time has elapsed to permit the investment market to absorb and evaluate the information. Examples of public
dissemination include, but are not limited to, press releases, annual reports to shareholders and filings with the Securities and Exchange
Commission (“SEC”), such as Forms 10-K, 10-Q and 8-K. You should generally consider
3
information to be nonpublic until one full trading day has elapsed following public disclosure. A “trading day” is a day on which the New
York Stock Exchange is open for business. The fact that rumors, speculation, or statements attributed to unidentified sources are public is
insufficient to be considered widely disseminated even when the information is accurate.
V. Additional Guidelines and Restrictions
A. Post-Termination Transactions
Once you are no longer a Company Person, you and your Family Members and Covered Entities will cease to be subject to this Policy.
However, the laws that prohibit insider trading will continue to apply, and if you possess material nonpublic information about the
Company or another company that you obtained in the course of your work with Union Pacific, you and your Family Members and
Covered Entities should not trade that company’s securities.
B. Restrictions on Hedging and Short Sales
Covered Persons are prohibited from hedging activities relating to the Company’s securities, such as (i) buying, selling or writing puts,
calls or options related to the Company’s common stock and (ii) executing straddles, equity swaps and similar derivative arrangements
that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company’s common stock. In addition, if
you are aware of material nonpublic information about another company that you learned in the course of working for Union Pacific,
you are prohibited from engaging in any transaction involving hedging activities, such as (x) buying, selling or writing puts, calls or
options involving or related to that other company’s securities and (y) executing straddles, equity swaps and similar derivative
arrangements involving or related to that other company’s securities. Covered Persons are also prohibited from engaging in short sales
of Company securities (i.e., sales of securities that are not then owned), including a “sale against the box” (a sale with delayed delivery).
C. Blackout Periods
Restricted Persons are required to comply with additional trading restrictions. Restricted Persons may only trade in Company securities
during an “Open Window Period.” The Open Window Period will be communicated to Restricted Persons each quarter. However, even if
there is an Open Window Period, Restricted Persons may not trade in Company securities if they are aware of material nonpublic
information about the Company.
Generally, all pending purchase and sale orders or other transactions involving Company securities that could be, but have not been,
executed during the Open Window Period must be cancelled before it closes, unless those transactions are scheduled to occur under an
approved Rule 10b5-1 Trading Plan. In addition, unless otherwise approved by the Chief Legal Officer or VP Law – Finance and
Compliance, or other comparable executive responsible for securities compliance (the “Designated Officer”), Restricted Persons should
not make any election outside of the Open Window Period under any employee benefit plan that will result in a transaction in Company
securities, including any election to change the amount that is contributed to or held in Company stock under the Company’s 401(k) plan
or similar thrift plans.
From time to time the Company may impose a blackout on transactions outside of the Open Window Period due to developments
involving material nonpublic information. In such events, the Company will notify particular individuals that they should not engage in
any transactions involving the purchase or sale of Company securities and should not disclose to others the fact that the trading blackout
has been imposed.
D. Preclearance
The Company requires Section 16 Persons and other executive officers who have been notified that they are subject to this provision to
contact the Chief Legal Officer or VP Law – Finance and Compliance, or other comparable executive responsible for securities compliance
(the “Designated Officer”) in advance of the Restricted Person effecting any purchase, sale, gift, or other transaction involving Company
securities, including a stock plan transaction such as an option exercise, transfers to or
4
from a trust, or any other transfer, and obtain prior approval of the transaction from the Designated Officer. Requests should be
submitted to the Designated Officer at least two trading days in advance of the proposed transaction. The Designated Officer will then
determine whether the transaction may proceed. This preclearance policy applies even if the Restricted Person is initiating a transaction
during an Open Window Period.
If a transaction is approved under the preclearance policy, the transaction should be entered into within five trading days after the
approval is obtained, but regardless may not be executed if the Restricted Person acquires material nonpublic information concerning
the Company before engaging in the transaction. If a transaction is not effected within the period described above, the transaction must
be approved again before it may be executed.
If a proposed transaction is not approved under the preclearance policy, the Restricted Person should refrain from initiating any
transaction in Company securities and should not inform anyone within or outside of the Company of the restriction.
E. Sales of Company Common Stock
The Company requires sales or transfers by Section 16 Persons and other executive officers who have been notified that they are subject
to this provision to occur pursuant to an Exchange Act Rule 10b5-1 Trading Plan that satisfies the restrictions in Appendix A, “Guidelines
for Rule 10b5-1 Trading Plans,” unless the Designated Officer grants an exception. Shares of common stock or units representing
ownership of the Company’s common stock owned by Executives in any Company 401(k) plan (or similar thrift plans) are exempt from
the requirements set forth in this Section E and, therefore, such shares or units may be sold or transferred without establishing a Rule
10b5-1 Trading Plan. However, any such sale or transfer must be pursuant to an election or instruction that is (i) made during an Open
Window Period and when such Executive is not in possession of material nonpublic information regarding the Company, and (ii) pre-
cleared by the Designated Officer.
