By Jacqueline Doherty
Three years ago, Jack Koraleski's retirement plans were firmly
in place. After 40 years at the Union Pacific railroad, where he
had risen to executive vice president of marketing and sales, his
September 2012 retirement date was set. The Omaha Country Club was
reserved for the party, and a vacation to Maui was on the
calendar.
But in March 2012 his colleague and friend of more than 30
years, then-CEO James Young, told Mr. Koraleski he had pancreatic
cancer. He asked Mr. Koraleski to delay his retirement and become
the next CEO.
Mr. Koraleski joined the board of directors that summer and was
named chairman of Union Pacific last year, after Mr. Young died.
"But the thing that was important to him was making sure the
company didn't miss a beat, and that was something that I knew I
could do," says Mr. Koraleski.
Indeed, he has. In his three years at the helm, revenue at the
country's largest railroad has grown 22% to $24 billion, driven by
strong demand. Due to increasingly efficient operations, earnings
have risen nearly 60%, to $5.2 billion, or $5.75 a share. This year
earnings per share are expected to grow 13%, to $6.51.
Union Pacific shares (UNP) are up 117% since Mr. Koraleski
became CEO, to under $120, beating an index of railroad stocks by
32 percentage points. The S&P 500 index is up 50% in that
period.
Mr. Koraleski is quick to credit his success to Mr. Young's
inclusive management style. As CEO, Mr. Young had led an operating
committee of senior executives to discuss and debate the company's
goals and come to agreement on its direction.
"We were going to continue to do what we all knew how to do,
which is to keep the momentum and the trajectory going for our
shareholders, for our customers, and for our employees," Mr.
Koraleski says. "There was no dramatic need for change."
A decade ago, poor conditions on 2,000 miles of track had slowed
Union Pacific trains. The slower a railroad system runs, the more
engines and trains are needed to meet delivery schedules. By last
year, after continual maintenance, only 400 miles of track were in
poor condition.
"Customers want great transportation that gives them an
advantage in their marketplace," says Mr. Koraleski. Union
Pacific's capital expenditures, including money for track repair,
totaled $4.1 billion last year.
Now approaching 65, Mr. Koraleski doesn't look ready to retire
anytime soon. "I'll wait and see," he says with a chuckle. "This is
a lot more fun than I thought it would be."
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