DATE: Sunday, June 29, 1997                 TAG: 9706280575



                                            LENGTH:  428 lines


David Goode casually picks up the small pottery bowl in one hand. ``This is from the 11th or 12th century,'' he says, displaying it cavalierly if it were an ordinary cereal dish.

The pre-Columbian Pueblo vessel is one of several dozen pieces of Native American pottery on the living room bookshelves of Goode's sweeping riverside ranch in Norfolk.

Like a museum with too little space, the walls are crammed with paintings. Many of them were collected by Susan Goode, his wife, though here and there Goode's influence is seen in prints with locomotives steaming through them.

The pottery is his, too.

Goode replaces the Pueblo bowl. ``If I drop it, I drop it,'' he says, adding with a grimace, ``It's happened before.''

Goode exudes the casual confidence of a man in control of himself and his surroundings. There's a willingness in his demeanor to take risks and assume the consequences. Though stout, he has liveliness and determination in his step. Eager, probing eyes gaze out from behind thick, squarish glasses.

Somehow, it's not surprising that this man - until six years ago a tax lawyer and now chairman of Norfolk Southern Corp. - led his company to victory in a battle for its corporte life.

Norfolk Southern muscled its way into a merger between CSX Corp., its Richmond-based rival in the Southeast, and Conrail Inc., the dominant Northeastern railroad. A CSX-Conrail merger would have forced Norfolk Southern, regarded as the nation's best run railroad, into a secondary role that it probably would not have survived.

With superior financial firepower and an unwavering confidence born of Goode's resolve and the company's single-minded corporate culture, Norfolk Southern walked away with the lion's share of Conrail.

``Norfolk Southern was staring at a very bad situation, perhaps even at an abyss,'' says Scott Flower, a rail stock analyst for Paine Webber. ``David Goode, through his own skills and tenacity, allowed Norfolk Southern to claw its way to the top.''

Norfolk Southern and CSX are now dividing Conrail between them in a $10.2 billion takeover that will make the two railroads roughly equal competitors in the East. Just last Monday, the rivals filed their joint application for control of Conrail with federal regulators.

As the Conrail deal illustrates, the 56-year-old Goode has a way of turning adversity into opportunity. His competitive streak is as wide as a freight train is long.

``He's a lot more competitive than he lets on,'' says John W. Snow, chairman of CSX, who knows Goode socially as well as from their business rivalry. ``I don't think you get to where he's gotten without having a strong drive. . . .

``He also has an appreciation of when competition's becoming destructive,'' Snow says. ``I don't think he wanted to pay $130 a share for Conrail.''

The bidding war for Conrail started at $92.50 a share and ended at $115.

While he has a sense of humor about it, Goode clearly doesn't like to lose. Even against the railroad's shipping customers, to whom it might be wise to lose, Goode doesn't like to be left behind. ``I notice most of the shippers are better golfers than I am, so it's not usually a problem,'' he cracks.

He has felt left behind twice.

In 1982, he remained in Roanoke as the Norfolk & Western Railway Co. pulled up stakes and moved to Norfolk to merge with Southern Railway Co. to form Norfolk Southern.

``I was very disappointed in that,'' Goode says. ``I wanted to be in the leading edge of what was happening and be part of the core strategy group.''

Instead he was stuck in Roanoke with a bunch of other mid-level executives, watching the real action from afar. But Goode turned the situation on its head.

He became involved in the local arts community and in Roanoke politics, managing campaigns for several Democratic politicians. He handled tax issues in Washington for Norfolk Southern's first attempt in 1986 to buy Conrail.

While he wasn't the most senior person, he became ``the railroad's man in Roanoke,'' he says. It was a role he wore comfortably and it caught the attention of his bosses in Norfolk.

Within 10 years, he was called to Norfolk, where he wore an executive vice president's cap for less than a year before getting the nod from then-Norfolk Southern Chairman Arnold McKinnon and the board to become president. A year later, he succeeded McKinnon.

The second time Goode felt left behind was the morning of Oct. 15.

He was driving his sleek Lincoln Mark VIII coupe to work when the cell phone rang. Snow was on the line.

The CSX chairman told Goode that CSX was about to announce an $8.4 billion merger with Conrail.

``It was obviously disappointing when they made a deal with CSX,'' says Goode, who had called Conrail's top executive just three weeks earlier to once again express Norfolk Southern's long-standing interest in acquiring the Philadelphia-based railroad. ``We certainly didn't expect that Conrail would make a move like that without contacting us first to sort of test the waters knowing of our interest as they did.''

