Conrail managers to get 2-year severance pay deal But fate of 18,000 workers in union is uncertain

March 14, 1997|By KNIGHT-RIDDER NEWS SERVICE

PHILADELPHIA -- Conrail managers who lose their jobs when the Philadelphia-based railroad is carved up next year will receive up to two years of severance pay, plus enhanced pension and stock benefits worth tens of thousands of dollars.

In a memo sent to employees this week, Conrail provided the first indication of how the railroad's demise will affect as many as 3,000 white-collar and management workers, more than 1,000 of whom work in or near Philadelphia.

The fate of Conrail's 18,000 unionized workers is still uncertain. Norfolk Southern and CSX are expected to negotiate deals with the various unions before submitting the merger plan to federal regulators for approval.

Details of Conrail's memo were confirmed yesterday by a Conrail spokesman.

Conrail agreed earlier this month to be divided up between its two eastern rivals, CSX Corp. and Norfolk Southern Corp., ending a bruising four-month merger battle.

Under the $10.3 billion merger plan, Conrail shareholders will receive $115 in cash for their stock by early June, and the railroad will be split up between CSX and Norfolk Southern. Both companies are headquartered in Virginia.

While the new owners have promised to maintain a "major operating presence" in the Philadelphia region, officials say it is likely that many, if not most of Conrail's headquarters employees and top managers will lose their jobs.

However, it is expected to take several months to negotiate the final details of the split-up, and several more for federal railroad regulators to approve the plan. Conrail's memo to employees indicates it will likely be mid-1998 before CSX and Norfolk VTC actually take control of Conrail.

The plan includes:

* Severance payments worth up to two years' pay for nonunion employees who lose their jobs in the takeover. Employees with more than a year's service would receive one year's pay; those with more than five years would receive 18 months' pay; and those with over 10 years' service would get the full two years' in severance.

* Increased stock awards. The company plans to speed distribution of 7 million Conrail shares held by an employee stock purchase plan, which workers receive as contributions to their -- 401(k) plans. Incentive stock and stock-option plans will also be improved, the memo indicated.

Pub Date: 3/14/97

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