Is CSX going to sell?

Noel Weaver wrote:"Crazy Nip", I put in plenty of 60 and 80 weeks in my extra list days and
with little or no time and one half, even today, most railroaders except on
local freights, traveling switchers and yard jobs do not get time and one
half except for the railroads that pay completely by the hour. Most of the
larger railroads do not want to go to an hourly pay system as then they
would have to pay out huge amounts of time and one half, holiday pay for
all and some other goodies that they can avoid today. I have worked
under both the mileage pay setup and hourly pay setup and have done
reasonably well either way.

let me re-phrase. out here in the real world, FLSA exempt (AKA: salaried) employees dont get ANY pay above 40 hours, no matter the hours worked. Not no time and a half, NO PAY. Not even straight pay above 40 hours. Period.

I venture to guess you never had to do this as a railroad employee...

Noel Weaver wrote:One more point, the railroads (at least CSX and some of the others too) are
always crying about their return on investment and operating ratio but
they continue to pay executives six and seven figure salaries and benefit
packages that are way out of proportion to what these people actually
accomplish. A salary of millions, stock options, generous retirement
package and very lucrative contracts benefit nobody except the executive
who gets a contract like that. The railroad then turns around when the
unions ask for air conditioning on all the engines, decent toilets, better
cabs, pay increases etc and throw this back.

most large companies drastically overpay their top executives (the CxO title people...). Railroads are no different than any other industry. Somehow most of them seem to get by

I think corporate compensation is absurd, most executives are not worth the ammount of money they recieve in pay, perks, etc. But that is the current corporate culture

CSX and UP are no different than say, Verizon or AT&T or proctor and gamble when it comes to this.

The rank and file workers in those companies im sure resent them for that as well, so dont think you are unique when it comes to this

crazy_nip wrote:out here in the real world, FLSA exempt (AKA: salaried) employees dont get ANY pay above 40 hours, no matter the hours worked. Not no time and a half, NO PAY. Not even straight pay above 40 hours. Period.

I venture to guess you never had to do this as a railroad employee...

In my 12+ years as a railroad manager (non-agreement positions) I was never paid anything more than 40 hours a week, no matter how many actual hours I put in. That's just part of being a salaried employee.

crazy_nip wrote:

AmtrakFan wrote:Uh if we didn't have Conrail we'd have no Chicago-Boston direct route. All of the PC would be gone.

that is an assumption based on very little fact...

if there was no conrail, the railroads would have been liquidated and the existing railroads would have bought the various systems piecemeal, at very much reduced prices and would have had the option to renegotiate labor contracts at favorable rates/concessions

like what happened to the rock island and milwaukee road when they went bankrupt...

I wouldnt expect you to know anything about this since you werent even alive when any of this went down...

the C&O and N&W and likely Southern would have ended up with big pieces of the various railroads. Perhaps even the ATSF would have tried to get in on the action, the EL would have been a perfect match for them

the N&W would have likely bought a good hunk of the PRR and C&O would have likely tried to get a big part of the NYC and / or EL

some lines would have been lost, but likely not as much as ended up being lost due to conrail

Amtrak would have ended up with the NEC, like they ended up getting anyway

Mr. Nip,
I read a ton of book so I know what I am talking about.

AmtrakFan wrote:Mr. Nip,
I read a ton of book so I know what I am talking about.

fascinating...

Saying that Conrail should have never been is like yelling down a well. The fact is that in 1973, political and economic realities (or at least percieved realities) pointed toward a revitalization of northeastern railroads. Could it have been done differently or better? Certainly. But it wasn't. Accepting reality is a key component of psychological health!

All in all, the Conrail situation ended up much better than many predicted. Conrail shareholders made out very well, actually -- thank you very much Dave LeVan. CSX and NS were foolish to pay what they did for a franchise that was actually slowly going out of business.

This was a continuation of what has faced railroads in that part of the country for many years -- namely, not enough revenue to justify the value (and the capital maintenance) of the assets held to make the revenue. The only solution is to sell assets that are marginal in this regard.

CSX is facing the same situation. Marginal branches and lines will be sold, I would guess. Until a method for acquiring a lot more revenue comes along, CSX will shrink physically. Or be absorbed by a larger fish (UP?).

Outrageous executive salaries burn my butt, too, but that subject's a red herring in the grand scheme of things. If you add up the real numbers, you see that these salaries are miniscule compared to everything else on the balance sheet. Sorry, but it's true. Why does Joe Paterno make millions when the average Penn State professor (who actually educates students -- the product the school is supposed to put out) makes so much less? I mean really -- why? Does anyone know?

LCJ wrote:Why does Joe Paterno make millions when the average Penn State professor (who actually educates students -- the product the school is supposed to put out) makes so much less? I mean really -- why? Does anyone know?

thats actually a bad example... when you consider the ammount of money that college football brings in to universities annually (at least top 25 division 1 football), the coach's salary (paid ENTIRELY by boosters, albeit indirectly) pales in comparaison. The average college professor may get a big grant or research contract every few years, but they dont bring in the revenue to the schools like football does

Particularly, even though Penn State football is one of the laughing stocks of the Big 10 conference, they still bring in money hands over fist. The stadium is always sold out and the big money, the booster money just flows in from millionaire grads willing and able to give money back to the university in a vain attempt to relive past glory.