Goode thanked Snow for doing the ``courteous'' thing. The two agreed to meet soon to discuss the situation.

Courtesy aside, David Goode knew what he had to do.

Arriving in his 20th-floor office in the green-glass Norfolk Southern tower in downtown Norfolk, Goode called together his lieutenants. It was time to consider their options and take action. Fast. 'DON'T SHOOT FROM THE HIP'

The move is a key to Goode's management style. Norfolk Southern employs nearly 26,000 people, and Goode clearly can't manage them all. He manages the senior leadership team, and they run the railroad.

``You don't shoot from the hip. You get your team together and call in your resources, get your outside lawyers and accountants and investment bankers and do the best thing that you can,'' Goode says. ``A company like ours has a lot of resources, and the important thing is to make sure you bring the resources to bear.''

And bring resources he did. Goode and right-hand man Henry C. Wolf, the chief financial officer, took Norfolk Southern's pristine balance sheet to Wall Street to borrow money. By keeping its financial house squeaky clean, one might say Norfolk Southern had been preparing itself for years to buy Conrail.

Arriving in the morning to meet with the investment bankers, Goode and Wolf secured $15 billion in loan commitments ``not only before lunchtime, but before the coffee was cold,'' Goode says.

Eight days after his conversation with Snow, Norfolk Southern topped CSX's offer for Conrail by $1 billion.

The counteroffer set off a takeover war fought in courtrooms and cocktail parties, in newspapers and in the minds of railroad executives.

In early talks, CSX offered concessions to Norfolk Southern that Goode called insufficient. CSX twice ratcheted up its offer and twice Norfolk Southern topped CSX by a cool billion. Conrail's shareholders sided with Norfolk Southern in a lopsided Jan. 17 vote, but Conrail remained comitted to CSX.

After a nudge from top federal regulators, the railroads started talking again, but the talks were stuck on a sidetrack by the intransigence of Conrail's leadership.

Goode issued an ultimatum in a Feb. 24 letter to Snow and David LeVan, Conrail's chairman: Deal by March 3 or Norfolk Southern would use its clout with Conrail shareholders to replace Conrail's board and dictate the terms of a takeover.

Not surprisingly, Conrail threw in the towel on March 3 and agreed to talks leading to Conrail's division between Norfolk Southern and CSX. The railroads then negotiated their plan and filed it Monday with the federal Surface Transportation Board, which will take 350 days to review it.

Norfolk Southern has taken a $5.9 billion gamble that it can integrate its 58 percent of Conrail with its existing system - and repay the debt on its balance sheet by gaining back cargo that now moves by truck. A TEAM BUILDER

The plan's approval is widely expected because, for the most part, it restores competition to Northeastern markets for first time since Conrail's monopoly was created by Congress in 1976.

``Everybody in the rail industry is amazed that given the head start CSX had that Norfolk Southern wound up with 58 percent of Conrail,'' says Michael Lloyd, a rail stock analyst at Merrill Lynch. ``That accomplishment reflects the ability, tenacity and intellect of David Goode.''

Says retired Norfolk Southern Vice Chairman John R. Turbyfill: ``David won with a great deal of firmness and a great deal of courage. They were well behind the curve for a long time. He could easily have compromised or given up, but he didn't flinch.''

Characteristically, Goode demurs when it comes to taking credit for the victory. He commends the team of talented top executives with which he has surrounded himself.

``He's very good about putting people around him who are excellent at handling the day-to-day operations,'' Lloyd says.

Staff meetings are marked by debate and even argument, Goode says. ``Both the challenge and the pleasure of being CEO of Norfolk Southern is that you know you have a lot of talent behind you,'' Goode says.

He's uncomfortable in the spotlight, but handles it well. Goode strode confidently into the Jan. 17 Conrail shareholder meeting, which was packed with partisan Conrail employees. Despite the palpably hostile atmosphere, Goode beamed with confidence and spoke with ease.

``There's no lack of clarity there,'' said the analyst Flower. ``He's got a sense of where he wants to take Norfolk Southern and he's very good at communicating it.'' PLEASANT COMPANY

Perhaps the most remarkable thing about Goode is the breadth and depth of his knowledge, associates say. He finds it as easy to talk at length about Winston Link, the noted railroad photographer, as about the railroad itself.