F. Restrictions on Discretionary Trading by Third Party Managers
In order to avoid inadvertent violations of the insider trading laws, Section 16, and Company policies, Section 16 Persons and other
executives who are subject to the preclearance requirements set forth in Section D above should deliver written instructions to any third
party broker or investment advisor or manager who has authority to execute trades on their behalf (including under any “managed
account”) expressly prohibiting their broker or advisor from executing transactions involving Company common stock in or for the
benefit of any account owned by, or attributable to, them without first obtaining their consent to any such transaction. Section 16
Persons and others subject to the preclearance requirements should satisfy those notice and pre-clearance requirements discussed
above prior to consenting to any such transaction.
G. Restrictions on Pledging Company Securities
Section 16 Persons may not pledge, deliver as collateral, or otherwise subject to a security interest any shares (restricted or otherwise)
of Company common stock or options or other rights to acquire such stock. The foregoing also expressly prohibits the pledge or delivery
of Company common stock or options or other rights to acquire such stock to open or maintain any margin or similar account. All of
these arrangements may result in a sale of Company common stock without notice to, or consent of, the Section 16 Person. Such
involuntary sales could result in short-swing profit liability under Section 16 of the Securities Exchange Act or violate this Policy, the
insider trading provisions of the Exchange Act, or certain provisions of the Exchange Act adopted pursuant to the Sarbanes-Oxley Act of
2002.
Shares of Company common stock owned by executives who are not Section 16 Persons that exceed an executive’s stock ownership
target may be pledged, although the Company cautions executives from entering into such transactions, and any such pledge should not
represent a significant amount of an executive’s holdings of Company common stock. Pledged Company common stock is not included in
overall stock ownership shares and significant pledging of Company common stock may be considered a governance risk or oversight
failure, which could result in negative implications to the Company.
5
VI. Questions
Any questions about this Policy should be directed to:
VP Law – Finance and Compliance
Union Pacific Corporation
1400 Douglas Street, Stop 1580
Omaha, Nebraska, 68179
or (402) 544-3440
Last Updated: October 1, 2024
Last Reviewed: October 1, 2024
6
Appendix A
Guidelines for Rule 10b5-1 Trading Plans
As discussed in the Policy, Rule 10b5-1 provides an affirmative defense from insider trading liability. All Section 16 Persons and other
executive officers who have been notified that they are subject to the requirements in Part V, Section E of the Policy may sell or
otherwise transfer shares of Company common stock in the open market or to another person or entity only pursuant to an Exchange
Act Rule 10b5-1 trading plan that satisfies the following restrictions, unless the Chief Legal Officer or VP Law – Finance and Compliance,
or other comparable executive responsible for securities compliance (the “Designated Officer”) grants an exception. Capitalized terms
used in these guidelines without definition have the meaning set forth in the Policy.
These guidelines are in addition to, and not in lieu of, the requirements and conditions of Rule 10b5-1. The Designated Officer will
interpret and administer these guidelines for compliance with Rule 10b5-1, the Policy and the requirements below. No personal legal or
financial advice is being provided by the Designated Officer regarding any Rule 10b5-1 Trading Plan or proposed trades. Restricted
Persons remain ultimately responsible for ensuring that their Rule 10b5-1 Trading Plans and contemplated transactions fully comply with
applicable securities laws. It is recommended that Restricted Persons consult with their own attorneys or other advisors about any
contemplated Rule 10b5-1 Trading Plan. Note that for any Section 16 Person, the Company is required to disclose the material terms of
his or her Rule 10b5-1 Trading Plan (and may be required to disclose the material terms of Rule 10b5-1 Trading Plans of Family Members
and Controlled Entities of such persons), other than with respect to price, in its Form 10-K or Form 10-Q for the quarter in which the
Rule 10b5-1 Trading Plan is adopted, as well as disclosing any termination or modification of a Rule 10b5-1 Trading Plan.
1.
The Rule 10b5-1 Trading Plan must be reviewed and approved in advance by the Designated Officer. It is recommended that you
submit Rule 10b5-1 Trading Plans to the Designated Officer several days prior to when you plan to enter into the plan to allow for
review and preclearance in accordance with the procedures set forth in the Policy and these guidelines. The Company may
require use of a standardized form of Rule 10b5-1 trading plan.