Yesterday's beer guzzling jock is now a millionaire willing to get drunk 12 weekends a year and spend more money doing it than most people MAKE in a year...

EDIT: back on the point of executive compensation. The same analogy cannot be made in comparaison to CEO, Chairmen of the board, etc. They are dead weight to some extent. Sure they are able to use their good old buy network they have built up to get favorable outcomes out of business deals to some extent, but not in the grand scheme of things

LCJ wrote:All in all, the Conrail situation ended up much better than many predicted. Conrail shareholders made out very well, actually -- thank you very much Dave LeVan. CSX and NS were foolish to pay what they did for a franchise that was actually slowly going out of business.

Im sure it did, they paid way too much for what they got, especially when you consider the initial price CSX was going to pay for the WHOLE thing and what they paid to get what they GOT...

not just the lines, but the ammount of JUNK motive power they got, a good hunk of which is already off the roster of BOTH rr's...

UP is in MUCH worse shape however. They have spun off thieir more proffitable divisions in recent years like CSX did in the mid 90's with sea-land

Actually, Conrail had a fairly decent fleet of locomotives during the 90's.
All of the troublesome "U" series GE's had departed (good riddance) and
the Alco's were long gone too (mixed feelings on these).
What remained were a good size fleet of SD-40-2's, GP-40-2's, SD-50's,
SD-60's both standard cab and wide cab, SD-80 Mac's (the only ones
anywhere) and the better GE's which were the dash eights. Most if not all
of the dash sevens are gone and while they had a lot of hard use on the
grades of the B & A, they were not really great engines and their time had
come to go.
Conrail had a decent fleet of GP-38's and GP-38-2's most of which are still
around, some SW-1500's which were fairly moden yard power and in
decent shape, SD-38's with slugs for the humps, GP-10's some with slugs
were also used at least well into the 90's.
There were plenty of former Conrail engines that both CSX and NS
thought were good for quite a few years to come and these can still be
seen around various areas. We even get them down here from time to
time.
I would be willing to bet that the overall average of Conrail's engines was
younger than CSX engines prior to the takeover as a whole.
Conrail's maintenance was as good as any in the business, Altoona could
and did assemble new engines, totally rebuild old ones and could do major
wreck work as well.
I ran engines from just about every railroad between Selkirk and Buffalo
and Conrail's took a back seat to NONE of them so far as maintenance was concerned.
Noel Weaver

From the UTU Web site:

CREWS 'DISSED' AS CEOS ROLL IN DOUGH

Union Pacific Railroad, which, along with other carriers wants give-backs from its train and engine service employees, has a different opinion regarding its board of directors and its chairman.
Union Pacific thinks its directors should be paid more just to be honest. Honest!

And despite Union Pacific's well-publicized service failures, its chairman, Dick Davidson, was awarded a huge stock option.

For sure, you will use up most of your fingers counting the figures in a CEO's annual pay. BNSF Chairman Matt Rose received total compensation of about $13 million last year -- although he might complain it wasn't all cash. He's correct. Some of it was the value of country club memberships and the use of BNSF's corporate jet.

But let's return to Union Pacific, for now. According to Traffic World magazine, Union Pacific has boosted the pay of its outside board members by between $30,000 and $20,000 annually -- to as much as $130,000 each -- "to reflect their heightened responsibilities under the 2002 Sarbanes-Oxley Act."

The Sarbanes-Oxley Act was passed by Congress in 2002 after the Enron and WorldCom financial scandals. Its purpose is to help ensure businesses don't commit financial fraud. In short, Sarbanes-Oxley requires that boards of directors make sure a company is honest and doesn't tell lies in its annual report.

Union Pacific said it has to pay its directors that much money "to ensure that the company continues to attract and retain qualified directors."

Well, how about qualified train and engine service crews? Union Pacific -- and all rail carriers, which continue to be short of qualified T&ES crews, and which have substantial difficulty attracting and retaining qualified new hires -- say they want concessions from those crews, according to their Section 6 notice that detail demands for a new contract.

As for UP Chairman Dick Davidson, he received 305,000 stock options at year-end 2004. The stock options permit him to purchase those shares at some time in the future at a fixed price of $65.10. On Friday, April 8, Union Pacific's share price was $68, meaning that if the share price doesn't climb further, Davidson could realize a tidy profit of $942,500 for those year-end stock options.

Not bad for the chairman of a company whose customers say its service -- pardon the crude term -- sucks.

What the devil is going on here?

Well, Davidson isn't the only railroad CEO rolling in big bucks. CEOs at BNSF, CSX and Norfolk Southern also are raking in big compensation while service suffers, operating crews struggle to keep trains moving and carriers demand concessions.

