Stock Unit Grant and Deferred Compensation Plan for the Board of Directors - Union Pacific Corp.


                            UNION PACIFIC CORPORATION

                 STOCK UNIT GRANT AND DEFERRED COMPENSATION PLAN

                                     FOR THE

                               BOARD OF DIRECTORS


















            (Effective December 1, 1978 - as Amended April 30, 1987,
              January 1, 1995, January 25, 1996, February 26, 1998,
                January 28, 1999, May 27, 1999 and May 31, 2001)



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                            Union Pacific Corporation
                 Stock Unit Grant and Deferred Compensation Plan
                           for the Board of Directors
                          As Amended as of May 31, 2001



1.       Purpose

         The purpose of this Plan is to permit grants of Stock Units to
         Directors to align their interests with those of stockholders, and to
         provide a means for deferring payment of all or a portion of any cash
         compensation, excluding expenses, payable to Directors for their
         service on the Board of Directors (the "Board") of Union Pacific
         Corporation (the "Company") in accordance with Article II, Section 4 of
         the By-Laws of Union Pacific Corporation. Such compensation eligible to
         be deferred, not including any grants under paragraph 3, is referred to
         herein as "Compensation".

2.       Eligibility

         Any individual (a "Director") serving as a member of the Board as of
         the effective date of this Plan or who subsequently becomes a member is
         eligible under this Plan, other than members who are employees of the
         Company or any of its subsidiaries.

3.       Stock Unit Grants

         (a)      Commencing with the second quarter of 1998, each full
                  quarterly installment of a Director's Compensation shall be
                  accompanied by the grant of an amount of whole Stock Units
                  equal to $7,500 (as such amount may be changed from time to
                  time by the Board) divided by the Fair Market Value of one
                  share of the Company's Common Stock on the first business day
                  of the month following the quarter in which such Compensation
                  was earned, plus cash in lieu of any fractional Stock Unit
                  resulting from such calculation. A pro-rata grant of Stock
                  Units will accompany any partial quarterly Compensation
                  installment. "Fair Market Value" on a date means the average
                  of the high and low trading prices per share on that date, as
                  reported in The Wall Street Journal listing of consolidated
                  trading for New York Stock Exchange issues. Stock Units and
                  cash so granted shall be credited to such Director's Stock
                  Unit Account referred to in paragraph 6.

         (b)      Each person serving as a member of the Board on January 25,
                  1996 who has elected (the "Election") to forfeit $6,000 of the
                  annual retirement pension under the Directors' Pension Plan
                  pursuant to Section 12 thereof shall receive a grant of an
                  amount of Stock Units equal to the dollar 



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                  amount set forth in the election form pursuant to which such
                  person made the Election, divided by the Fair Market Value of
                  one share of the Company's Common Stock on the date that the
                  grant is credited to such Directors' Stock Unit Account, plus
                  cash in lieu of any fractional Stock Unit resulting from such
                  calculation. For all persons making the Election who are
                  eligible on January 25, 1996 for benefits under the Directors'
                  Pension Plan, such grant will be credited to such person's
                  Stock Unit Account on February 15, 1996. For all other persons
                  making the Election, such grant will be credited on the date
                  they become eligible for such benefits (or if such date is not
                  a business day, on the next business day).

         (c)      Each person elected as a member of the Board for the first
                  time after January 25, 1996 shall receive, on the date such
                  person completes five consecutive years of service on the
                  Board (or if such date is not a business day, on the next
                  business day), a grant for immediate credit to such person's
                  Stock Unit Account of an amount of Stock Units equal to
                  $85,000 (as such amount may be changed from time to time by
                  the Board), divided by the Fair Market Value of one share of
                  Common Stock on the date of such grant, plus cash in lieu of
                  any fractional Stock Unit resulting from such calculation. In
                  determining whether a person has completed five consecutive
                  years of service, there shall be disregarded any period of
                  such service during which such person was employed by the
                  Company or any of its subsidiaries and, in the case of any
                  person formerly so employed, any period after termination of
                  such employment if at the time of termination the person is
                  entitled to receive benefits as an employee under any pension
                  plan of the Company or any of its subsidiaries.

4.       Deferral Election

         An election to defer Compensation is to be made on or before December
         31 of any year for Compensation for services as a member of the Board
         for the following and later calendar years. In addition to deferrals of
         1995 Compensation elected in the previous year, at any time prior to
         March 31, 1995, a Director may elect to defer additional Compensation
         to be paid for services in the last three quarters of 1995.

