John Orr
Executive Vice President & Chief Operating Officer at NSC
Executive
About John Orr
John F. Orr, age 60, was appointed Executive Vice President & Chief Operating Officer of Norfolk Southern on March 20, 2024, following a four-decade railroad career at Canadian National (CN), Kansas City Southern (KCS), and Canadian Pacific Kansas City (CPKC) focused on precision scheduled railroading and operational turnarounds . He holds a BA in Environmental Studies from the University of Waterloo and completed Harvard Business School’s Advanced Management Program . Company performance metrics tied to executive pay include ROAIC and relative TSR for PSUs (2022–2024 ROAIC achieved 12.3% with TSR below the 25th percentile, yielding a 37.5% payout), and annual financial/service/safety goals that produced a 92.5% corporate performance factor for 2024 incentives .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| CPKC | Executive Vice President & Chief Transformation Officer | 2023–2024 | Led integration after CP’s acquisition of KCS; rapidly remediated challenged Mexican operations by restoring service levels and resiliency, driving significant operating improvements across train speed, terminal dwell, locomotive productivity, and customer service . |
| KCS | Executive Vice President, Operations | 2021–2023 | Oversaw Transportation, Engineering, Mechanical, Network Operations, HSE, and Labor Relations; executed service‑focused scheduled railroading initiatives to improve service . |
| CN | Senior Vice President & Chief Transportation Officer; earlier operating/network roles | 1985–2021 | Drove process improvements and progressive safety culture; recognized for safety and operational performance; began as craft railroader and union representative for 15 years . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Railway Age | Top Influencer award recipient | 2023 | Recognized industry expert and author in precision scheduled railroading operations . |
| CN (union representation) | Union Representative | ~15 years | Frontline representation experience informs approach to team building, safety, and engagement with regulators . |
Fixed Compensation
| Component | 2024 Detail |
|---|---|
| Base Salary | $750,000 (set upon appointment as EVP & COO in March 2024) . |
| Target Bonus % | 150% of salary (EMIP annual incentive opportunity) . |
| Annual Incentive Payout | $1,040,625 based on 92.5% corporate performance factor . |
| Sign‑On Cash Bonus | $825,000 hiring bonus per offer letter . |
Performance Compensation
Long‑Term Incentive Grants and Structure
| Award Type | 2024 Target Value | Mix / Terms | Vesting |
|---|---|---|---|
| Annual LTIP | $2,700,000 | 50% PSUs, 25% Nonqualified Stock Options, 25% RSUs; standard form award agreements . | Options: 4 equal installments on 1st–4th anniversaries of grant date; RSUs typically 4‑year ratable; certain new hire/promotional RSUs 3‑year ratable . |
| One‑Time LTIP (Retention) | $6,000,000 | RSUs only | Vest in three equal annual installments on the first, second, and third anniversaries of grant date . |
Annual Incentive Plan (EMIP) – 2024 Metrics and Outcomes
| Metric | Weight | Threshold (%) | Target (%) | Maximum (%) | Achievement (% of Target) |
|---|---|---|---|---|---|
| Operating Ratio | 30% | 30% | 67% | 150% | 150.0% |
| Operating Income | 25% | 30% | 67% | 150% | 74.4% |
| Annual Revenue | 15% | 30% | 67% | 150% | 0.0% |
| Merchandise On‑Time Delivery | 10% | 30% | 67% | 150% | 64.1% |
| Intermodal Composite | 10% | 30% | 67% | 150% | 150.0% |
| FRA Reportable Injury Rate | 5% | 30% | 67% | 150% | 0.0% |
| FRA Reportable Train Accident Rate | 5% | 30% | 67% | 150% | 149.0% |
| Corporate Performance Factor | — | — | — | — | 92.5% |
Notes: In 2024, the Committee included the financial impact of the East Palestine incident in calculations, reducing annual incentive payouts by 17% vs. excluding the impact .
PSU Plan – 2022–2024 Cycle Results (Company‑level metric affecting all NEOs)
| Measure | Target Framework | Actual Result | Payout / Modifier | Final Outcome |
|---|---|---|---|---|
| ROAIC (3‑yr avg) | Target at ≥13.9% = 100% payout; <11.6% = 0% | 12.3% | 50% base payout | 37.5% after 0.75x TSR modifier (TSR <25th percentile vs S&P 500 Industrials) . |
Outstanding Equity and Vesting
| Instrument | Quantity / Terms | Valuation / Dates |
|---|---|---|
| RSUs (unvested) | 27,770 units | Market value $6,517,619 . |
| PSUs (unearned) | 10,840 units | Payout value $2,544,148 . |
| Stock Options (unexercisable) | 8,090 options @ $240.38 strike; expiration 04/25/2034 . | Standard options vest in four equal annual installments . |
Detailed Vesting Schedule
| Award | Units | Vest Dates |
|---|---|---|
| RSUs (hire / promotion grants) | 24,960 | 4/26/2025; 4/26/2026; 4/26/2027 . |
| RSUs (additional tranche) | 2,810 | 4/26/2025; 1/30/2026; 1/30/2027; 1/30/2028 . |
| PSUs (2024 grant cycle) | 10,840 | 12/31/2026 (performance period end) . |
| 2024 Option exercise/stock vesting | — | Orr had 0 shares acquired on vesting and 0 option exercises in 2024 . |
Equity Ownership & Alignment
- Beneficial Ownership: John F. Orr reported 0 shares of common stock as of March 3, 2025 (RSUs/PSUs not counted as beneficial ownership for SEC purposes) .