Recently, he was concurrently reading a military history book by John Keenan, Robert Reich's memoir of his years as President Clinton's Labor Secretary and Arthur C. Clarke's latest science-fiction novel. He also reads The Economist news magazine and several art magazines religiously.

Still he's not bookish. His sense of humor and ready laugh make him pleasant company. A toy Conrail locomotive, festooned with a red ribbon, rests whimsically among the management manuals and other career momentos on the shelves of his well-appointed, if cluttered office.

Arty railroad photos lean against side tables. In his personal collection, he favors industrial, ``Ash Can School'' pictures with trains in them, but broadly includes many rail images. The hobby began when he joined the railroad. His interest in Native American pottery stems from his wife Susan's collection of Sioux artifacts.

Goode's corner of Norfolk Southern's tower affords a broad vista of downtown Norfolk and the Elizabeth River basin. He can even see massive coal terminal at Lambert's Point, upon which the railroad built its success.

A mug adorned with the black mask of Darth Vader, the villain of ``Star Wars,'' pokes fun at Norfolk Southern's reputation as a militaristic operation.

A recent Wall Street Journal story harps on that disciplinary image. It relates an anecdote about Goode rebuking a Norfolk Southern executive for wearing khaki pants to the office on a Saturday. Goode, attired as usual in a dark suit and tie, asks the man, ``Did someone change the dress code and not tell me?''

The story's true, but the Journal took it too seriously, Goode says.

On a recent Sunday, Goode went to the office and ran into John Friedman, a strategic planning manager, who was working on the STB application. Friedman was walking around in ``Bermuda shorts, a dirty old T-shirt and bare feet,'' Goode says. ``I said to him, `John, for goodness sakes, didn't you read the article in the Wall Street Journal?' ''

While he doesn't advocate casual dress, Goode says Friedman and others had been working day and night to get the application together and what they wore on the weekends wasn't a big deal. ``We get things done around our shop,'' he adds.

But that doesn't mean Goode is a pushover. While he's always calm and controlled, employees know when he's unhappy with them, says Thomas L. Finkbiner, the railroad's vice president of intermodal.

``He may look like a country preacher, but he's not,'' Finkbiner said.

Goode was born the son of a small-town department store owner in Vinton, Va., just east of Roanoke. He cut his business teeth helping his father Otto Goode around the store after school. As a teenager he learned to do the books on a roll-top desk he still has in his Norfolk home.

Although he sold his store in the early 1970s, Otto Goode, now 91, was one of the oldest active real estate brokers in Virginia until this year when he let his license lapse. David Goode's mother Martha, a Bedford County native, died 15 years ago.

Goode's roots reach into West Virginia coal country, where his father's family were miners. That coal still flows over Norfolk Southern's lines down to Norfolk and to power plants and steel mills around the country.

Young David Goode was a typical, but intelligent kid. He played baseball until he realized he couldn't he couldn't hit all that well. His father taught him to play tennis on a court bulldozed out of the Bedford County clay in payment for a department store debt. (To win points, Goode used to lob the ball into the lights. His opponents would get flustered when bats flew down, following the ball.)

He was high school valedictorian and voted ``most likely to succeed'' by his prescient classmates. While he had a scholarship to Washington & Lee College, he visited Duke University while trying to win a scholarship there, too, and fell in love with the Durham school. HARVARD MAN

There he studied liberal arts before settling on accounting. He was advertising manager, then business manager of the Duke Chronicle, the school's newspaper. The paper made so much money under him, it was able to pay salaries.

He spent three summers working as a seasonal campground ranger at The Peaks of Otter for the U.S. Forest Service.

``It was a fabulous job,'' he says. ``I got to wear my Smokey the Bear hat and my uniform and drive a pick-up truck around the campground all summer.''

He went back to Duke early in his junior year to start selling advertising and ran into Susan Skiles, a sophomore, at a freshman mixer they had both crashed. She had dated one of his fraternity brothers the year before.

After graduating from Duke in 1962, Goode went to Harvard Law School, aiming for a lucrative job on Wall Street or in Washington.

``We didn't get married until Susan graduated from college and I completely ran out of money at Harvard,'' Goode says.

``We took off for Cambridge,'' recalls Susan Goode. ``I didn't have a job and we weren't sure whether we had a place to live.''

