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