filings.toolsCover and table of contents
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Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ____________
Commission File Number 1-6075
UNION PACIFIC CORPORATION
(Exact name of registrant as specified in its charter)
| Utah | 13-2626465 | |
|---|---|---|
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
1400 Douglas Street, Omaha, Nebraska
(Address of principal executive offices)
68179
(Zip Code)
(402) 544-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each Class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common Stock (Par Value $2.50 per share) | UNP | New York Stock Exchange |
| ■ | Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. |
|---|
☑Yes ☐ No
| ■ | Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. |
|---|
☐Yes ☑ No
| ■ | Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. |
|---|
☑Yes ☐ No
| ■ | Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). |
|---|
☑Yes ☐ No
| ■ | Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. |
|---|
| Large Accelerated Filer | ☑ | Accelerated Filer | ☐ | Non-Accelerated Filer | ☐ | ||
|---|---|---|---|---|---|---|---|
| Smaller Reporting Company | ☐ | Emerging Growth Company | ☐ |
| ■ | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
|---|
☐
| ■ | Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered accounting firm that prepared or issued its audit report. |
|---|
☑
| ■ | Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). |
|---|
☐Yes ☑ No
| ■ | As of June 30, 2021, the aggregate market value of the registrant’s Common Stock held by non-affiliates (using the New York Stock Exchange closing price) was $142.0 billion. |
|---|
The number of shares outstanding of the registrant’s Common Stock as of January 28, 2022, was 636,898,957.
Documents Incorporated by Reference – Portions of the registrant’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held on May 12, 2022, are incorporated by reference into Part III of this report. The registrant’s Proxy Statement will be filed with the Securities and Exchange Commission (SEC) within 120 days after the end of the fiscal year that this report relates pursuant to Regulation 14A.
TABLE OF CONTENTS
Fellow Shareholders:
Union Pacific demonstrated again in 2021 that our team is “best in class” as we navigated challenges from the pandemic and numerous operational disruptions. The pandemic continued to impact our daily lives and disrupt supply chains in significant ways. Despite these wide-ranging impacts, the Union Pacific team achieved record financial results. In 2021, we are reporting earnings per share of $9.95, which is a 26% increase versus 2020. Total volumes increased 4% versus 2020, as our economy continued to recover from the pandemic impacts. Operating ratio was a record 57.2%, 270 basis points better than 2020’s 59.9% demonstrating continued focus on efficient operations. 2020 results were negatively impacted by a one-time $278 million non-cash impairment charge that reduced earnings per share by $0.31 and increased operating ratio by 140 basis points.
Safety is foundational to everything we do at Union Pacific. 2021 safety results did not meet our expectations. In 2022, we are continuing to engage external experts to help us get back on track to world class industrial safety performance. We are implementing more effective ways to coach, train, and root-cause analyze, all while building a stronger, deeper safety culture. Nothing is more important than making sure every employee returns home safely.
| During 2021, we rolled out a new strategic plan we call, “Serve, Grow, Win, Together.” The essence of our strategy is unchanged; however, as our culture evolves, it’s imperative that we have a strategic plan that clearly defines our path to long-term sustainable growth. Everything we do starts with Serve and the transportation products we provide our customers. Precision Scheduled Railroading (PSR) is the foundation for delivering customer-centered operational excellence and creating a more resilient and agile service product. In 2021, weather, wildfires, supply chain disruptions, and pandemic impacts to crew availability all impeded our ability to further improve our service product. Freight car velocity was down 8% versus 2020, lowering Trip Plan Compliance for both Intermodal and Manifest/Autos 8 points. Beyond reliable service, our customers want “greener” transportation options. Every carload of freight we take off the highway saves fuel, lowers emissions, and reduces highway congestion. We took steps toward our long-term emission reduction goals by achieving a best-ever fuel consumption rate, improving 1% versus 2020, helping our customers eliminate roughly 23 million metric tons of greenhouse gas emissions by choosing rail versus truck. To support our service product, we continue to make significant investments in our infrastructure. In 2021, we invested approximately $3.0 billion, completing 15 siding extensions, opening pop-up intermodal terminals in the Twin Cities, MN, and West Colton, CA, modernizing 100 locomotives, and hardening our infrastructure. We also invested in energy management systems to reduce fuel consumption and the resulting carbon emissions. |  |
|---|
These investments also underpin the next tenet of our strategy – Grow. We believe we have the best rail franchise in North America. By providing a quality service product, along with the lowest cost structure in the industry, we are well positioned to handle more business for new and existing customers. We see many opportunities to grow, whether by providing more services for our customers or by expanding our reach through new transload facilities or pop-up intermodal terminals. Improving the customer experience is critical and technology plays a key role. Our industry leading practices provide our customers with application programming interfaces (API), with over 50 services launched, we are integrating deeper into our customers’ systems and supply chains. And our team is winning in the marketplace! We welcomed new customers in 2021, are onboarding more in 2022, and already setting the stage for a great 2023 with a significant domestic intermodal win.