She got a job teaching and supported him very well, he says with pride. They've since had two daughters, Christina, 28, and Martha, who will be 16 on Wednesday.

On a trip home during his third and final year of law school, Goode dropped by the Roanoke headquarters of Norfolk & Western Railway to meet some Harvard alumni - John ``Jack'' Fishwick and Robert Claytor. He says he wasn't thinking about a job.

``Fishwick was sitting in his office with maps all spread all out all over the place,'' Goode says. ``He was the kind of guy who said, `Let me show you what I'm doing,' and he showed me all these railroads going every which way.'' ART OF THE DEAL

Fishwick, N&W's general counsel and senior vice president, was working on a railroad merger deal.

``Frankly,'' says Goode, ``I thought it was the most exciting thing I'd ever seen - the deal, the deal-making, the big deal, the big transaction, the high-level corporate work.''

Fishwick took to Goode and sent him to meet Claytor, vice president of the law department. Claytor offered Goode a job in the railroad's new tax department. While Goode hadn't really thought of working for the railroad, the pay was good and it brought him back home. He figured he'd try it for two or three years.

``They were almost paying New York wages at the time in Roanoke,'' Goode says. ``It was what seemed like a lot of money at the time. It was $6,800 a year. That shows how old I am. That's what lawyers coming out of Harvard made in those days. I think the Wall Street scale was $7,200 a year.''

The next 15 years were the best of times for a young tax lawyer and the worst of times for the railroad industry.

Norfolk & Western took over several railroads, creating a lot of tax and legal work and a lot of opportunities for Goode. The railroad promoted him quickly. By 1971 he was director of taxation.

But the industry was in a tailspin. Overburdened by federal regulation and laws dating to when railroads dominated the country, inefficient railroads were losing business to trucks. Many railroads went bankrupt and many people left the industry.

With a tradition of sound, conservative management, Norfolk & Western survived to take advantage of the railroad industry's deregulation, approved by Congress in 1980.

In 1982, when Norfolk & Western merged with Southern Railway, Goode was promoted to assistant vice president in the taxation department. He became vice president of the department in 1985. He'd spent the bulk of his career in Roanoke practicing tax law, but it's not as narrow as it sounds.

``I got to work with just about everybody in the company,'' he says. ``Tax problems sort of permeated the company. . . . In order to do a good job in taxes you need to understand a fair amount about the railroad.''

While some say Goode was destined for upper management, Goode says it came as a surprise to him when McKinnon told him to come down to Norfolk to take the executive vice president of administration job in 1991.

Then he knew he was in the running for the top job, even though it didn't make any sense. He was only 50, and there were many executives senior to him.

But McKinnon was frustrated by only having five years as chairman. About the time he felt comfortable with the job and decided what direction he wanted to lead the company, he had to find a successor before before he hit the railroad's mandatory retirement age of 65.

McKinnon decided to bypass the senior ranks and look a little deeper for someone who could be the railroad's leader long enough to follow a strategic plan through to its end.

Goode fit the bill, but McKinnon has said the decision wasn't made until a few days before the fall board meeting at which Goode was appointed president. A year later, he succeeded McKinnon as chairman and chief executive.

``At least in the investment community, nobody knew who David was,'' says Merrill Lynch's Lloyd. ``Now he's catapulted in stature to the head of the class.'' 'ALL THE TOOLS'

Goode exhibited breadth of intelligence, judgment and experience, says Turbyfill, whom Goode credits as his mentor. ``He was not a narrow technician as some specialists can be,'' he says.

``It's hard to point to any one thing and say, `Hey, that's what made it for David,' '' Turbyfill says. ``He just had all the tools that one needs for high leadership.''

Goode moved decisively in his first year as chairman. He replaced the senior leadership at North American Van Lines, the railroad's then-troubled trucking unit. Since Norfolk Southern couldn't seem to buy Conrail to obtain much-desired routes into the Northeast, he tried to form an alliance with that railroad.

Conrail bought a half-stake in Norfolk Southern's Triple Crown unit, which uses rail cars that look and act like truck trailers with both rail wheels and street tires. The idea behind the sale was to revitalize moribund North-South rail traffic and compete better with trucks in the busy corridor.

It didn't work. Norfolk Southern executives say Conrail just didn't seem to care about the business or its potential.

In 1994, Goode almost cut a merger deal with Conrail's retiring chairman, but Norfolk Southern balked at the price Conrail wanted.