2.
All Executive Officers and other Restricted Persons subject to the Company’s stock ownership guidelines may sell or otherwise
transfer shares of Company common stock in the open market or to another person or entity only if they have satisfied the
applicable ownership target set forth in the stock ownership guidelines, and may only sell shares of Company common stock that
exceed their ownership target (“Eligible Shares”).
3.
Eligible Shares may only be sold or transferred pursuant to a written Exchange Act Rule 10b5-1 trading plan that:
(i) is adopted during an Open Window Period, when a trading blackout is not in effect and when such Executive is not in
possession of material nonpublic information regarding the Company,
(ii) has been reviewed and approved by the CLO or VP Law – Finance and Compliance,
(iii) complies with the requirements of Rule 10b5-1(c) of the Exchange Act,
(iv) provides that no transaction will occur until the applicable “cooling off” period under Rule 10b5-1(c)(1)(ii)(B) is satisfied
(generally, for Section 16 Persons, at least 91 days from the date the trading plan is entered into, and for others, at least 31 days
from the date the trading plan is entered into),
(v) provides that the plan was entered into in good faith and cannot be suspended, modified, or terminated without approval
from the Designated Officer, and
(vi) provides that no more than 50% of the shares to be sold under the trading plan can be sold in any one calendar week.
4.
The total sales of Eligible Shares during any calendar year may not exceed 50% of the total shares of Company common stock
beneficially owned by the person entering into the trading plan, using the immediately preceding
7
February 1 as the measurement date. For purposes of these guidelines, the number of shares beneficially owned will be
calculated in accordance with the Company’s stock ownership guidelines.
5.
Modifications, amendments and terminations of an existing Rule 10b5-1 Trading Plan are strongly discouraged due to legal risks,
and can affect the validity of trades that have taken place under the plan prior to such modification, amendment or termination.
If a Restricted Person is considering any modification or amendment to or termination of a Rule 10b5-1 trading plan, that person
should consult with the Designated Officer in advance. Any modification, amendment or termination of an existing Rule 10b5-1
Trading Plan must be reviewed and approved in advance by the Designated Officer in accordance with preclearance procedures
set forth in the Policy and these guidelines.
st
8
Exhibit 21
SIGNIFICANT SUBSIDIARIES OF UNION PACIFIC CORPORATION
Name of Corporation
State of Incorporation
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, Registration Statement No. 333-252947, and Registration Statement No. 333-277044 on Form S-3 of our reports dated
February 7, 2025, 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, 2024.
/s/ Deloitte & Touche LLP
Omaha, Nebraska
February 7, 2025
Exhibit 24
UNION PACIFIC CORPORATION
Powers 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 the Company’s Annual Report on
Form 10-K, for the year ended December 31, 2024, and any and all amendments thereto, and to file 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 6, 2025.
/s/ William J. DeLaney
/s/ Michael R. McCarthy
William J. DeLaney
Michael R. McCarthy
/s/ David B. Dillon
/s/ Doyle R. Simons
David B. Dillon
Doyle R. Simons
/s/ Sheri H. Edison
/s/ John K. Tien Jr.
Sheri H. Edison
John K. Tien, Jr.
/s/ Teresa M. Finley
/s/ John P. Wiehoff
Teresa M. Finley
John P. Wiehoff
/s/ Deborah C. Hopkins
/s/ Christopher J. Williams
Deborah 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 fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with 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 all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange 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 designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, 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;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this 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 the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially 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 over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: February 7, 2025
/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 fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with 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 all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange 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 designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, 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;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this 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 the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially 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 over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: February 7, 2025
/s/ Jennifer L. Hamann
Jennifer L. Hamann
Executive Vice President and
Chief Financial Officer
Exhibit 32
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 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 period ending
December 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, V. James Vena, Chief
Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted 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 of operations of the
Corporation.
By:
/s/ V. James Vena
V. James Vena
Chief Executive Officer
Union Pacific Corporation
February 7, 2025
A signed original of this written statement required by Section 906 has been provided to the Corporation and will be retained by the
Corporation and furnished to the Securities and Exchange Commission or its staff upon request.
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 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 period ending
December 31, 2024, 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, as adopted 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 of operations of the
Corporation.
By:
/s/ Jennifer L. Hamann
Jennifer L. Hamann
Executive Vice President and
Chief Financial Officer
Union Pacific Corporation
February 7, 2025
A signed original of this written statement required by Section 906 has been provided to the Corporation and will be retained by the
Corporation and furnished to the Securities and Exchange Commission or its staff upon request.