Form 10-K - Union Pacific

does not change the items which must be reported in other comprehensive income, how such items are
measured or when they must be reclassified to net income. This standard is effective for interim and
annual periods beginning after December 15, 2011. Because this ASU impacts presentation only, it will
have no effect on our financial condition, results of operations or cash flows.
4. Stock Options and Other Stock Plans
There are 7,140 restricted shares outstanding under the 1992 Restricted Stock Plan for Non-Employee
Directors of Union Pacific Corporation. We no longer grant awards of restricted shares under this plan.
In April 2000, the shareholders approved the Union Pacific Corporation 2000 Directors Plan (Directors
Plan) whereby 1,100,000 shares of our common stock were reserved for issuance to our non-employee
directors. Under the Directors Plan, each non-employee director, upon his or her initial election to the
Board of Directors, receives a grant of 2,000 retention shares or retention stock units. Prior to December
31, 2007, each non-employee director received annually an option to purchase at fair value a number of
shares of our common stock, not to exceed 10,000 shares during any calendar year, determined by
dividing 60,000 by 1/3 of the fair market value of one share of our common stock on the date of such
Board of Directors meeting, with the resulting quotient rounded up or down to the nearest 50 shares. In
September 2007, the Board of Directors eliminated the annual payment of options for 2008 and all future
years. As of December 31, 2011, 18,000 restricted shares and 219,900 options were outstanding under
the Directors Plan.
The Union Pacific Corporation 2001 Stock Incentive Plan (2001 Plan) was approved by the shareholders
in April 2001. The 2001 Plan reserved 24,000,000 shares of our common stock for issuance to eligible
employees of the Corporation and its subsidiaries in the form of non-qualified options, incentive stock
options, retention shares, stock units, and incentive bonus awards. Non-employee directors were not
eligible for awards under the 2001 Plan. As of December 31, 2011, 545,696 options were outstanding
under the 2001 Plan. We no longer grant any stock options or other stock or unit awards under this plan.
The Union Pacific Corporation 2004 Stock Incentive Plan (2004 Plan) was approved by shareholders in
April 2004. The 2004 Plan reserved 42,000,000 shares of our common stock for issuance, plus any
shares subject to awards made under the 2001 Plan and the 1993 Plan that were outstanding on April 16,
2004, and became available for regrant pursuant to the terms of the 2004 Plan. Under the 2004 Plan,
non-qualified options, stock appreciation rights, retention shares, stock units, and incentive bonus awards
may be granted to eligible employees of the Corporation and its subsidiaries. Non-employee directors are
not eligible for awards under the 2004 Plan. As of December 31, 2011, 6,276,021 options and 3,760,260
retention shares and stock units were outstanding under the 2004 Plan.
Pursuant to the above plans 32,374,343; 32,904,291; and 33,559,150 shares of our common stock were
authorized and available for grant at December 31, 2011, 2010, and 2009, respectively.
Stock-Based Compensation – We have several stock-based compensation plans under which
employees and non-employee directors receive stock options, nonvested retention shares, and
nonvested stock units. We refer to the nonvested shares and stock units collectively as “retention
awards”. We have elected to issue treasury shares to cover option exercises and stock unit vestings,
while new shares are issued when retention shares are granted. Information regarding stock-based
compensation appears in the table below:
Millions 2011 2010 2009
Stock-based compensation, before tax:
Stock options $ 18 $ 17 $ 19
Retention awards 64 57 39
Total stock-based compensation, before tax $ 82 $ 74 $ 58
Excess tax benefits from equity compensation plans $ 83 $ 51 $ 10
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