Norfolk Southern never took its eyes off the prize. In 1995, Goode and CSX's Snow discussed a joint takeover of Conrail, but it never left the station.

Conrail, meanwhile, was nearing the end of the line. The cash-strapped railroad wasn't investing enough in its operations. It embarked on a sale of many lesser-used routes. Service and profits began to suffer.

For reasons that probably date back to Norfolk Southern's first attempt to buy Conrail in 1986, Conrail turned to CSX a decade later. In the earlier fight, Norfolk Southern had argued that Conrail could never stand on its own, but Congress disagreed and sold Conrail in a public stock offering in 1987. Thanks to its monopoly on markets like New York City, it worked its way to a modicum of profitability.

Still, Snow now describes the current outcome as inevitable.

``It was the nature of Conrail that either we were going to bid for Conrail and Norfolk Southern was going to respond, or Norfolk Southern was going to bid for Conrail and we were going to respond,'' Snow says. ``The whole thing was inevitable down to the way it's being divided.'' AT THE FOREFRONT

Some day soon, there will be two big railroads east of the Mississippi River to match the two big Western railroads. The situation begs a question: Will the century-old dream of one transcontinental railroad be fulfilled?

Goode is circumspect on the issue. He's said in the past he's not sure such a merger would be necessary.

``I'm trying not to pre-judge it,'' Goode says. ``One way or another, Norfolk Southern is going to be at the forefront of the transportation industry.''

The railroad's first priority, however, is securing federal approval to take over Conrail and then making that transaction work, he says. And he's got more than eight years before he turns 65 to make sure it happens, a luxury his predecessors didn't have.

Goode says he hasn't even thought about what happens after that.

In the past two years, Goode took a more active voice in Hampton Roads civic affairs, chiding the region for its lack of cooperation and taking an active role in the formation of the Hampton Roads Partnership, a regional public-private planning body he co-chairs.

But the railroad's needs have diverted his attention.

``He has taken control of Norfolk Southern in terms of leadership,'' said Flower, the Paine Webber analyst. ``He doesn't sit back and let events pull it along, as the situation with Conrail proves. He sets the agenda.'' ILLUSTRATION: Color photos

IAN MARTIN, The Virginian-Pilot

David Ronald Goode

A friend gave David Goode this Conrail locomotive model.

Color photo

BETH BERGMAN, The Virginian-Pilot

Goode relaxes in a room overlooking the Lafayette River. His wife

Susan, daughter Martha and Dizzy the dog share the art-filled home

with him.


BETH BERGMAN, The Virginian-Pilot

Susan and David Goode, in their back yard...



AGE: 56 (Born Jan. 13, 1941, in Vinton, Va.)

FAMILY: Susan Skiles, wife (married June 22, 1963), and daughters

Christina, 27, and Martha, 15

1996 INCOME: $1.94 million (Also owns 265,566 shares of Norfolk

Southern stock worth $105 each as of June 25, including unexercised

stock options and shares in company's 401(k))

EDUCATION: Duke University, 1962, bachelor's in accounting;

Harvard University Law School, 1965; Harvard Business School's

Advanced Management Program, 1990.

CAREER: Norfolk and Western Railway Co.: tax attorney, 1965-1968;

assistant general tax attorney, 1968-1969; general tax attorney,

1969-1971; director of taxation, 1971-1982

Norfolk Southern Corp.: assistant vice president-taxation,

1982-1985; vice president-taxation, 1985-1991; executive vice

president-administration, 1991; president, 1991-1992; chairman,

president, chief executive and director, 1992-present

OTHER CORPORATE BOARDS: Aeroquip-Vickers Inc., director;

Caterpillar Inc., director; Georgia-Pacific Corp., director; Texas

Instruments Inc., director


Railroads, director; Business Committee for the Arts, director;

Chamber of Commerce of the United States of America, director; Fuqua

School of Business, Duke University, visitor; General Douglas

MacArthur Memorial Foundation, trustee; Hampton Roads Partnership,

co-chairman; Hollins College, trustee; Kennedy Center Corporate Fund

Board, vice chairman; Virginia Economic Devlopment Partnership,

director; The Virginia Foundation for Independent Colleges, trustee;

and others

HOBBIES: Reading, golf (18 handicap), tennis and collecting

Native American pottery and railroad prints and art. KEYWORDS: BIOGRAPHY PROFILE

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