CSX CORPORATION (NASDAQ:CSX) Files An 8-K Costs Associated with Exit or Disposal Activities

Item2.05. Costs Associated with Exit or Disposal Activities.

On February21, 2017, CSX Corporation (CSX or the Company)
approved and commenced a management streamlining and realignment
plan that is expected to deliver at least $175million in annual
productivity savings. The management streamlining plan is
expected to impact up to 1,000 employees, representing over
20percent of CSXs management workforce.

Implementation of this plan is expected to be substantially
completed by mid-March 2017 and is projected to result in a
pretax charge of at least $160million related to
employee-termination benefits, including expenses for cash
severance costs, pension expenses and expenses for acceleration
of equity compensation. This streamlining charge will fluctuate
depending on final calculation of individual employee benefits.
The projected pretax charge includes approximately $90million of
cash expenditures related primarily to one-time severance costs.
CSX expects the majority of this charge will be recognized during
the first quarter of 2017.

The foregoing contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act. These
forward-looking statements include the size of the management
streamlining plan, the amount and timing of the related charges
and the anticipated future productivity savings. Statements
regarding future events are based on CSXs current expectations
and are necessarily subject to associated risks related to the
completion of the management streamlining plan in the manner
anticipated by CSX. Readers are cautioned that these
forward-looking statements are only predictions and may differ
materially from actual future events or results due to a variety
of factors, including CSXs ability to achieve the benefits of the
announced management streamlining plan, the time required to
successfully implement the management streamlining plan and
changes in the assumptions on which the plan is based. For more
information related to risks facing CSX, please see Risk Factors
in Part I, Item 1A of CSXs Annual Report on Form 10-K, filed with
the Securities and Exchange Commission on February14, 2017 and
CSXs other public filings and press releases. Forward-looking
statements speak only as of the date they are made, and CSX
undertakes no obligation to update or revise any forward-looking
statement. If CSX updates any forward-looking statement, no
inference should be drawn that CSX will make additional updates
with respect to that statement or any other forward-looking
statements.

Forward-looking statements are subject to a number of risks and
uncertainties, and actual performance or results could differ
materially from that anticipated by any forward-looking
statements. Factors that may cause actual results to differ
materially from those contemplated by any forward-looking
statements include, among others: (i)CSXs success in implementing
its financial and operational initiatives; (ii)changes in
domestic or international economic, political or business
conditions, including those affecting the transportation industry
(such as the impact of industry competition, conditions,
performance and consolidation); (iii) legislative or regulatory
changes; (iv)the inherent business risks associated with safety
and security; (v)the outcome of claims and litigation involving
or affecting CSX; (vi)natural events such as severe weather
conditions or pandemic health crises; and (vii)the inherent
uncertainty associated with projecting economic and business
conditions.

Item5.02. Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.

Consistent with its past practices, in February, the Compensation
Committee approved and adopted the Companys new three year
long-term incentive program. Specifically, on February22, the
Compensation Committee approved the CSX 2017-2019 Long-Term
Incentive Plan (the 2017-2019 Plan), that seeks to motivate and
reward certain employees.The program is comprised of three
componentsPerformance Units, Restricted Stock Units and Stock
Optionswhich account for 50%, 25% and 25% of the awards,
respectively.The Performance Units, Restricted Stock Units and
Stock Options were awarded as set forth next to each executives
name in the table below.

to the 2017-2019 Plan, the Company awarded Performance Units with
potential payouts ranging from zero to 200% of the target awards
depending on Company performance against predetermined
goals.Performance Units will be paid out, if earned, in the form
of shares of CSX common stock in early 2020, after the conclusion
of the three-year performance cycle.Payouts for certain
executives are subject to downward adjustment by up to 30% based
upon total shareholder return relative to specified comparator
groups.

Payouts of the Performance Units will be based on the achievement
of goals related to Operating Ratio (OR) and Return on Assets
(ROA), with each measure excluding nonrecurring items as
disclosed in the Companys financial statements.The 2017-2019
cycle will measure cumulative OR and average ROA from the
beginning of 2017 through the end of 2019.OR and ROA will each
comprise 50% of the total payout opportunity for participants and
each will be measured independently of the other.OR is defined as
operating expense divided by operating revenue. ROA will be
calculated using tax-adjusted operating income divided by net
property, which is defined as gross property less accumulated
depreciation.

to the 2017-2019 Plan, Restricted Stock Units and Stock Options
generally will vest on February22, 2020.The Restricted Stock
Units will be settled by delivery of a number of shares of CSX
common stock equal to the number of Restricted Stock Units
granted.Unexercised Stock Options will expire on February22,
2027.

Consistent with past practices, the number of Performance Units
and Restricted Stock Units was based on the average closing price
of CSX common stock for November 2016,December 2016 and January
2017, which was $37.22.The number of Stock Options was calculated
based on the Black-Scholes value of $8.43 which, consistent with
past practices, was determined using the average closing price of
CSX common stock for November 2016, December 2016 and January
2017, which was $37.22. The exercise price of $48.39 is based on
the closing price of CSX common stock on the date of grant.The
foregoing description of the awards made to the 2017-2019 Plan is
qualified in its entirety by reference to the 2017-2019 Plan,
which is attached to this Current Report on Form 8-K as Exhibit 10.1, and
incorporated herein by reference.