Megan Onferrica

Megan Onferrica sought clarification on Union Pacific's 2026 expectation for a 4%-5% year-over-year compensation per employee increase: whether it's a net figure including offsetting efforts, and details on identified offsetting opportunities.

Answer

Jennifer Hamann, Chief Financial Officer, confirmed that the 4%-5% is the *net* compensation per employee, already incorporating offsetting efforts. She identified wage agreements, health and welfare increases, and higher payroll taxes as key drivers. Eric Gehringer, Executive Vice President of Operations, detailed offsetting efforts including Remote Control Locomotives (RCL), reducing car touches, automating switch operations, and fundamental operational improvements leading to cost reductions (e.g., record car velocity, locomotive productivity, fuel savings). Jim Vena, Chief Executive Officer, added that increased workforce productivity (fewer employees for the same work) helps offset the higher cost per employee.