Successful execution of our plans to “Serve” and “Grow” leads to Win. For our shareholders, winning means generating best-in-industry cash returns. In 2021, we paid dividends of $2.8 billion, which included two 10% dividend increases during the year. In addition, we repurchased 33 million Union Pacific shares, decreasing our full-year average share count 3%. Combining dividends and share repurchases, Union Pacific returned $10.1 billion to our shareholders in 2021.
Our definition of “winning” extends to all UP’s stakeholders, which is the final piece of our strategy – Together. Our comprehensive approach to Environmental Social Governance (ESG) issues, “Building a Sustainable Future 2030”, is designed to address the evolving needs of our stakeholders. In 2021, we took major steps on our ESG journey, beginning with the July release of our 2018, 2019, and 2020 EEO-1 reports, providing increased transparency to our workforce demographics. And we continue to report quarterly progress towards our long-term diversity representation goals. Further, in December, we released our initial Climate Action Plan, laying out our plan to achieve our 2030 carbon emission reduction goals, approved in February by the Science Based Targets initiative (SBTi), and our commitment to Net Zero by 2050, the only U.S. rail to do so.
Every year can bring real challenges to our “outdoor factory”, although the last two years were unique. In response, the resiliency of the Union Pacific team has been on full display, and our employees have positioned our Company for even greater success in 2022. As we prepare to celebrate our 160th anniversary in 2022, we are focused on customer-centered operational excellence, growing with our customers, and winning together with all our stakeholders. The future is very bright for Union Pacific.
Chairman, President, and Chief Executive Officer
DIRECTORS AND SENIOR MANAGEMENT
| BOARD OF DIRECTORS | ||||
| Andrew H. Card, Jr. | Lance M. Fritz | Thomas F. McLarty III | ||
| Former White House | Chairman, President, and | Chairman | ||
| Chief of Staff | Chief Executive Officer | McLarty Associates | ||
| Board Committees: Compensation and Benefits, Corporate Governance | Union Pacific Corporation and Union Pacific Railroad Company | Board Committees: Finance (Chair), Corporate Governance and | ||
| and Nominating | Nominating | |||
| Deborah C. Hopkins | ||||
| William J. DeLaney | Former Chief Executive Officer | Jose H. Villarreal | ||
| Former Chief Executive Officer | Citi Ventures and Former | Retired Advisor | ||
| Sysco Corporation | Chief Innovation Officer Citi | Akin, Gump, Strauss, Hauer, & | ||
| Board Committees: Audit, | Board Committees: Audit, Finance | Feld, LLP | ||
| Compensation and Benefits (Chair) | Board Committees: Compensation | |||
| Jane H. Lute | and Benefits, Corporate Governance | |||
| David B. Dillon | Strategic Advisor | and Nominating | ||
| Former Chairman and CEO | SICPA, North America | |||
| The Kroger Company | Board Committees: Audit, Corporate | Christopher J. Williams | ||
| Board Committees: Audit (Chair), | Governance and Nominating | Chairman | ||
| Compensation and Benefits | Siebert Williams Shank & Co. | |||
| Michael R. McCarthy | Board Committees: Audit, Finance | |||
| Sheri H. Edison | Chairman – McCarthy Group, LLC | |||
| Former Executive Vice President and | Co-Chairman – Bridges Trust Company | |||
| General Counsel Amcor plc | Lead Independent Director | |||
| Board Committees: Pending Assignment | Board Committees: Corporate | |||
| Governance and Nominating (Chair), | ||||
| Finance | ||||
SENIOR MANAGEMENT*
| Lance M. Fritz | Rahul Jalali | Craig V. Richardson | ||
| Chairman, President, and | Senior Vice President – Information | Executive Vice President, Chief Legal | ||
| Chief Executive Officer | Technologies and Chief Information | Officer, and Corporate Secretary | ||
| Officer | ||||
| Prentiss W. Bolin, Jr. | Kenny G. Rocker | |||
| Vice President – External Relations | Michael V. Miller | Executive Vice President – Marketing | ||
| Vice President and Treasurer | and Sales | |||
| Bryan L. Clark | ||||
| Vice President – Tax | Scott D. Moore | Todd M. Rynaski | ||
| Senior Vice President – Corporate | Vice President and Controller | |||
| Eric J. Gehringer | Relations and | |||
| Executive Vice President – Operations | Chief Administrative Officer | Elizabeth F. Whited | ||
| Executive Vice President – | ||||
| Jennifer L. Hamann | Clark J. Ponthier | Sustainability and Strategy | ||
| Executive Vice President | Senior Vice President – Supply Chain | |||
| and Chief Financial Officer | and Continuous Improvement | |||
| *Senior management are elected officers of both Union Pacific Corporation and Union Pacific Railroad Company, except Messrs. Gehringer, Ponthier, and Rocker are elected officers for Union Pacific Railroad Company. |