Stephen Fortune
Executive Vice President and Chief Digital & Technology Officer at CSX
Executive
About Stephen Fortune
Stephen Fortune, 55, is Executive Vice President and Chief Digital & Technology Officer (EVP, CD&TO) at CSX, having joined in April 2022; tenure ~3 years as of the 2025 proxy. He leads CSX’s technology strategy and IT operations, bringing 30+ years as a corporate technology leader, including serving as CIO of BP Group after earlier roles in engineering and operations (transitioning into IT in 2003) . 2024 accomplishments included completing CSX’s data center migrations to Microsoft Azure (first U.S. railway on Azure), advancing an SAP transformation, modernizing pricing/contracting systems, consolidating analytics reporting, and driving an InnovationX pipeline; he also delivered key intermodal system and trucking transitions that support growth and efficiency . Incentives are anchored to company-wide operating and service metrics: 2024 MICP formulaic achievement was 82% after an impairment adjustment (61% unadjusted), with measures covering operating income, operating margin, initiative-based revenue growth, safety, trip plan compliance, and fuel efficiency; long-term PSUs measure operating income growth and economic profit with a relative TSR modifier .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| BP (global) | Chief Information Officer (prior roles in chemical/process engineering and operations; transitioned to IT in 2003) | c. 30 years (dates not disclosed) | Led enterprise IT for a global energy major; deep experience across operations and digital transformation |
External Roles
No external public company directorships or committee roles were disclosed for Fortune in the 2025 proxy .
Fixed Compensation
| Metric | 2022 | 2023 | 2024 | 2025 (announced) |
|---|---|---|---|---|
| Base Salary ($) | 487,500 | 650,000 | 650,000 | 670,000 (effective Feb 1, 2025) |
| Target Annual Bonus (% of Base) | — | 100% (same as 2024) | 100% | No increases to target opportunities; implies unchanged vs 2024 |
Notes:
- Actual 2024 annual bonus paid was $487,500 after clawback offset; amount that would have been earned before clawback reduction was $533,000 .
Performance Compensation
2024 Short-Term Incentive (MICP) – Structure and Outcomes
| Metric | Weight | Target | Actual Payout Contribution | Notes |
|---|---|---|---|---|
| Operating Income | 30% | 100% payout at target | 21% (adjusted) / 17% (unadjusted) | 2024 impairment adjustment excluded a $108M goodwill charge (Quality Carriers) for MICP; total achievement 82% vs 61% unadjusted |
| Operating Margin | 30% | 100% | 17% (adjusted) / 0% (unadjusted) | Diesel price collar adjusted margin target by +20 bps due to 2024 average $3.76/gal |
| Initiative-based Revenue Growth | 10% | 100% | 20% | Non-GAAP; measures new line-haul revenue from specific customer initiatives |
| FRA Personal Injury Rate | 5% | 100% | 0% | Safety |
| FRA Train Accident Rate | 5% | 100% | 0% | Safety |
| Trip Plan Compliance | 10% | 100% | 7% | Customer service |
| Fuel Efficiency | 10% | 100% | 17% | Environmental |
| Total Achievement | — | 100% | 82% (adjusted) / 61% (unadjusted) | Committee made no individual performance adjustments for NEOs |
- Fortune’s 2024 MICP target opportunity was 100% of base salary; same as 2023 .
- Actual earned (pre-clawback reduction) for Fortune: $533,000; actual paid: $487,500 due to 2023 MICP clawback recovery .
2024–2026 Long-Term Incentive Plan (LTIP) – Design
| Instrument | Weight | Performance Metrics / Terms | Payout Range |
|---|---|---|---|
| Performance Share Units (PSUs) | 60% | 50% Average Annual Operating Income Growth; 50% Economic Profit; Relative TSR modifier ±25% with no impact between 40th–60th percentile; cap 250% | 0–250% (0–200% base, ±25% TSR modifier) |
| Non-qualified Stock Options | 20% | 3-year graded vesting (1/3 per year) | Value only if stock price appreciates |
| Restricted Stock Units (RSUs) | 20% | 3-year ratable vesting | Time-based vesting |
2024 Equity Grants to Fortune (Granted Feb 16, 2024)
| Grant Type | Units/Shares | Price | Vesting | Grant Date Fair Value ($) |
|---|---|---|---|---|
| PSUs (2024–2026 cycle) | 94,978 target units | — | Earned over 3-year performance period; subject to metrics and TSR modifier | Included within total stock awards value $1,860,052 |
| RSUs | 12,664 | — | 1/3 on 2/16/2025, 2/16/2026, 2/16/2027 (continued employment) | Included within $1,860,052 |
| Stock Options | 40,187 | $36.72 strike | 1/3 exercisable on 2/16/2025, 2/16/2026, 2/16/2027 | $465,004 |
Clawback enforcement: Following a “little r” restatement, the Committee recouped overpaid 2023 MICP amounts by reducing 2024 MICP payouts; Fortune’s 2023 MICP clawback was $45,500 .
