XML 24 R11.htm IDEA: XBRL DOCUMENT
v3.19.1

Share-Based Compensation | 3 Months Ended
--- | ---
Mar. 31, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Share-Based Compensation | Share-Based Compensation Under CSX's share-based compensation plans, awards consist of performance units, restricted stock awards, restricted stock units and stock options for management and stock grants for directors. Awards granted under the various programs are determined and approved by the Compensation Committee of the Board of Directors or, in certain circumstances, by the Chief Executive Officer for awards to management employees other than senior executives. The Board of Directors approves awards granted to CSX's non-management directors upon recommendation of the Governance Committee. Share-based compensation expense for awards under share-based compensation plans and purchases made as part of the employee stock purchase plan is measured using the fair value of the award on the grant date and is recognized on a straight-line basis over the service period of the respective award. Total pre-tax expense and income tax benefits associated with share-based compensation are shown in the table below. Income tax benefits include impacts from option exercises and the vesting of other equity awards.
| First Quarters
(Dollars in millions) | 2019 | 2018
Share-Based Compensation Expense: |  |
Performance Units | $ | 6 |  | $ | 6 |
Stock Options | 2 |  | 4 |
Restricted Stock Units and Awards | 2 |  | 1 |
Stock Awards for Directors | 2 |  | 2 |
Employee Stock Purchase Plan | 1 |  | — |
Total Share-Based Compensation Expense | $ | 13 |  | $ | 13 |
Income Tax Benefit | $ | 28 |  | $ | 8 |
NOTE 3. Share-Based Compensation, continued Long-term Incentive Plan On February 6, 2019, the Company granted approximately 300 thousand performance units to certain employees under a new long-term incentive plan ("LTIP") for the years 2019 through 2021, which was adopted under the CSX Stock and Incentive Award Plan. During first quarter 2018, approximately 350 thousand performance units were granted pursuant to the corresponding LTIP. Payouts of performance units for the cycle ending with fiscal year 2021 will be based on the achievement of goals related to both operating ratio and free cash flow, in each case excluding non-recurring items as disclosed in the Company's financial statements. The cumulative operating ratio and cumulative free cash flow over the plan period will each comprise 50% of the payout and will be measured independently of the other. Grants were made in performance units, with each unit representing the right to receive one share of CSX common stock, and payouts will be made in CSX common stock. The payout range for participants will be between 0% and 200% of the target awards depending on Company performance against predetermined goals. Payouts for certain executive officers are subject to formulaic upward or downward adjustment by up to 25%, capped at an overall payout of 225%, based upon the Company's total shareholder return relative to specified comparable groups over the performance period. The fair values of the performance units awarded during the quarters ended March 31, 2019 and March 31, 2018 were calculated using a Monte-Carlo simulation model with the following weighted-average assumptions:
| First Quarters
| 2019 | 2018
Weighted-average assumptions used: |  |
Annual dividend yield | 1.4 | % | 1.6 | %
Risk-free interest rate | 2.5 | % | 2.3 | %
Annualized volatility | 27.63 | % | 29.15 | %
Expected life (in years) | 2.9 |  | 2.9 |
Stock Options Also, on February 6, 2019, the Company granted approximately 843 thousand stock options along with the corresponding LTIP. The fair value of stock options on the date of grant was $17.45 per option, which was calculated using the Black-Scholes valuation model. These stock options were granted with ten-year terms and vest over three years in equal installments each year on the anniversary of the grant date. The exercise price for stock options granted equals the closing market price of the underlying stock on the date of grant. These awards are time-based and are not based upon attainment of performance goals. During first quarter 2018, approximately 950 thousand stock options were granted pursuant to the corresponding LTIP. NOTE 3. Share-Based Compensation, continued The fair values of all stock option awards during first quarters 2019 and 2018 were estimated at the grant date with the following weighted average assumptions:
| First Quarters
| 2019 | 2018
Weighted-average grant-date fair value | $ | 17.45 |  | $ | 14.62 |
Stock options valuation assumptions: |  |
Annual dividend yield | 1.3 | % | 1.5 | %
Risk-free interest rate | 2.6 | % | 2.6 | %
Annualized volatility | 25.8 | % | 27.0 | %
Expected life (in years) | 6.0 |  | 6.5 |
Other pricing model inputs: |  |
Weighted-average grant-date market price of CSX stock (strike price) | $ | 68.09 |  | $ | 54.07 |
Restricted Stock Units Finally, on February 6, 2019, the Company granted approximately 65 thousand restricted stock units along with the corresponding LTIP. The restricted stock units vest three years after the date of grant. Participants receive cash dividend equivalents on the unvested shares during the restriction period. These awards are time-based and are not based upon CSX's attainment of operational targets. For information related to the Company's other outstanding long-term incentive compensation, see CSX's most recent annual report on Form 10-K. During first quarter 2018, approximately 85 thousand restricted stock units were granted pursuant to the corresponding LTIP. Restricted stock units are paid-out in CSX common stock on a one-for-one basis. Employee Stock Purchase Plan In May 2018, shareholders approved the 2018 CSX Employee Stock Purchase Plan (“ESPP”) for the benefit of Company employees. The Company registered 4 million shares of common stock that may be issued pursuant to this plan. Under the ESPP, employees may contribute between 1% and 10% of base compensation, after-tax, to purchase up to $25,000 of CSX common stock per year at 85% of the closing market price on either the grant date or the last day of the six-month offering period, whichever is lower. During the quarter ended March 31, 2019, 105 thousand shares of CSX stock were issued at a weighted average purchase price of $52.81 per share. These issuances were related to employee contributions in 2018.

X
- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration