The plans by CSX to lop off up to 1,000 management employees is expected to affect more than 20 percent of its workforce and save at least $175 million annually.
In a regulatory filing this week, the railroad said it will take a pre-tax charge of at least $160 million related to employee termination benefits, including severance, pension, and stock compensation costs.
Those losing their jobs are expected to receive severance pay equal to two times their base salary.
They also will receive a target bonus and a prorated bonus payment and be credited with three additional years of age and two additional years of service under the company pension plan.
The layoffs are expected to be completed by the middle of this month.
CSX CEO Michael Ward, who will be retiring at the end of May, has described the layoffs as “essential to CSX’s ability to remain competitive in a challenging and changing market.”
The management restructuring is part of an on-going cost cutting campaign over the past year that has seen CSX reduce expenses by $430 million. The railroad also has said that it expects to reap another $150 million this year through efficiency and productivity gains.
Much of the cost cutting has been triggered by the loss of coal revenue, which has been $2 billion over the past five years and $470 million last year alone.
At the same time that it is cutting its management ranks, CSX is implementing a program of long-term incentives for managers who remain that is tied to performance units, restricted stock units, and stock options that will account for 50 percent, 25 percent, and 25 percent of the payouts, respectively.
New CSX President Fredrik Eliasson will see his base salary increase to $700,000. His short-term incentive opportunity has increased to 100 percent of annual base salary and the value of his target long-term equity incentive award rose to $2.5 million.