         An election to defer is a continuing election until changed by the
         Director on or before December 31 of any year for the then following
         and later calendar years. However, once an election is made (and
         effective), subsequent elections will have no effect on the amounts,
         timing and manner of payment covered by the previous election.

         Any newly elected Director who was not a Director on the preceding
         December 31 may elect, before his term begins, to defer Compensation
         for 



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         services as a member of the Board for the balance of the calendar year
         following such election.

         Forms shall be made available to Directors each year for the purpose of
         making or changing their election.

5.       Amount

         All or any portion, in multiples of 1%, of a Director's Compensation
         may be deferred.

6.       Deferred Accounts

         Each Director shall have a Stock Unit Account and may have one or more
         Other Accounts (together, the "Accounts"). Amounts deferred pursuant to
         paragraph 4 may be credited to any Account, at the election of the
         Director made at the time of the deferral election, in multiples of 1%
         of such Director's Compensation. A Director may change the Account to
         which any quarterly installment of such Director's Compensation so
         deferred is to be credited at any time on or before the fifth business
         day prior to the date such quarterly installment is to be credited.
         Amounts deferred and credited to the Stock Unit Account shall be
         converted into whole Stock Units on the basis of the Fair Market Value
         of the Company's Common Stock on the first business day of the month
         following the quarter in which the Compensation was earned, and cash
         shall be credited to the Stock Unit Account in lieu of any fractional
         Stock Unit. In addition, (i) on or prior to March 31, 1995, each
         Director shall have a one-time election to transfer all or any part of
         the balance of his or her Other Account to the Stock Unit Account based
         on the Fair Market Value of the Company's Common Stock on April 3,
         1995, (ii) at any time, a Director may transfer all or any part of the
         balance of any of his or her Other Accounts to another of his or her
         Other Accounts subject to any regulations regarding such transfer
         adopted by the Board and (iii) at any time on or after the 30th day
         after the date of a Director's termination from the Board, such
         Director may transfer all or any part of the balance of any of his or
         her Accounts to another of his or her Accounts, pursuant to any
         regulations regarding such transfers adopted by the Board.

         On the payment date for each cash dividend or other cash distribution
         with respect to the Company's Common Stock, each Director's Stock Unit
         Account shall be credited with an amount equal to the amount of the per
         share dividend or distribution, multiplied by the number of Stock Units
         in such Account, and, if such Director is then serving as a member of
         the Board, shall be converted into whole Stock Units on the basis of
         the Fair Market Value of the Company's Common Stock on the payment date
         for such dividend or distribution, and cash shall be credited to the
         Stock Unit Account in lieu of any fractional Stock Units. If a Director
         is no longer serving as a member of the Board on the payment date for
         such dividend or distribution, the amount representing such dividend or


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         distribution shall be paid out of the Stock Unit Account to such
         Director as soon as practicable after the payment date for such
         dividend or distribution.

         Except as provided in the preceding sentence, any cash credited to a
         Director's Stock Unit Account shall be added to other cash credited to
         such Account and converted into a whole Stock Unit on the date
         sufficient cash exists to purchase a whole Stock Unit, based on the
         Fair Market Value of the Company's Common Stock on such date. In the
         event of a subdivision or combination of shares of Company Stock, the
         number of Stock Units credited to the Stock Unit Accounts on the
         effective date of such subdivision or combination shall be
         proportionately subdivided or combined as the case may be. No
         adjustment shall be made in Stock Units in connection with the issuance
         by the Company of any rights or options to acquire additional shares of
         Company Common Stock or securities convertible into Company Common
         Stock. In the event of any stock dividend or reclassification of
         Company Common Stock, any merger or consolidation to which the Company
         is a party, or any spinoff of shares or distribution of property other
         than cash with respect to the Company Common Stock, the Committee shall
         cause appropriate adjustments, if any, to be made in the Stock Units to
         reflect such stock dividend, reclassification, merger or consolidation,
         spinoff or distribution of property.

         Other Accounts shall have such name, and be charged or credited
         pursuant to such method, as the Board shall determine upon
         establishment of such Other Account, and the Board may change such name
         or method for any such Other Account, but no such change shall reduce
         any amount previously accrued in a Director's Other Account.