Equity Ownership & Alignment
Beneficial Ownership (as of March 1, 2025)
| Holder | Shares Beneficially Owned | Acquirable Within 60 Days | Total | % of Class |
|---|---|---|---|---|
| Stephen Fortune | 85,439 | 44,853 | 130,292 | <1% |
- Company-wide policy prohibits hedging and pledging of CSX securities by officers and directors; stock ownership guidelines require EVPs to hold stock equal to 4x base salary, retain 100% of net shares until met, and achieve within five years .
- Fortune was hired after Jan 1, 2020 and receives additional 3% EDCP contributions on eligible pay in excess of IRS limits; not listed as an EDCP deferral participant (company notes which NEOs defer) .
Outstanding Equity Awards at 12/31/2024 (Fortune)
| Category | Detail | Amount/Units | Valuation Basis |
|---|---|---|---|
| Options – Exercisable | 2/15/2033 expiration, $31.67 strike | 15,728 | — |
| Options – Unexercisable | 2/15/2033 ($31.67) and 2/16/2034 ($36.72) | 31,457 and 40,187 | — |
| Stock Awards – Shares Not Vested (RSUs etc.) | Shares not vested | 49,537; Market value $1,598,559 | Priced at $32.27 on 12/31/2024 |
| Equity Incentive Awards Not Vested (PSUs) | Target awards outstanding | 57,350; Market value $1,850,685 | Priced at $32.27 on 12/31/2024 (target assumption) |
2024 Option Exercises and Vesting (Fortune)
| Type | Shares/Units | Value Realized ($) | Notes |
|---|---|---|---|
| Options – Exercises | — | — | No NEO option exercises in 2024 |
| Stock Awards – Vested | 34,697 | 1,205,453 | Includes PSUs (2022–2024 LTIP payout), RSUs (2021–2023 LTIP), 1/3 of 2023–2025 RSUs; sign‑on RSUs vested 4/1/2024 priced at $36.78 |
Employment Terms
Severance (Not in connection with a Change of Control)
| Component | Fortune Terms |
|---|---|
| Cash Severance | 1x base salary + 1x target MICP (paid in installments over 12 months) |
| Pro‑Rata Bonus | Pro‑rata MICP for year of termination |
| Equity | Prorated vesting; settled on original schedule; PSUs vest based on actual performance |
| Benefits/Perqs | Up to 12 months continuation of medical/dental; financial planning; outplacement for one year |
| Illustrative Dec 31, 2024 Total | $5,404,618 (Severance $1,300,000; Stock $3,449,243; Options $46,282; Non‑Equity Incentive $533,000; Other $76,093) |
Change-of-Control (Double Trigger)
| Component | Fortune Terms |
|---|---|
| Cash Severance | 2.99x base salary + target bonus |
| Bonus | Pro‑rata annual bonus based on plan achievement (82% used in illustration) |
| Equity | Accelerated vesting at target for outstanding LTIP cycles (used for illustration) |
| Welfare Benefits | Continuation for 3 years |
| Outplacement | $40,000 |
| Illustrative Dec 31, 2024 Aggregate | $9,828,340 (Severance $3,887,000; Pro‑Rata Bonus $533,000; Equity $5,284,470; Welfare $83,870; Outplacement $40,000) |
Restrictive covenants: As a condition of LTIP participation, non‑compete and non‑solicitation apply for 18 months post‑separation (precludes working for competitors and prohibits soliciting customers/employees) . No individual employment agreement for Fortune; he is covered by the executive severance plan (Sept 2022, amended July 2023) .
