Investor Presentation 2017 Engagement 1 Forward-Looking Statements - PowerPoint PPT Presentation

Investor Presentation 2017 Engagement 1

Forward-Looking Statements Certain statements in this presentation are forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995, as amended. These statements relate to future events or Norfolk Southern Corporation’s (NYSE: NSC) (“Norfolk Southern,” “NS” or the “Company”) future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Company or its industry to be materially different from those expressed or implied by any forward-looking statements. In some cases, forward-looking statements may be identified by the use of words like “believe,” “expect,” “anticipate,” “estimate,” “plan,” “consider,” “project,” and similar references to the future. The Company has based these forward- looking statements on management’s current expectations, assumptions, estimates, beliefs and projections. While the Company believes these expectations, assumptions, estimates, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which involve factors or circumstances that are beyond the Company’s control. These and other important factors, including those discussed under “Risk Factors” in the Annual Report on Form 10 -K for the year ended December 31, 2016, filed with the Securities and Exchange Commission (the “SEC”) on February 6, 2017, as well as the Company’s subsequent filings with the SEC, may cause our actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Forward-looking statements are not, and should not be relied upon as, a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at or by which any such performance or results will be achieved. As a result, actual outcomes and results may differ materially from those expressed in forward-looking statements. We undertake no obligation to update or revise forward-looking statements, whether as a result of new information, the occurrence of certain events or otherwise, unless otherwise required by applicable securities law. 2

Extensive Market Research Supports Growth Growth driven by markets, service solutions, and long-standing customer relationships and development 40+ Ports 22 States Served ~20,000 Route Miles 250+ Short Lines Norfolk Southern’s network, by Network of Track alignment with shipping partners and market approach generates long-term growth:  Serves more than 50% of the US population, manufacturing activity, and energy consumption  Superior eastern Intermodal network  Alignment with steamship lines adding capacity in the East  Largest metals franchise  Largest network of automotive plants  Industry-leading short line access  First-in-class industrial development Generates diversified customer and market base 3

Norfolk Southern’s Strategic Plan Norfolk Southern’s Board has worked closely with  Productivity Savings Plan management to develop the strategic plan since Jim Squires became CEO in June 2015. High-quality service allows Norfolk Southern to capitalize on  − Extensive ongoing evaluation by highly qualified and cost initiatives and leverage capacity for growth independent Board of Directors Dynamic plan with flexibility to address market headwinds  − and opportunities Management team driving execution with Board ensuring accountability Revenue Growth Plan − Dynamic plan based on ongoing review of customer expectations and key performance indicators, plant-level Optimize pricing  forecasts and market expectations balanced with  Double digit compound annual growth rate in earnings per disciplined cost control share by 2020 − Norfolk Southern is successfully implementing 5-year plan Growth of service-sensitive traffic  to increase profitability and deliver enhanced value to Conservative long-term pricing and volume forecasts  shareholders Executing plan to achieve more than $650 million of cost savings and an operating ratio of less than 65 by 2020  Focused on providing high-quality service  Idling terminals and yards, including Ashtabula Docks,  Reducing G&A and consolidating headquarters Knoxville, and Chattanooga  Rationalizing and revitalizing locomotives and freight cars in service  Operating region and division consolidation, including  Rationalizing over 1000 miles of track, including shortlining of WV Central Division consolidation  Restructuring Triple Crown and Pocahontas Land Secondary and Delmarva South lines Strategic plan is delivering significant long-term shareholder value by balancing disciplined cost savings, growth and capital return with investment 4

Driving Increased Shareholder Value Key Financial Targets Key Focus Areas 2020E 2016 Optimize revenue – both pricing Disciplined pricing increases above rail inflation and volume Improve productivity to deliver Operating Ratio < 70 Operating Ratio < 65 efficient and superior service [record 68.9% for 2016] Double-digit compound annual EPS growth by 2020 Increase asset utilization [up 10% in 2016] Focus capital investment to ~$1.9bn of CapEx CapEx ~17% of revenue support long-term value creation Dividend payout target of ~33% over the longer term and Reward shareholders with continuation of dividend growth and significant share significant return of capital repurchases [$700M dividends and $800M share repurchases in 2016] Intensely focused on executing initiatives to drive long-term shareholder value 5

Delivering on Our Commitments 2016 Highlights  Record 2016 operating ratio and strong  Productivity achievements earnings per share growth 68.9% operating ratio  Improved employee productivity, including  reduced overtime 370-basis point (5%) improvement from 2015  Improved locomotive and freight car  EPS increased 10% to $5.62 for 2016  productivity Net income increased by 7%   Better fuel efficiency  Expenses decreased by 11%, revenues  Longer average train length decreased by 6% Line and Yard rationalizations  Pricing above rail inflation  Organizational restructurings   Service improvements provided a solid Proactive management of capital spending  foundation Composite service performance improved to  above 80% for the year vs.72% in 2015 Cost discipline balanced with excellent service. Norfolk Southern continues to deliver shareholder value 6

2016 Results Achieved in the Face of Economic Headwinds 2016 Volume Impacted by Market Conditions 2017 Volume Improving Revenue Mix 160,000 (trailing 12-months 12/31/16) 155,000 150,000 145,000 Coal 140,000 15% Weekly Volume 135,000 130,000 Merchandise Intermodal 63% 22% 125,000 120,000 115,000 110,000 105,000 2015 2016 2017 100,000 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 Week Weekly carloadings are posted as “Performance Reports” in the Invest in NS tab at nscorp.com. 7

Capital Deployment Strategy Balances Investment with Shareholder Returns Capital Allocation Capital Expenditures Dividends Share Repurchases Increasing share repurchases to $1 billion in 2017 Investment and Shareholder Returns Capital Allocation by Year (2007 through 2016) ($ in Millions) 6,000 Capital Expenditures Capital Expenditures Dividends Shares Shares Dividends $18.8 Billion 4,000 $15.0 Billion 2,000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Commitment to continue pursuing a disciplined capital allocation strategy while investing appropriately in the network 8

Norfolk Southern’s Highly Independent and Experienced Board of Directors James A. Squires Highly Engaged & Effective Board of Directors Mitchell E. Daniels, Jr. President & CEO President, Purdue University Chairman of the Board Our Directors’ Skills & Expertise CEO/Senior Office 12 Environmental and Safety 4 Steven F. Leer Marcela E. Donadio Finance and Accounting 9 Lead Independent Director Former Partner and Americas Oil Governance/Board 12 & Gas Sector Leader Government Relations 7 Former CEO and Chairman, Arch Ernst & Young LLP Coal HR and Compensation 6 Information Technology 3 Marketing 6 Michael D. Lockhart Thomas D. Bell, Jr. Strategic Planning 12 Transportation 5 Chairman, Mesa Capital Partners Former Chairman, President and CEO, Armstrong World Board Independence and Tenure Industries Amy E. Miles Erskine B. Bowles Average Tenure: <6 Years 8% CEO, Regal Entertainment Senior Advisor and Non- 1 Group Executive Vice Chairman, BDT Capital Partners 5 4 92% 2 Wesley G. Bush Martin H. Nesbitt <5 years 6-10 > 10 years years Chairman, CEO and President, Co-Founder, The Vistria Group Independent Insider Northrop Grumman Independent Chairman / CEO Norfolk Southern Corporate Governance Best Practices   Annually elected directors Extensive shareholder Daniel A. Carp John R. Thompson  Majority voting standard engagement Former Senior Vice President Former Chairman and CEO, Eastman Kodak Company and General Manager,  Shareholders’ right to call a special  Lead independent director Best Buy.com  meeting Enterprise risk management  Proxy access program 9