§1323 Board of Directors

Summary

Sets who must sit on the Corporation’s board and how those seats change as the United States sells its shares. Until June 30, 1987, the board stays the same as it was on October 21, 1986, and any empty seats are filled by the remaining directors. Starting July 1, 1987, the board will have 3 directors picked by the Secretary of Transportation, the Corporation’s Chief Executive Officer and Chief Operating Officer, and 8 directors chosen by special court trustees. The trustees must be people with business experience and are chosen so the company keeps steady leadership, protects the U.S. investment, keeps essential rail service, and helps sell the U.S. shares. If more than 50 percent of the U.S. interest is still unsold by June 1, 1987, a special court will name 3 trustees to make those 8 appointments. The Corporation pays those trustees up to the same amount it pays its directors. A trustee cannot have been an officer, employee, or director of the United States Railway Association, the Corporation, or the Department of Transportation during the 30 months before appointment. As U.S. shares are sold, public shareholders win the right to elect board members. After the sale date, one director is elected by public shareholders for each 12.5 percent of the U.S. interest sold. Before July 1, 1987, those elected directors replace appointed directors in a set alternating order between two groups of appointees. After July 1, 1987, elected directors replace the trustees’ appointees in the order the trustees set when they were first chosen. Once more than 50 percent but less than 100 percent of the U.S. interest is sold, remaining trustee appointees (and, for the period ending June 30, 1987, most other appointed members except three Secretary appointees plus the CEO and COO) are replaced by public-elected directors. After 100 percent is sold, any remaining directors appointed by the Secretary, the United States Railway Association, or the special court trustees must be replaced by directors elected by the public shareholders. Directors chosen under these rules cannot be special court trustees or federal employees, and they generally cannot be employees of the Corporation unless they are the CEO or COO or are elected by public shareholders.