Clawback policy: Applies to both short- and long‑term incentives, based on financial restatement or specified misconduct, beyond SEC/NASDAQ requirements; applied to 2023 MICP overpayment (Fortune clawback $45,500) by reducing 2024 MICP .
Multi‑Year Compensation Summary (NEO Table – Fortune)
| Metric ($) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | 487,500 | 650,000 | 650,000 |
| Bonus | — | — | — |
| Stock Awards | 2,833,335 | 1,860,011 | 1,860,052 |
| Option Awards | — | 465,008 | 465,004 |
| Non‑Equity Incentive (MICP) | 736,125 | 747,500 | 533,000 (pre‑clawback; actual paid $487,500) |
| Change in Pension Value/Deferred Earnings | — (does not participate in CSX Pension Plan) | — | — |
| All Other Compensation | 25,899 | 83,469 | 78,298 |
| Total | 4,082,859 | 3,805,988 | 3,586,354 |
Compensation Structure Analysis
- Mix and at‑risk pay: Average variable or at‑risk compensation for NEOs was ~70% in 2024; Fortune’s mix follows the NEO design with 60% PSUs, 20% options, 20% RSUs in LTI .
- 2024–2025 changes: No base salary increase in 2024; 3% base increase to $670,000 effective Feb 1, 2025; no increase to target annual bonus in 2025 (remains at 100% of salary) .
- Governance controls: Double‑trigger CoC agreements; no hedging/pledging; significant share ownership requirements; independent consultant and annual risk assessment for pay program .
Performance & Track Record Highlights (Role-Specific)
- 2024 transformation delivery: Completed Azure data center migrations; advanced SAP program; modernized pricing/rating/contract systems; reduced reports from ~50,000 to ~2,300 via analytics transformation; launched InnovationX (650+ ideas; 36 PoCs); replaced legacy intermodal system; executed trucking and off‑core moves transitions .
- 2024 incentives alignment: MICP outcome 82% adjusted/61% unadjusted, reflecting macro headwinds (export coal, fuel, intermodal storage, one‑time insurance cycling, hurricanes, Key Bridge impact) and safety/service metrics performance; Committee excluded a $108M goodwill impairment for MICP fairness .
Risk Indicators & Red Flags
- Clawback applied: 2023 MICP overstatement recouped via 2024 MICP reduction; Fortune clawback $45,500 — demonstrates active enforcement but flags prior control/measurement issues (restatement) .
- Pledging/hedging: Prohibited by policy (mitigates alignment risk) .
- Option repricing/tax gross‑ups: Not permitted (shareholder‑friendly) .
- Say‑on‑pay: Program described as aligned with best practices; specific vote outcomes not disclosed in cited sections .
Equity Ownership & Alignment Commentary
- Beneficial ownership <1% of shares outstanding; absolute holdings 130,292 including acquirable within 60 days (44,853) as of Mar 1, 2025 .
- Significant unvested equity and unexercisable options create multi‑year retention hooks; substantial 2024 vesting ($1.21M value realized) indicates ongoing selling pressure windows tied to vest events, though no 2024 option exercises were reported .
Employment Terms (Key Takeaways)
- No individual employment agreement; covered by executive severance plan (1x salary + 1x target bonus; prorated equity and bonus; benefits continuation; outplacement) .
- Change‑of‑control economics are double‑trigger with 2.99x cash multiple, equity acceleration at target for outstanding LTIPs (illustrative aggregate $9.83M as of 12/31/2024) .
- 18‑month non‑compete and non‑solicit covenants support post‑employment protection .
Investment Implications
- Pay-for-performance alignment is robust, with diversified metrics and a high at‑risk mix; 2024 adjusted MICP at 82% signals balanced accountability amid macro headwinds and impairment noise .
- Retention risk is moderated by sizable unvested PSUs/RSUs and staged option vesting through 2027; minimal 2024 cash raises (3% base in 2025) suggest continued reliance on equity for alignment .
- Governance is strong (double‑trigger CoC, no hedging/pledging, clawback enforcement), though the 2023 MICP restatement/clawback episode is a watch item for control rigor; overall, Fortune’s digital transformation agenda has clear operating leverage potential if execution on SAP, analytics, and intermodal systems continues to translate into service and margin improvements tracked by incentive metrics .