Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

Schedule of Share-Based Compensation and Related Income Tax Benefit

Total pre-tax expense and income tax benefits associated with share-based compensation are shown in the table below. Income tax benefits include impacts from option exercises and the vesting of other equity awards.

	Third Quarters				Nine Months
(Dollars in millions)	2019		2018		2019		2018
Share-Based Compensation Expense:
Performance Units	$	8	$	8	$	23	$	22
Stock Options	2		4		9		10
Restricted Stock Units and Awards	2		1		6		4
Stock Awards for Directors	—		—		2		2
Employee Stock Purchase Plan	1		—		3		—
Total Share-Based Compensation Expense	$	13	$	13	$	43	$	38
Income Tax Benefit	$	6	$	6	$	41	$	23

Schedule of Weighted Average Assumptions

The fair values of the performance units awarded during the third quarters and nine months 2019 and 2018 were calculated using a Monte-Carlo simulation model with the following weighted-average assumptions:

	Third Quarters			Nine Months
	2019(a)	2018		2019		2018
Weighted-average assumptions used:
Annual dividend yield	N/A	1.2	%	1.4	%	1.6	%
Risk-free interest rate	N/A	2.7	%	2.5	%	2.3	%
Annualized volatility	N/A	27.9	%	27.6	%	29.1	%
Expected life (in years)	N/A	2.3		2.9		2.9

(a) No performance units were awarded in third quarter 2019.

Schedule of Fair Value Assumptions for Stock Option Awards

The fair values of all stock option awards during the quarters and nine months ended September 30, 2019 and September 30, 2018 were estimated at the grant date with the following weighted average assumptions:

	Third Quarters						Nine Months
	2019			2018			2019			2018
Weighted-average grant-date fair value	$	15.44		$	20.52		$	17.99		$	14.65
Stock options valuation assumptions:
Annual dividend yield	1.4		%	1.2		%	1.3		%	1.5		%
Risk-free interest rate	1.4		%	2.8		%	2.5		%	2.6		%
Annualized volatility	25.7		%	25.5		%	25.7		%	27.0		%
Expected life (in years)	6.5			6.5			6.1			6.5
Other pricing model inputs:
Weighted-average grant-date market price of CSX stock (strike price)	$	66.35		$	74.84		$	69.96		$	54.19