CSX Long Term Incentive Plan

The CSX Long Term Incentive Plan (“LTIP” or “the “Plan”) is the vehicle pursuant to which CSX Corporation (“CSX”) awards Performance Grants, as described in Section 8 of the CSX Omnibus Incentive Plan. The purpose of LTIP is to reward eligible employees for their contribution to the attainment of improved operating results which is intended to result in CSX share price appreciation. Grant amounts, approved by the Compensation Committee of CSX’s Board of Directors (the “Committee”), are based on an employee’s job position, accountability, and the potential to impact CSX’s financial results.

The Plan seeks to motivate and reward employees through the issuance of Performance Grants, represented in the form of units. Grants are payable upon achievement of certain levels of Operating Ratio (as defined herein) during a given performance period and are referred to as Performance Awards at the time of payment.  Performance Awards are payable in the form of CSX common stock.

Effective Date and Term

The 2009–2011 LTIP Cycle (the “2009–2011 Cycle” or “Cycle”) is the three-year period during which performance is measured.  The Cycle commences May 5, 2009 (“the Effective Date”) and ends December 30, 2011.

Eligibility and Participation

Active employees of CSX or a participating affiliate (the Company or collectively, the “Companies”) in salary Band 06 and above as of the Effective Date shall participate in the 2009–2011 LTIP Cycle (“Participants”) and shall receive Performance Grants in accordance with the dollar value schedule approved by the Committee. The CSX Compensation and Benefits Department calculates the Performance Grants for each salary band level. The Performance Grant schedule is maintained in the office of the Plan Administrator.

Employees hired or promoted into Band 06 and above after the Effective Date and before the end of the 2009–2011 Cycle will receive a pro rata allocation of Performance Grants based on their participation (and status as full time or part-time).  Participants who are moved to a higher or lower Band during the Cycle will receive a pro rata reallocation of Performance Grants pertaining to each applicable Band based upon the number of months of participation in each Band relative to the number of months in the Cycle.  The same pro rata method will be used for employees who transfer between union and non-union employment. For purposes of the pro rata calculation, participation begins on the first day of the month following the date the Participant was hired, promoted, demoted, or transferred.  Notwithstanding the preceding sentence, any Participant who is hired at or promoted to a salary level making such Participant a “covered employee” under Internal Revenue Code Section 162(m) must have had a period of service of at least 3 months to qualify for a Performance Grant at that level. In such cases, the pro rata calculation shall be made as of the date of hire or promotion.

Performance Grant Value

Under the long-term incentive compensation program design, the Committee approves the annual competitive dollar value of long-term incentive compensation for each Band. For the 2009-2011 Cycle, performance units comprise 75% of the value approved by the Committee and restricted stock units comprise the other 25% which is provided in a separate grant.

Performance Units are calculated by dividing the annual grant value for each Band by the average closing price of CSX common stock during the most recent three months preceding the Effective Date.  For the 2009-2011 Cycle, the average stock price equaled $27.31, representing the months of February, March and April 2009.  This price is used solely to determine the number of Performance Units granted to each Participant at the commencement of the Cycle.

Performance Measure

Operating Ratio is the single performance measure used in the 2009-2011 Cycle and is defined as consolidated CSX Corporation operating expenses divided by operating revenue.  It is calculated excluding nonrecurring items disclosed in the financial statements.  Performance achievement for the Cycle is based on Operating Ratio as measured in the third and final year of the Cycle (2011).

Using this measure to determine payout levels reinforces the correlation between an improving Operating Ratio and an increasing stock price.  Efforts to improve the Operating Ratio align CSX’s business objectives in a way that allows individuals to equate personal actions to desired performance outcomes.  Each Plan Participant should be motivated to grow revenue, reduce expense, improve service, increase productivity, improve safety, and increase asset utilization and rationalization.

As the price of fuel has a significant impact on this particular performance measure, the Operating Ratio targets vary based on the average cost of oil per barrel outside of a pre-determined range (‘fuel collar”) established at the beginning of the Cycle based on the average price per barrel of oil according to West Texas Intermediate (WTI).  The chart in Exhibit A reflects the Operating Ratio targets and related Performance Awards at various WTI per barrel oil prices and provides a payout example.

Performance Awards