- Ownership Guidelines: EVPs required to hold 3x annual salary; officers must retain 100% of net shares until meeting guideline; hedging and pledging transactions are prohibited for executive officers .
- Vesting Pipeline: Significant scheduled RSU vesting across 2025–2028 and PSU performance vest in 2026 , indicating strong ongoing equity‑based alignment and potential future share delivery.
- Insider Selling Pressure: No 2024 option exercises or stock vesting distributions for Orr; reduces near‑term selling pressure signals for 2024 .
Employment Terms
| Term | Provision |
|---|---|
| Employment Start | Appointed EVP & COO effective March 20, 2024 . |
| Severance (Offer Letter) | If terminated without Cause or resigns for Good Reason: cash equal to 2.0x (base salary + target annual incentive), continued vesting of all outstanding equity awards, prorated annual incentive payable in ordinary course; repay $500,000 of the signing bonus if voluntary departure without Good Reason within first two years . |
| Executive Severance Plan | For eligible executives: 2x salary lump sum; prorated annual incentive if not retirement eligible; favorable LTIP treatment if retirement eligible; otherwise cash value of RSUs, option profit on unvested options, and prorated PSU cash value; plus $30,000 outplacement and $36,000 healthcare lump sums . |
| Non‑Compete / Forfeiture | LTIP awards subject to forfeiture for “competing employment” in North American markets following termination; additional non‑compete restrictions following change in control apply to NEOs . |
| Change‑in‑Control | Double‑trigger structure: benefits only upon CIC and subsequent termination/constructive termination; no excise tax gross‑ups . |
| Clawbacks | Mandatory clawback for accounting restatements (3‑year lookback); supplemental clawback for “Detrimental Conduct” (fraud, intentional misconduct, gross negligence, major policy violations) covering time‑ and performance‑based awards (adopted Jan 2024) . |
Potential Payments – December 31, 2024 Hypothetical
| Scenario | Severance Pay ($) | PSUs ($) | RSUs ($) | Total ($) |
|---|---|---|---|---|
| Involuntary Separation | 3,073,500 | 1,542,390 | 6,517,619 | 11,133,509 |
| Death | — | 1,542,390 | 6,517,619 | 8,060,009 |
| Disability | — | 1,542,390 | 6,517,619 | 8,060,009 |
| Change in Control (w/ termination) | 3,522,033 | — | — | 3,522,033 |
Performance & Track Record
- 2024 Operational Turnaround: The company cited “significant improvement” in operating and safety performance as a direct result of Orr’s hiring and leadership, including multi‑year network velocity highs, $292 million in cost savings, and industry‑leading mainline accident rate avoidance .
- Strategic Impact: These improvements supported a multi‑year Cooperation Agreement in November 2024 with activist Ancora, enabling management to focus on execution and value delivery .
Compensation Committee Analysis
- Shareholder Feedback Actions: In response to 2024 Say‑on‑Pay and investor engagement, the Committee changed methodology to include the East Palestine impact in both the annual incentive and the 2022–2024 PSU calculations, reducing payouts by 17% and 16%, respectively; 2023–2025 PSUs currently tracking to 0% .
- Program Design Updates (2025): Increased Operating Ratio weighting to 35% (from 30%); PSUs now 60% ROAIC and 40% relative TSR (target requires TSR above peer 50th percentile); discontinued PSU modifiers; increased PSU weighting for NEOs to 60%; increased CEO ownership guideline to 6x salary; adopted share retention requirements until guideline met .
Equity Ownership & Alignment (Detail)
| Item | Status |
|---|---|
| Beneficial Shares | 0 (as of March 3, 2025) . |
| Unvested RSUs | 27,770 units; $6,517,619 market value . |
| Unearned PSUs | 10,840 units; $2,544,148 payout value . |
| Options (Unexercisable) | 8,090 @ $240.38; expires 04/25/2034 . |
| Ownership Guideline | EVP: 3x salary; five‑year accumulation period; retention of all net shares until guideline met; hedging and pledging prohibited . |
Investment Implications
- Alignment: Large, multi‑year RSU and PSU pipeline and retention vesting schedules (2025–2028) support alignment and reduce voluntary departure risk; EMIP and PSU frameworks are directly tied to OR, ROAIC, and relative TSR performance .
- Retention Economics: Offer letter severance at 2x salary+target bonus with continued vesting, plus Executive Severance Plan benefits, creates meaningful retention hooks; signing‑bonus repayment obligation further discourages early departure .
- Governance Safeguards: Double‑trigger CIC, no excise tax gross‑ups, broad clawbacks, and strict anti‑hedging/pledging policies limit shareholder‑unfriendly outcomes and mitigate reputational/behavioral risk .
- Execution Signal: Company explicitly attributes 2024 operations and safety improvements to Orr’s leadership, with $292M cost savings and improved network velocity—constructive for margin trajectory and EMIP outcomes; however, relative TSR underperformance in 2022–2024 PSU cycle highlights execution bar for long‑term value creation .
- Near‑Term Selling Pressure: No 2024 stock vesting or option exercises reported for Orr; combined with retention RSU schedule, indicates limited immediate selling pressure from his equity .