The fact, is, railroads are enjoying some of their biggest profits in more than a generation. Railroads are literally rolling in dough as they act like unregulated monopolies by raising prices and reducing capacity.

The Journal of Transportation Law, Logistics & Policy says rail prices seem to be "on steroids." Association of American Railroads President Ed Hamberger said, "Rail business is booming." Wall Street analyst Tony Hatch said that on Norfolk Southern alone, "earnings should grow about 20 percent" in 2005. "Never before have I seen such an opportunity" for all railroads to boost profits, Hatch said.

The fact is, most of the increased profits are being contributed by the rank-and-file employees the CEOs are dissing.

In 1975, labor costs consumed 53 percent of the railroads' operating revenue. Massive workforce reductions, forcing remaining employees to work considerably harder, resulted in labor costs tumbling to just 33 percent of operating revenue. Meanwhile, freight revenue ton-miles per employee soared from 690 in 1975, to almost 3,900 today. Productivity improvements, contributed by the rank-and-file, are absolutely phenomenal.

And that's not all.

Railroad Retirement reform, which was passed by Congress with rail labor's assistance, netted the railroads about $400 million more annually in profits. Railroads gained a second windfall when Congress voted to phase-out a 4.3 cents per gallon locomotive diesel-fuel tax -- also with the help of its rail labor unions. Those fuel-tax relief savings add up to about $170 million annually.

BNSF CEO Matt Rose said the combined savings from Railroad Retirement reform and fuel-tax relief is about $61 for each freight shipment -- more than doubling BNSF's net income per shipment.

So where is the money going? Certainly not to employees -- unless, of course, you are a top officer of the railroad.

Here is what railroad CEOs are earning, according to The New York Times:

BNSF CEO Matt Rose received total compensation in 2004 of $12.9 million.

CSX CEO Michael Ward received total compensation in 2004 of $2.1 million.

NS CEO David Goode received total compensation in 2004 of $11.2 million.

UP CEO Dick Davidson received total compensation in 2004 of $9.7 million.

By comparison, United Parcel Service CEO Michael Eskew -- whose company's service sets the standard by which other transportation giants are measured, and which has criticized the poor quality of rail service -- received 2004 total compensation of $1.7 million

Noel,
thanks for "fighting the good fight" for us rails. I have been out on the road, working. If you get any more information about that "welfare, unproductive, overpaid and featherbedding job please let me know. I'd like to put a bid in on it. lol

I believe that the precedents of the New York Dock Railway decision were overruled in cases where "entreprenureal" railroads acquired properties from Class I railroads (RailTex acq. of the CV Ry from CN)

I gladly accept the tough part of working on the railroad. There are a lot of folks out there that also enjoy the work ( but would never admit it!). I am a member of a union that represents an operating craft. I do believe that the protection of a union and the enforcement of an agreement goes a long way to protect me from the sometimes reckless behavior of a minority of railroad managers.

To LCJ I want to apologize for making an insulting remark about railroad managers. It was inappropriate, please accept my apology.

Being a union member does not mean that I am opposed to the company making profits or that I am careless in handling the company's business. Getting the job done right is not just an "early quit" it means, business delivered on time and done correctly the first time. Workers everywhere are being pressured to increase productivity, in our industry I believe the ability of a worker to stand up to bad management when appropriate is a good thing. We certainly cannot count on the FRA tp protect our health and well being!

I have really enjoyed reading this thread. Even though it went off topic, a lot of interesting points were brought up. Thanks,

SnoozerZ49 wrote:BNSF CEO Matt Rose received total compensation in 2004 of $12.9 million.

CSX CEO Michael Ward received total compensation in 2004 of $2.1 million.

NS CEO David Goode received total compensation in 2004 of $11.2 million.

UP CEO Dick Davidson received total compensation in 2004 of $9.7 million.

I have to agree -- their performance does not warrant their salaries/bonuses/stock options, etc.

If I owned significant shares in any of these companies, I would be inundating the boards with complaint-mail for sure. The only railroad stock I ever owned was as part of my 401k plan when I had no choice. Railroads, like airlines, are not a good investment in my opinion (for what that's worth!).

---Just a thought---

Imagine if CSX merged someday with Guilford Rail System. This would create a big entity from Maine to Virginia and as far west as Ohio, but I haven't heard of CSX mixing with GRS.

Any thoughts?

LCJ:

Just a thought but collectively these guys have consumed over $36 million in one year! That is a lot of clams for the quality of leadership these top executives contribute. $36 million can by a fair amount of infrastructure improvements!

Is anyone really worth that amount, I doubt it. I think it is a pervasive problem in all of American industry. Please tell me if I am wrong but I would guess more money is spent in top executive incomes than that spent on R&D in our economy.

I support noel weavers opinion about the railroad too. I like what i do and im pround but i do see some pretty horrible stuff like the stuff he mentioned and some stuff he didnt mention which im not gonna say cuase itll just open a can of worms for some. Im not a disgruntle worker ( well not yet 4 years and counting) im kinda just there riding along.