THE VIRGINIAN-PILOT 
              Copyright (c) 1996, Landmark Communications, Inc.

DATE: Saturday, May 18, 1996                 TAG: 9605180271
SECTION: BUSINESS                 PAGE: D2   EDITION: FINAL 
SOURCE: BY RIP WATSON, THE JOURNAL OF COMMERCE 
                                             LENGTH: Short :   46 lines

NORFOLK SOUTHERN TIES PAY OF ENGINEERS TO ITS PROFIT

Locomotive engineers working for Norfolk Southern Corp. have approved a precedent-breaking contract that ties their future pay increases to the company's financial performance.

The five-year deal is a departure from traditional railroad labor contracts, which incorporate a blend of salary changes that include general increases to a worker's base pay, lump-sum awards and cost-of-living adjustments.

The new contract with Norfolk Southern would give the railroad's 3,000 engineers bonuses of up to 5 percent on 1996 and 1997 wages and up to 10 percent for earnings in 1998 and 1999 if the company meets financial targets tied to return on invested capital, asset utilization and net income.

The targets are the same as those for the railroad's management incentive pay program.

If the company reaches all its management incentive targets in the future, as it did in 1994 and 1995, the total bonus payout to the engineers could reach 30 percent over the contract's life.

``We think this is an important agreement,'' said David R. Goode, Norfolk Southern's chairman, chief executive and president. ``This opens a lot of possibilities for a better aligning of interests between management and labor.''

Ray Wallace, one of the union's general chairmen who proposed the bonus pay plan, said the old, traditional way is outdated. ``We have an opportunity to make things better for both sides.''

The new agreement also includes a cost-of-living increase. It won't be signed by Norfolk Southern until all the nation's freight railroads have reached agreement with the engineers' union, a Norfolk Southern spokesman said.

While engineers at most other large railroads have approved compensation agreements, talks are ongoing at Conrail Inc. and CSX Transportation Inc., the rail subsidiary of Richmond-based CSX Corp.

The agreement with Norfolk Southern will be retroactive to May 1 when the national talks are concluded successfully. MEMO: Staff writer Christopher Dinsmore contributed to this report. by CNB