7.       Distribution

         All distributions from Accounts shall be made in cash. For purposes of
         distributions from the Stock Unit Account, each Stock Unit shall be
         converted into an amount of cash equal to the Fair Market Value of one
         share of the Company's Common Stock on the first business day of the
         month in which such distribution is made. The Director must elect the
         timing and manner of payment: (a) in the case of deferred Compensation,
         at the same time and on the same form he elects a deferral of
         Compensation, (b) in the case of a Stock Unit grant under 3.a., on or
         prior to the time an election to defer the accompanying Compensation
         would have been required to be made, (c) in the case of a Stock Unit
         grant under 3.b., at the same time as the Election referred to therein,
         and (d) in the case of a Stock Unit grant under 3.c., prior to the time
         the Director receives such grant

     -   Timing of Payment: Directors may elect to begin distributions from the
         Accounts (a) following termination from the Board, (b) in a year
         specified by the Director which, in the case of distributions from the
         Stock Unit Account, must be after termination from the Board, or (c) in
         the case of distributions from any Other Account, following retirement
         from the Director's principal occupation.



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     -   Manner of Payment: The Director may elect to receive payment from the
         Accounts in a lump sum or in a number of equal annual installments, not
         to exceed fifteen. A Director may change the foregoing election,
         provided that any such change must be made: (i) in the case of payments
         commencing on termination from the Board, one year prior to
         termination, (ii) in the case of payments commencing in a specified
         year, one year prior to the earlier to occur of termination from the
         Board and the commencement of such specified year, and (iii) in the
         case of payments commencing upon retirement from a principal
         occupation, one year prior to the earlier to occur of termination from
         the Board and the such retirement.

         The lump sum or first installment is to be paid in January of the year
         following the year of termination or retirement or in January of the
         year selected by the Director, as applicable, and any remaining
         installments in January of each succeeding year until the total balance
         is paid. Distributions from the Stock Unit Account in installments
         shall be based on equal numbers of Stock Units in each installment.

         In the event of the death of a Director then serving as a member of the
         Board or a terminated or retired Director entitled to a distribution
         under this Plan, the balance of the Accounts shall be payable to the
         estate or designated beneficiary in full during the January of the year
         following the year of such Director's, terminated Director's or retired
         Director's death.

         The Director may designate his beneficiary at the same time he elects
         deferral of Compensation. However, the latest designated beneficiary
         will be the beneficiary or beneficiaries for the total of all
         distributions from the Accounts. The designated beneficiary may be
         changed at any time on a form provided by the Corporate Secretary,
         provided that no designation will be effective unless it is filed with
         the Corporate Secretary prior to the Director's death.

8.       Early Withdrawal with Penalty

         A Director may request a withdrawal from an Other Account (not to
         include the Director's Stock Unit Account) prior to the date specified
         in the Director's deferral election by filing a request in writing with
         the Corporate Secretary. Payment will be made to the Director within
         thirty (30) days of such request. Any withdrawal under this Section
         will be charged with a 10% early withdrawal penalty that will be
         withheld from the amount withdrawn and such amount withheld shall be
         irrevocably forfeited.



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9.       Unfunded Plan

         The liability of the Union Pacific Corporation to any Director,
         terminated Director, retired Director or his estate or designated
         beneficiary under the Plan shall be that of a debtor only pursuant to
         such contractual obligations as are created by the Plan, and no such
         obligation of Union Pacific Corporation shall be deemed to be secured
         by any assets, pledges, or other encumbrances on any property of Union
         Pacific Corporation.

10.      Inalienability of Deferred Compensation

         Except to the extent of the rights of a designated beneficiary, no
         distribution pursuant to, or interest in, the Plan may be transferred,
         assigned, pledged or otherwise alienated and no such distribution or
         interest shall be subject to legal process or attachment for the
         payment of any claims against any individual entitled to receive the
         same.

11.      Controlling State Law

         All questions pertaining to the construction, regulation, validity and
         effect of the Plan shall be determined in accordance with the laws of
         the State of Utah.

12.      Amendment

         The Board of Directors of the Union Pacific Corporation at its sole
         discretion may amend, suspend or terminate the Plan at any time.
         However, any such amendment, suspension or termination of the Plan may
         not adversely affect any Director's or his beneficiary's rights with
         respect to Compensation previously deferred.

13.      Administration

         Administration of the Plan will be coordinated by the Corporate Finance
         Department. Administration will include, but not be limited to,
         crediting of deferred compensation, dividends and accrued interest to
         individual Director accounts and ultimate disbursement of deferred
         amounts.

14.      Effective Date

         This Plan shall become effective December 1, 1978, applicable only to
         compensation for services after December 31, 1978, provided that the
         provisions hereof related to Stock Units shall be effective January 1,
         1995.



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